Author: Ren Shangkun
Source: Business People (ID: biz-leaders)
Hebei's well-known consumer brands, how many do you think of?
Lulu and six walnuts should make the list and be considered a rare species.
For a long time in the past, they were many regular customers of family gift lists, and they were carried away to visit relatives and friends.
In recent years, including this Spring Festival, have you still prepared Lulu and six walnuts as gifts for the New Year?
Can't sell anymore
For these two drinks that look and even taste the same, it is possible to see that they are getting less and less popular.
Lulu's base camp is in Chengde, the place that has contributed a summer resort to the whole country. In 2012, Chengde Lulu began to disclose sales in the annual report. Since 2014, almond dew sales have fallen sharply and in 2015 there was negative growth. The company's annual revenue fell from 2.7 billion yuan to 2.2 billion yuan in 2019, roughly returning to the level of ten years ago.
Usually, Chengde Lulu would put forward her own market share, and Ming Huang would write a 90%. But that number suddenly disappeared later, disappearing in 2018. In addition, the company did not clearly explain the reason for the decline in performance that year.
One thing is certain, almond butter accounts for 99% of the company's revenue. In other words, this is a super item that holds the root of the company's life. For such a treasure, Guan Dayuan, then chairman of Chengde Lulu, was once very confident, he said, "We thought that the wine was not afraid of the deep alley." Therefore, the company's marketing investment for many years is below the industry average. Even the children who watched "Smiling Proud of the Jianghu" have grown up, and Xu Qing, who plays Ren Yingying in the play, has not moved for 18 years or Lulu's spokesperson.
During this time, Lulu ceded the market to six walnuts for the rising star. In terms of revenue, the company behind the six walnuts, Yangyuan Beverage, was nearly 4 times higher than Chengde Lulu, and its annual advertising expenditure of about 600 million yuan was 5 times that of the latter.
Six walnuts began in 2008, borrowing the melamine incident to see the needle in the needle. In 2010, Yangyuan Beverage spent a huge amount of money to ask the host Chen Luyu to endorse the advertisement of "often use your brain, drink six more walnuts", and it also smashed the advertisement to the CCTV prime time. By 2015, the performance of Yangyuan Beverage reached its peak, with revenue exceeding 9 billion yuan. After that, the number plummets.
In the past five years, two rather old-school companies have faced similar thorny issues: transformation, changing the layout of single products, and moving closer to young people. Yangyuan Beverage signed a new generation of popular stars Wang Yuan, while sponsoring a number of intellectual variety shows. Chengde Lulu's response was slightly sluggish, the advertising slogan changed stubble after stubble, and in 2018, it was clear that the hot drink positioning of "breakfast is good and nutritious, drink hot Lulu".
However, the effect is not obvious. Compared with the annual advertising expenses of hundreds of millions of yuan, the two companies have invested just tens of millions of research and development expenses. Another interesting phenomenon is that although the money is earned less and less, the products are more and more unsalable, and the dealers are complaining, this does not prevent the two companies from paying large dividends every year and increasing capital to expand large production lines.
ATMs
Thanks to financial gains, on the books, the fluctuation of the net profit of Yangyuan Beverage is not large. According to the 2019 annual report, "At the end of the reporting period, the company's monetary funds decreased by 87.45% compared with the beginning of the period, mainly because the company used idle own monetary funds to purchase bank wealth management products." "In 2018 and 2019, the net investment income of Yangyuan Beverage was 350 million yuan and 464 million yuan, respectively.
Counting the profits from the sale, most of this money has gone into the pockets of company executives in recent years.
In 2018, the dividend amount of Yangyuan Beverage reached 2.26 billion yuan, accounting for 84.4% of net profit. Among them, Chairman Yao Kuizhang and his co-actors took 891 million yuan, and General Manager Fan Zhaolin and Vice Chairman Li Hongbing each received 223 million yuan.
To say that Yao Kuizhang originally took over the mess of Yangyuan drinks, I am afraid that no one thought that he would one day be able to sit and wait to collect money. Originally a state-owned enterprise in Hengshui, Hebei Province, Yangyuan Beverage was founded in 1997 and later sold to another local state-owned enterprise, Hengshui Laobaigan, in 2005 due to consecutive losses. Not long after, Yangyuan faced a second sale, and Yao Kuizhang, the general manager at the time, joined hands with 58 employees of the company at that time to acquire all the shares for more than 3 million yuan. Judging from the prospectus, natural person shareholders include accountants, security guards, cooks, drivers, workers, etc. Then, there is the story of "six walnuts" out of the circle.
And the establishment is earlier than Yangyuan, the performance is not as good as Yangyuan Chengde Lulu, is also keen to send money.
Since 2006, Chengde Lulu has paid dividends almost every year with half of her profits. From 2006 to 2019, the company achieved a cumulative net profit attributable to the mother of 4.264 billion yuan and a cumulative cash dividend of 2.792 billion yuan, accounting for more than 65%. That is to say, two-thirds of the money chengde Lulu has earned over the years has been directly divided and not put into reproduction. In addition, the company also has about 2 billion yuan of monetary cash lying on the company's books for many years, waiting for disposal.
Some voices in the outside world believe that the controlling shareholder, Wanxiang Group, only looks at the high-quality asset of Chengde Lulu and has no intention of becoming bigger.
Chengde Lulu's predecessor was also a state-owned enterprise, the Chengde Canned Food Factory established in 1950. In the 1970s, the cannery was instructed by its superiors to undertake the task of producing beverages using the local specialty wild mountain almonds, and it became an industry leader in catching up with the consumption boom.
In 2006, Chengde Lulu completed the restructuring. Lu Guanqiu's Wanxiang Group became the company's largest shareholder. By 2018, the general manager and chairman of Chengde Lulu had left successively, and Lu Yongming, a member of the Lu Guanqiu family, had gained actual control over Chengde Lulu. Although Lu Yongming has some reform measures, it has neither improved the company's performance nor reversed the decline in stock prices.
Now, Yangyuan Beverage and Chengde Lulu have invariably launched the same action: expanding the new production line.
Yangyuan Beverage landed on A-shares in 2018 and raised 3.3 billion yuan when it was listed. According to the official version, in simple terms, the money is mainly used for advertising and marketing and the construction of a new production line of 200,000 tons. On the other hand, Chengde Lulu also plans to build a production line with an annual output of 500,000 tons. Comparable data, the original production capacity of the two companies is enough to cover the sales volume, and the capacity utilization rate is less than 50%.
Of course, this is after all two companies with more money and idle.
controversy
Is Yangyuan Beverage's fist product "Six Walnuts" collecting IQ tax?
The media and consumers have repeatedly questioned the concept of six walnuts hyping up brains, suspected of "false propaganda". According to the protein content, the walnut content of a can of "six walnuts" does not exceed 1.5. Some doctors have told the media that after processing walnut drinks, their brain tonic effect is minimal, far less than eating walnuts directly.
In fact, Yangyuan beverage is also a kind of advertising method of the edge ball, it often comes forward to respond, saying that it is only talking about often using the brain, drinking six more walnuts, and not directly saying six walnuts to supplement the brain, "six walnuts for the company's product name and registered trademark, not a specific description of the product's raw material content, the product promotional language is said to have a supplementary nutritional effect, not explicitly or implicitly it has the effect of health care or prevention, treatment of diseases."
In addition, what you spend money on is probably not walnuts, but cans. Just as Nongfu Spring does not make money from water, but on outer packaging and plastic bottles, the cost of six walnut cans accounts for 50%, and the cost of walnut kernels accounts for only 20%.
Consumers are already not surprised by this kind of business method, so although Yangyuan Beverage is condemned by users from time to time, it does not affect it to still throw money at programs such as "The Strongest Brain". Its former direct rivalry against Chengde Lulu was more troublesome, and the latter was caught in a protracted lawsuit and was in court with his brother company.
This is a matter of history. In order to open up the southern market that year, Lulu Group and Hong Kong Feida Group established Shantou Lulu as a joint venture. For a long time, Chengde Lulu controlled the northern market, and Shantou Lulu cultivated the eight southern provinces. Later, in order not to affect the financial report of the listed company Chengde Lulu, Shantou Lulu was stripped. After several turnovers, the two were completely decoupled in the equity relationship, but before that, the two leadership signed two agreements to allow Shantou Lulu to continue to use Chengde Lulu's trademark and patented technology.
The situation in which the two sides were at peace was completely broken after the arrival of the "stepfather" Wanxiang Group. The new managers found the two agreements flawed, denied their validity, and sued Shantou Lulu for alleged trademark infringement. Lulu Shantou counterclaimed and fought back.
The result, of course, is a lose-lose situation. On February 1, 2021, Lulu Shantou issued a message calling out to Chengde Lulu, saying that the marathon lawsuit seriously hurt lulu's brand and was willing to communicate on relevant issues.
Lawsuits have been fought year after year. Solving Lulu's problem is really a mental work. Negotiators could consider drinking six more walnuts.
*Title image purchased from Visual China