After the concern about the performance of property sales insurance, Bishengyuan recently issued another profit warning. It is expected that the group’s net loss in 2021 will reach 120 million to 130 million yuan, far exceeding the 50 million to 70 million yuan disclosed in the previous announcement. In the past, Bishengyuan, which was listed on the Hong Kong Stock Exchange as the “first share of weight loss tea”, had unlimited scenery. At its peak, its value was as high as HK $5.2 billion. Now its share price has plummeted nearly 96%. As of the closing on January 14, Bishengyuan reported HK $0.175/share, and its market value has evaporated about HK $5 billion compared with its peak.
The shell finance reporter of the Beijing News found that since going public in Hong Kong in 2010, Bi Shengyuan has issued ten profit warnings and guaranteed performance by selling assets. After listing, many health products that Bishengyuan tried to develop have a mediocre response. Entering the tea bag beverage industry has not aroused too much spray. Now it is focusing on weight loss drugs.
Bishengyuan’s trump products have been controversial. “Weight loss tea” and “Changrun tea” have been exposed that the raw material cost of each bag of tea is very low, but the price is very high, and the weight loss effect depends on the ingredients causing diarrhea such as senna leaves in the tea bag. In recent years, many products of Bishengyuan have also been notified by relevant departments for many times. The strain content of the products seriously exceeded the standard during sampling inspection. In the past, the “two bags of tea” sold wildly for 4.5 billion, with overwhelming advertising and beautiful performance, but now the market value has fallen sharply and the brand is almost forgotten. What happened to Bishengyuan these years?
highlight moment: once achieved a sharp increase in sales through advertising, and the annual compound growth rate of turnover was nearly 100%
Zhao Yihong, the founder of Bishengyuan, once said that Bishengyuan has only done one thing in the past 14 years (2000-2014), selling two bags of tea, one bag of Bishengyuan slimming tea and the other bag of Bishengyuan Changrun tea. Two bags of tea sold 3 billion bags, 4.5 billion yuan. So, what kind of magic makes “two bags of tea” sell 4.5 billion?
In 2000, the predecessor of Bishengyuan, Beijing aoteshuer health products company, was established. At the beginning of its establishment, Bishengyuan’s two bags of tea were not well-known in China. Until 2006, Bishengyuan changed its marketing strategy and shifted the focus of advertising to television, the two bags of tea began to be popular all over the country. “Bishengyuan brand often moistens tea, wash your intestines quickly”, Bishengyuan brand weight loss tea “thin here, thin here, thin here, beautiful clothes”, “don\’t be too thin” are all familiar advertising words. According to the listing documents of Bishengyuan, the company’s turnover in 2007 was 163 million yuan, of which advertising expenditure reached 49.1 million yuan, accounting for 30.1% of the turnover.
The mass launch of advertising helped Bishengyuan quickly realize the sharp rise in turnover. Bishengyuan, who tasted the sweetness, made great efforts to increase advertising marketing in the second year, and the advertising expenditure rose to 118 million yuan. Correspondingly, in 2008, the turnover of Bishengyuan reached a new high of 358 million yuan, an increase of 220%. In the following years, Bi Shengyuan seemed to have mastered the “traffic password” and expanded the advertising expenditure year by year. The annual advertising amount was about 30% of the company’s turnover, and the turnover increased all the way with the increase of advertising. Until Bishengyuan was listed in Hong Kong in 2010, the annual compound growth rate of the company’s turnover in the first three years reached 99.1%, and the annual compound growth rate of the company’s gross profit was 123.9%, ranking the first in China’s functional health tea industry.
change face the next year after listing
After listing, Bishengyuan aimed at the health care products market and began intensive new product R & D activities. According to the 2011 Annual Report, the research and development cost of the company was about 2.4 times that of the previous year. Research and development of new products include “Meian granules” focusing on improving sleep quality, and “maishuping” tea bags that help stabilize blood pressure. After more than a year of research and development, Bishengyuan launched a new product “mei\’an granules” in March 2012. In addition to health products, Bishengyuan also began to try to enter the tea bag beverage market and began to develop Bishengyuan brand beverage tea bag. In 2012, Bishengyuan also launched two new tea drinks.
In addition to continuously launching new products, Bishengyuan has not relaxed its investment in the advertising market. In 2012, Bi Shengyuan appeared in popular variety shows and large parties. Bishengyuan’s 2012 annual report disclosed that in order to establish a long-term brand and make the public refreshing, the company carried out various promotion and exchange activities through various channels, including sponsoring Jiangsu Satellite TV’s popular variety “if you are sincere, do not disturb” in the first half of 2012 Zhejiang satellite TV’s “good voice of China” and other popular satellite TV programs, as well as the Mid Autumn Festival Party of China Central Television in 2012. The 2012 annual report disclosed that the company’s advertising expenditure accounted for 65.6% of the revenue in that year.
Nevertheless, Bishengyuan’s highlight moment did not last. The launch of Meian granules and tea bag drinks had a mediocre response, and the large amount of advertising did not bring an increase in sales. According to the 2011 Annual Report, Bishengyuan began to suffer a small loss, with a net loss of 40 million yuan. By 2012, Bishengyuan’s turnover had shrunk significantly, with a loss of 342 million yuan, a record high. In that year, Bishengyuan issued three profit warnings to shareholders and shareholders on the performance of the whole year of 2011, the first half of 2012 and the second half of 2012.
Since then, in order to save the declining performance, Bishengyuan had to cut dealers, reduce national retail stores and reduce advertising spending in 2013, and raise the price of two bags of tea at the same time. However, this series of practices did not change the operating status of Bishengyuan. Since then, Bishengyuan’s performance fluctuated and often fell into losses – from 2011 to 2013, it suffered losses for three consecutive years, with net profit losses of 40.876 million yuan, 342 million yuan and 89.976 million yuan respectively; From 2014 to 2015, Bishengyuan’s net profit improved slightly, but it lost another 68.714 million yuan in 2016; After a small profit of 4 million yuan in 2017, it fell into a loss situation in 2018, with a net loss of 95.299 million yuan; Turn losses into profits from 2019 to 2020, and fall into losses again in 2021. The amount of losses is expected to be 120-130 million yuan.
slimming tea is said to be a laxative in essence, and the product has been controversial for many years
In fact, shortly after the listing of Bishengyuan, it was deeply in dispute.
The effect of Bishengyuan tea has been questioned by the public. Because one of the main components of Bishengyuan slimming tea, the main function of senna is to cause diarrhea. In other words, the weight loss of consumers after taking slimming tea is mainly due to the discharge of a large amount of water from the body in the short term. In addition, if you take excessive weight loss tea, its side effects can not be ignored. Professor Huang kaihong, Department of Gastroenterology, Sun Yat Sen Memorial Hospital, Sun Yat sen University, said that the daily intake of senna leaves for normal adults should be controlled at 1-2 grams. If the dose is too large, it may cause side effects such as nausea, vomiting and abdominal pain. Guangdong TV reported in 2021 that a consumer in Urumqi had severe diarrhea and high fever after drinking Bishengyuan slimming tea. According to the website of the State Food and drug administration, the product function of Bishengyuan Changrun tea is only to improve constipation, while in the advertisement, bad breath, color spots, acne and even insomnia and forgetfulness are included in the scope of curative effect.
Bishengyuan has also been warned, stopped selling or revoked approvals for many reasons such as “publishing without approval”, “infringing on consumers\’ portrait right” and “exaggerating efficacy”, and dealers have also violated regulations for many times.
A series of negative news broke out, and consumers gradually realized the importance of healthy weight loss. The days when Bishengyuan could maintain revenue growth only by advertising “bombing” are gone forever. The sales of two bags of Bishengyuan tea in 2012 decreased by more than half compared with the previous year. In 2016, the State Food and Drug Administration issued new regulations requiring that from May 1, 2016, the names of health products on the market shall not contain words promoting the efficacy of products. Results the word “slimming” in Bishengyuan slimming tea was picked, and the product was renamed “Bishengyuan Changjing tea”. Bishengyuan spent many years and spent a lot of money to cultivate user awareness, which was greatly affected by the renaming. According to the 2016 annual report, the company’s sales volume of tea bags of this category decreased sharply, and the annual net loss exceeded 68 million yuan.
repeatedly sold off assets to ensure performance, moved to the weight loss drug market, and has not completely turned over
In 2015, when the sales of two bags of tea continued to shrink, Bishengyuan began to enter the weight loss drug market.
In April 2015, Bishengyuan invested and controlled 80% of the shares of Guangzhou runliang Pharmaceutical Co., Ltd. Guangzhou runliang has the exclusive sales agency right of orlistat preparation produced by Zhejiang Zhejiang Hisun Pharmaceutical Co.Ltd(600267) with specific sales indicators in China for more than ten years. Orlistat is the only anti obesity prescription and over-the-counter dual cross drug recognized and approved by the US FDA, EU EMA and China SFDA in the world. Guangzhou runliang’s Laili brand orlistat slimming drug is also the first time Bishengyuan has sold drugs in retail pharmacies since the two tea business. In the market segment of weight loss drugs, orlistat of Laili brand ranked first. In 2016, its market share in the top five brands of weight loss drugs was 59.47%, an increase of 12.37 percentage points year-on-year. In 2017, Bishengyuan also spent money to acquire Zhongshan wanhan and Zhongshan Wanyuan pharmaceutical enterprises, through which they developed and produced their own brand orlistat weight loss drugs. In 2018, Bishengyuan launched Bishengyuan brand orlistat weight loss drug and vigorously promoted it to the market.
The annual report shows that the turnover of Bishengyuan’s weight loss drugs accounted for 9.6% in 2015, doubled in 2016, accounting for 18.2%, decreased slightly in 2017, accounting for 11.5%. After the launch of Bishengyuan brand orlistat in 2018, the proportion increased to 17.7%. After a year of publicity and operation, the proportion soared to 40% in 2019, surpassing two bags of tea and becoming the single product with the highest sales volume in Bishengyuan company. However, even if the transformation to do weight loss medicine business did not make Bishengyuan turn around luxuriantly, and it lost money again in 2021.
In January 2022, Bishengyuan still issued a profit warning, saying that the company expected to lose 120 million to 130 million yuan in 2021. In this regard, Bi Shengyuan explained that the sales performance of last year’s double 11 and double 12 shopping festivals did not meet expectations, the redistribution of marketing forces affected the sales revenue, and the dealer’s inventory management measures changed.
In order to cope with losses and maintain performance, Bi Shengyuan has repeatedly relied on the sale of assets to “continue his life”. In 2021, it plans to sell its 8 houses (with a construction area of 1819.42 square meters) located in Zhongshan North Road, Putuo District, Shanghai and the land use right within the occupied area of the houses for 56 million yuan. The net proceeds from the sale are about 49.63 million yuan. In fact, since 2018, Bishengyuan has repeatedly sold its own assets to ensure performance – in 2018, 555 million yuan sold 100% equity of Beijing Changsheng Business Consulting Co., Ltd., 75 million yuan sold 100% equity of Bishengyuan food and beverage in July 2019, and 463 million yuan sold all equity of Beijing Shenhui Biyuan cloud Computing Technology Co., Ltd. in December 2019.
