In the first quarter of 2024, China’s economy started well, and the beverage industry also ushered in a round of “little spring”. According to third-party data, the beverage industry as a whole experienced rapid growth in 2023, with a market size reaching a new high of over 300 billion yuan in nearly five years, a year-on-year increase of 6.2%. Especially for functional drinks, the year-on-year growth was 11.4%. In the first quarter of this year, the attention of Chinese consumers to health grew rapidly, affecting the overall health and consumer market, and accelerating the track of functional drinks once again.
At present, major beverage brands both domestically and internationally are entering the functional beverage market, but whenever this category is mentioned, it is inevitable to mention China Red Bull and Huabin Group. In the first quarter, China Red Bull achieved a good start, and as of the end of April, its cumulative industrial output value has exceeded 60 billion cans.
1982 was the first year of China’s modern beverage industry. At the beginning of the beverage industry, China’s beverage production was only 440000 tons. Before 1995, there were no functional beverage categories in the Chinese beverage market. Huabin Group officially introduced and landed its Red Bull beverage products in the Chinese market, while cooperating with regulatory authorities to complete formula adjustments, conduct functional and safety assessments, and ultimately achieved the successful landing of China Red Bull with a “blue hat” (health food approval certificate).
In the following 20 years, Huabin Group continued to invest heavily in cultivating the market, accelerating the layout of national industrial bases, and promoting the growth of China Red Bull from zero to a super large single product with annual sales of 20 billion yuan. Nowadays, Huabin FMCG Group has established 8 production bases and 6 functional beverage production bases nationwide, with an annual production capacity of 5.2 billion cans of its own functional beverages and over 4 million terminal outlets nationwide. The annual revenue of the industrial chain exceeds 100 billion yuan, and millions of people are employed.
The Road of Red Bull’s Entrepreneurship with Difficulties and Difficulties
Chinese Red Bull is also considered one of the classic cases in the history of entrepreneurship and development of the Chinese beverage industry. Most practitioners praise the growth rate and solid market foundation of China Red Bull, but few know that its entrepreneurial journey is not always smooth.
In 1993, Thai Chinese Xu Shubiao planned to introduce his energy drink brand “Krating Daeng” into the Chinese market and cooperate with friends to invest in building a factory in Hainan. But after the factory was built, problems arose as the products could not obtain production licenses, let alone be produced and marketed in China.
At that time, China had strict regulations and review procedures for imported food, especially for beverages containing caffeine, which not only required expert verification but also approval from multiple relevant departments. This also led to the stagnation of the Xu Shubiao Chinese market plan, which insisted on keeping the formula unchanged. As the initial investment faced setbacks, it was introduced that Xu Shubiao met Yan Bin, the founder of Huabin Group, and the situation changed accordingly.
Out of mutual trust and a desire to serve the country through industry, Yan Bin studied, understood, and communicated with major domestic enterprises and departments for several months. Through signing an agreement with a validity period of 50 years, he successfully formed a joint venture with two state-owned enterprises, China National Food Corporation and Shenzhen Zhonghao Group, and adjusted the formula of Thai Red Bull Beverage. The adjusted formula not only met the requirements of regulatory authorities, but also maximized the preservation of the efficacy of functional drinks, while also being more suitable for the Chinese population.
Through the efforts of Chinese shareholders, in September 1995, Red Bull Beverage finally obtained the most crucial approval – the approval of the former Ministry of Health for the formula license of “vitamin functional drinks”, and obtained the entry ticket to enter China.
Although the formula approval has been obtained, there are still many challenges to be solved for the launch of the Chinese Red Bull beverage project.
At that time, the Chinese beverage market was still dominated by carbonated soda, and the functional beverage market was still blank. It was crucial for products to have a loud name. Previously, Austrian businessman Dietrich Mateschitz collaborated with Xu Shubiao to launch the “Red Bull” in the European and American markets, which was successful. Yan Bin, who is familiar with the Chinese market, insisted on using the simplified “Red Bull” as the trademark and brand, and named the product “Red Bull Vitamin Functional Beverage”.
Although the name of Chinese Red Bull was determined, both parties soon discovered that the “Bullfighting Map” trademark was highly similar to the trademark of a certain amusement park in China at that time. After months of negotiations with Chinese shareholder Shenzhen Zhonghao, the transfer of the “Bullfighting Map” trademark was finally completed on January 13, 1996, which also cleared the obstacles for the birth and advertising promotion of the Chinese Red Bull brand.
From zero to huge losses and then to 20 billion
In the first two years of Red Bull’s listing in China, both confident China and Thailand were hit hard.
In order to launch and establish the brand of China Red Bull, the management team of China Red Bull made a large-scale investment in the brand. At the 1996 Spring Festival Gala, China Red Bull made a high-profile appearance. At the Spring Festival Sugar and Wine Fair of the same year, in order to better assist in investment promotion, China Red Bull not only won the naming rights for the opening ceremony, but also held the “Red Bull Night” reception ahead of schedule, greatly increasing the popularity of the Chinese Red Bull market and attracting dealers and channel merchants from all over the country to come and negotiate.
But after a substantial investment, China Red Bull, whose brand awareness has greatly increased, failed to achieve a breakthrough in sales. On the contrary, many dealers have not sold a few cans in a year.
In the industry’s view at that time, on the one hand, this was related to China Red Bull’s adoption of a higher pricing strategy. At that time, China Red Bull’s retail price was 6 yuan/can, while during the era when Coca Cola carbonated soda was only 2 yuan/bottle, the retail price of 6 yuan made it difficult for many consumers to accept; On the other hand, Chinese consumers have not yet developed the habit and scenario of consuming functional drinks, often hesitant to purchase products, leading to a decline in sales. This also puts the Chinese Red Bull project at risk of huge losses in its first year of listing.
But Yan Bin did not give up, but started a pioneering journey with the first generation of Chinese Red Bull people, exploring mountains and building bridges when faced with water. In the fast-moving consumer goods industry, the most crucial aspects were products, channels, and brands, all of which were indispensable. However, for Chinese Red Bull at that time, it was a blank space.
On the channel side, in the face of numerous doubts from channel merchants, Yan Bin led the team to not be afraid of difficulties and “enter every store”, adopting a more active and flexible market strategy – starting from a small distribution volume, one or two boxes or even a few cans can be used, but should be displayed in the most prominent position, striving for more opportunities for brand exposure.
The domestic public does not have the habit and consumption scenario of consuming functional drinks, and even the management of companies including Yan Bin and employees go out to set up street stalls and promote products. On a cold winter night in Beijing, Yan Bin took the lead in giving cans of Chinese Red Bull to taxi drivers on Chang’an Street. At the same time, in order to expand the market, the sales team of Chinese Red Bull actively entered small scenes such as school surroundings, gyms, and sports fields, ultimately opening up the situation.
On the brand side, the Chinese Red Bull team has launched a famous advertising slogan based on the characteristics of Chinese Red Bull products: “Drink Red Bull when thirsty, drink Red Bull when tired, and drink Red Bull even more when tired.” This thoughtful slogan has also made the Chinese Red Bull brand a hit.
In the following 20 years, China Red Bull continued to increase its investment in brand marketing and other areas, and helped the Red Bull brand become well-known in the Chinese market through sponsoring advertising, sports sponsorship, extreme sports and other popular projects.
It is worth noting that the cultivation of the consumer market is not achieved overnight. In the first decade of listing, although the sales of China Red Bull have been increasing steadily, they have not been able to break through the 200 million can mark; With the continuous investment of Huabin Group and China Red Bull, Chinese consumers have gradually begun to recognize functional beverages. China Red Bull’s sales have also surged from less than 200 million cans for ten consecutive years to 5.5 billion cans in 2015, occupying 80% of the Chinese functional beverage market at one point. By December 2023, the cumulative industrial output value of China Red Bull has exceeded 58 billion cans.
Even in 2022, when outdoor consumption scenarios are limited, facing the overall impact of external factors on the beverage industry, Huabin FMCG Group, where China Red Bull is located, has maintained stable growth in performance. The total annual sales of all products reached 21.54 billion yuan, with over 1 million key stores and nearly a million visits per month. The digital management core network has reached 600000.
The rapidly growing Red Bull brand has also accelerated the development of Huabin Group in China, becoming a leading enterprise in China’s functional beverage industry and driving the great development of the Chinese functional beverage category. Therefore, in the eyes of the outside world, although Huabin Group is not the inventor of Red Bull products, it is the founder of the Chinese Red Bull brand.
The original intention of serving the country in industry for 29 years remains unchanged
At the beginning of his entrepreneurship, Yan Bin had a dream of serving the country through industry. With the growth of China Red Bull, it has also fulfilled its due responsibility as a socially responsible enterprise.
On the one hand, China Red Bull’s business has grown rapidly, which has also led to the growing layout of its functional beverage industry chain and the formation of a nationwide production and sales network. In the process of industrial layout, after thorough consideration and planning, China Red Bull empowers the high-quality development of the industrial chain while developing itself, thereby driving local economic growth.
For example, in the Xianning production base of Red Bull in Hubei, China, from July 1, 2006 to May 2021, the Xianning base has produced over 15 billion cans of Chinese Red Bull beverages, with a cumulative output value of over 47.1 billion yuan. Driven by Chinese Red Bull, many world-renowned brands have gathered in Xianning, and the “one bottle of water” industry has become one of the important industries in the local area. By the end of 2021, there were 12 large-scale enterprises in the beverage and food industry in Xianning High tech Zone alone, with an annual tax revenue exceeding 1 billion yuan.
On the other hand, while expanding the Chinese Red Bull market, Huabin FMCG Group has gained channel advantages and is constantly seeking diversification and greater health, gradually entering popular categories such as high-end natural mineral water and natural coconut water. While building a high-end health beverage system, Huabin Group also does not forget its original intention of serving the country through industry and plays its corporate social responsibility.
After introducing the top natural mineral water brand VOSS Fushi from Norway, Huabin Group leveraged Fushi’s experience to search for similar water sources in China and ultimately chose to build a domestic VOSS Fushi factory in Zhuxi, Hubei. At that time, the conditions in Zhuxi County were difficult. After overcoming difficulties such as autumn floods, landslides, landslides, floods, and snowstorms, the builders of Huabin FMCG Group finally put the new factory into operation in June 2018.
It is reported that VOSS not only brings direct industrial investment and employment to Zhuxi, but also drives the development of local infrastructure, logistics transportation, agricultural product trade, tourism services and other industries. At present, two local logistics companies, three cooperatives, and two product packaging factories have established cooperative relationships with VOSS, bringing tangible benefits to 380000 people in Zhuxi.
As Yan Bin has repeatedly stated in public speeches, Chinese entrepreneurs should not only develop their enterprises and do a good job in the real economy, but also make new contributions to the needs of the country, society, and the people to the best of their ability. Huabin fast-moving consumer goods group and China Red Bull will continue to adhere to the corporate culture concept of “breaking through mountains and building bridges when facing water”, and work together with industry chain partners to forge ahead and create greater value.