Source of this article: Times Weekly Author: Wang Chenting
Recently, the dispute with Hubei Zhijiang Wine Industry has made Zhijiang Wine Industry’s original shareholder Weiwei Shares (600300.sh) once again become a hot topic.
turned the clock back 30 years ago, and the advertising slogan "VV Soy Milk, Happy" resounded across the north and south. That was the time when VV Soy Milk was at its most prosperous.
During the period of rapid expansion, VV Co., Ltd. entered multiple industries including milk, real estate, and liquor. The diversified strategy did not bring a second growth curve to the listed company; on the original main track of plant protein, latecomers have emerged one after another. And rise. Another main thread is that Cui Guiliang, the core figure behind the series of capital operations, has never been the actual controller of VV Holdings.
Times have changed, and the aura of the "King of Soymilk" is no longer there. Now that the equity is transferred, VV Holdings-VV Group is not the actual controller of VV Shares, but Cui Guiliang, a related person, has stood in front of VV Holdings. Absolutely Holdings no longer need to be speculated.
Behind the ups and downs of VV Soymilk’s business and equity, it also reflects the Cui Guiliang family’s thirty-year capital game history.
Picture source: VV Co., Ltd. official website
From rice mill to CCTV standard king
The success of many enterprises is inseparable from a key figure. For VV Soy Milk, this person is Cui Guiliang.
In 1989, Cui Guiliang had worked in the rice mill in Damiao Town, Tongshan County, Xuzhou, Jiangsu Province for seven years. He started out as a technician, obtained a university diploma, and became the director of a state-owned factory at the age of 27. Cui Guiliang is already a model of young and promising in the eyes of outsiders. But he was not satisfied with the status quo and chose to introduce the first soy milk powder production line in the factory.
Cui Guiliang, the founder of VV Soymilk (Source Network)
Bypassing the traditional idea of boxed and canned drinks, Cui Guiliang created VV Soymilk into a small package of brewed soymilk that looks like milk powder. This brand-new species quickly gained market recognition. Two years later, the output value of soy milk powder at the rice mill reached 12.31 million yuan, with a profit of 1.64 million yuan, which was several times higher than before. But to become famous in one fell swoop, Weiwei still needs a key promoter.
It was the 1990s when the TV series "Desire" was popular all over the country. In 1992, VV Group was established, and Cui Guiliang went to Xuzhou TV Station with 100,000 yuan to buy out the special broadcast rights of "Desire".
The older generation of Xuzhou people still remember waiting in front of the TV from 7 o'clock, finishing "Xinwen Lianbo", then "Xuzhou News", until the words "VV Soy Milk Happy" floated out from the TV , "Desire" "specially broadcast by VV Soy Milk" was officially opened.
The TV series "Desire" once triggered a crowd of people and was also a key opportunity for the success of VV soy milk (Source: Douban)
The investment of 1 million yuan brought Cui Guiliang an unexpected success, and the sales of VV soy milk skyrocketed. In 1993, VV's overall output value exceeded 100 million yuan and 12 production bases were established across the country; in 1994, sales exceeded 500 million yuan.
Cui Guiliang, who had tasted the benefits of advertising, made an effort. In 1994, VV Soy Milk spent 100 million yuan to win CCTV’s 1995 prime time advertisement, becoming CCTV’s first “100 million yuan bid winner”. Since then, for more than 10 consecutive years, Vivian has placed soy milk advertisements in prime time on satellite TV at all levels.
With the spring breeze of reform and opening up, this small processing factory with less than a hundred employees has come to the forefront of the times. In 2000, VV Soy Milk was successfully listed on the Shanghai Stock Exchange at an issue price of 10.28 yuan per share, with a market value of 6.6 billion yuan. In the prospectus, VV was very high-spirited: "Currently, the company covers a total area of 281.771 acres and has the ability to produce 178,000 tons of soy milk powder annually. It is the well-known 'soy milk king' in the country." The prospectus of
also listed the information at that time. Several financial indicators of VV. In 1997, VV's main business income exceeded 1.3 billion yuan. In the following two years, it declined slightly due to the financial crisis. However, the main business profit had stabilized at more than 100 million yuan before going public.
24 years later, in 2023, VV's total revenue was 4.036 billion yuan, declining for five consecutive years. From 2019 to 2023, the net profit attributable to the parent company was 0.73, 4.36, 2.23, 0.95, and 209 million yuan respectively, which is almost the same as 20 years ago. From the perspective of market value, the total market value of VV shares is now less than 4 billion yuan, which is significantly lower than when it was listed.
VV Shares’ revenue has continued to decline in the past five years (Source: Baidu Stock Exchange)
Diversified layout, confused
VV Shares has been stuck in the same place for 24 years, and we have to start with the diversification strategy it has promoted since its listing. . VV has been involved in various unrelated fields such as real estate, liquor, coal, mining, medicine, finance, and the grain industry.
From soy milk to liquid milk, entering the dairy industry is the first step.
In fact, in the prospectus, VV mentioned that it would invest 180 million yuan in a joint venture to establish Xuzhou VV Dairy Co., Ltd. Cui Guiliang once set a goal: to become one of the top six dairy companies in China within three years, "to develop soy milk stably, fully enter the dairy industry, and strive to make VV Dairy and VV Soy Milk fly together."
has a lot of money in hand, and investment and mergers and acquisitions are the fastest way to expand. Since 2002, VV Group has started to “enclose the land”. In Zhuhai, we won the Zhuhai Special Zone Milk Company, acquired Xinjiang Hutubi Yiran Dairy Company, invested 160 million yuan to establish Xi'an Weiwei Dairy Co., Ltd., and acquired Wuhan Xiangmanlou Dairy Company... Nearly 40 dairy companies were included in the acquisition, and VV And began to build its own brand "Tianshan Snow".
The dairy empire was beginning to take shape, but at that time the milk industry had been divided into three parts by the forerunners Yili, Mengniu and Guangming. Choosing the core milk source in the northwest also leads to high transportation costs. Tianshan Snow, which has always been a second-tier brand, failed to support VV's second growth curve. Instead, it was dragged down by severe excess production capacity. VV Group had no choice but to announce in 2005 that it would focus on returning to the soy milk field. "The dairy industry only accounts for 30% of the total." %".
A batch of milk equipment assets were resold on the official website of VV Co., Ltd.
As can be seen in the 2023 annual report of VV Co., Ltd., the revenue of animal and plant protein beverages was 430 million yuan, which only accounted for about 10% of the total revenue. This still includes In the case of soy milk drinks. Its gross profit margin is 12.48%, which is only higher than primary grain processing and transportation and storage among its main businesses.
"catch up with hot spots" and enter unfamiliar fields, invest and acquire on a large scale, and then shrink after a few years. This is almost the unified path led by Cui Guiliang in several diversification attempts.
A senior executive of Weiwei once said in an interview with a reporter: "VV's industrial diversification is to follow the policy, short-term investment, short-term profits, and quick profits to enhance the company's ability to resist risks."
Some investments have indeed yielded returns. For example, in the mining field, in 2009, its subsidiary Xi'an VV Resources Co., Ltd. invested 196 million yuan to acquire 51.001% of the equity of Wuhai Zhengxing Coal Chemical Co., Ltd.; in 2013, it then sold 100% of the shares of Inner Mongolia VV Energy Co., Ltd. When acquiring equity, it obtained an equity transfer income of RMB 344 million.
But not all investments are profitable. In 2011, VV acquired a coal chemical company to enter the coal industry. The following year, the company suffered a huge loss of 20 million yuan. In 2013, it entered the tea industry, and its tea revenue began to decline again the following year.
For VV Group, the liquor industry is the one that focuses the most on “diversified layout”.
In 2006, VV Holdings acquired 38% of the shares of Jiangsu Shuanggou Liquor Industry and increased its holding to 40.6% two years later. Cui Guiliang said in one of the few interviews with the media in 2007, "VV's investment in Shuanggou Liquor Industry is definitely not a short-term behavior, but to make the wine industry one of the company's main businesses like soy milk." In 2007 , we will ensure the sales of Shuanggou Liquor Industry to reach 1 billion yuan, and strive to reach 1.2 billion yuan.”
In Cui Guiliang’s view, “Liquor is not an emerging industry and requires the accumulation of culture and brand. If we can acquire existing brands through equity participation. Resources are the best choice for VV."
Picture source: Tuchong Creative
In 2009, after Shuanggou was acquired by Yanghe Holdings, it brought revenue of 282 million to VV Holdings. Having tasted the benefits, VV Holdings continued its efforts and spent 348 million yuan to control Hubei Zhijiang Liquor Industry in the same year. In 2012, it invested 357 million yuan to acquire Guizhou Chun Liquor Factory. In 2013, it spent 240 million yuan to increase its capital in Zhijiang Liquor Industry.
After catching up with the golden decade of liquor, VV Shares has not harvested the expected “second growth curve.” The market performance of Guizhou Chun is not satisfactory.
From 2015 to 2017, Guizhou Chun’s cumulative net loss reached 150 million yuan. In 2018, VV Group transferred all 55% of its shares to VV Group for a transaction consideration of 275 million yuan, a decrease of 82 million yuan from its acquisition. All the equity of Zhijiang Liquor Industry was transferred to Jiangsu Variety Show Holdings Co., Ltd. in 2020. The transaction consideration was 462 million yuan, a decrease of 126 million yuan from the time of acquisition.
Cui Guiliang finally stood on the stage.
Mining coal, selling liquor, and selling tea are the "most profitable" industries in traditional concepts. VV Group has covered them all, and it has not missed out on the real estate market.
VV Shares has a long-standing desire for the real estate market. As early as 2007, VV made a high-profile partnership with COFCO and planned to participate in the development and construction of new urban areas in Xuzhou City. However, because the target land price far exceeded expectations, the cooperation project came to nothing, and the joint venture between the two parties was also canceled the following year.
In 2013, VV announced that its wholly-owned subsidiary VV Impression City would invest 80 million yuan to establish a joint venture with Xuzhou Zhongcai Technology Development Co., Ltd. to enter the real estate industry again.
In 2016, listed company VV Holdings transferred its real estate business, including VV Impression City, to VV Group. But in 2020, VV Co., Ltd. announced that it planned to purchase the real estate assets of VV Impression City that had not yet been completed and accepted for 180 million yuan, a 31% premium, as the company's new headquarters, and the Shanghai Stock Exchange sent a letter to inquire.
Subsequently, VV Holdings issued an announcement admitting that in May and August 2016 and between 2019 and 2020, 63 non-operating capital transactions occurred between VV Holdings and VV Group, with a cumulative amount of 947 million yuan. In addition, large financial guarantees are also involved. The explanation is that private enterprises have difficulty in financing, bank loans have been severely compressed, stock pledge rates are too high, and short-term capital turnover difficulties have occurred.
The equity and funding puzzle between VV Group and VV Group once attracted much attention, and "Mr. Key" Cui Guiliang also experienced several identity changes.
Cui Guiliang served as the group leader when he founded VV Group in 1992 until it went public. From September 1999 to September 2004, Cui Guiliang served as the chairman of VV Food and Beverage Co., Ltd. (VV Co., Ltd.); from January 2008 to 2020, he served as the chairman and general manager of VV Group.
But on the surface, Cui Guiliang has never been the actual controller of VV Holdings and VV Group. According to the 2005 annual report of VV Co., Ltd., Cui Huanli, Yang Qidian and other seven persons acting in concert controlled VV Holdings Co., Ltd., VV Holdings Co., Ltd. controlled VV Group Co., Ltd., and VV Group Co., Ltd. largest shareholder.
Source: VV Group’s 2005 Annual Report
In November 2021, VV Group transferred 284 million shares of the listed company it held to the state-owned Xinsheng Group, accounting for 17% of the company’s total share capital. Ten days after Xinsheng Group officially replaced VV Group and became the largest shareholder of VV Group, 59-year-old Cui Guiliang resigned and no longer held any position in VV Group.
But on the other hand, at the level of VV Holdings, Cui Guiliang has begun to really come to the forefront: According to Tianyancha, after VV Holdings went through several rounds of equity changes from 2019 to 2022, Cui Guiliang currently holds 63.14% of VV Holdings. % of the equity and become the actual controller.
After the transfer and reduction of holdings, Cui Guiliang still controls VV Holdings-VV Group, but the listed company VV shares are no longer Cui Guiliang’s VV shares.
VV Group’s 2023 financial report shows that VV Group continues to significantly reduce its holdings of all shares, holding only 0.43%; in the first quarter of 2024, VV Group increased its holdings by 2.7 million shares, but its shareholding ratio was only 0.60%. The 8th largest shareholder of Weiwei Co., Ltd. After relinquishing its status as the largest shareholder of VV shares, Cui Guiliang indirectly controlled VV Group, which still has a huge industry, and currently still has subsidiaries such as hotels, coffee, mining, real estate development, and wine.
Competition in the main business is fierce
In the past twenty years, VV has returned to its starting point after going through a series of diversification strategies.
VV Group formulated a plan to “return to industry and focus on its main business” in 2016, returning its strategy to “big agriculture, big grain, and big food”.According to its 2023 annual report, its main businesses include solid prepared beverages, animal and plant protein beverages, tea, primary grain processing, storage and transportation, and others.
Among them, the primary grain processing and storage and transportation business, which was promoted after the entry of state-owned assets, accounted for about 36% of the revenue, but the gross profit margin was only 0.47%, and the revenue also dropped sharply by 14.68% compared with the previous year.
Solid prepared beverages based on soy milk powder accounted for the highest revenue, about 48%, and the gross profit margin was also the highest, at 39.14%. Animal and plant protein beverages account for about 10% of revenue, with a gross profit margin of 12.48%.
The current main businesses of VV Co., Ltd. (Source: VV Co., Ltd. 2023 Annual Report)
Does VV still have advantages in returning to the plant-based milk track?
Let’s first look at the overall market. The “2020-2025 China Plant Protein Beverage Industry Market Demand and Investment Planning Analysis Report” shows that the average annual growth rate of the plant milk industry in the next few years is expected to remain above 20%. It is expected that the plant milk market will grow by 2025. The scale will exceed 300 billion yuan. But from a practical point of view, after the rapid growth from 2013 to 2016, the plant milk track has entered an "industry quiet period" since 2018.
"From the perspective of the future of China's consumption, plant protein is still a very important category. Although the soy milk industry is not as big as the dairy industry, it can reach around 100 billion in the future based on the actual ex-factory price. Currently, there are more and more While non-standard products are playing the role of basic products, VV Soymilk has chosen to return to the normal track, focus on its main business, and be refined, detailed and thorough. This is definitely the right choice," Dairy Industry Analyst Song Liang said. A reporter from Time Weekly analyzed that.
Let’s look at the competitors. In the field of solid preparation, VV still maintains its comparative advantage, but liquid beverages are already a red ocean. Liquid soy milk and plant milk products such as Vitasoy, Doubendou, Yili Zhixuan Soy Milk, and Uni-President Honest Bean are emerging one after another. The battle for the soy milk brand market is not easy to win.
For example, Dali Food’s Doubendou was launched in 2017 and was heavily marketed. It initially brought a lot of revenue to Dali Food, with sales exceeding 1 billion in the first year. Euromonitor data shows that Doubendou’s retail market share will reach approximately 23% in 2021, ranking first in the country.
However, as the market enthusiasm receded, Dali Foods was delisted, and after the huge marketing volume receded, Doubendou also faced the dilemma of stalling.
Zuming's plant protein drinks will have revenue of 218 million yuan in 2023, a year-on-year decrease of 6.4%, with gross profit margin remaining at 32.08%. Zuming's products are mainly soy milk in stand-up bags, and its small distribution model is relatively differentiated. Zuming Co., Ltd. stated in its annual report that it will basically achieve full coverage of e-commerce platforms in 2023, and the company will have a major breakthrough in the Douyin sector.
Yangyuan Beverage achieved double growth in operating income and net profit in 2023 with the strong performance of its six walnut brands. Its financial report shows that walnut milk's operating income in 2023 is 5.71 billion yuan, a slight increase of 1.11% from last year, but its gross profit margin is as high as 47.04%; Chengde Lulu's almond milk sold 2.86 billion yuan last year, and its gross profit margin also reached 42.09%.
Among the main products of Weiwei Co., Ltd., the gross profit margin of solid preparation products can reach 39.14%, but the gross profit margin of animal and plant protein drinks is only 12.48%, which is significantly lower than the average level of the same industry.
Source: Tuchong Creative
"VV has actually been boiling frogs in warm water. Blind diversification has caused it to lose a good opportunity for high-speed expansion of its main business." Chinese food industry analyst Zhu Danpeng analyzed to reporters. In his view, VV's biggest problem is the business philosophy of traders, and the management team's overall awareness and level of innovation, upgrading and iteration are limited. Up to now, the main business is not strong and is still dragged down by too many side businesses. It may be too late to return to the main business.
Song Liang believes that the first thing VV needs to do now is product innovation and grasp the details, whether it is products, packaging, channels, or business models; secondly, companies can launch more functions on the basis of meeting the needs of guaranteed products. At the same time, it is recommended to consider fully integrating with new retail channels.
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