China Food

Bingfeng dream broken a shares, “domestic old soda” feelings difficult to continue?

If the attack on the A-share market fails, how can the feeling of domestic “old soda” of Bingfeng beverage continue? Feelings are no longer the expansion barrier of domestic old soda. The revival of regional old brands is facing many problems. Bingfeng beverage still has many “shackles” that need to be broken.
After queuing for nearly 11 months, the domestic time-honored Bingfeng beverage from Xi’an chose to give up the dream of “the first share of domestic old soda” before the “big test” test of the development and examination commission!
Since the prospectus was submitted and updated in July and December last year, the IPO progress of Bingfeng beverage was originally scheduled to sprint to the main board IPO of Shenzhen Stock Exchange on May 19.
However, on May 19, the official website of the CSRC showed that the examination of its issuance application documents was cancelled because Bingfeng beverage withdrew its application materials.
Source: Official Website of China Securities Regulatory Commission
“Liangpi, roujiamo and another bottle of Bingfeng” is known as the folk “Sanqin package” in Xi’an. Bingfeng beverage, which has a history of more than 70 years, has a high reputation in Shaanxi, but consumers still have more brand awareness of “it tastes very Xi’an”.
In recent years, new and online popular drinks and other new consumer brands have emerged one after another, while traditional beverage brands are declining, brands are aging, and consumption scenarios and regional development are limited. Many time-honored enterprise products have been “dusty” for many years, and life is not easy.
In the prospectus, Bingfeng beverage plans to issue no more than 60 million shares on the main board of Shenzhen Stock Exchange to raise 669 million yuan. The sponsor is Huachuang securities. The raised funds will be used for the reconstruction and expansion of glass bottled production line, the upgrading of marketing service network, brand construction and the construction of information management platform.
Now, on the way to market, Bingfeng beverage has voluntarily given up. After withdrawing the declaration, how will Bingfeng beverage finance?
There are many tests in front of the “ice peak”. In the prospectus, Bingfeng beverage said it would speed up the market layout of key cities across the country and open up new increments. However, it is difficult to enter the national market. It is no longer the expansion barrier of domestic old soda. The revival of regional old brands faces many difficulties. Bingfeng beverage still has many “shackles” that need to be broken.

Shaanxi flavor hometown

In 1948, a businessman imported steam water production equipment from Tianjin and built the first steam water plant in Xi’an – Northwest steam water plant to produce “foreign gas water”. In 1953, the northwest steam water factory was incorporated into the state-owned Xi’an food factory through public-private partnership, and a steam water workshop was established in xiguanzheng street, from which Bingfeng brand was born.
Relying on the hometown mood and Shaanxi flavor culture, Bingfeng, 74, has grown into one of the “three Qin packages” loved by Xi’an locals. Its main business is the research and development, production and sales of carbonated and plant drinks such as orange flavor soda and sour plum soup. Its main products are glass bottles, canned orange flavor soda and sour plum soup.
However, on the way of expansion, this old brand has not been able to go out of Shaanxi, and its performance is not stable.
“Bingfeng” soda has maintained a market share of more than 80% in Xi’an bottled beverage market, and monopolizes the top of the glass bottle carbonated beverage market. According to the prospectus, from 2018 to the first half of 2021, the sales of Bingfeng beverage in Shaanxi accounted for 87.44%, 81.73%, 80.23% and 77.79%. However, the national coverage is insufficient, and there is a certain risk of regional concentration of sales: the proportion of revenue in South China, North China, central China and East China is in single digits.
In this regard, Bingfeng beverage also pointed out in the prospectus that the concentration risk of sales area restricts its future outward expansion business to a certain extent. If the company cannot effectively develop new markets outside Shaanxi Province, it will have a certain impact on the company’s future growth.
From 2018 to the first half of 2021, the operating revenue of Bingfeng beverage continued to grow slightly, with 286 million yuan, 302 million yuan, 333 million yuan and 219 million yuan respectively. The net profit data were not stable, with 69.6909 million yuan, 77.6708 million yuan, 65.2515 million yuan and 61.5615 million yuan respectively. In 2020, there was a net profit decline of “increasing revenue without increasing profit”.
Image source: titanium media app drawing
From 2018 to the first half of 2021, the comprehensive gross profit margin of Bingfeng beverage was 49.81%, 50.67%, 46.73% and 49.19% respectively. Bingfeng beverage explained that the decline of comprehensive gross profit margin in 2020 was mainly due to the adjustment of financial policies. However, the cost data disclosed by Bingfeng beverage has not been fully recognized because of the cost doubt. During the listing process, Bingfeng beverage once aroused doubts about the possibility of false cost reduction and performance “water injection”.

The amount of connected transactions is too high, and the CSRC 54 asked

On May 3, the Securities Regulatory Bureau asked Bingfeng beverage to provide supplementary materials for listing, but titanium media app found that it did not see Bingfeng beverage provide information publicly. Now it has taken the initiative to withdraw from listing, which inevitably makes the hostages doubt whether it is “passive cancellation” or “active withdrawal” with material problems?
At the end of last year, the prospectus of Bingfeng beverage has encountered 54 questions from the CSRC, requiring the supplementary disclosure of a number of information to explain whether there are a series of situations to related parties, such as adjusting costs and expenses through related party transactions and whether there is interest transmission.
Bingfeng beverage has formed frequent and large number of related party transactions with subsidiaries of the controlling shareholder sugar and wine group, which has become an inseparable controversial topic on the IPO of Bingfeng beverage.
In the prospectus, Bingfeng beverage disclosed that it purchased white granulated sugar and other raw materials from the related party Xi’an Xitang tobacco and wine Chain Supermarket Co., Ltd., logistics transportation services and storage services from the related party Xi’an sugar and wine Bingfeng Logistics Co., Ltd., property, parking and other management services from Xi’an Tangjiu property management Co., Ltd., and endorsement services from Shanghai Wanhe Tianyi film and Television Culture Co., Ltd.
Among them, Xitang tobacco and wine chain supermarket is a wholly-owned subsidiary of Tangjiu group, the controlling shareholder of Bingfeng beverage. Lin Jinfeng, director of Bingfeng beverage, is also a director of Beijing Wanhe Tianyi.
Source: prospectus of Bingfeng beverage
The amount of related party transactions of Bingfeng beverage is too high, and the total amount has been close to the “warning line” of 30% regulatory audit. From 2018 to the first half of 2021, the total purchase amount of Bingfeng beverage from related parties was 38.2796 million yuan, 39.2681 million yuan, 27.863 million yuan and 23.6682 million yuan respectively, accounting for 26.65%, 26.35%, 15.73% and 20.69% of the operating cost respectively.
Behind the “warning line” of 30%, it shows that Bingfeng beverage has insufficient ability to expand its foreign business. The dependence of enterprises on related party transactions is not a substantive issue of listing audit. However, insiders said that related party transactions are directly related to the independence of the enterprise’s own business and the authenticity of its performance. Under non competitive conditions, injustice is easy to occur, resulting in violations of the rights and interests of shareholders or some shareholders and creditors. For investors, it is of great significance.

Single product, transitional “dependence” on orange soda

Bingfeng beverage has always relied on orange soda as the main source of income. The prospectus shows that in the first half of 2018-2021, the sales amount of glass bottle orange soda and canned orange soda accounted for more than 80% of the total revenue and maintained revenue growth, while the revenue of glass bottle orange soda and canned plum soup decreased.
Some tea brand investors told titanium media app that glass bottles of drinks can be recycled, but the packaging cost is usually higher than the content, while the packaging cost of canned drinks is usually not high. The raw material cost of dismantling Bingfeng beverage products, and the actual input cost of drinking liquid content of Bingfeng beverage is not high. According to the prospectus, in the first half of 2021, the cost of cans accounted for the highest, followed by white granulated sugar and concentrated juice, which accounted for only 5.38%.
Source: prospectus of Bingfeng beverage
In terms of product patents, as of July 31, 2021, Bingfeng beverage has 1 design patent and 54 utility model patents, but they are related to production equipment and devices, and the patents related to the formula and production process of the beverage itself are declining.
In the production process, Bingfeng beverage also has the dilemma of relying on outsourcing manufacturers and low capacity utilization, and has not established a clear moat.
The glass bottled beverage of Bingfeng beverage is produced by the company, and the canned beverage is produced by the outsourcing manufacturer. In the first half of 2021, the production capacity of Bingfeng beverage canned products was sufficient, but this part was processed by Commission, and the revenue accounted for more than 60%.
Bingfeng beverage said that there was no risk in the company’s entrusted processing mode, but more than one of its outsourced manufacturers violated food safety regulations for many times and was subject to administrative punishment. Among them, the quality management system certification certificate of Shenghua pharmaceutical, the outsourcing manufacturer of sour plum soup, has been revoked.
The production capacity of glass bottled drinks produced by Bingfeng beverage has a bottleneck, and the capacity utilization is not saturated, which also increases the operating cost of the enterprise to a certain extent. According to the prospectus, Bingfeng beverage has two production lines of 24000 bottles / hour and 18000 bottles / hour. The capacity utilization rates from 2018 to the first half of 2021 are 56.84%, 55.64%, 60.21% and 63.57% respectively, which may not be fully utilized.
In terms of specific product lines, the main products of Bingfeng beverage, carbonated drinks and plant drinks, are cold drinks. Summer and autumn are the peak seasons for production and sales, and winter is the off-season. The product line is vulnerable to the risk of seasonal fluctuations in performance.
As FMCG products, beverage products should not be produced and stored in off-season and sold in peak season. It is suitable to produce and sell and drink immediately. One standard to measure the capacity of enterprises is the capacity utilization rate in peak season. From 2018 to the first half of 2021, the capacity utilization rates of Bingfeng beverage in peak seasons are 87.29%, 82.55%, 101.26% and 89.18% respectively, which are relatively high. In peak seasons, production equipment and workers are often in a state of high load and in short supply.
Bingfeng beverage said in the prospectus that the listing and fund-raising will expand the glass bottled product line, “dismantle the original 18000 bottle / hour production line, build a 36000 bottle / hour production line, and then intelligently transform and upgrade the 24000 bottle / hour production line”, and said it will effectively alleviate the difficulty of insufficient production capacity in the peak season. However, this also creates a risk. There will be a large number of idle new capacity in the off-season. At the same time, it will increase costs to a certain extent and lower the overall gross profit margin.

There is still a long way to go for the revival of regional old brands to the whole country

In the 1990s, the domestic “old soda” faced a crisis, or the brand was stopped after the joint venture, or was impacted to stop production, and the scale shrunk sharply, barely maintaining its business. In the millennium, the domestic old soda brands that have been suppressed for nearly 20 years have embarked on the road of rejuvenation. Shenyang Bawangsi soda returned in 2003, Qingdao Laoshan Cola resumed production in 2004, Beijing Arctic soda returned in 2011, Tianjin Shanhaiguan soda restarted in 2014, and Chongqing Tianfu Cola also announced its brand comeback in January 2016.
These domestic soda brands have similar growth backgrounds with Bingfeng soda, bearing the childhood memories of generations. Without exception, most of them are faced with the problems of single main products and difficult to break regional brands.
Source: prospectus of Bingfeng beverage
How to revive the old soda brand?
Time honored brands have a long history and regional feelings. A beverage brand trader told titanium media app that another option for the revival of old brands is to “join hands” with stronger beverage brands, but he said that usually strong brands only consider acquiring old brands with popularity and good performance. “Old brands usually have popularity. We can save marketing expenses by acquiring old brands and then” starting a business. “
However, in the current new consumption environment, the feelings and regional popularity of old brands are no longer the only good brand. In recent years, Bingfeng beverage has focused on plant protein, fruit tea and sugar free tuyere, and wants to break through by constantly pushing new products.
According to titanium media app, Bingfeng beverage has extended its research and development of new products since 2015. This year, Bingfeng beverage launched brewed sour plum soup in cans; Listed in 2016: disposable bottled fruit juice soda; In 2019, we will launch glass bottled sour plum soup, apple flavored soda and plant protein beverage; In 2020, sugar free orange flavored soda and low sugar sour plum soup will be launched; Sugar free original flavor Fu tea, grapefruit Jasmine Fu tea and other healthy tea drinks; In 2021, canned white peach soda and PET bottled orange soda were launched.
Bingfeng beverage said that the market sales of flavor drinks increased rapidly, Fu tea drinks were in the development stage, and the product line was further enriched in the follow-up.
It can be seen that every promotion of Bingfeng beverage focuses on the preferences of the younger generation after 95 and 00, and has invested relevant resources in R & D and listing. However, the strategy of rejuvenating Bingfeng beverage, the main group of post-80s generation, has little effect.
At present, the main revenue of Bingfeng beverage still comes from orange soda, and the sales and performance of other products are not outstanding. Nielsen data show that among the fruit drinks with steam drinks, the retail sales of Arctic Ocean brand in 2021 was 250 million yuan, and Bingfeng beverage was only 140 million yuan.
From the perspective of channel construction, especially in direct sales and online e-commerce channels, Bingfeng beverage also has a long way to lay in the future.
For a long time, more than 90% of the annual income of Bingfeng beverage depends on dealers in Xi’an. Because most of its dealers are private individuals or natural persons, their business scale is small and their financial strength is limited, and the proportion of third-party payment collection is high. Meanwhile, direct selling and e-commerce accounted for a small proportion of revenue. From 2018 to the first half of 2021, the e-commerce channel sales of Bingfeng beverage were 04 million yuan, 11 million yuan, 20 million yuan and 11 million yuan respectively, accounting for 1.43%, 3.66%, 6.09% and 4.96% of revenue respectively.
In the list of dealers, JD didn’t squeeze into the top five customers of sales revenue until the first half of 2021, but it only accounted for 2.81% of the main revenue.
Source: prospectus of Bingfeng beverage
The earliest advertising slogan of Bingfeng beverage was “drink it from an early age”, and then did not do too much marketing for a long time. From 2018 to the first half of 2021, the sales expense of Bingfeng beverage accounted for 10.75%, 14.30%, 8.73% and 9.56% of the revenue respectively, while the average sales expense ratio of Dongpeng beverage and Yangyuan beverage of the beverage company in the same period reached 22.42% and 15.86% respectively. At present, the number of fans of Bingfeng beverage on Taobao, Tiktok and other traffic platforms also lags behind domestic soda brands such as the Arctic Ocean and Yuanqi forest.
Specific to marketing expenditure, titanium media app found that from 2018 to 2020, Bingfeng beverage spent advertising and marketing expenses on endorsement promotion and print media. Bingfeng beverage chose Shanghai Wanhe Tianyi film and Television Culture Co., Ltd., in which director Lin Jinfeng took a stake, to carry out brand publicity cooperation, and endorsed by Zheng hehuizi, Baike and other artists under Wanhe Tianyi. However, it is reported that according to the data of social platform, the video playback volume of Zheng hehuizi endorsing Bingfeng beverage products is only 30000 times.
Source: prospectus of Bingfeng beverage
Perhaps seeing that the endorsement action did not set off a big splash, since 2021, Bingfeng beverage has abandoned the endorsement road and began to launch outdoor media and electronic media communication carriers. An unnamed consumer track investor disclosed to titanium media app that 2020 and 2021 are the tuyere for consumer enterprises to start listing, but this tuyere has passed, and Bingfeng beverage is likely to be “blocked”. “In the past two years, the consumption outlet came and did a lot of marketing. Now the consumption is cold. If it is not listed, the principal may not be recovered.”
From regional brands to national brands, Bingfeng beverage regards the project of marketing service network upgrading and brand building as an important strategic measure, which accounts for 64.2% of the total funds raised.
Source: prospectus of Bingfeng beverage
On the laying of offline channels, Bingfeng beverage said that the funds to be raised will increase the investment in the shelf display and promotion of national chain supermarkets such as China Resources Wanjia, RT mart, Wumart, Metro and 7-11, such as Haidilao, Xibei youmian, Quanjude, Yang Guofu and other large and medium-sized well-known chain catering enterprises.
Now, Bingfeng beverage, which launched an attack on the A-share market, withdrew its declaration at the door-to-door stage. It is difficult for Bingfeng beverage to rely on the capital market. How can the old soda feeling of Bingfeng beverage continue?
In the past, the revival of domestic brands in the Arctic Ocean with more price advantages has accelerated, and then Coca Cola and nongnongshan spring have encircled and suppressed the new rich vitality forest. The competition in the domestic beverage market has become white hot. Regional old soda brands have expanded the national market, increased sales terminals and improved the influence of old brands It’s not easy to go to the ice peak all over the country.
Original title: suspend IPO! Bingfeng beverage failed to sprint A shares, and the feeling of “domestic old soda” is difficult to continue | IPO Express



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