Huiyuan officially acquires Suntory China

Recently, Huiyuan Juice announced that its wholly-owned subsidiary Beijing Huiyuan Food & Beverage Co., Ltd. and Suntory (China) Investment Co., Ltd. (" Suntory China") and its wholly-owned subsidiary Suntory (Shanghai) Food Trading Co., Ltd. (" Suntory Trading " ) Signed a formal acquisition agreement.

Pursuant to the acquisition agreement, Huiyuan Juice will acquire 100% equity interest in Suntory (Shanghai) Foods Co., Ltd. (hereinafter referred to as “Sunteli Foods”) of Suntory China and 50% of Suntory Trading, totaling a total consideration of approximately RMB118 million. Upon completion of the acquisition of 50% equity interest in Suntory Trading, Suntory Trading will become a joint venture between Huiyuan Juice and Suntory China (hereinafter referred to as the "Joint Venture"), and Suntory China and its parent company will grant the use rights of the joint venture company's trademarks. Huiyuan Juice and Suntory China will cooperate in sales and development of Suntory brand products and promote the common development of the beverage industry.

In fact, the acquisition of Suntory Foods is the second time Huiyuan has tested the water tea beverage market. In 2011, Huiyuan purchased Sun Rising, but the effect was not satisfactory. For this coming back, the person in charge of Huiyuan Fruit Juice stated to Securities Daily: “As of now, all acquisitions by the company are based on considerations of the company's development strategy. Suntory is a world-renowned brand and is currently the top ten tea beverages in the Chinese market. One of the brands, Huiyuan Juice, a leading fruit and vegetable juice and beverage manufacturer in China, and Suntory's strength in product R&D, quality control, and supply and demand systems will help the Group expand its tea and coffee beverage business. , can help Huiyuan expand the non-fruit and vegetable juice beverage market."

According to public information, Suntory is an international, multi-variety, multi-field business large-scale multinational group that deals with alcohol, beverages, food, health products, food and beverage management, and flowers. The business area spans 40 countries and regions. The tea drinks sold in China mainly include black oolong tea, oolong tea, and jasmine tea.

The channel distribution rate has risen dramatically With the increase in people’s dietary health requirements, the consumption structure of the beverage market is changing, and sugar-free beverages represented by tea beverages have rapidly emerged as a new force in the beverage market. Oolong tea, green tea and other unsweetened teas The product maintains a growth of approximately 110%. Suntory Oolong tea currently has a growth rate of approximately 120%, and its market share in Shanghai (without water content) is approximately 11%-12%.

According to the relevant person in charge of Huiyuan, “Suntrich has a large sales network in Shanghai and neighboring cities, and the major markets are concentrated in Shanghai and Jiangsu Province, and the channels are concentrated in convenience stores and supermarkets. After the acquisition, it will help increase Huiyuan’s market in these regions. Shares, while constantly expanding the traditional (distribution) channel distribution rate and share, thus directly pulling company sales.”

Why did you only acquire 50% of Suntory Trading? The person in charge explained: "This kind of equity ratio setting is conducive to better complementing each other's advantages and jointly expanding sales of Suntory branded beverage products in mainland China."

In addition, the person in charge also said: "With the company's new market development strategy, we will continue to try to include a variety of marketing modes including e-commerce in parallel to expand market share, which will further drive Huiyuan market sales.

Profitability prospects are better Huiyuan's 2013 annual report shows: In 2013, the company's sales reached 4.5039 billion yuan, an increase of 13.1% year-on-year; gross profit increased by 25.4% year-on-year to 1.4 billion yuan. According to ACNielsen survey data, as of December 31, 2013, Huiyuan Juice was the largest producer of 100% fruit juice and medium concentration fruit and vegetable juice in China, with a market share of 56% and 45.2% respectively.

"Huiyuan will insist on focusing on the main juice industry, diversification of development under the premise of a unified, under the consideration of factors such as market share, shareholder returns and other factors, expand non-fruit and vegetable juice business, enrich the production line, and create greater value for consumers and shareholders. The person in charge of Huiyuan Juice stated that Huiyuan’s cash flow status will become better and better with the improvement of its main business. As of the end of 2013, Huiyuan’s operating cash flow has exceeded RMB 700 million.