How does “the first share of lactic acid bacteria beverage” compose a new business legend after 30 years of entering the board and 600 days of listing?

“ 

after constantly trying various businesses, where will Junyao health place its bets?

 ”

By: Monica

Source: foodaily daily food (id:foodaily)

 

Recently, Junyao Health announced that it plans to pay a deposit of 2million yuan to participate in the public recruitment of investors for the bankruptcy reorganization of runying biology. This well-known private enterprise has been established for nearly 30 years. Since its listing in 2020, with the legendary experience of the founding team and its unique business strategy, it has received extensive attention from the capital, industry and the public. This participation in the bankruptcy and reorganization of runying biology is another attack in the field of probiotics after the cooperation with Jiangnan University in 2021. Probiotics are becoming the “new growth curve” of Junyao health. After the first decline in performance growth in nearly a decade in 2020, Junyao health will show a new trend in 2021 with the help of the second growth curve composed of probiotics and mineral water.

 

The financial report of 2021 shows that the total revenue of Junyao health is 914million yuan, an increase of 7.24% over the previous year. Among them, the beverage sector as the main business accounted for 96% (878million yuan), an increase of 3.06% over the previous year. The impact of the epidemic in the past two years has also made Junyao health realize the necessity of diversified development, thus increasing its investment in product research and development. According to the financial report, in 2021, Junyao health’s investment in R & D increased by 530.3% year-on-year, reaching more than 12 million yuan. What are the positive results of the substantial increase in R & D investment? Can the huge Junyao group provide a strong backing for Junyao’s health? Does participating in the restructuring of runying biology mean that Junyao health will still take probiotic drinks as its core business? In the field of probiotic food with increasingly fierce competition, what are the odds of Junyao’s health?

 

30-year history of the ups and downs of Junyao

 

Many people’s understanding of Junyao is limited to Junyao milk, which was once famous. But milk is far from the only thing supporting Junyao building. Reviewing the growth process of Junyao group is a microcosm of the development of China’s private economy.

 

Junyao group started from the aviation business. After more than ten years of hard work, it has become a diversified group company integrating aviation, health food, real estate and commercial retail. As we all know, lucky Airlines is one of the businesses of the group. In the past 30 years, Wang Junyao, Wang junjin and Wang Junhao started their business simply to make some money. Later, they thought about how to make the enterprise evergreen and make unremitting efforts to become a model and pioneer of private enterprises.

 

Let’s go back to 31 years ago: in 1991, the three Wangs contracted to open the route from Changsha to Wenzhou, the first private charter flight in China, and also let the word “Junyao” break into people’s vision. However, in Wang Junhao’s view, if you want to become a century old store, you must diversify your investment and operate professionally. He once said with a smile that Junyao is developing based on the logic of architecture. “A building needs 4-8 pillars to support. For each ‘pillar’, I hope to be one of the best private enterprises in China, and even have international competitiveness, so as to ensure the sustainable development of this’ big building ‘of Junyao group.”

 

Source: sina.com

 

Opportunities are always reserved for those who are prepared. In the 1990s, China’s dairy industry ushered in a growth period. Wang Junyao, 27, joined the dairy industry under the call of “a cup of milk will strengthen a nation”. Relying on the cash flow of charter business, he founded Junyao dairy in Wenzhou in 1994. At that time, the two giants of Yili and Mengniu had not yet completed the national layout, the dairy enterprises had just entered the era of branding, and the regional dairy brands ushered in the development spring. In 1998, Junyao milk occupied about 60% of the local market share in Wenzhou; Two years later, it ranked among the top five in China and ranked second in the Shanghai market. In the same year, the company carried out shareholding reform, and Junyao dairy was changed into Junyao group Dairy Co., Ltd.

 

But things change. In 2004, the founder of Junyao group, Wang Junyao, died of cancer. The group ushered in a dark moment and faced many crises. At this time, the domestic dairy industry is developing at a high speed and the competition is extremely fierce. The major dairy enterprises use the price war to seize the market share. Milk is “as cheap as water”. Many enterprises are facing the dilemma of either adding “materials” or losing money. Many companies are very nervous about the cash flow. In order to safeguard the group’s interests and brand image, the new helmsman Wang junjin decided to cut off the pure milk business. Although the move was opposed by the public, it allowed Junyao dairy to avoid the “melamine” incident in 2008.

 

Since then, Junyao dairy began to explore the market direction of milk beverage. However, milk containing beverage is a very broad concept. Hainan coconut, Chengde Lulu and Yangyuan walnuts had formed a tripartite situation at that time. How much space could there be left for Junyao? In view of this, Junyao dairy will focus on the relatively subdivided normal temperature lactic acid bacteria beverage field and enter a long transition period.

 

Image source: Tu Xing Tian Xia

 

During this period, Junyao group did not stop expanding. In November2004, they announced the tender offer report for Wuxi Commercial Building Co., Ltd., which included the Wuxi Department Store Leader with 240million yuan, thus winning the first A-share listed company. In the real estate sector, the company acquired the “Jinhui building” in Shanghai Xujiahui business district in October 2002, built the “Yichang Junyao International Plaza” in June 2003, and held and restructured Hubei Wuhan Hanyang real estate company in August 2005, constantly consolidating the stable position of Junyao group in the real estate industry. In addition, Junyao group has also laid out cultural, medical, educational, financial and other fields, and its huge business network is shocking. The expanding revenue source has become the support and foundation for Junyao’s health transformation and subsequent product research and development.

 

In 2011, with the launch of the flavor power brand, Junyao dairy officially entered the field of normal temperature lactic acid bacteria. The investment of a large number of R & D resources, the optimization and iteration of products, and the production of self owned and cooperative large-scale modern chemical plants have made it once a large healthy single product. Meanwhile, Junyao health is also trying to expand other product lines. In 2015, the brand proposed the concept of “dietotherapy family”, and launched 6 kinds of nutty health drinks based on the lactic acid bacteria drinks; In 2017, the body relaxed herbal beverage and qimengxing puffed food were launched, but the effect was not satisfactory. Qimengxing leisure puffed food will not be operated since 2019.

 

On December 3, 2018, Junyao dairy was renamed Hubei Junyao health drink Co., Ltd., marking that the company’s strategy officially shifted from milk drinks to a broader range of health drinks, which also means that the company will enter a diversified field. Two years later, on August 18, 2020, Junyao health successfully landed in the A-share capital market and became the first share of lactic acid bacteria beverage.

 

What has Junyao health done in the 22 months since its listing?

 

On the first day of listing of Junyao health, the company’s share price rose 44.01% and its market value reached 8.316 billion yuan. However, its products have a single category, and more than 90% of its revenue comes from the flavor power normal temperature lactic acid bacteria products, which has become a hidden risk.

 

Just as the parent company always practices the diversification strategy, Junyao health is also trying to spread the risks to different market segments. In the 22 months since its listing, Junyao health has been on the road of diversified exploration.

 

1. Layout of high-end water business and cross-border entry by means of acquisition

 

On september8,2020, the domestic pure faucet enterprise nongfushanquan was listed on the Hong Kong stock exchange. For a time, drinking water became the focus of the industry. It soon became the first stop of Junyao’s diversified journey. In december2020, the company invested in the establishment of Shanghai Junyao natural mineral water Co., Ltd. and in April 2021, it established Hubei Junyao Enshi natural mineral water Co., Ltd. through acquisition, successively launching its own brands such as “core water run” and “Jixi”; In January this year, it was announced to invest 150million yuan to build the gift mineral water Industrial Park, which is full of confidence in the growth space of pure water business.

 

Image source: Weili power flagship store

 

However, the water business seems to have low threshold and high gross profit, but it has high requirements for channel construction. The channel construction experience accumulated in the past dairy business may not be easy to use. In 2021, the two mineral water companies were in a state of loss. Foodaily did not find out the detailed operation of Junyao health water business. However, from the lines of the annual report, we can feel the hardships and challenges of Junyao health in the pure water market.

 

2. Focus on probiotics and derive multi product matrix

 

In 2021, Junyao health will focus on product research and development. In March, Junyao health signed a strategic cooperation agreement with Jiangnan University to expand the field of probiotic health products, and promote the marketization of health products by focusing on more than ten functional strains. Jiangnan University will have two world leading functional strains – Lactobacillus curlicus, which can prevent and / or treat Helicobacter pylori infection, and Lactobacillus rhamnosus, which can alleviate chronic alcoholic liver injury – which are exclusively licensed to Junyao for healthy use. The two strains have been launched in the second half of 2021 and started product testing and iteration in the new retail platform and some offline areas. With its own strains as the core, Junyao health has successively launched two series of houshengyuan drinks and live bacteria matrix to continuously meet the health needs of consumers in online and high-speed cities.

 

Image source: Tencent

 

In 2021, the product matrix of Junyao health will be greatly expanded, and probiotic functional food will become the “second growth curve” worthy of the name. At the beginning of the year, Junyao Health launched probiotic UE Jun solid drink; Subsequently, changshuang active probiotic dark chocolate and compound probiotic chewable tablets also followed the market. In the second half of the year, Weili qingyoushuang probiotic lactobacillus drink was launched. It uses Lactobacillus curlicus, which can help effectively prevent or inhibit Helicobacter pylori; Changyinshuang uses Lactobacillus rhamnosus to focus on the liver protection of drinkers. In addition, Junyao health also laid out prebiotic products and launched light body prebiotic Lactobacillus drinks after meals, which filled the gap of Junyao health in this market.

 

Photo source: Junyao flavor power

 

The continuous warming of the domestic cheese stick market also makes Junyao healthy and eager to try. In April, 2021, they launched normal temperature cheese, targeted low sodium and probiotics to create competitive differentiation, and deeply bound with the well-known IP “Kung Fu Panda” to try to gain a foothold.

 

3. Vigorously develop online business and strengthen the in-depth integration of all channels

 

The epidemic situation lasting for more than two years has seriously impacted the offline channels of FMCG. Therefore, Junyao health proposed to lay out new online business forms in the 2020 financial report, and build Junyao health’s online sales system by leveraging the head platform, working together with big V, social networking and community e-commerce to promote the “three forces” of private traffic.

 

In April, 2022, Junyao health acquired 51% of the equity of Shanghai hongyiyuan. The company mainly provides supply chain services such as FMCG distribution and marketing. This acquisition will help strengthen Junyao health’s channel resources and operation capacity, and help the company quickly and safely complete its strategic layout.

 

At the distribution end, Junyao health has set up two marketing departments: lactic acid bacteria and probiotics, which are respectively responsible for the development and marketing planning of new probiotics and epigenetic drinks, and set up four new business departments according to the characteristics of new probiotics and channels.

 

Both the channel layout and the expansion of product matrix have played a positive role in Junyao health, making it better adapt to the current consumption environment. The equity incentive plan released by Junyao health in early March this year also reflects its confidence in its future development direction.

 

With a hundred flowers blooming and diversified layout, how many possibilities are there for Junyao’s health

 

According to Euromonitor International data, the compound growth rate of China’s lactic acid bacteria beverage market was 11.2% from 2015 to 2019. In 2019, the scale of the mainland lactic acid bacteria market was 36.48 billion yuan, and it will increase to 49.24 billion yuan in 2024. In the lactic acid bacteria market, the low-temperature drinks represented by Yakult and Weiquan developed earlier, accounting for about 60% of the market share. However, normal temperature drinks have a larger sales radius, can meet more consumption scenarios, and have a broader market space. In fact, in the past few years, the growth rate of normal temperature lactic acid bacteria drinks (17.8%) was much higher than that of low temperature drinks (7.6%). Low temperature products are difficult to penetrate into low-level cities, which also provides an opportunity for normal temperature lactic acid bacteria to seize the sinking market.

 

The vast market space will inevitably lead to the influx of many players. Changyi under Yili, zhenguoli and go Chang under Mengniu, and fresh vitality and moslian under Guangming can be found everywhere. Even dark horse Yuanqi forest in the beverage industry will launch a new “countermeasure” lactic acid bacteria beverage in 2021 to accelerate the layout of this track.

 

Image source: tmall

 

Objectively speaking, the low market access threshold of normal temperature lactic acid bacteria beverage, the large number of small brands, the low market concentration, and the quality hidden dangers of local small enterprises have all become the limiting factors for the development of the whole industry. The brand dispute also intensifies the homogenization of products. As an old normal temperature lactic acid bacteria beverage enterprise that has been in the business for 11 years, Junyao health has the advantages of continuous accumulation in formula, process and supply chain management, and continuous overweight in the development of core raw materials – probiotic strains, so as to build a competitive product matrix. Of course, in the face of many strong players, how to improve the communication power of brands and products and how to strengthen the brand awareness and recognition of the new generation are the key to break through the Red Sea.

 

Probiotic functional food is another key point for Junyao’s health to run continuously. At present, the public’s attention to probiotics is growing rapidly, and the whole industry is experiencing a blowout development, with an industry growth rate of more than 20%. Traditional dairy enterprises, health care products enterprises and new consumer brands are pouring into this 100 billion level market.

 

The core competitiveness of probiotic food is still reflected in strain vitality and physiological efficacy. Junyao health, which has reserved more than ten unique probiotic strains, has formed a sufficiently high technical barrier and considerable product competitiveness. If it can continuously improve its product design and marketing promotion, it will achieve good performance in the probiotic market. Some netizens who are concerned about the prospects of Junyao’s stock market commented that the qingyoushuang and changyinshuang launched by Junyao health respectively focus on the gastritis and hangover caused by Helicobacter pylori infection, which correspond to the life pain points of hundreds of millions of Chinese people, and are likely to become two wonders to improve Junyao’s performance.

 

Image source: Weili tmall flagship store

 

On the eve of the national two sessions this year, chairman Wang junjin said in an interview that the state should establish a national standard for probiotic food as soon as possible to regulate industrial innovation. From this, we can also see the determination of Junyao executives to cultivate the probiotic track.

 

As for high-end drinking water and normal temperature cheese, both belong to the Red Sea market with “giants”. Junyao’s own technical reserves are not enough, its product competitiveness is not high, and it is also limited by the channel control. It remains to be seen how far it can go in the future.

 

Summary

In Junyao health’s 2021 annual report, foodaily saw the 16 character general policy of “secondary entrepreneurship, science and technology empowerment, high-end products and global outlook” put forward by Chairman wangjunhao. Junyao health should not only become an expert in vivo microecology, but also become a global leader in probiotics.

 

The advantages of technology research and development and the layout of popular product lines are the positive comments of many stock market analysis institutions on Junyao health. However, in terms of channel construction and brand marketing, Junyao health will face many tests.

 

Founded in 1991, Junyao group has written a tortuous private enterprise entrepreneurship legend in 30 years. Today, with new consumption surging and the business environment changing rapidly, how will they take the next road to business? Foodaily will continue to pay attention with you.

 

reference material:

[1] Annual report of Hubei junyaoda health drink Co., Ltd. in 2021

[2] 2020 annual report of Hubei junyaoda health drink Co., Ltd

[3]“4+？” Capital restraint of “Junyao clan” and Wang Junhao’s impulse to “vegetable garden”, 21st Century Business Herald

Reprint authorization and media business cooperation: Amy (wechat: 13701559246);

Join the community: Cherry (wechat: 18261804307).

Related reading

Food people are “watching”