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Soft Drinks in China

Q1 2015



Table of Contents

I. Industry Overview

1. Industry Highlights

2. Investment Opportunities

3. Key Industry Indicators

4. Industry Forecasts

5. Industry Drivers

6. Industry Inhibitors

7. Sales Revenue and Cost

8. Output and Retail Sales

9. Industry Globalisation

10. Imports and Exports

11. Exports by Product

12. Imports by Product

II. Competition Overview

1. Competition Landscape

2. Industry Concentration

3. Top Groups

4. Foreign Players

5. Top Players

6. Competition Elements

7. Cost Analysis

8. Profitability

9. Price Indices

III. Regulation Overview

1. Government Policy

IV. Regional Overview

1. Soft Drinks Regional Distribution

2. Soft Drinks Production, Distribution and Growth in 2013

3. Industrial Financial Data by Province

4. Industrial Financial Data by Province (cont’d)

V. Companies Overview

1. Top Listed Companies

2. Top Industry Deals

3. Top Industry Deals (cont’d)

VI. Company Profiles

1. Uni-President China Holdings Ltd.

2. Tingyi (Cayman Islands) Holdings Corp.

3. V V Food & Beverage Co., Ltd.

4. Hebei Cheng De Lolo Co., Ltd.

5. China Huiyuan Juice Group Ltd.

6. Blackcow Food Co., Ltd.



I. Industry Overview



Industry Highlights

China's soft drinks industry is expected to maintain an annual growth rate of around 9-11% in the next two to three years, appreciably lower than the average annual growth rate of over 18% in 2009-2013.

The government is expected to continue to impose stricter requirements on product quality and safety.

The average price of soft drinks is expected to rise. Despite intense competition, the rising costs of raw materials, labour and logistics are bound to push prices up eventually.

Digital advertising platforms are expected to attract a greater share of firms’ investment expenditure in 2015, with budgets shifting away from traditional advertising media such as television and print.

The growth of the revenues of China's soft drinks industry decreased gradually from 11.7% in Q1 2014, to 10.1% in Q2 and to 9.5% at the end of 2014, compared to a revenue growth rate of 12.8% at the end of 2013.

The gross profit rate of the industry dropped from 23.7% in Q1 2014 to 22.6% in Q2 and remained relatively flat throughout the rest of the year. The net profit rate decreased from 6.3% in Q1 to 6.1% in Q2 and 5.9% in Q3 of 2014. Declining profitability was attributable mostly to rising operating costs.

China's soft drinks industry had full-year revenues of RMB 578bn in 2014, up 9.5% y/y. The rise was driven by a combination of higher income levels among the country's residents, product innovation, continuing urbanisation and government support. However, the growth rate of the industry's revenues has slowed down in the last three years, along with lower growth of the Chinese economy and falling export of fruit juices. Food safety was a major focus of public attention throughout 2014 and the government continued imposing new safety and quality requirements, adding to the huge number of compulsory food safety criteria in place - which had already exceeded 5,000. This posed a certain challenge to industry players, who also saw slightly declining profit rates in 2014. The milk & vegetable protein drinks segment registered the fastest annual growth of 16.1% in 2014, followed by tea beverages with 12% and bottled water with 11%. The concentrated juice and carbonated soft drinks segments had the lowest growth rates of 2.3% and 2.6%, respectively.

Annual Overview

Quarterly Performance

Development Trend



Investment Opportunities

Overview

China's soft drinks market has significant potential, given the country's large population and relatively stable economic growth.

The promising growth opportunities have so far attracted over 1,790 enterprises and many foreign investors to the industry. As

the industry has developed, manufacturing requirements have grown stricter and competition has become more intense.

Mergers and acquisitions (M&As) have become more frequent and industry concentration is increasing. This will limit

investment opportunities in the next 1-3 years to a certain extent, as the industry's growth rate is slowing down and the ongoing

consolidation process will be most favourable to the current market leaders.

M&A

opportunities

Acquisitions present great opportunities for companies to optimise their product structures or eliminate production bottlenecks,

as well as to enhance their sales advantages and enter specific segments. With the development of the various segments and

with government encouragement of industry consolidation, numerous M&As have taken place over the last three years.

Segments

Opportunities

Healthy soft drinks have become more popular recently. The popularity and wider availability of juices with added vitamins

and/or other nutritional supplements have also stimulated the demand for naturally healthy ready-to-drink (RTD) tea and plant-

based ingredients. There is also a growing demand for so-called "super fruits" (blueberry, guava, etc). Given increasing health

awareness and a shortage of water resources, industry segments such as bottled and canned water, dairy & plant-protein and

tea beverages will continue to maintain a rapid growth. The share of these segments in total sales is expected to increase.

Government

Policy

The government will continue to impose stricter food quality and safety requirements in the sector. This will result in improved

industry standards and may push some low-end products and manufacturers out of the market. On the one hand, this trend

opens up opportunities for quality suppliers, but, on the other, it may limit the market in some less developed regions. The

government's encouragement of industry consolidation and of M&As in the soft drinks industry is favourable to the growth of the

local market leaders, and aims to strengthen their positions on both local and global markets.



Source:

Key Industry Indicators

Key Industry Indicators

National Bureau of Statistics, General Administration of Customs

Dec-

2012

Mar-

2013

Jun-

2013

Sep-

2013

Dec-

2013

Mar-

2014

Jun-

2014

Sep-

2014

Dec-

2014

Industry Revenue, RMB bn 472 117 248 396 528 132 277 436 578

Carbonated Soft Drinks 84.8 19.7 38.7 63.0 78.2 19.0 40.8 64.9 80.3

Bottled and Canned Water 82.3 19.5 45.5 72.1 101.4 24.5 55.2 85.9 113.2

Fruit ,Vegetable Juice and Syrup 107.4 22.6 51.5 80.4 111.5 24.7 55.4 87.4 121.0

Milk & Vegetable Protein Drink 74.9 21.8 43.1 69.7 89.5 25.8 48.3 75.2 103.9

Solid Beverage (concentrated juice) 44.3 12.5 23.3 34.9 48.8 12.8 23.9 36.1 49.9

Tea Beverage and Other Soft Beverage 77.9 21.1 46.3 76.4 98.4 25.3 53.5 86.4 110.2

Number of Enterprises, units 1,582 1,619 1,618 1,641 1,686 1,786 1,757 1,797 1,824

Total Profits, RMB bn 37.5 9.7 18.9 31.9 45.9 11.1 22.6 34.5 48.24

Total Assets, RMB bn 322 321 328 344 361 365 384 392 408

Soft Drinks Production, thou tonnes 130,240 32,604 70,708 113,390 149,268 36,374 83,624 130,607 -

Cost of Sales, RMB bn 358.2 89.0 191.0 305.5 404.8 100.9 214.5 337.7 448

Gross profit, % 24.0 24.1 23.1 22.9 23.3 23.7 22.6 22.5 22.5

Net profit rate, % (divide net profit by industry revenue to obtain) 6.0 6.2 5.7 6.0 6.5 6.3 6.1 5.9 -

Import: soft drinks, USD mn 3,087 723 1,467 2.319 3.051 666 1,423 2,288 -

Export: soft drinks, USD mn 1,328 215 520 888 1,287 280 672 1,123 -



Source:

Industry Forecasts

Revenue Quarterly Forecasts, RMB bn

The growth rate of China's soft drinks manufacturing

industry declined in 2014. The industry is expected to

continue to grow at a slower average annual rate of

around 9-11%.

The increase of residents' income and their growing

health awareness, as well as the fast urbanisation

process, are the major drivers for a steady growth in the

soft drinks industry. However, with China's economic

slowdown, the industry's growth in 2015 is expected to

be slightly slower than in 2014.

In future, the soft drinks industry will enter a relatively

mature stage. The industry's development will mainly

depend on product innovation and upgrading. In 2015,

health and wellness awareness will continue to shape

consumer behaviour and sales patterns. Soft drinks

producers are expected to invest more heavily in

advertising and new product development, relying on

"healthy" concepts in both respects.

Soft drinks manufacturers will still have to face issues

related to strict market regulation, decreasing profitability

and strong international competitors.

Revenue Annual Forecasts, RMB bn

EMIS Insight

436

578

145

305

479

631

Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Dec/15

578 633

696

773

2014 2015 2016 2017



Industry Drivers

The incomes of Chinese residents have been rising steadily. The per capita income of urban residents was RMB 29,547 in 2013, of which disposable income was RMB 26,955, representing a nominal increase of 9.7% y/y. The per capita net income of rural residents was RMB 8,896 in 2013, representing a nominal increase of 12.4%.

The rising incomes and purchasing power of the population will have a positive impact on the soft drinks market, especially on its high-end segment.

Resident income

New product innovation

China's growing middle class and rising per capita incomes are results of the country's fast urbanisation process. China's urban population reached 53.7% of the national total in 2013 and its share increases every year.

The urbanisation process still has a long way to go. Residents' consumption habits will change and there will be increasing numbers of young people consuming soft drinks, which will be an additional driver for market growth.

Manufacturers are increasingly focused on introducing new versions of products or enhancing existing product lines. Such product innovations include, for example, the addition of vitamins and other fortified supplements, and a focus on reduced-sugar or entirely sugar-free healthy and natural products. Players are trying to build healthy brand image through such products in order to meet consumers' increasing health consciousness and demand for healthier options. New product development has helped to maintain the dynamism of the soft drinks industry in China and to make consumer tastes increasingly sophisticated.

The Chinese government is working to release the nation's economic potential through expansion of domestic demand. Measures aimed at boosting domestic demand will benefit the soft drinks industry as well as other industrial branches.

The laws and regulations concerning the food and beverage industry, as well as the government supervision that enforces these rules, are becoming steadily more stringent and effective, with a view to instilling consumer confidence in the sector and boosting its development.

Government support

Urbanisation



Industry Inhibitors

The rising costs of raw materials, labour and logistics - as well as the growing investments required in advertising, packaging and building brand

awareness among consumers - have slightly lowered the industry's profitability, forcing soft drinks producers to resort to increasing sales prices.

Higher sales prices and marketing costs will impact sales volumes to a degree, resulting in slower growth for the industry.

With the improvement of living standards, Chinese consumers are becoming increasingly health conscious. The concept of healthy

consumption will mean that beverage producers must take new consumer requirements into account and that consumption of some existing

products is bound to decrease. Drinks with added sugar, as well as artificially sweetened diet soft drinks, are losing some market share to natural

products - a trend that is well illustrated by the declining sales of carbonated drinks.

Beverages are fast-moving consumer goods, so the development of the industry is strongly influenced by the domestic economic environment,

unlike consumer staples industries, which are less affected by the performance of the economy.

China's economic growth is generally expected to continue to slow down in 2015, so the government's economic policy will remain focused on

stimulating growth and domestic consumption. If the country's economic growth continues to decline, the development of the beverage industry will

be restrained to a certain degree.

Economic downturn

Health and Wellness

Cost pressure



Source:

Sales Revenue and Cost

Sales Revenue, ytd, RMB bn Cost of Sales, RMB bn

National Bureau of Statistics

85

20 39

63 78

19 41

65 80

82

20

46

72

101

25

55

86

113

107

23

52

80

112

25

55

87

121

75

22

43

70

90

26

48

75

104 44

13

23

35

49

13

24

36

50 78

21

46

76

98

25

54

86

110

0

100

200

300

400

500

600

700 TeaBeverage andOther SoftBeverage

SolidBeverage(concentratedjuice)

Milk &VegetableProtein Drink

Fruit,VegetableJuice andSyrup

Bottled andCanned Water

CarbonatedSoft Drinks

55

14 28

46 57

14 30

47 59

62

15

35

56

76

18

42

65

85

86

19

43

67

92

20

46

72

99

58

16

32

53

69

20

38

59

82 35

10

19

28

39

10

19

29

40

60

15

34

56

72

19

39

64

83

0

50

100

150

200

250

300

350

400

450

500

Tea & Other

Solid Beverage

Milk &VegetableProtein Drinks

Fruit Juice

Bottled DrinkingWater

CarbonatedDrinks



Source:

Output and Retail Sales

Industrial Production: Soft Drinks, ytd, mn tonnes

Soft Drinks Retail Sales, ytd, RMB bn

236 328

430

558 669

784 895

986 1,075

1,176

71 159

267 368

475

599

726

852

978 1,062

1,163

1,302

192

326 442

563

707

848

998

1,134 1,248

1,367 1,493

217

364

497

648

836

1,000

1,154

1,306 1,431

Mar

/11

Apr

/11

May

/11

Jun/

11

Jul/1

1

Aug

/11

Sep

/11

Oct

/11

Nov

/11

Dec

/11

Jan/

12

Feb

/12

Mar

/12

Apr

/12

May

/12

Jun/

12

Jul/1

2

Aug

/12

Sep

/12

Oct

/12

Nov

/12

Dec

/12

Jan/

13

Feb

/13

Mar

/13

Apr

/13

May

/13

Jun/

13

Jul/1

3

Aug

/13

Sep

/13

Oct

/13

Nov

/13

Dec

/13

Jan/

14

Feb

/14

Mar

/14

Apr

/14

May

/14

Jun/

14

Jul/1

4

Aug

/14


24 32

40 48

57 66

75 84

93 104

20 28

37 46

57 67

78 90

102 114

126

24 35

45 57

70 83

97 111

125 139

153

27 39

52 62

80 95

109 124

140 156

Mar

/11

Apr

/11

May

/11

Jun/

11

Jul/1

1

Aug

/11

Sep

/11

Oct

/11

Nov

/11

Dec

/11

Jan/

12

Feb

/12

Mar

/12

Apr

/12

May

/12

Jun/

12

Jul/1

2

Aug

/12

Sep

/12

Oct

/12

Nov

/12

Dec

/12

Jan/

13

Feb

/13

Mar

/13

Apr

/13

May

/13

Jun/

13

Jul/1

3

Aug

/13

Sep

/13

Oct

/13

Nov

/13

Dec

/13

Jan/

14

Feb

/14

Mar

/14

Apr

/14

May

/14

Jun/

14

Jul/1

4

Aug

/14

Sep

/14

Oct

/14

Nov

/14



Source:

Industry Globalisation

Imports

China imported USD 3.05bn worth of soft drinks in 2013 and USD 2.83bn in January - November 2014. Imports' share in the industry's

total revenues has fluctuated around 12% in the last two years - representing a downward trend compared with previous years.

As incomes rise, there is a tendency for an increase in the demand for imported soft drinks - especially for those of a high-end sort.

However, logistics costs and other factors are, to a certain degree, hindering the development of the imported soft drinks market.

Exports

The main exports of China's soft drinks industry are fruit and vegetable juice products. The country exported USD 1.29bn worth of soft

drinks in 2013 and USD 1.46bn in January – November 2014. In 2013, the export value of fruit and vegetable juice products accounted

for 81% of the total exports of soft drinks. Chinese soft drinks are sold mainly to the United States, Japan, the Netherlands, Germany,

Australia, Canada and Russia. These seven countries made up over 80% of China's soft drinks export volume in 2011, according to

local consultancy Zhengdian International. In 2014, the export volumes of the major segments in the industry - fruit & vegetable juice,

apple juice and orange juice—decreased by 20.6%, 11.7% and 20.9% respectively, year on year.

Foreign

Ownership

Many foreign companies, and companies from Hong Kong and Taiwan, are active in China's soft drinks industry. These operate in all

segments of the industry and some are market leaders in their segments, with examples including Coca-Cola China Ltd, Ting Hsin

International Group, PepsiCo China Ltd, and President Enterprises (China) Investment Co Ltd. Despite their strong presence on the

market, these are facing increasing pressure as a result of lower profits, rising sales costs, and more numerous competitors.

In 2008, Coca-Cola announced plans to acquire China Huiyuan Juice Group Limited, and obtained the approval of Huiyuan's three big

shareholders. However, the Ministry of Commerce vetoed this acquisition, claiming that it would adversely affect competition and was

not conducive to the healthy development of China's fruit juice industry. Many analysts believe that the ban on the deal was largely

aimed at protecting local brands.

EMIS Insight



Source:

Imports and Exports

Soft Drinks Imports, ytd, USD mn

Soft Drinks Exports, ytd, USD mn

General Administration of Customs

231 452

661 848

1,082 1,342

1,614

1,917

2,222 2,485

2,759

3,087

340 509

723 967

1,227 1,467

1,713

2,021

2,319 2,539

2,777

3,051

284 434

666 916

1,189 1,423

1,735

2,012

2,288 2,546

2,828

Jan/

12

Feb

/12

Mar

/12

Apr

/12

May

/12

Jun/

12

Jul/1

2

Aug

/12

Sep

/12

Oct

/12

Nov

/12

Dec

/12

Jan/

13

Feb

/13

Mar

/13

Apr

/13

May

/13

Jun/

13

Jul/1

3

Aug

/13

Sep

/13

Oct

/13

Nov

/13

Dec

/13

Jan/

14

Feb

/14

Mar

/14

Apr

/14

May

/14

Jun/

14

Jul/1

4

Aug

/14

Sep

/14

Oct

/14

Nov

/14

69 167

272 374

504

637 745

846

978 1,088

1,199

1,328

47 125

215 312

421 520

635

757

888

1,016 1,106

1,287

69 156

280

407

536

672

812

968

1,123

1,314

1,458

Jan/

12

Feb

/12

Mar

/12

Apr

/12

May

/12

Jun/

12

Jul/1

2

Aug

/12

Sep

/12

Oct

/12

Nov

/12

Dec

/12

Jan/

13

Feb

/13

Mar

/13

Apr

/13

May

/13

Jun/

13

Jul/1

3

Aug

/13

Sep

/13

Oct

/13

Nov

/13

Dec

/13

Jan/

14

Feb

/14

Mar

/14

Apr

/14

May

/14

Jun/

14

Jul/1

4

Aug

/14

Sep

/14

Oct

/14

Nov

/14



Source:

Exports by Product

Export Volume by Product, ytd, thou tonnes Exports Value by Product, ytd, USD mn


680

170

340

490

680

143

288

407

540

5.8 1.1 2.4 4.1 5.2 1.2 2.4 3.5 4.6

590

140

290

410

580

121

244

346

459

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

Fruit and Vegetable Juice

Fruit and Vegetable Juice: Orange Juice

Fruit and Vegetable Juice: Appple Juice

1,307

277

531

749

1,042

212

423

591

776

10.7 2.3 4.8 8.2 10.3 2.5 4.9 7.0 9.1

1,144

242

463

652

907

175

349

489

639

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

Fruit and Vegetable Juice

Fruit and Vegetable Juice: Orange Juice

Fruit and Vegetable Juice: Appple Juice



Source:

Imports by Product

Import Volume by Product, ytd, thou tonnes Import Value by Product, ytd, USD mn


1,166

898

1,064

946

766

632 658

525 478

441 458 491

923

734

832

704

560

410 422

329

252 253 273 293

Dairy Product Dairy Product: Milk Powder

248

191

230

217

177

160 163

136 126

115 119

132

169

132

149

123

96

71 73

54

37 41 49 51

Dairy Product Dairy Product: Milk Powder



II. Competition Overview



Competition Landscape

Overview

Competition in China's soft drinks industry is heating up. There were 1,797 enterprises in the industry at the end of September 2014 and their number is increasing.

The growing number of enterprises indicates that the industry is at the growth stage of its lifecycle, despite increasing competition and declining profitability. Soft drinks manufacturers continue to increase their market penetration through expansion of their distribution networks and through focus on new product developments designed to meet consumers’ need for greater variety.

Major Players

Foreign

Players

The carbonated soft drinks market in China is dominated by two big foreign brands - Coca-Cola and PepsiCo.

Enterprises with foreign shareholders, such as Coca-Cola China Ltd, Ting Hsin International Group, and President Enterprises (China) Investment Co Ltd, are among the leading juice manufacturers in the country. In order to be more competitive, such foreign companies are developing different brands in each category.

Market Entries

There are numerous small and local companies in the soft drinks market, operating on a regional level and supplying small

market niches.

The rapid development of the soft drinks industry has made it very attractive to new players. However, brand awareness is an

important entry barrier in the sector.

Coca-Cola China Ltd, Ting Hsin International Group, Hangzhou Wahaha Group Co Ltd, Nongfu Spring Co Ltd, and PepsiCo China Ltd. are the major players in the industry. Each of them is involved in several soft drink segments. For example, Coca-Cola China Ltd operates in the bottled water, carbonated drinks and juice and RTD tea segments. Ting Hsin International Group operates in the bottled water, juice and RTD tea segments. Hangzhou Wahaha Group Co Ltd operates in the bottled water, dairy and plant protein, juice and RTD tea segments.

These major players have powerful brands and extensive distribution networks. They also take care to promote their brands and boost their sales by means of hefty advertising and marketing campaigns.



Comments

Source:

Industry Concentration

On the whole, the soft drinks industry in China is rather fragmented, with active enterprises numbering 1,797 at the end of September 2014. Most Chinese soft drinks companies are not listed. The top five listed corporations accounted for less than 9% of the industry's revenues in 2013.

Along with the trend to consolidation, the share of the top five players is expected to increase in the coming years. The soft drinks industry has seen many mergers and acquisitions lately, which is another reason to expect further consolidation in future.

Government legislation also strongly supports consolidation and the formation of larger groups in the soft drinks industry, because big companies are seen as able to control the quality of products and raise the level of production technology.

Revenue Market Shares Revenue Shares of Top 5 Listed Companies, 2013, RMB bn

Company data, EMIS Insight

1.5

2.2

4.5

5.6

12.4

Hebei Cheng De Lolo CompanyLimited

V V Food & Beverage Co., Ltd.

China Huiyuan Juice Group Limited

Tingyi (Cayman Islands) HoldingsCorp.

Uni-President China Holdings Ltd

8.4% 9.5%

91.6% 90.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-2013 Jun-14

other Top 5 listed companies



Source:

Top Groups

Tingyi

(Cayman

Islands)

Holdings

Corp.

Tingyi (Cayman Islands) Holding Corp. and its subsidiaries are engaged in the production and distribution of instant noodles,

beverages and instant food products. In March 2012, the group expanded its beverages business by establishing a strategic alliance

with PepsiCo. The company is the exclusive manufacturer, packager and distributor of PepsiCo non-alcoholic drinks in China. In 2013,

the company’s sales revenue was RMB 11bn, representing a growth of 18.7% on 2012. At end-2013, Tingyi had a sales network

consisting of 566 sales offices and 75 warehouses, serving 33,504 wholesalers and 110,355 direct retailers.

V V Food &

Beverage

Co., Ltd

V V Food & Beverage Co., Ltd. was founded in 1994 and was listed on the Shanghai stock exchange in 2007. The company's major

products are soybean milk powder products, soybean juice powder products, milk powder for infants and soymilk drinks sold under the

brand name of VV, as well as milk, yoghurt, flour, oil and others. The company has more than 30 production facilities. In 2013, V V

Food & Beverage Co acquired a 51% stake in Hunan Yiqingyuan Tea Co, thus entering the tea segment. The company's sales

revenue was RMB 5.06bn in 2013 - down 12.88% on 2012 - while its gross profit margin was 31.17%, higher than in previous years.

Hangzhou

Wahaha

Group Co.,

Ltd.

Hangzhou Wahaha Group Co., Ltd. is active in the manufacturing of bottled water, carbonated drinks, juices, RTD tea, RTD coffee,

sports and energy drinks, dairy products, canned/preserved food and various other products. The company was founded in 1987 by

entrepreneur Zong Qinghou. Wahaha is known for its large distribution network, which covers not only cities but also rural areas and

even mountainous regions. In 2013, the total beverages output of the company reached 12.7mn tonnes. Its operational revenue in that

year was RMB 78.3bn, up 23% y/y. Wahaha has 70 production bases and 170 subsidiaries in 29 different provinces and municipalities

countrywide. The company employs 30,000 and has RMB 40bn in fixed assets.

Company data



Source:

Foreign Players

Danone

French food group Danone first entered the Chinese market in 1987 and since then China has become a market of strategic

importance for the Danone Group. The Chinese market generates around 7% of the group's average annual turnover. Danone has 18

production facilities in China and employs around 10,000. Danone is present on the Chinese market with brands such as Mizone,

Health, Robust, Evian, Badoit, Dumex, Nutrilon, Karicare, Activia and Nutricia. In autumn 2014, Danone announced it would invest

USD 550mn in Chinese infant formula producer Yashili, taking a 25% stake in the company in the process. The deal would tie Danone

more closely to local dairy producer China Mengniu Dairy.

Danone and

Wahaha

In 1996, Danone and Wahaha Group set up a joint venture company, with Danone holding a 51% stake. In 2007, Danone accused

Zong Qinghou, the founder of Wahaha Group, of running lucrative parallel businesses, using the Wahaha brand name. Following a

series of protracted lawsuits, Danone announced that the two parties had reached an amicable settlement in 2009. The French firm

agreed to sell its 51% stake in the joint venture back to Wahaha. According to some analysts, the Danone-Wahaha case could have

lasting implications for the Chinese market, as foreign investors will be more cautious when building their business in China.

Nestle

Swiss food company Nestle was among the first multinational companies to enter China’s food and beverage market. Nestle holds an

80% stake in Shanghai Totole, a leading chicken bouillon producer, as well as 60% in Hsu Fu Chi (a confectionery, cereal-based

snacks and packaged cakes producer), 60% in ready-to-eat rice congee maker Yinlu, 70% in bottled water manufacturer Dashan and

80% in Haoji, a producer of spicy pastes. Nestle runs over 25 production facilities in China and has four R&D centres in the country.

Company data, Media reports



Comments

Source:

Top Players

With almost 1,800 enterprises engaged in the manufacture of soft drinks, the list of the biggest 10 remains relatively stable year on year. Coca-Cola China

Ltd was the top soft drink manufacturer in 2013 and ranked first in juice segment as well. The company has established itself as one of the most popular

and well-known beverage brands in China, with high brand awareness not only in first-tier cities but also in second- and lower-tier cities. Ting Hsin

International Group was the second largest soft drinks and juice manufacturer in 2013.

Top 10 Manufacturers in 2013 Top 10 Juice Manufacturers in 2013

No Company Name

1 Coca-Cola China Ltd

2 Ting Hsin International Group

3 Hangzhou Wahaha Group Co Ltd

4 Nongfu Spring Co Ltd

5 PepsiCo China Ltd

6 President Enterprises (China) Investment Co Ltd

7 Shenzhen C'est Bon Food & Beverage Co Ltd

8 Guangdong Jiaduobao Beverage & Food Co Ltd

9 Guangdong Robust Corp

10 Guangzhou Wanglaoji Pharmaceutical Co Ltd

No Company Name

1 Coca-Cola China Ltd

2 Ting Hsin International Group

3 President Enterprises (China) Investment Co Ltd

4 Beijing Huiyuan Beverage & Food Group Corp

5 Coconut Palm Group Co Ltd

6 Hangzhou Wahaha Group Co Ltd

7 China Green (Holdings) Ltd

8 Beijing Qianshou Fruit & Vegetable Beverage Co Ltd

9 Nongfu Spring Co Ltd

10 PepsiCo China Ltd

Euromonitor, EMIS



The rising costs of raw materials, labour and logistics are bound to result in increasing sales prices, despite producers' efforts to stay competitive by

keeping prices down.

Advertising and marketing campaigns will put additional pressure on prices.

Price

Products

Distribution

Promotion

Product innovation is vital to enterprises in the soft drinks industry, with both international and local brands engaged in such innovation in

recent years. For instance, Xi'an Tangyun Drinks Co. has released a new Asian specialty drinks product called "Shihuatang". Some small juice

manufacturers have developed premium 100% "super fruit" juices targeting high-end consumers. More and more companies are striving to

increase their market share by launching similar products.

Distribution networks are also a key success factor for players in the soft drinks industry. Most soft drinks enterprises have invested much effort and

money in building their own distribution networks, including both traditional and innovative sales channels.

Soft drinks promotions rely mainly on advertising and large-scale marketing activities, including online advertising and sponsorship

activities, promotions and interactive campaigns. For example, Jiaduobao Beverage & Food Co Ltd spent RMB 250mn to become the title sponsor

of the third season of "The Voice of China", a popular musical talent contest.

Competition Elements



Source:

Cost Analysis

Cost Elements in 2013, % of total operating costs

Raw materials are the major cost element in the cost

structure of soft drinks manufacturers. Nearly 50% of

revenue is spent on raw materials.

The industry's profitability has been slowly decreasing

year-on-year in the past few years, with increased

competition.

The gross profit rate has also decreased slightly, from

24.0% in 2012, to 22.9% in 2013 and 22.5% in the first

three quarters of 2014.

Since the product portfolios and business models of the

different beverage enterprises vary, so too do

their profit levels.

EMIS Insight estimates

Raw materials 48.2%

Wages 11.6%

Depreciation 8.3% Other operating

cost 2.5%

Selling and distribution cost

13.4% Management

and administration

cost 4.0%

Financial cost 0.7%

Profit 11.3%



Source:

Profitability

Total Profit, RMB bn Gross profit rate, %


24 24

23 23 23

24

23 23 23

29

28

27 27 27

26

27 27 27

24

24

22 22

25

27

24 24

25

18

17

17 16

18 18

17

17

18

24

25 25 25

23 22

21 21 21

22 22

20 20

21 21

19 19 19

Dec

-12

Feb

-13

Apr

-13

Jun-

13

Aug

-13

Oct

-13

Dec

-13

Feb

-14

Apr

-14

Jun-

14

Aug

-14

Oct

-14

Dec

-14

Beverage

CarbonatedDrink

Bottle ofDrinkingWater

Fruit Juice &Fruit JuiceDrink


Solid Drink

1 1 2 4 4

1 2 4 4

8

1

3

5

9

2

4

7

10

8

1

3

5

8

2

4

7

11

10

3

6

10

13

3

6

10

13

3

1

2

3

4

1

2

2

3

9

2

3

6

8

2

4

6

7 9

2

3

6

8

2

4

6

7

0

10

20

30

40

50

60

Tea & OtherBeverage

Tea & OtherBeverage

Solid Drink


Fruit Juice &Fruit Juice Drink

Bottle ofDrinking Water

CarbonatedDrink



Source:

Price Indices

Soft Drinks, Retail Price Index

CPI, Soft Drinks

Soft drinks, Urban and Rural Retail Price Index

CPI, Soft Drinks

National Bureau of Statistics, prev month=100

9596979899

100101102103104105106

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

96

97

98

99

100

101

102

103

104

105

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

94

96

98

100

102

104

106

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Urban Rural

96

97

98

99

100

101

102

103

104

105

106

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Urban Rural



III. Regulation Overview



Source:

Government Policy

Policy

Overview

Food safety is one of the most sensitive issues in China and there are a dozen national government bodies in charge of ensuring

it. China's local governments and the sector's companies have been under pressure to take a more active role in tackling food safety

issues. The country's Food Safety Law was initially introduced in 1982 and has since been amended several times. The latest draft

amendments to the law were released for public comment in December 2014. The amendments envisage increased penalties for

violations of the law including seizures, fines, and licence cancellations, as well as criminal prosecutions.

Food additives

In December 2014, China's National Health and Family Planning Commission issued an update of the national food safety standard

for use of food additives, which will become effective in May 2015.

The updated standard contains more specific information regarding the principles governing the use of food additives, the types of

food additives permitted, the scope of application, and the maximum level or residue levels.

Packaged

drinking

water

The National Health and Family Planning Commission also approved an updated standard for packaged drinking water, which will take

effect in May 2015. The update introduces new requirements for packaged drinking water differentiated by water source - i.e.,

according to whether tap water or surface/underground water is used for bottling.

National Health Planning Commission



IV. Regional Overview



Source:

Production Distribution, 2013

Total Profits by Region, 2013

Sales Revenue by Region, 2013

Comments

China's soft drinks production is mainly concentrated in the South

Central and Eastern regions of the country.

Guangdong province is China's largest soft drinks producer, with

output of 23.69mn tonnes in 2013 - accounting for 15.9% of the

national total.

The country's South Central region accounted for 38.1% of the

production, 35.1% of the sales revenues and 41.0% of the total profits

of the sector in that year.

East China was responsible for 21.6% of the production, 31.4% of the

sales revenues and 30.1% of the total profits in 2013.

South Central 38.1%

East China 21.6%

Southwest China 12.7%

North China 11.5%

Northeast 10.2%

Northwest China 6.0%

South Central 35.1%

East China 31.4%

North China 11.9%

Northeast 8.7%



South Central 41.0%

East China 30.1%

North China 10.0%

Northeast 5.7%



National Bureau of Statistics, EMIS Insight

Soft Drinks Regional Distribution



Soft Drinks Production, Distribution and Growth in 2013

Northeast China (thou tonnes, % )

Liaoning: 4,317; -2.6%

Jilin: 7,549; -3.1%

Heilongjiang: 3,364; 24.9%

East China (thou tonnes, % )

Shanghai: 2,805; 2.6%

Jiangsu: 4,101; -6.7%

Zhejiang: 8,637; -4.6%

Anhui: 2,343; 22.7%

Fujian: 4,876; 8.4%

Jiangxi: 3,050; 29.0%

Shandong: 6,371; 3.1%

South Central China (thou tonnes, % )

Henan: 12,022; 23.6%

Hubei: 8,625; 16.2%

Hunan: 4,898; 14.4%

Guangdong: 23,692; 7.2%

Guangxi: 7,120; 5.4%

Hainan: 499; 0.9%

North China (thou tonnes, % )

Beijing:4,626; 5.9%

Tianjin: 4,356; 6.0%

Hebei:3,742; 22.2%

Shanxi: 1,469; 14.5%

Inner Mongolia: 2,941; 10.0%

Southwest China (thou tonnes, % )

Chongqing: 3,031; 16.0%

Sichuan: 11,045; 42.0%

Guizhou: 1,939; 44.4%

Yunnan: 2,813; 5.2%

Tibet: 133; 15.2%

Northwest China (thou tonnes, % )

Shaanxi: 5,239; 22.9%

Gansu: 1,750; 58.1%

Qinghai: 260; 14.4%

Ningxia: 66; -44.1%

Xinjiang: 1,591; 15.2%



Source:

Industrial Financial Data by Province

Province

Sales Revenue of Soft Drinks, RMB mn Total Profits of Soft Drinks, RMB mn Number of

enterprises,

Sep-14 Dec-13 Mar-14 Jun-14 Sep-14 Dec-13 Mar-14 Jun-14 Sep-14

Anhui 10,770 2,846 6,208 10,255 1,431 415 845 1,356 64

Beijing 15,065 3,857 8,344 12,784 546 45 349 340 26

Chongqing 5,668 1,382 2,760 4,297 259 58 102 170 28

Fujian 24,988 6,640 13,143 20,512 1,475 481 709 1,120 75

Gansu 3,522 965 2,139 3,065 243 106 175 222 23

Guangdong 72,611 15,466 36,457 61,316 6,071 1,104 2,741 4,980 151

Guangxi 16,244 3,418 7,449 11,521 2,583 216 545 796 52

Guizhou 3,197 986 2,199 3,020 635 72 149 234 26

Hainan 1,147 374 765 1,142 76 18 43 58 17

hebei 20,810 6,150 11,141 18,170 2,705 785 1,819 2,703 66

Heilongjiang 8,578 1,774 4,165 6,420 522 134 274 408 50

Henan 48,249 12,624 25,787 44,696 5,831 1,669 2,962 4,876 179

Hubei 30,183 7,342 14,207 21,240 3,385 728 1,380 1,914 103

Hunan 16,970 4,610 8,555 13,586 890 292 533 780 88

Inner Mongolia 7,866 1,474 3,395 6,296 702 68 125 218 35

Jiangsu 44,447 12,311 24,446 36,548 3,344 987 1,982 2,960 63

National Bureau of Statistics, EMIS



Source:

Industrial Financial Data by Province (cont'd)

Province

Sales Revenue of Soft drinks, mn Total Profits of Soft drinks, mn Number of

enterprises,

2013 Dec-13 Mar-14 Jun-14 Sep-14 Dec-13 Mar-14 Jun-14 Sep-14

Jiangxi 10,897 2,768 5,718 9,403 683 192 368 639 37

Jilin 15,661 4,191 7,948 11,952 736 251 358 582 82

liaoning 21,725 5,068 10,634 15,803 1,357 286 580 905 89

Ningxia 351 103 171 268 -3 4 6 -4 6

Qinghai 1,701 336 941 1,442 -178 -31 -24 -35 8

Shaanxi 18,321 4,134 7,999 12,672 2,057 559 1,018 1,563 71

Shandong 38,124 9,559 21,271 30,574 3,125 1,010 1,932 2,565 140

Shanghai 8,984 2,035 4,839 7,498 378 72 313 501 27

shanxi 5,073 1,100 2,466 3,531 401 77 215 260 30

Sichuan 26,539 7,689 17,030 24,854 2,291 532 1,166 1,816 109

tianjin 13,934 3,842 8,290 14,162 227 88 139 12 25

Tibet 354 52 124 302 101 7 28 114 4

Xinjiang 3,404 816 1,667 2,797 296 50 163 249 18

Yunnan 5,112 1,505 3,156 5,157 366 92 208 363 46

Zhejiang 27,296 6,689 13,730 20,619 3,384 713 1,404 1,871 60

National Bureau of Statistics, EMIS



V. Companies Overview



Source:

Top Listed Companies

Top Listed Companies by Operating Revenue in 2014 Q3, RMB mn

Top Listed Companies by Total Profit in 2014 Q3, RMB mn

Competitors Sep-13 Dec-13 Mar-14 Jun-14 Sep-14

Uni-President China Holdings Ltd - 21,406 - 12,367 -

Tingyi (Cayman Islands) Holdings Corp. 8,972 11,011 2,815 5,614 8,612

V V Food & Beverage Co., Ltd. 3,883 5,062 1,147 2,223 3,306

Hebei Cheng De Lolo Company Limited 2,039 2,633 1,286 1,533 2,107

China Huiyuan Juice Group Limited 1,701 4,004 2,077 4,523 1,973

Blackcow Food Company Limited 459 697.2 159.7 255.8 407.8

EMIS, Company data

Competitors Sep-13 Dec-13 Mar-14 Jun-14 Sep-14

Tingyi (Cayman Islands) Holdings Corp. 723.7 723 245 464.9 746.8

Uni-President China Holdings Ltd - 1116.1 - 454.6 -

Hebei Cheng De Lolo Company Limited 374.4 458.9 328.34 362.5 470

V V Food & Beverage Co., Ltd. 265.8 242.4 82.4 110.4 123.3

China Huiyuan Juice Group Limited -43.1 1.5 116.7 318.8 59.0

Blackcow Food Company Limited 2.9 22.9 8 12 3.1



Source:

Top Industry Deals

Date Target Company Deal Type Buyer Deal Value

USD mn Stake %

25-Nov-14 V V Food & Beverage Co Ltd Minority stake purchase

Shenzhen Jinsu Asset Management Center LP;

Shenzhen Gamuda Equity Center LP; Shenzhen

Jinhui Equity Center LP

130.28 8.73

5-Nov-14 Tibet Highland Natural Water Minority stake purchase Tibet 5100 Water Resources Holdings Ltd 97.64 20

15-Sep-14 Tycoon Beverage Group Co Ltd Acquisition Keen Smart Capital Ltd 8.39 82.3

15-Jul-14 Vita Coco Minority stake purchase Reignwood Group 165 25

12-May-14 Beijing Huiyuan Group Huanggang

Co Ltd Acquisition Chengdu Huixin International Investment Co Ltd 49.67 100

20-Mar-14 Suntory (Shanghai) Foods Co Ltd;

Suntory (Shanghai) Foods

Marketing Co Ltd

Acquisition China Huiyuan Juice Group Ltd 19.12 100;

50

28-Oct-13 Laiyang Yi Tian Juice Co Ltd Acquisition Shangdong Lu Hua Group Co Ltd 4.25 100

23-Oct-13 Donghua Fruit Industry Co Ltd Acquisition Private investor 9.06 60

20-Aug-13 Axton Inc Minority stake purchase V V Food & Beverage Co Ltd 3.68 30

10-Apr-13 Tibet Tiandi Green Beverage

Development Co Ltd Acquisition Tibet 5100 Water Resources Holdings Ltd 82.11 30

28-Mar-13 Beverage products manufacturing

machinery and equipment Acquisition Ton Yi Industrial Corp 98.84 100

21-Mar-13 China Culiangwang Beverages

Holdings Ltd Minority stake purchase Private investor 20.88 16.67

20-Mar-14 Shenzhen PepsiCo Beverage Co

Ltd Minority stake purchase PepsiCo (China) Investment Co Ltd 15.15 10

EMIS DealWatch



Source:

Top Industry Deals (cont'd)

Date Target Company Deal Type Buyer Deal Value

USD mn Stake %

9-Jan-13 Besunyen Holdings Co Ltd Minority stake purchase Undisclosed investors 3.86 3.58

23-Apr-12 Guangdong Tiandi Yihao Beverage

Co Ltd Minority stake purchase

China Science & Merchants Venture Capital

Management Co Ltd; Shenzhen Capital Group Co Ltd 37.87 6

5-Apr-12 Qing Dao Nannan Beverage Co Ltd Acquisition Buyer(s) unknown in this case 2.2 70

19-Feb-12 Shanxi Taizhou Food Co Ltd Acquisition Deyu Agriculture Corp 5.5 100

12-Jan-12 Long Chuan Shen Long Mineral

Water Co Ltd Acquisition CVM Minerals Ltd 25.75 51

8-Dec-11

Longkou Andre Bio-feedstuff Co Ltd;

Baishui Andre Bio-feedstuff Co Ltd;

Xuzhou Andre Pomace Products Co

Ltd

Acquisition Yantai North Andre Juice Co Ltd 1.47 75

30-Aug-11 Shenzhen PepsiCo Beverage Co

Ltd Acquisition PepsiCo (China) Investment Co Ltd 22.55 15

27-Apr-11 Xianyang Andre Juice Co Ltd Acquisition AGRANA AG 16.78 50

27-Apr-11 Yongji Andre Juice Co Ltd Acquisition Yantai North Andre Juice Co Ltd 8.75 50

24-Jan-11 A non-alcoholic beverage joint

venture Form a joint venture

China Resources Enterprise Ltd;

Kirin Holdings Co Ltd

N/A

60;

40

10-May-10 Jialinshan Mineral Water Factory;

Yonglong Beverage Co., Ltd. Acquisition

C'ESTBON FOOD & BEVERAGE (SHENZHEN) CO.,

LTD. N/A 100

9-Apr-10 Laiyang Yi Tian Juice Co Ltd; Yi

Tian Juice (Shaanxi) Co Ltd Acquisition China Haisheng Juice Holdings Co Ltd 10.39 100

1-Jan-10 Shishi Xianghe Food Science and

Technology Co., Ltd. Acquisition China Marine Food Group Ltd 278 80

EMIS DealWatch



VI. Company Profiles



Uni-President China Holdings Ltd.



Source:

Company Information

Major Stakeholders, 2014 Q4

Uni-President China Holdings Ltd. is an investment

holding company engaged in the manufacturing and sale

of beverages and instant noodles in China.

It is a unit of Taiwan's largest food conglomerate Uni-

President Enterprises Co.

The company's beverage portfolio includes juice drinks,

ready to drink teas, milk tea, coffee, bottled water and

yoghurt. Its instant noodles range includes bowl noodles,

pack noodles, and snack noodles in different flavours.

Uni-President China Holdings employed 38,453 people in

2013 and claimed a 17.6% share of the domestic instant

noodles market.

The company's subsidiaries include Uni-President Asia

Holdings Ltd., Uni-President Enterprises (China)

Investments Ltd., Xinjiang President Enterprises Food

Co., Ltd., Beijing President Enterprises Food Co., Ltd. and

Kunshan President Enterprises Food Co., Ltd., among

others.

Key Executives

Highlights

Company data

Stakeholders Shares

number, mn

Shareholding,

%

Chase managed Saudi Arabia Central Bank 187.701 3.44%

HSBC (Taiwan) 161.822 2.96%

Hou boming 142.069 2.60%

Hou boyu 123.959 2.27%

Standard Chartered 98.540 1.80%

Florescence Bank of Taiwan 96.445 1.77%

Deutsche Fs Global 92.356 1.69%

Gao Xiuling 89.599 1.64%

English Name Position

Chih-Hsien Lo Executive Chairman of the Board

Jung-Lung Hou President, Executive Director

Kuo-Hui Chen Chief Financial Officer, Executive Director

Jui-Fen Chen General Manager - Group Tea Business

Chih-Chung Wei General Manager - Juice Business

Chia-Heng Chen Head - Combined Drink Products Business

Xin-Hua Liu Head - Food Department



Source:

Financial Performance

Annual performance, RMB mn

Financial performance

Semi-Annual performance, RMB mn

Semi-annual performance

Company data

Uni-President China Holdings posted revenues of RMB 23.3bn in

2013, representing an increase of 9% against 2012.

Revenue and profit growth in the last two years is largely attributed to

the company's continuous investments in product development.

Revenues from instant noodles and beverages in 2013 rose by 7.7%

and 8.9% to RMB 7.8bn and RMB 15bn, respectively, accounting for

33.5% and 64.9% of the company's total revenues.

During the first half of 2014, the company's revenue growth slowed

down along with the slowing pace of China's economy. The company

recorded revenues of RMB 12.4bn, representing an increase of 1.3%

y/y.

The profitability of Uni-President China Holdings in the first six

months of 2014 dropped y/y, mainly due to an aggressive increase in

the company's investments in improving its instant noodles business

in order to obtain a larger market share.

Indicator Jun-12 Dec-12 Jun-13 Dec-13 Jun-14

Operating revenue 10,648 21,406 12,204 23,329 12,367

Operating cost 10,247 20,857 12,034 23,346 12,101

Total profit 616 1,077 729 1,116 455

Net profit 505 856 575 916 355

Net profit rate (%) 4.74 4.00 4.71 3.93 2.87

Total assets 16,540 16,540 18,978 18,968 21,192

Earnings per share, RMB 0.14 0.24 0.16 0.25 0.10

Indicator 2011 2012 2013

Operating revenue 16,932 21,406 23,329

Operating cost 16,876 20,857 23,346

Total profit 396 1,077 1,116

Net profit 312 856 916

Net profit rate (%) 1.84 4.00 3.93

Total assets 13,737 16,540 18,968

Earnings per share, RMB 0.09 0.24 0.25



Source:

Operating Performance

Revenue by Product in 2013, RMB mn

Revenue Growth by Product in 2013, %, y/y

Revenue by Product in 2014 Q2, RMB mn

Company data

Revenue Growth by Product in 2014Q2, %, y/y

instant noodles business

7,826

beverage business 15,152

other products 352

instant noodles business

3,939

beverage business

8,092

other products 336

7.7% 9.8% 6.6% 8.7%

47.0%

11.4%

instantnoodlesbusiness

Tea drinks juice drinks milk tea BottledWater

coffee

4.3% 1.0%

-9.9%

1.3%

33.3%

instant noodlesbusiness

Tea drinks juice drinks milk tea Bottled Water



Tingyi (Cayman Islands) Holdings Corp.



Source:

Background Information


Tingyi (Cayman Islands) Holding Corp. (Tingyi Holding)

and its subsidiaries are engaged in the production and

distribution of instant noodles, beverages and instant food

products in China.

The company started its instant noodle business in 1992

and expanded into instant foods and beverages in 1996.

Tingyi Holding was listed on the Hong Kong Stock

Exchange in February 1996.

In March 2012, the company expanded its beverage

business, establishing a strategic alliance with PepsiCo.

In July 2014, Tingyi Holding employed 76,753, down from

80,541 at the end of 2013.

According to AC Nielsen, in December 2013, the

company ranked first in China in terms of sales of instant

noodles, RTD tea, bottled water and overall juice,

accounting for 44.1%, 51.8%, 23.6% and 25.9% of the

respective markets.

Key Executives

Highlights

Company data

Stakeholders Shares

number, mn

Shareholding,

%

Sanyo Foods Co., Ltd. 1854.8 33.11

Ting Hsin (Cayman Islands) Holding Co., Ltd. 1854.8 33.11

Wei Yingzhou, Wei Zhanglvyun 13.2 0.24%

Chinese Name English name Position

魏应州 Ing-Chou Wei Executive Chairman of the Board,

Chief Executive Officer

井田纯一郎 Junichiro Ida Vice Chairman of the Board,

Executive Director

林清棠 Frank Lin Chief Financial Officer

吴文聪 Wilson Wu Chief Auditor

魏应交 Ying-Chiao Wei Executive Director

叶沛森 Pui-Sum Ip Company Secretary



Source:




Quarterly performance, RMB mn

Quarterly performance

Company data

In 2013 the company's sales revenue was RMB 11bn, up 18.7% y/y.

The company distributed its products through its own extensive sales

network consisting of 566 sales offices and 75 warehouses serving

33,504 wholesalers and 110,355 direct retailers at the end of

December 2013.

The sales network is a significant contributor to the company's

leading market position, enabling it to introduce new products rapidly

and effectively.

The operating revenues of Tingyi Holding for the first three quarters

of 2014 stood at RMB 8.6bn, down by 4.01% y/y, however, its net

profit for the same period reached RMB 391.6mn, up by 2.36% on

the year.

The company's total assets increased by 9.38% y/y in the first three

quarters of 2014.

Indicator Sep-13 Dec-13 Mar-14 Jun-14 Sep-14


Operating cost 8,235 10,412 256 5,138 7,847

Total profit 724 723 245 465 747

Net profit 383 409 128 232 392

Net profit rate (%) 4.3% 3.7% 4.6% 4.1% 4.5%

Total assets 8,757 8,424 8,996 9,529 9,578


Indicator 2011 2012 2013


Operating cost 7,360 8,686 10,412

Total profit 663 828 723


Net profit rate (%) 5.3% 4.9% 3.7%

Total assets 5,809 7,473 8,424




Source:



Revenue Growth by Product in 2014 Q2, %, y/y

Gross Profit by Product in 2014 Q2, %

Company data

Sales and Production Information in 2013

drinks 3,332

Convenience foods 90

Instant noodles 2,034

others 49

2.54

-9.56

2.05

-39.78

drinks Conveniencefoods

Instant noodles others

33.45 35.27

27.29

drinks Convenience foods Instant noodles

Number of 2009 2010 2011 2012 2013

Sales Office 493 548 555 571 566

Warehouse 79 89 91 95 75

Wholesaler 5,798 6,155 6,188 32,424 33,504

Direct Retailer 72,955 73,282 86,755 107,131 110,355

Employee 50,023 64,436 64,309 79,419 80,541

Production Line 414 457 510 607 654

Production Centre 56 53 65 108 119



V V Food & Beverage Co., Ltd.



Source:



V V Food & Beverage Co., Ltd is engaged in the

production and sale of food products, including soybean

milk powder products, soybean juice powder products,

milk powder for infants and soymilk drinks under the

brand name VV, as well as milk, yoghurt, flour, oil and

others.

The company also sells wine and operates coal mines.

V V Food & Beverage Co was founded in 1994 and listed

on the Shanghai stock exchange in 2007.

Since 2006, V V Food & Beverage has accelerated the

pace of its diversification strategy by increasing its

involvement in the wine, grain and oil industry, launching

snack foods, beverages, liquor and other products.

In 2013, entered the tea industry by acquiring a 51%

stake in a tea company based in Hunan province.

Key Executives

Highlights

Company data

Stakeholders Shares

number, mn

Shareholding,

%

Weiwei Group 532.9 31.87

GIANT HARVEST LIMITED 316.8 18.95

Otsuka (China) Investment Co., Ltd. 104.7 6.26

China Growth Investment Fund 5.0 0.3%

Chen jianping 3.556 0.21%

Zhejiang Sanmei Chemical industry Co.,Ltd 3.014 0.18%

China CITIC Bank Corporation Limited-CCB

lasting value Securities Investment Fund 2.911 0.17%

Bank Of Communacations(LOF) 2.499 0.15%

LI chengxun 2.493 0.15%


杨启典 Yang Qidian Legal Representative,

Chairman of the Board

霍立娟 Huo Lijuan Chief Financial Officer

梅野雅之 Umeno,

Masayuki Vice Chairman of the Board

熊铁虹 Xiong Tiehong General Manager, Director

曹荣开 Cao Rongkai Executive Deputy General Manager

藤谷阳一 Fujitani, Yoichi Deputy General Manager, Director



Source:






Company data

In 2013 the company's sales revenues reached RMB 5.06bn, down

by 13% y/y while its gross profit margin was 31.17%.

Sales of soy milk and vegetable protein beverages maintained a

steady growth. The revenues from soy milk powder products grew by

9.77% over the period and sales of vegetable protein drinks were up

by 15.08%.

The main reason for the decrease in revenue and assets in 2013 is

the reduction of the trade income from V V's energy business, which

was taken out of the scope of the consolidated financial statement.

V V Food & Beverage posted operating revenues of RMB 3.3bn for

the first three quarters of 2014, down by 14.86% y/y. The decline in

revenue was due to falling sales of vegetable protein beverages

and wine.

The company's total profit and net profit reached RMB 123.3mn and

RMB 72.6mn at the end of September 2014, both down over 50% y/y.

This was due to the separation of the company's energy business in

2013, resulting in a further reduction of the operating income and

profit in the first three quarters of 2014.



Operating cost 3,959 5,218 1,068 2,128 3,236

Total profit 266 242 82 110 123

Net profit 146 91 56 65 73

Net profit rate (%) 3.8 1.8 4.9 2.9 2.2

Total assets 7,370 7,027 7,625 7,579 7,286


Indicator 2011 2012 2013


Operating cost 5,150 5,675 5,218



Net profit rate (%) 4.1 2.7 1.8

Total assets 7,089 8,070 7,027




Source:



Revenue growth by product in 2014 Q2, %, y/y


Company data

Solid Beverage 713

Beverage Including Dairy and

Plant Protein 382

wine 741

41.49

20.77

42.81

Solid Beverage Beverage Including Dairyand Plant Protein

wine

East China 640

Central China 618

North China 309

Southwest 188

Northwest China 157

South China 75

Northeast China 64

Other 31

Revenue by Region in 2014 Q2, RMB thou

-3.15

-10.01

-19.46

Solid Beverage Beverage Including Dairyand Plant Protein

wine



Hebei Chengde Lolo Company Limited



Source:



Hebei Chengde LoLo Company Limited, founded in 1050,

is principally engaged in the production and distribution of

beverages.

The company produces vegetable protein beverages,

including walnut milk as well as almond milk, under the

brand name of LoLo (known as Lulu on the market). It

distributes its products on the domestic market.

In 1997, the company was listed on the Shenzhen Stock

Exchange. Its major shareholder is Universal Sannong

Holdings Limited.

The company's most competitive product is the Lulu

almond milk. Its production relies on local almond

resources.

The company claimed a 90% share of the domestic

almond milk market in 2013.

The company is headquartered in Chengde and has four

production bases in Beijing Huairou, Hebei Langfang,

Henan Zhengzhou and Chende, with annual production

capacity of 400,000 tonnes.

Key Executives

Highlights

Company data

Stakeholders Shares

number, mn

Shareholding,

%

Universal Sannong Group Co. Ltd. 204.16 40.68

104 combinations of China Social Security

Fund 14.99 2.99

Agricultural Bank of China - Penghua Power

Growth Mixed Securities Investment Fund 11.31 2.25

109 combinations of China Social Security

Fund 11.30 2.25

Agricultural Bank of China -Dacheng Innovation

Growth Mixed Securities Investment Fund 9.24 1.84

China Social Security Fund 8.86 1.77


管大源 Guan Dayuan Chairman of the Board

李兆军 Li Zhaojun Finance Director, General Manager

王旭昌 Wang Xuchang Deputy General Manager

王新国 Wang Xinguo Deputy General Manager, Secretary

of the Board

陈跃鹏 Chen Yuepeng Deputy General Manager, Director

左辉 Zuo Hui Deputy General Manager



Source:






Company data

In 2013, the company's sales revenue grew by 3.34% to reach RMB

2.63bn. The revenue growth reflects an increase in the demand for

the company's products and services due to favourable market

conditions.

Its gross profit margin was 38.18%, slightly less compared to 2012.

The net profit rate rose to 13.05% in 2013 from 10.65% in 2012.

For the nine months ending September 2014, Hebei Chengbe LoLo’s

revenues rose by 3.34% y/y to RMB 2.11bn.

Its net profit increased by 25.4% to RMB 348.4mn. This was mainly

due to an increase in operating income and a decline in operating

costs. The steady growth in the sales volumes of vegetable protein

beverages also contributed to the rising profit.

The company's profitability benefited from a 2.86% drop in sales

costs to RMB 357.7mn. General and administrative expenses also

decreased by 3.5% to RMB 46mn.



Operating cost 1,673 2,188 958 1,179 1,646

Total profit 374 459 328 363 470

Net profit 278 344 245 269 348

Net profit rate (%) 13.6 13.1 19.1 17.6 16.5

Total assets 1,418 1,875 1,746 1,471 1,613


Indicator 2011 2012 2013


Operating cost 1,680 1,829 2,188



Net profit rate (%) 10.0 10.7 13.1

Total assets 1,498 1,547 1,875




Source:



Revenue Growth by Product in 2013, %, y/y

Gross Profit by Product in 2013, %

Company data

Production and Sales Volume by Product, thou tonnes

Walnut 147

Almond milk and other 2,483

19.06

39.34

Walnut Almond milk and other

42.41

22.22

Walnut Almond milk and other

9 13 18 8 13 19

241 246

328

241 253

310

2011 2012 2013

Walnut-production Walnut-Sales volume

Almond milk and other-production Almond milk and other-Sales volume



China Huiyuan Juice Group Limited



Source:



China Huiyuan Juice Group Limited was established in

1992 and was listed on the Hong Kong Securities

Exchange in 1996.

The company and its subsidiaries are engaged in the

production and sale of fruit juice, fruit and vegetable juice

and other beverages.

The company produces 100% juices, nectars and juice

drinks based on juice concentrate. Most of the products of

the company are sold under the Huiyuan brand.

The company has more than 50 subsidiaries, 9,447

employees and over RMB 4.5bn of annual sales revenues.

According to AC Nielsen, at the end of 2013, Huiyuan

ranked first in China in terms of sales of 100% juices and

nectars with market shares of 56% and 45.2%,

respectively.

In March 2014, the company expanded its product

portfolio to tea and coffee drinks by buying USD 19mn

worth of assets from Suntory (China) Holding Co Ltd.

Key Executives

Highlights

Company data

Stakeholders Shares

number, mn

Shareholding,

%

China Huiyuan Juice Holdings Limited 1071.809 53.58

Sino Fountain Limited 716.516 16.87

Temasek Holdings (Private) Limited 238.586 10.99

Su yingfu 6.042 0.30%

Liang minjie 0.15 0.01%

Song houquan 0.15 0.01%

Zhao yali 0.15 0.01%

Zhao chen 0.15 0.01%

Yan yan 0.15 0.01%

Chinese Name

English Name Position

朱新礼 Zhu Xinli Chairman ;

Legal Representative

于洪莉 Yu Hongli chief executive officer

吴文楠 Wu Wen Nan Chief Financial Officer

高彦祥 Gao Yanxiang Vice president

江旭 Jiang Xu Vice president



Source:




Semi-Annual performance, RMB mn

Interim performance

Company data

The company's sales reached RMB 4.52bn in 2013, up by 12.96% y/y

and gross profit margin was 31.05%.

The company's total assets came in at RMB 17.2bn at the end of

2013.

Huiyuan's production facilities and distribution network are some of its

most valuable assets. The company has 43 production facilities and a

network of 14 direct sales branches.

Despite being one of the biggest fruit and vegetable juices players,

Huiyuan had a relatively slow revenue growth in 2014.

In the first half of 2014, the company's 100% fruit juice sales

decreased by 7.1%.

Its gross profit margin dropped to 29.4% in the first half of 2014. The

main reason for the decline was the increased fixed cost and

depreciation.

Indicator Jun-12 Dec-12 Jun-13 Dec-13 Jun-14


Cost of Sales 1,270 2,866 1,427 3,106 1,388

Gross profit 420 1,115 636 1,398 577

Profit for the period -32 16.2 114 235 20.5

Net profit rate (%) -1.9% 0.4% 5.5% 5.2% 1.0%

Total assets 10,019 11,160 11,263 17,213 16,953

Earnings per share, RMB -0.02 0.01 0.08 0.14 0.01

Indicator 2011 2012 2013


Cost of Sales 2,861 2,866 3,106

Gross profit 964 1,115 1,398

Profit for the period 310.5 16.2 235

Net profit rate (%) 8.1% 0.4% 5.2%

Total assets 10,046 11,160 17,213




Source:




Performance by Product in 2013

Company data

Market share (%)

Sales volume Sales Revenue

100% Juice

First: Huiyuan Juice 56 50

Second ranked competitor 24.9 28.9

Third ranked competitor 6.2 5.7

Fourth ranked competitor 2.9 2.9

Fifth ranked competitor 1.5 1.6

Nectar

26%-99%

Concentration

First: Huiyuan Jucie 45.2 38.5





Juice drink

(25% & below

Concentr

ation)

First ranked competitor 30.8 32.4





Sixth: Huiyuan Juice 2.4 2.2

Juice drink 1,011

Nectar 1,456

100% Juice 1,205

Other drinks 832

Juice drink 435

Nectar 589

100% Juice 394

Other drinks 547



Blackcow Food Company Limited



Source:



Blackcow Food Company Limited, founded in 1998, is

principally engaged in the research, development,

production and distribution of soybean and grain nutritious

drinks.

The company's main products are soybean protein drinks,

oatmeal and other grain cordial drinks, soybean milk

powders, sesame pastes and walnut powders, as well as

liquid milks, among others. It distributes its products

primarily on the domestic market.

The company was listed on the Shenzhen Stock

Exchange's SME board in 2010.

Its subsidiaries include Jieyang Heiniu Food

Industry Co., Ltd., Liaoning black cattle food Industrial Co.

Ltd., and Anhui Province black food industry Co., Ltd.

In July 2013, the company obtained operational license

for a newly established subsidiary, a Guangzhou-based

company that is engaged in the wholesale and retail of

packaged foods.

Key Executives

Highlights

Company data

Stakeholders Shares number, mn Shareholding, %

Lin Xiuhao 135.86 43.41

Wu Dinian 8.98 2.87

Lin Xiuwei 8.09 2.58

Yang Tianyi 7.49 2.39

Liu Guanjun 7.02 2.24

Lin Xiuhai 7.02 2.24

Huang Lihong 4.00 1.28

Gao Liang 3.10 0.99


林秀浩 Lin Xiuhao Executive Chairman of the Board

吴迪年 Wu Dinian Vice Chairman of the Board, General

manager

林秀海 Lin Xiuhai Deputy general manager

何玉龙 He Yulong Chief Financial Officer

黄树忠 Huang Shuzhong Secretary of the board of directors



Source:






Company data

The company's sales revenue reached RMB 6.97bn in 2013,

decreasing by 8.61% compared to 2012.

The revenue decline was due to adjustment in the product structure,

optimisation of the dealership structure and a channel inventory

clean-up.

The firm's total assets reached RMB 1.8bn at the end of 2013, up by

almost RMB 220mn from the year-ago period.

For the nine months ending September 2014, Blackcow Food's

revenues decreased 11.17% y/y to RMB 407.8mn. The main reason

for the revenue decline was the adjustment of the product structure

initiated in 2013, clearing of the channel inventory and strengthening

the distributors management.

The net profit for the period increased by 12.1% to RMB 2.5mn. The

reduction of sales and administration expenses was the major profit

growth driver.

Total assets rose to RMB 2.1bn from RMB 1.7bn in the same period

of the previous year.


Operating revenue 459 697. 160 256 408

Operating cost 462 684 152 262 418

Total profit 2.9 22.9 8.0 12.0 3.1

Net profit 2.2 14.6 6.5 7.3 2.5

Net profit rate (%) 0.5 2.1 4.1 2.9 0.6

Total assets 1,700 1,799 1,802 1,857 2,102


Indicator 2011 2012 2013

Operating revenue 857 763 697

Operating cost 727 693 684

Total profit 136.9 73.4 22.9

Net profit 102.8 55.3 14.6

Net profit rate (%) 12.0 7.3 2.1

Total assets 1,444 1,580 1,799




Source:



Revenue Growth by Product in 2014 Q2, %, y/y


Company data

Income by Region in 2014 Q2, RMB mn

Liquid soy milk 122

Soybean milk powder 83

Oatmeal 30

Sesame paste 12

Walnut powder 7

37.59 34.2

38.35 37.28

43.18

Liquid soy milk Soybean milkpowder

Oatmeal Sesame paste Walnutpowder

East China 78

Central China 75

Northeast China 35

Southwest 34

Northwest China 14

North China 11

South China 7

-17.51 -25.03 -3.07

53.76

128.72

-40

-20

0

20

40

60

80

100

120

140

Liquid soymilk

Soybean milkpowder

Oatmeal Sesame paste Walnutpowder



Contact:

Corporate Headquarters

6-8 Bouverie Street

London EC4Y 8DD

UK

Voice: +44 20 7779 8100

Fax: +44 20 7779 8224

Americas Headquarters

225 Park Avenue South

New York, New York 10003

US

Voice: +1 212 610 2900

Fax: +1 212 610 2950

Asia Headquarters

Eucharistic Congress Bldg. No.

III

4th Floor, 5 Convent Street

Mumbai 400 001

India

Voice: +91 22 22881123

Fax: +91 22 22881137

Disclaimer:

The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness

of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional

Investor PLC take no responsibility for decisions made on the basis of these opinions.

Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. A Euromoney Institutional Investor company.

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