news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Following Yuanqi Forest and Heytea, the global luxury giant LVMH Group has set its sights on the plant protein beverage market. Recently, L Catterton, an investment company under the LVMH Group, announced the completion of a strategic investment in Sichuan Weiyi Beverage Food Co., Ltd. (hereinafter referred to as "Weiyi Beverage"). What kind of sparks can luxury brands and beverage companies create?

LVMH

The beverage industry, which has not seen any investment action for a long time, is seeing ripples again. Recently, L Catterton’s official account announced that it has completed a strategic investment in Wei Yi Beverage.

Weiyi Beverage was founded in 1992 and is a plant protein beverage company under Sichuan Lanjian Beverage Group Co., Ltd. (hereinafter referred to as "Lanjian Group"). Initially, Weiyi was called Tianxiaxiu Soy Milk. It was not until 2001 that the Weiyi brand was officially launched. "Weiyi" sounds the same as "vitamin E" and emphasizes the health attribute. Guo Yimin, chairman of Lanjian Group, once publicly stated, "We only sell health." According to the official website of Lanjian Group, it was founded in 1985 and is an employee-funded entrepreneurial company. It has gone through the beer era, beverage era, and big health era. It has developed into a comprehensive big health industry holding group that integrates natural beverages, natural mineral water, brewing, supermarkets, chain wine cellars, global food, biopharmaceuticals, international trade, banks, funds and other industries and finances. The company's production scale has exceeded 4 million tons, the sales of natural mineral water are leading in the country, and the sales of plant protein beverages are among the top in the country.

The huge potential of the plant protein beverage market is one of the main reasons why L Catterton is optimistic about Wei Yi Beverage. According to data released by China Research Institute of Industry, the demand for plant beverages continues to grow, especially plant protein beverages and herbal beverages, which have become the main market segments. It is estimated that by 2026, the market size of the plant protein beverage industry alone is expected to reach 140 billion yuan, showing huge market potential.

Wei Yi Beverage has market appeal in Sichuan and Chongqing, which is another major reason why L Catterton is optimistic about it. Public information shows that Wei Yi Beverage's sales in 2022 exceeded 4 billion yuan, with Sichuan and Chongqing accounting for more than 70%, of which more than 90% of sales came from catering channels. Among plant protein drinks, Wei Yi Beverage ranks third in the country and first in the southwest region.

"In the vast and resilient consumer market in Sichuan and Chongqing, Wei Yi has a large and growing loyal consumer group," said Chen Yue, managing partner of LVMH Asia Fund. "Wei Yi has not only developed beverages that are well-known in the Sichuan and Chongqing regions, but also established a vertically integrated supply chain and an extensive network of distributors, and established long-term cooperative relationships with them. The company's profits have been showing a clear upward trend and hit a record high in 2023, proving that consumers' recognition of Wei Yi is enduring and crosses cycles. Wei Yi also has a proven management team, and we look forward to working closely with the management team to further tap the company's potential."

Invested in Yuanqi and Heytea

Many people may not be familiar with L Catterton, but the financial sponsor behind it, LVMH Group, is well-known and has become a world-renowned luxury giant. What sparks can be created by combining a luxury goods company with a beverage company?

In fact, as a consumer fund under the LVMH Group, L Catterton has a total of 9 investment platforms in five continents, including flagship acquisition funds, growth funds, Latin American funds, European funds, Asian funds, RMB funds and real estate funds, etc. It is the world's largest top private equity investment institution focusing on the consumer industry. American functional bottled beverage brand Glaceau Vitaminwater, Scottish craft beer brewery Innis Gunn, American organic ready-to-drink tea brand Sweet Leaf Tea are among the investments.

In 2021, at the height of the domestic investment boom, L Catterton also kept "buying, buying, buying" in China. That year, Yuanqi Forest received two rounds of strategic financing, including strategic financing led by L Catterton, Warburg Pincus, and Sequoia China in March, and nearly US$200 million in strategic financing from Temasek, HongShan Sequoia China, and Warburg Pincus in November. It was also in July of that year that Heytea received US$500 million in Series D financing, with investors including HongShan Sequoia China, Hillhouse Capital, Tencent Investment, Temasek, L Catterton, Black Ant Capital, and RiChu Capital.

Chen Fangchao, general manager of Junzhi Strategic Consulting Industry Department, said, "Wei Yi is a leading brand of regional plant protein beverages, which has a broad recognition base in Sichuan and Chongqing, and has a strong connection with the hot pot scene. LVMH has rich experience in successful beverage and food investments around the world. In addition to its good recognition base and operating status, this investment in Wei Yi is also optimistic about the domestic healthy beverage track. Take soy milk as an example. The category has strong national recognition, few well-known brands, and huge market space. With the addition of LVMH's strategic investment, there is an opportunity to quickly go national by leveraging this topic marketing, matching corresponding product upgrades and channel construction."

Chinese food industry analyst Zhu Danpeng told the Beijing Business Daily reporter that "drinks that are served with meals have been very popular in recent years. As the number one beverage brand for meals in Sichuan, Wei Yi itself has brand effect, scale effect and fan effect. As the Sichuan and Chongqing catering markets continue to be hot, with the support of capital, there is still a lot of room for imagination in the future."

Market competition pressure is not small

Regarding L Catterton's investment, Guo Yawen, the representative of Wei Yi's founder, said, "We are deeply impressed by the comprehensive value creation plan designed by L Catterton for Wei Yi. We are very happy to work with L Catterton to promote the implementation of relevant plans. By consolidating our leading position in the southwest market, we will move towards the national market."

Zhan Junhao, a well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, said in an interview with a Beijing Business Daily reporter that "the strategic investment from L Catterton will help Wei Yi Beverage further consolidate its brand position in the southwest region and accelerate its layout and expansion in the national market with the help of LVMH Group's global resources and market network. This cooperation will bring Wei Yi support in terms of capital, management, market and other aspects, helping it achieve strategic goals such as product upgrades, channel expansion and brand building."

The plant protein beverage market has already produced five listed companies, including Yangyuan Beverages, Huanlejia, Vitasoy, Chengde Lulu, and Vivi Group. There are also regional leaders such as Coco Tree and Yinlu, as well as new players such as Yili and Mengniu. The market competition pressure is not small, and there are leaders in multiple market segments.

According to the first quarter financial report of 2024 disclosed by Yangyuan Beverage, the company achieved operating income of 2.316 billion yuan, a year-on-year increase of 3.91%; net profit of 879 million yuan, a year-on-year increase of 19.96%. The market penetration rate of its core product "Six Walnuts" has further increased, but it only has a high market share in walnut milk. In addition, Chengde Lulu occupies almond milk, Coco Tree occupies coconut milk, and the soy milk field that Wei Yi focuses on is the expertise of Vitasoy and Vivi Group. Vitasoy International's 2023 fiscal year results showed that it achieved revenue of 6.217 billion Hong Kong dollars, a year-on-year decrease of 2%; and achieved a net profit of 116 million Hong Kong dollars, a year-on-year increase of 155%. According to the first quarter financial report of 2024 released by Vivi Group, it achieved revenue of 1.109 billion yuan, a year-on-year increase of 0.83%; and achieved a net profit of approximately 127 million yuan, a year-on-year increase of 251.48%.

In the view of Lan Shili, chairman of the board of directors of Dongxing Group and actual controller of Wuhan No. 2 Soda Factory, "Wei Yi's main markets are in Sichuan and Chongqing. L Catterton's investment is a preemptive opportunity for the Chinese beverage market, but whether it can (help Wei Yi) go nationwide and even enter the capital market remains to be seen."

Regarding the form of this strategic investment, its impact on the business and plans to expand the national market, a Beijing Business Daily reporter sent an interview letter to L Catterton via email and also consulted Wei Yi Beverage, but no response was received as of press time.

Beijing Business Daily reporter Kong Wenxie