With annual sales of 5.5 billion, it once crushed Coca-Cola! “National Divine Water” Jianlibao was sold for 338 million?

In the youth memories of many Chinese people, a can of orange Jianlibao is sealed.

In the era when Coke monopolized the domestic market, it was the only local beverage brand that could compete head-on with international giants.

At its peak, Jianlibao’s annual revenue was close to 5.5 billion yuan, and its sales volume exceeded that of Coca-Cola and Pepsi.It was once called Oriental Magic Water by the outside world, and it was a well-deserved domestic product in the 1990s.

But no one expected that this jar of national sacred water would finally change hands at a low price of only 338 million yuan, completely falling from the altar.

The rise and fall of Jianlibao for more than 40 years seems to be the ups and downs of the brand, but in fact it hides the most profound business lessons of China’s established enterprises.

The birth of Jianlibao was a legendary comeback in the history of Chinese industry.

In the 1980s, there were no mature sports drinks in China, and the related market was completely blank. Scientific research institutions have developed an electrolyte formula that can quickly replenish physical energy, but no one has commercialized it for a long time.

At that time, Sanshui Winery was on the verge of bankruptcy, with a lack of funds on its books and almost no confidence to continue operating.

Factory director Li Jingwei has a unique vision and sees the blue ocean opportunity of sports drinks, and actively cooperates to incubate new products.

When Jianlibao came out, the entire market environment was extremely unfriendly to new local brands. In terms of foreign investment, Pepsi-Cola and Coca-Cola have been in the market for many years and have strong funds, strong brands, and mature channels.

The local market is divided between eight major soda factories including Arctic Ocean and Tianfu Cola, leaving no room for new brands to gain a foothold.

Jianlibao, which has no funds and no channels, can only break out of the traditional way of playing and choose sports marketing to break the situation.

The 1984 Los Angeles Olympics attracted nationwide attention, and national self-confidence was at an all-time high. It was a once-in-a-century communication window. Jianlibao faced huge financial pressure and urgently produced canned drinks, becoming the exclusive drink for the Olympic delegation.

While Chinese athletes were winning gold medals, Jianlibao became popular and was hailed as the Oriental Magic Water by foreign media.

After becoming famous in one battle, Jianlibao continued to bet on top events and continued to expand its brand advantages.

In 1987, Jianlibao defeated Coca-Cola at a high price of 2.5 million and won the exclusive beverage naming rights for the National Games. The high investment brought explosive returns. An order fair directly locked in an order of 200 million yuan, firmly establishing itself as the industry leader.

In the 1990s, foreign capital aggressively acquired local sodas, and the eight established sodas were frozen out and eliminated. Only Jianlibao stuck to its own brand line, refused foreign mergers and acquisitions, and even took the initiative to expand overseas to expand into the U.S. market.

In 1997, Jianlibao’s revenue exceeded 5.4 billion yuan, becoming the first domestic beverage brand and ushering in the most prosperous period of its career.

The rapid rise of Jianlibao is highly dependent on founder Li Jingwei’s personal courage and the dividends of the times.

This personal-led strongman model is suitable for start-ups to grab the limelight, make breakthroughs, and quickly break through. However, as the size of the enterprise expands, the shortcomings of the lack of a modern governance structure begin to be fully exposed.

Jianlibao, which is firmly at the top of the industry, did not delve deeply into the main beverage business, but instead embarked on crazy cross-border expansion.

Companies continue to invest across borders in unfamiliar areas, frequently acquire various unrelated companies, and expand at a chaotic pace. New mergers and acquisitions are added almost every two months, and a large amount of cash flow is occupied by non-main business projects.

These cross-border investments have generated almost no effective profits, but instead continue to consume the core profits of the main beverage business.

Product research and development, taste upgrades, and channel maintenance continued to stagnate, and brand growth gradually lost momentum.

What is more fatal than blind diversification is Jianlibao’s inherent constraints of the state-owned system.

As a 100% state-owned enterprise, the internal mechanism of the company is rigid, the atmosphere of big pot rice is strong, the innovation vitality is seriously insufficient, all business operations are subject to administrative constraints, the market response is slow, and it cannot keep up with the pace of market competition.

Li Jingwei was clearly aware of the problem of institutional drag and took the initiative to promote joint-stock reform of enterprises.

In 1999, the management planned to raise 450 million yuan of its own funds to repurchase all state-owned shares and realize privatization.

This plan can not only preserve the foundation of the local brand, but also activate the vitality of the enterprise. It is the optimal development path. However, because it involves complex interest issues such as local taxation, territorial control, and asset ownership, the restructuring was completely rejected.

Since then, conflicts between the founding team and local authorities have continued to intensify, and the company has fallen into long-term internal consumption.

Strategic stagnation, reform obstruction, and internal friction intensified. Jianlibao, which had been growing at a rapid pace, completely stopped its growth.

The leading company that still looks bright on the surface has long been riddled with hidden dangers and its vitality is gradually declining.

Long-term institutional constraints and internal games have caused Jianlibao to completely lose the possibility of sustainable development. The company’s growth has stagnated, management is chaotic, and there is no way to reform. Equity restructuring has become the only way out.

The most embarrassing thing is that under the same quotation conditions, the founding team of Shengen Industrial was eliminated.

In 2002, the local government finally transferred Jianlibao to capital player Zhang Hai at a very low price of 338 million yuan.

This price is far lower than the true value of the company, and also lower than the acquisition price given by the management. This controversial transaction directly announced the end of Li Jingwei’s industrial era.

The founder of Jianlibao, who had been sticking to Jianlibao all his life, left the industry in despair. Soon after, he suddenly suffered a cerebral hemorrhage and was seriously ill in bed. The regretful end of a generation of national industrialists also marked the complete end of the golden era of Jianlibao.

After capital took over, Jianlibao completely transformed from a physical enterprise into a tool for capital arbitrage.

The new helmsman, Zhang Hai, lacks experience in industrial management and only knows how to hype up the popularity but does not know how to deeply develop products. He invested a lot of money in brand marketing and spent heavily to win the special broadcast rights of the World Cup and CCTV advertising resources.

The overwhelming advertising bombardment increased the popularity of the new series of products, but did not match the production capacity.

All corporate funds are consumed on the promotion side, and the production line, supply chain, and stocking system are all short of money. The market has a serious embarrassing situation of advertising but no products, and dealers across the country are running out of goods to sell.

Upstream suppliers had long-term difficulties in collecting payments and terminated cooperation one after another, causing the supply chain system to completely collapse.

The national distribution network that Jianlibao spent more than ten years building was completely collapsed in a short period of time. Brand reputation quickly overdrawn, consumer trust was completely lost, and the national beverage quickly fell into decline.

In the more than ten years since Jianlibao’s decline, the domestic consumer market, beverage industry, and domestic product environment have undergone a comprehensive iteration. The national trend is on the rise, and many old domestic products have been restarted, renovated, broken out, and returned to the mainstream.

Old soda brands such as Beibingyang and Hankou No. 2 Factory have accurately captured the nostalgic trend and completed the brand rejuvenation upgrade. They have improved the taste, updated the packaging, and fit the aesthetics of young people, and have successfully returned to the mass consumer market.

On the other hand, Jianlibao has changed owners many times and struggled many times, but it has never been able to find its development positioning in the new era.

The brand has always relied on childhood sentiments to survive, resting on its laurels all year round, with almost no substantial product innovation. Traditional homogeneous marketing, old product formulas, and backward packaging design are completely out of touch with contemporary consumer needs.

Today’s beverage market has already entered a new competition stage of refinement, segmentation, and iteration.

Emerging brands such as Yuanqi Forest have accurately entered the healthy, sugar-free, light-burden and other segmented tracks, relying on rapid iteration, user thinking, and data-based operations to continue to seize the new generation consumer market.

The core of the replacement of old and new brands is no longer who is more sentimental, but who is more suitable for the needs of the times.

If old domestic products only sell memories and do not upgrade, they will eventually be completely eliminated by young users.

Jianlibao Kong has a top national brand heritage, but lacks modern operational thinking and innovation capabilities. It missed the transformation window time and time again, continued to be marginalized, and eventually became a niche brand in the market from a national miracle water.

Looking at the ups and downs of Jianlibao for more than 40 years, it has succeeded in the trend of the times and the courage of strong people, but failed in the constraints of the system, blind expansion and capital hollowing out.

Enterprises can rely on dividends in the short term, but long-term development can only rely on innovation, focus and stable governance.