According to the Hygienic Standards of Vegetable Protein Beverage issued by the Ministry of Health of China, the vegetable protein beverage is the milky beverage which takes the plant kernel, pulp and soybean as the raw materials and is obtained through the high pressure sterilization and aseptic packaging after processing and blending, which is the major beverage category parallel to juice, instant tea, carbonated beverage, instant coffee and other soft beverages. In the category division, as the vegetable protein beverage generally uses the plant with native characteristics as the raw materials, it is classified as the “Asian characteristic beverage” together with Wanglaoji, Jiaduobao and other herbal tea beverages, which is corresponding to the coffee, cola and other beverages originating from Europe and America.
The Report on Market Research and Future Development Trend of China’s Vegetable Protein Beverages during 2012 to 2016 issued by China Industry Information Network points out that the market consumption volume of China’s vegetable protein beverages in 2013 reaches 2.622 billion liters with a year-on-year growth of 4.8%; the industry market scale is RMB 25.329 billion with a year-on-year growth of 26.9%; it is estimated that the market scale of China’s vegetable protein beverages will reach about RMB 73.3 billion by 2018.
Scale Calculation of China's Vegetable Protein Beverage Market during 2008 to 2018
|Retail value: RMB million Yuan||Sales volume: million liters||Average price: RMB Yuan|
The vegetable protein beverage industry is composed of walnut milk, coconut juice, almond juice and other main niche markets; the leading position of each market is strong, and large single products are launched frequently. We believe that the main reasons are that the innate and distinctive local characteristics of these products improve the loyalty degree and acquired broad spectrum positioning and expand the consumer groups. The strong position of leading enterprises is also reflected in the financial data, and the industry loss rate is the lowest in the food and beverage industry; the overall ROE of the industry in 2013 reaches 29%, which is far more than that of other sub-industries.
Competition pattern of vegetable protein beverage industry
The vegetable protein beverage industry is mainly composed of walnut milk, coconut juice, almond juice, peanut milk (which be classified as the vegetable-animal compound protein beverage) and other main niche markets. Before 2008, the industry pattern could be concluded as “North Lolo, South Coconut Palm”, and this pattern was roughly determined by the tastes of north and south population. In addition, some small local enterprises in various regions have also participated in this industry. After 2008, through the new value positioning and the progress and expansion in the channel, Hebei Yangyuan Zhihui Beverage Co., Ltd. which is a walnut milk production enterprise in Hebei has opened the national market and obtained more than 40% of the market share in the vegetable protein beverage industry. By contrast, the market of Chengde Lolo is still mainly concentrated in north China, and its market share is relatively low.
Compared with the scale of other major soft beverages including juice, instant tea, bottled water and carbonated beverage, the vegetable protein beverage is unimpressive, which contains coconut juice, walnut milk, almond juice and other sub-categories with smaller scale of less than RMB 10 billion. But in these small-scale niche markets, all leading enterprises have a strong position; for instance, in 2013, Chengde Lolo accounted for about 90% of the market share of almond juice, Yangyuan and Yinlu respectively accounted for about 80% of the market share of walnut juice and peanut milk, and Coconut Palm accounted for more than 40% of the market share of coconut juice. This makes these companies have the attributes similar to Coca Cola (65% of the market share of carbonated beverages in 2013), Red Bull (59% of the market share of energy beverages in 2013) and Nestle (60% of the market share of instant coffee in 2013). In fact, the initial positioning of Coca Cola and Red Bull is also the compound vegetable beverages very similar to vegetable protein beverages, which makes these niche markets small, beautiful and interesting.
In fact, the competition between these categories is very fierce. The peanut protein beverage sector which Yinlu is located at is taken as an example; during 2010 to 2012, the newly-launched peanut protein beverages reached 30 to 40 styles in Chinese Mainland, and a large number of new products were launched to the market. But Yinlu still maintained the first place in peanut protein beverages, and its market share in the overall vegetable protein beverage industry was improved slightly. Visibly, vegetable protein beverage companies have very wide city moat so as to protect their markets from being occupied by others. According to the understanding of Herbridge Media, the main reasons include the following two aspects:
1) The distinctive local characteristics improve the loyalty degree. Chengde Lolo uses the bitter almonds from Hebei, Yangyuan uses the walnuts from Mount Taihang; Jiaduobao makes consumers like this taste through its authentic Cantonese herbal tea formula.
2) The value positioning of broad spectrum expands consumer groups. The “drink Six Walnuts if often using your brain” of Yangyuan is corresponding to the requirements of soothing the nerves to brain. The “drink Wanglaoji to avoid suffering from excessive internal heat” of Wanglaoji is corresponding to the requirements of decreasing internal heat, which is the value positioning of broad spectrum so as to expand consumer groups, help the nationwide expansion and maximize the influence range. Vegetable protein beverage, herbal tea and other fields provide some real Chinese large single products through the local characteristics and value positioning.
The wide city moat makes the leading enterprises in the industry have the profitability obviously more than the average value.
|Number of enterprises||Loss-generating enterprises||Proportion of loss-generating enterprises|
|Bottled drinking water||527||36||6.8%|
|Fruit and vegetable juice||486||70||14.4%|
|Beverage containing milk and vegetable protein||211||11||5.2%|
1) According the data of the whole industry, the quantity of the enterprises participating in the beverages containing milk and vegetable protein is less, and the loss rate is the lowest, namely 5.2%.
2) The total industry ROE of beverages containing milk and vegetable protein in 2013 reaches 29%, which is far higher than the level (12-16%) of other sectors. According to the Dupont analysis, the enterprise leverage of beverages containing milk and vegetable protein is lower, but the profit rate of 11% in 2013 is far higher than the level (4-6%) of other sectors; this is mainly because that the vegetable protein beverage enterprises with gross profit rate can enjoy the premium price; as the competition is not so fierce and the expenses invested in the marketing are less, the value positioning of gross profit rate vs. net profit rate of the companies in all food & beverage industries is higher; the total asset turnover rate is close to upper and middle level in the industry, which shows that the ability of total assets driving sales scale is stronger. This fact is also reflected in the microcosmic financial report figures of enterprises, and the ROE of Yangyuan and Chengde Lolo during 2010 to 2012 respectively reaches 73% and 28%.