At 9 a.m. on January 18, 2020, Huiyuan Juice’s stock price was fixed at HK$2.02. After 14 years of listing and 35 months of suspension, its listing status was cancelled.
Huiyuan Juice is making rapid progress
From the former "Juice King" to now being delisted, what happened to Huiyuan Juice, which was founded 29 years ago?
Before understanding Huiyuan Juice, you cannot do without Zhu Xinli.
Zhu Xinli was born in Yiyuan County, Shandong Province in 1952. In this small county where people once shouted "To get rich, plant fruit trees", Zhu Xinli got an iron rice bowl and became the deputy director of the Yiyuan County Foreign Economic and Trade Commission.
In 1992, like many entrepreneurs, Zhu Xinli resigned from his position and went into business. But from the very beginning, he inherited a mess with debts of tens of millions of dollars and production halted for many years.
Zhu Xinli established Zibo Huiyuan Food and Beverage Co., Ltd. after taking over the defunct county-run fruit canning factory.
This cannery is the predecessor of Huiyuan Juice.
At that time, Chinese people did not have the habit of consuming concentrated apple juice, and the products produced by Huiyuan could not be sold domestically. According to China Youth Daily, in 1993, Zhu Xinli went to Germany alone with a sample of concentrated apple juice, and asked a friend's child who was studying abroad to be a guest translator. He eventually brought back a concentrated juice export order worth US$5 million.
Since then, Huiyuan Juice has exported concentrated juice to more than 30 countries.
In October 1994, Zhu Xinli founded Beijing Huiyuan Food and Beverage Co., Ltd. in Beijing to enter the domestic juice market.
In 1997, Huiyuan Juice spent 70 million yuan to obtain 5 seconds of advertising time on CCTV News Network. The advertisement "Drink Huiyuan Juice and Take a Healthy Road" is deeply rooted in the hearts of the people, and Huiyuan Juice has become the standard for New Year's Eve dinner. Since then, Huiyuan Juice has become a well-known national brand.
In February 2007, Huiyuan Juice was listed on the Hong Kong Stock Exchange, raising funds of HK$2.4 billion.
After its listing, Huiyuan Juice has deployed 9 factories in Leling, Shandong, Shulan, Jilin, and Jinzhou, Liaoning.
Huiyuan Juice, which has been making rapid progress, never imagined that it would reach a watershed one year later.
According to the Securities Times, on September 3, 2008, Coca-Cola and its wholly-owned subsidiary Altantic Industries jointly announced that they would acquire Huiyuan Juice for a total price of HK$17.92 billion (equivalent to RMB 15.4 billion at the time). Issued share capital and all outstanding convertible bonds of Huiyuan; canceled all outstanding share options of Huiyuan, and proposed a voluntary conditional cash acquisition proposal.
Affected by this news, Huiyuan Juice’s stock price skyrocketed on September 3, soaring by 164.25.
Acquisition cases "broken" by antitrust
Heroes are always lonely.
Different from the fiery capital market, the domestic public opinion environment is extremely cold. According to reports at the time, as many as 82% of netizens opposed Coca-Cola's acquisition of Huiyuan Juice. Seven months later, the Ministry of Commerce vetoed the Coca-Cola acquisition on antitrust grounds. This was also the first case that violated the Antitrust Law. Subsequently, Huiyuan Juice's stock price plummeted, falling by nearly 58 in just three trading days.
The chain reaction caused by the failed acquisition made Huiyuan Juice "unable to recover".
Since 2008, Huiyuan Juice’s performance has continued to decline. Huiyuan Juice’s annual report shows that from 2011 to 2016, Huiyuan Juice’s annual non-net profit deduction was negative, respectively: -230 million yuan, -318 million yuan, -479 million yuan, -575 million yuan, -553 million yuan, -208 million yuan.
In addition, Huiyuan Juice’s “family-style” business operation has been criticized by the outside world.
According to Tianyancha, Zhu Xinli’s daughter Zhu Shengqin has served as the vice president of Huiyuan Company for many years, his son-in-law Gao Yong has served as the company’s vice president, his brother Zhu Xinde has served as the general manager of Huiyuan Juice, and his nephew Zhu Shengbiao has served as the legal representative of Huiyuan Juice, and Responsible for Beijing Huiyuan Drinking Water Company, a subsidiary of Huiyuan Juice.
In 2013, Zhu Xinli hired former Lee Kum Kee Sauce Group CEO Su Yingfu as chief executive. After Su Yingfu took office, he made radical reforms, abolishing all business departments and requiring sales staff to cut off links that affected profits. In the end, the effect was very little. Only one year ended with Su Yingfu's resignation.
In April 2014, Liang Jiaxiang, former vice president of beverage operations of PepsiCo Greater China, became senior vice president of Huiyuan Juice. In September of the same year, Yu Hongli, the former executive vice president, became executive president. In 2017, Cui Xianguo took over as CEO, but it was all about looking at things. In 2019, it was revealed that six senior executives had left the company one after another in just over a month.
Various problems such as poor integration with professional managers, resignation of senior executives, failure to obtain board approval, and unilateral borrowing of 4.275 billion yuan led the Hong Kong Stock Exchange to consider suspending trading of Huiyuan Juice.
"Fighting between gods" in the beverage market
Debts are piling up and a storm is coming.
In fact, Huiyuan Juice’s “marriage” with Coca-Cola was inseparable from the market environment at that time.
There are many giants in the industry, and competition has already become fierce. I wanted to take this opportunity to cross a hurdle, but I unexpectedly fell down. Since then, Huiyuan Juice has been unable to recover.
It is reported that the Chinese beverage industry at that time formed three competitive forces: one was Taiwanese enterprises Uni-President and Master Kong; one included mainland enterprises such as Huiyuan Juice, Wahaha, and Nongfu Orchard; and the other was multinational enterprises such as Coca-Cola, Pepsi, etc.
In this environment, Huiyuan Juice has lost its advantage of being the only one company.
In addition to brand competition, consumers are also "finding fault".
In the 1980s and 1990s, my country's beverage market was dominated by carbonated drinks and packaged drinking water; at the beginning of the 21st century, tea drinks and fruit and vegetable juices emerged; in recent years, energy drinks, coffee drinks, Flavored beverages are showing a rapid development trend; now sugar-free sparkling water represented by Yuanqi Forest is becoming popular. Consumer demand for beverages shows a new trend of diversification.
Faced with fickle consumers and an overly segmented market, the problem of Huiyuan Juice’s product simplification is increasingly exposed.
In fact, there are many flavors of Huiyuan juice on the market shelves, but its main categories are juices, and its ability to resist risks when facing competition is low.
In addition, the product specifications of Huiyuan Juice are relatively "awkward". The main packaging has a capacity of 1 liter, which is only suitable for many people or party scenes. In daily consumption, Huiyuan juice purchases account for a low proportion. In addition, Huiyuan's small bottled products seem to have insufficient channel penetration and promotion, and the packaging is not exquisite enough, which has not aroused consumers' favor. In contrast, people will prefer small bottles of Farmers Orchard or NFC.
The frustrated Huiyuan Juice is also seeking changes.
In 2009, Huiyuan launched new low-concentration fruit juices and carbonated drinks such as "Lemon Me" and "Juice Juice". Later, it launched new products such as candied haws juice, Bailiwa, and mixed juices, and also dabbled in cocktails. , Pu'er tea and other fields.
In 2011 and 2014, Huiyuan Juice purchased the ice tea brand "Rising Sun" and "Suntory" China, which specializes in oolong tea drinks, for 12.01 million yuan and 118 million yuan respectively.
In 2018, Huiyuan also launched 95 black sparkling juice, targeting the post-95s consumer group.
Unfortunately, these operations appear to be failing.
The innovation of new products did not stimulate market consumption, and the market response was lukewarm.
"Sunshine" was discontinued one year after being acquired; "Suntory" even had a falling out with Huiyuan due to different business philosophy, and its market performance was seriously affected; 95 Black Sparkling Juice ultimately did not Stirring up a splash of water.
In fact, it is difficult to find a single reason for the failure of Huiyuan Juice.
But from the perspective of brand marketing, Huiyuan Juice is “a bit interesting”.
Although it has suffered losses year after year, it still spends heavily on advertising and marketing. Inviting Lin Gengxin to endorse; implanting popular TV series "Three Lives Three Worlds, Ten Miles of Peach Blossom", "In the Name of the People", "Ode to Joy 2"; sponsoring variety shows, engaging in holiday marketing...these days are popular marketing methods , Huiyuan Juice is involved.
In addition, during the 2020 Spring Festival, the brand concept of "Huiyuan is the only way to celebrate the New Year" that has lasted for more than ten years was also launched on CCTV-1 "Big Country Brand", showing "Huiyuan" to hundreds of millions of viewers through the national platform "The brand image of warm companionship.
Therefore, from a marketing perspective alone, Huiyuan Juice did not make any mistakes. But unfortunately, despite strong marketing, the core value of the "Huiyuan" brand is being lost.
The reason is that on the one hand, in the fierce market competition, Huiyuan Juice has repeatedly failed in trial and error, and each time it is losing the value of the brand.
On the other hand, the delisting crisis caused by the company's debt crisis has firmly labeled the brand as "the fall of the former juice king" and "the end of the glory of domestic products", which is also damaging the value of the brand.
Although Huiyuan Juice's production lines and sales channels are still there... but it is losing its "brand" step by step.
In addition, in April 2019, Huiyuan Juice announced that it would launch a joint venture with Tiandi No. 1 to jointly expand the Huiyuan juice beverage market.
Tiandi No. 1 will invest 3.6 billion yuan in cash in the potential joint venture company, accounting for 60% of the shares. Huiyuan Juice invested 2.4 billion yuan in the form of asset investment, including the Huiyuan Juice trademark. However, this cooperation did not reach the grand scale of 15.4 billion back then.
It is reported that Huiyuan Juice obtained the exclusive right to use the "Huiyuan Jitu" trademark No. 668129 on "juice drinks" in 1993. On September 28, 2001, we obtained the exclusive right to use trademark No. 1643301 on "fruit drinks" and other products.
Through the China Trademark Network, it was found that there are 587 trademarks owned by Huiyuan, including 202 trademarks including the word "Huiyuan". Including "Huiyuan", "Huiyuan Real Orange", "Huiyuan Lemonade", "Huiyuan Youxiang" and other trademarks, the main registration categories are Class 30 and Class 32.
In fact, since 1999, the "Huiyuan" trademark has been rated as a famous trademark in Beijing and a famous brand product in China several times. In 2002, the trademark "Huiyuan" was recognized as a "well-known trademark" by the former State Administration for Industry and Commerce. Since then, the "Huiyuan" trademark has been recognized as a well-known trademark by administrative agencies and judicial agencies many times.
But three months later, the cooperation with Tiandi-1 came to an early end. In July 2019, Huiyuan Juice suddenly issued an announcement saying: "The company believes that the conditions for further advancing the transactions contemplated under the agreement may not be mature yet." This also means that following the Coca-Cola acquisition, Huiyuan Juice's "second marriage" failed. .
The "Huiyuan" trademark is of great significance to Huiyuan Juice. At that time, some analysts believed that "the core of the cooperation agreement with Tiandi No. 1 is the right to use the trademark rather than the equity. Although the trademark is the core asset of Huiyuan Juice, Huiyuan Juice uses the trademark as an asset to invest. It is not clear whether it is the ownership of the trademark or just the ownership of the trademark." It’s the right to use.”
But there is no doubt that this unclear trademark offset will undoubtedly cause another heavy blow to the value of its trademark.
In fact, Huiyuan Juice has done a very good job in protecting intellectual property rights. According to Zhichanbao's query, using "Huiyuan" and "Huiyuan Juice" as keywords, 45 cases were found, mainly cases of trademark infringement and unfair competition. In 2018, the “Huiyuan” trademark infringement case was shortlisted for the Supreme Court’s typical intellectual property protection cases.
In June 2014, Beijing Huiyuan Food and Beverage Co., Ltd. (referred to as "Beijing Huiyuan Company") sued Heze Huiyuan Company to the Shandong High Court for trademark infringement and unfair competition, seeking compensation of 100 million yuan. In July 2015, the first-instance judgment of the Shandong High Court determined that Heze Huiyuan Company constituted trademark infringement and unfair competition, and ordered Heze Huiyuan Company to compensate Beijing Huiyuan Company for economic losses of 3 million yuan. However, both the original and defendant parties appealed.
In its final judgment in December 2017, the Supreme Court took into account Heze Huiyuan Company’s subjective malice and the fact that the registered trademark No. 7400527 was declared invalid and the registered trademark No. 242665 “Huiyuan Jitu” was revoked The facts upheld the conclusion of the Shandong High Court on the establishment of trademark infringement and unfair competition; Heze Huiyuan Company’s defense that the registered trademark was legally used at the time of the alleged infringement was not supported, and the amount of compensation was increased to 10 million Yuan
In fact, delisting does not mean withdrawing from the market. Huiyuan Juice still has a chance to reverse the situation. In the subsequent commercial competition, it needs to strengthen trademark protection at the legal level.
Let’s wait and see what the future direction of Huiyuan Juice will be.