The fall of Huiyuan Juice: filed for bankruptcy and reorganization

The fall of Huiyuan Juice: filed for bankruptcy and reorganization, news on July 19, Tianyancha App showed that Beijing Huiyuan Food and Beverage Co., Ltd. New bankruptcy and reorganization information was added. Previously, according to Tianyancha App, on July 2, Beijing Huiyuan Beverage and Food Group Co., Ltd., another company controlled by Huiyuan Group, added a piece of information about the person subject to execution, and the execution target exceeded Huiyuan 1.59 billion yuan. The Fall of Juice: Filed for Bankruptcy and Reorganization 1

According to news on July 19, Tianyancha App showed that Beijing Huiyuan Food and Beverage Co., Ltd. has added bankruptcy and reorganization information, and the case number is (2021) Beijing 01 Break 129 No. 1, the applicant is Shandong Deyuan International Logistics Co., Ltd., and the handling court is Beijing No. 1 Intermediate People's Court.

Public information shows that Beijing Huiyuan Food and Beverage Co., Ltd. was established in December 1994, with the legal representative Zhu Yantong and a registered capital of approximately 320 million yuan. The business scope includes the production of fruit and vegetable juice beverage series food; sales of self-produced products, etc. Shareholder information shows that the company is wholly owned by Hebei Huiyuan Food and Beverage Co., Ltd. It is worth noting that Beijing Huiyuan Food and Beverage Co., Ltd. has dozens of final cases, consumption restriction orders, etc.

In fact, the end of the juice king, which once ranked second in the industry in terms of sales and occupied 45% of the domestic juice market, has long been foreshadowed. When Huiyuan went public in Hong Kong in 2007, it set a record for the largest IPO amount on the Hong Kong Stock Exchange that year. However, after its acquisition by Coca-Cola failed in 2009, Huiyuan's share price halved, its turnover continued to decline, and its founder was even listed as dishonest. in the list of people.

Previously, according to the Tianyancha App, on July 2, another company controlled by Huiyuan Group, Beijing Huiyuan Beverage and Food Group Co., Ltd., added a piece of information about the person subject to execution, case number (2021) Beijing 04 Zhi No. 314, the execution subject matter exceeded 1.59 billion yuan, and the execution court was the Beijing No. 4 Intermediate People's Court. Beijing Huiyuan Beverage and Food Group Co., Ltd. was founded in 1992. In the past 12 years, it has developed, produced, and sold more than 400 varieties of products in more than a dozen categories, including fruit puree, concentrated juice, fruit juice, and infant food. The company is 51% owned by Hebei Weiling Group Co., Ltd. and 49% owned by Huiyuan Group Corporation. The fall of Huiyuan Juice: Filed for bankruptcy and reorganization 2

As a “national juice”, Huiyuan Juice carries the memories of a generation.

However, in addition to the company’s delisting, Huiyuan Juice founder Zhu Xinli has also been reduced from the Hurun Rich List in 2018 to the current “old laity”, which can’t help but make people sigh.

Why did the generation of juice king, a household name "national brand" decline to this point?

The turning point of the times: Coca-Cola's acquisition failed

Huiyuan Juice The turn from prosperity to decline began with the acquisition of Coca-Cola 12 years ago. To be precise, it was an aborted acquisition.

In the 1990s, like the protagonists of many legendary Chinese business stories, he decisively resigned and went to work, finding ways to revive a canning factory in the county that was on the verge of bankruptcy and become a household name national brand.

In 2008, Coca-Cola’s acquisition was viewed by Zhu Xinli, the founder of Huiyuan Juice, as an excellent opportunity to solve the problem of Huiyuan’s single product, and to kill two birds with one stone and help Huiyuan Juice enter the international stage. Coca-Cola is also determined to win this acquisition, offering a high premium of HK$17.92 billion.

Huiyuan Juice, which has been in business for 16 years, and Coca-Cola, a century-old company, seem to be a perfect match. It's a pity that God did not fulfill his wish. Huiyuan's "selling out" has aroused public opinion and there are endless voices of opposition. This cross-border marriage eventually died due to suspicion of monopoly, which also became a turning point for Huiyuan Juice from prosperity to decline.

During the acquisition negotiations, Coca-Cola believed that there was serious overlap in the sales channels of both parties. In order to cooperate with Coca-Cola’s acquisition, Huiyuan Juice cut off the sales system established in 16 years, abolished supermarket channels, provincial managers and a large number of Grassroots sales.

After the acquisition failed, Huiyuan Juice had to recruit people in a hurry, but it was not so easy to start over. Huiyuan Juice's sales system was severely damaged during the acquisition and has not recovered for many years.

In addition to "cutting off both arms" in sales channels, the single problem of Huiyuan juice products has also become increasingly prominent over time. Zhu Xinli began to obtain financing loans to expand factory production capacity. Not only did this approach fail to innovate and solve the problem of product upgrading, it also burdened Huiyuan Juice with the financial burden of blind expansion.

Next, Huiyuan Juice invested a lot of money in TV advertising and marketing, which not only failed to improve its performance, but also increased its financial burden.

As of 2017, Huiyuan Juice’s liabilities have reached 11.4 billion yuan.

"If the transaction in 2008 is successful, we will already be a company worth hundreds of billions. Of course, these things are called fate, and I will not complain at all." Even if we talk about it many years later, Zhu Xinli is still unwilling, This 67-year-old man with gray hair on his temples is still running around for the survival and development of Huiyuan.

Using debt and investing wildly, Huiyuan Juice fell into the abyss

As we all know, Huiyuan Juice is keen on bombarding TV advertisements. Because of this, Huiyuan Juice's marketing expenses have always remained high.

Take 2008 and 2009 as examples. Huiyuan Juice’s net profits in the past two years were 89 million yuan and 233 million yuan respectively, but its marketing expenses were as high as 604 million yuan and 846 million yuan respectively.

As the company’s performance deteriorates, the company’s operating cash flow becomes increasingly tight. As a last resort, Huiyuan Juice embarked on the road of debt financing. In 2013, Huiyuan Juice issued 447 million new shares and 655 million convertible preferred shares; in 2014, Huiyuan Juice issued another $150 million in convertible bonds. In addition, Huiyuan Juice continues to maintain cash flow through pledging and selling assets.

But at the same time, Huiyuan Juice made frequent mistakes in investment! For example, it made a surprise acquisition of Suntory, which was deeply in losses, and purchased its beverage business in China; for example, it invested 500 million yuan in a grape deep processing project and acquired more than a dozen European wineries; for another example, it invested 3 billion yuan to participate in Equity reform of Sinopec Sales Company, but the latter failed to enter the capital market as scheduled.

Coupled with the aforementioned short-term related loans of 4.275 billion yuan that have not been approved and have not signed an agreement, Huiyuan Juice’s capital chain has further deteriorated.

It must also be mentioned that Huiyuan Juice still spends a lot of money on marketing expenses despite the company's main business encountering serious difficulties.

Just imagine, how could such an operation not drain out the Huiyuan juice?

Corporate governance crisis: No one can save Huiyuan

Is Huiyuan Juice a good company? At least after 2010, this issue needs to be left with a question mark.

According to relevant data, the amount of government subsidies in 2010 was 108 million yuan, accounting for 54% of the net profit that year; in 2011, the government subsidies were 201 million yuan, accounting for 54% of the net profit. 64%. In other words, Huiyuan Juice relies heavily on blood transfusions from local governments.

In other words, if government subsidies and proceeds from asset sales were excluded, Huiyuan Juice would have been deep in losses!

In addition, Huiyuan Juice is also in a mess in terms of company governance.

In addition to the 4.275 billion yuan of illegal related-party loans mentioned earlier, which exposed Zhu Xinli's "paternalistic" style, it was also revealed that Zhu Xinli's son was unwilling to take over, the son-in-law scandal, and the change of professional managers. Wave after wave of jokes.

According to relevant reports, from 2013 to the present, Huiyuan Juice has changed five CEOs alone. In January this year, it was even more embarrassing that one executive director and two non-executive directors resigned collectively.

From this we can draw the following conclusion:

After Huiyuan Juice fell into trouble due to the acquisition, the company’s founder Zhu Xinli’s debt investment strategy further aggravated the company’s crisis. Later, due to flaws in the corporate governance structure and frequent personnel changes, the possibility of Huiyuan Juice's comeback became even slimmer.

In the end, it’s all your own doing.

The development of Huiyuan Juice to this day is worthy of many Chinese entrepreneurs to think about - when the company reaches a certain height, how to move the company towards modern governance, maintain an everlasting foundation, and at the same time have a good inheritance.