"sell more, lose more." Why did Hengda Bingquan of Xu Jiayin come to an end?
Author / Liu Yadan
Editor / Han Dapeng
The beginning is the peak! These five words could not be more appropriate to describe Evergrande Bingquan.
Today, it has long faded out of the sight of the people, but it suddenly came out of the news of listing recently. Xu Jiayin, chairman of Evergrande Group, is also happy with the bottle of water-after selling it cheaply after a huge loss of 4 billion, he bought 49% back this year and plans to make a comeback.
Maybe listing is the only way to save this bottle of water.
But the truth is a little cruel. Sina Finance consulted a number of insiders and industry insiders, everyone is not optimistic about its prospects, some people pointed to the key, "the product is a good product, but the team is too bad, unless sold to other companies."
Another market personage revealed that in 2020, Evergrande Bingquan Beijing area KA channel sales only 20 million, another loss of 10 million. At the same time, Evergrande Bingquan, which was born as a high-end water, has been sold "cheaply" all the way in the market, from 5 yuan a bottle to 1 yuan a bottle now, "the price is rotten directly, the profit is extremely low, or even lose money."
Some market participants even pointed out that some channels take goods directly lower than the ex-factory price, "sell more, lose more".
However, few people know that in terms of product quality, Evergrande Bingquan should be much higher than Nongfu Spring, but the strategies of the two are completely different: the latter is willing to sharpen a sword every 20 years, while the former is accustomed to the real estate thinking mode of "short-term quick money". Want to "eat a fat man in one bite".
This model of imbalance has dragged Evergrande Bingquan for many years until it was dragged into an infinite quagmire of losses.
Sell cheaply
"generally speaking, KA channels lose money, but Evergrande's team specializes in KA channels. The KA channel can be used for brand promotion, but the admission fee is high and the profit is low, "a middle manager of Evergrande Bingquan told Sina Finance. Evergrande lost 10 million yuan on sales of 30 million yuan in Beijing in 2020.
In the beverage industry, the real way to make money is circulation. Take mom-and-pop shops as an example, the admission fee is low, but the profit is very high. This is also an important reason why Wa has not had a large single item for many years, but it is still profitable because it goes deep into traditional channels such as mom-and-pop stores. But the interior of Evergrande Bingquan does not attach importance to this part of the channel.
Sina Finance visited a number of offline mom-and-pop stores and BC stores in Beijing, but there was no sign of Evergrande Bingquan. Some FMCG salesmen even said bluntly: "this brand is out of date, and I have not seen the salesman of their family."
According to the above insiders, Evergrande's Bingquan revenue in 2020 accounted for 20 million of which KA channels accounted for 20 million, while traditional channels accounted for only 10 million. And Evergrande Bingquan's traditional channel, almost no more profitable mom-and-pop stores, but convenience stores and other channels with equally high admission fees.
In Wumart's brand, good Food, Evergrande Bingquan once sold at a retail price of 7.9 yuan per case (12 bottles), which was even much lower than the ex-factory price (12 yuan per case). This means that other channels can even take goods directly from good Food. The cheaper it is, the more Evergrande loses, which means that the price given to Wumart is very cheap.
And the low-cost entry of KA channels also directly leads to internal fleeing of goods. At the same time, Evergrande Bingquan market price continued to decline, from 5 yuan a bottle, fell to 3.5 yuan, 2.5 yuan a bottle, and finally even fell to 1 yuan a bottle. At present, daily excellent fresh, offline gas stations and other channels, Evergrande Bingquan retail price of about 1 yuan a bottle.
"now there are still 1 yuan a bottle of water on the market," some consumers marveled. In fact, in the eyes of industry insiders, the quality of mineral water represented by Evergrande Ice Spring is much higher than that of Nongfu Spring, Yibao and other natural water, and its pricing should be higher than that of Nongfu Spring (natural water) and Yibao (pure water). Today, the retail price of Nongfu Spring and Yibao is 2 yuan per bottle; Changbai Snow, the brand of mineral water just out of Nongfu Spring, is priced at 3 yuan; and the price of mineral water boss, Centennial Mountain, is also 3-5 yuan.
According to national standards, drinking natural water is naturally gushed from the depths of the ground or collected by drilling, contains a certain amount of minerals, trace elements or other ingredients, is not polluted in a certain area and takes preventive measures to avoid pollution. However, the content of minerals in the natural water of Nongfu Spring is not up to the standard. Artificially treated water, such as Watson's distilled water and today's Mailang cool white boiled water, will also add some minerals, but there may be only 3-4 minerals.
The natural mineral water should contain 20-30 kinds of trace elements and minerals needed by the human body, and the water rich in minerals will help to supplement the trace elements of the human body. Therefore, the industry generally follows a simple ranking formula when judging whether water is good or bad: natural mineral water > drinking natural water > artificially treated water. In other words, the water quality of Evergrande Ice Spring is better than that of Nongfu Spring.
However, it is a pity that due to the strong marketing ability of natural water companies such as Nongfu Spring, people often equate mineral water with the natural water of Nongfu Spring. According to the visit of Sina Finance, a considerable number of consumers are unable to distinguish between Nongfu Spring natural water and Evergrande Ice Spring. Neither Evergrande Bingquan nor Centennial Mountain has rooted the idea that "mineral water is better water".
Amateur
Evergrande Bingquan can not do well, a very important reason is that the internal real estate team does not understand FMCG.
"Hengda does big circulation because the profits of big circulation accumulate slowly, and sales are piled up in one box and two boxes, while Evergrande Bingquan wants to become fat in one bite, and it doesn't know how to operate big circulation, let alone listen to professional advice." An Evergrande Bingquan insider revealed.
And this statement has also been confirmed by many people in the industry. In fact, not only the mineral water plate, but also within the Evergrande Group, automobiles, grain and oil, fast consumer goods and other sectors, including a large number of real estate elevation teams.
"these senior executives are veterans of Evergrande, who deeply enjoy the 'short and fast' dividends in the period of the real estate economy, so when developing other industrial groups, they like to apply the 'real estate business model'. Any business development pursues short-term results, does not pursue market accumulation, and respects market rules, which often leads to a large gap between development results and expectations." This is what people in the industry say.
Quick consumer materials list misprinted, convenience store shelves bought by laymen, executives never go to the market. The front-line marketing staff of Evergrande Bingquan are full of opinions on the unprofessionalism of the high-level and internal systems on FMCG.
A dealer who once represented Evergrande Bingquan told Sina Finance: "this manufacturer does not look formal and unprofessional." Compared with the traditional water enterprises, it was too amateur, so we stopped doing it later. "
Evergrande Bingquan in the water business amateur, there is a very obvious manifestation of the miscalculation of the market cost ratio. A person in the front-line market of Evergrande Bingquan told Sina Finance: "the calculation method of market fee-to-fee ratio should be market fee / terminal customer cash purchase, while Evergrande Bingquan's calculation method is based on market cost dealer total purchase (that is, terminal cash purchase + market fee). The actual market cost ratio of dealers far exceeds the recorded data, that is, the company gives away a lot of extra boxes of products free of charge. In this way, the company will only lose money and will not make a profit at all. "
When Evergrande Bingquan was first established in 2013, Xu Jiayin set a target of 10 billion a year. At that time, Evergrande Bingquan adopted the same model as real estate, did crazy marketing, spent a lot of money to ask stars to endorse it, and once spent 1.3 billion on advertising in 20 days. But three years later, Evergrande Bingquan suffered a huge loss of 4 billion yuan, advertising fees were higher than revenue for three consecutive years, and finally it was not allowed to sell at a low price of 1.8 billion yuan.
But in March this year, Xu Jiayin was moved again. At the industry conference, Evergrande Group has bought back 49% of Evergrande Bingquan shares.
Insiders revealed: "the real estate industry is not easy to do in recent years, Xu Jiayin wants to pick up fast consumer goods."
But fast consumer is a fully competitive industry, profits and word-of-mouth are a little bit of accumulation, need a long time to precipitate. Even the industry leader Nongfu Spring took about 20 years to achieve sudden sales of 10 billion yuan in 2017. During the years when Zong Qinghou founded Wa, he spent most of the year shuttling through markets across the country and going deep into the street shops at the end of the year.
In the current mineral water track, Centennial Mountain has become a leader in the industry. Since the beginning of this year, Nongfu Spring and Yuanqi Forest have also distributed mineral water one after another, and Evergrande Bingquan has more and more competitors.
KA lost 10 million last year. The target for the Beijing market this year is more than 70 million, and even the immortals cannot be completed, so I am afraid the person in charge of Beijing will have to leave, "some industry insiders recently revealed to Sina Finance and Economics.
Thus it can be seen that Evergrande Bingquan's high-level culture of "begging for speed" remains unchanged, and how can the centrifugal dealers and business team accompany Evergrande to realize the dream of the next Farmer Spring?