Over the past three years, Eastroc Beverage has seen its revenue growth rate more than halve. In the first half of 2026, the company reported total revenue of RMB 12.443 billion, a year-on-year increase of 15.89%, with net profit attributable to shareholders reaching RMB 2.867 billion, up 20.72%. However, in the first half of 2025, revenue growth had already slowed to 36.37%, and net profit growth was 37.22%. By the first half of 2024, revenue growth was 44.19%, with net profit growth at 56.17%.
Quarterly data reveals a more pronounced trend: first-quarter revenue growth was 21.46%, but the second quarter alone saw a meager 11.31% increase. The absolute revenue increment is also shrinking. In the first half of 2026, the revenue increase was RMB 1.706 billion, a drop of over RMB 1 billion compared to the RMB 2.864 billion increase in the same period of 2025.
Breaking down performance by product category
Three major product lines are running at vastly different speeds. The core flagship product, Eastroc Super Drink, generated revenue of RMB 8.937 billion in the first half, a year-on-year increase of only 6.89%. Its first-quarter growth was 13.1%, but this plummeted to 1.4% in the second quarter. Its revenue contribution fell from 77.91% to 71.92%. The electrolyte drink "Hydrate Me" brought in revenue of RMB 1.672 billion, up 11.98% year-on-year, a stark contrast to its previous explosive growth of over 200%. The company noted that heavy rainfall and high temperatures in some regions temporarily disrupted outdoor consumption scenarios. Tea-based beverages emerged as the sole bright spot, with first-half revenue of RMB 1.058 billion, surging 208.99% year-on-year, and its revenue share increasing from 3.19% to 8.52%.
Behind the slowdown: a changing industry landscape
The entire industry is shifting. The energy drink market's growth rate has fallen from over 15% in previous years to single digits. Competitors like Red Bull are deepening their presence in high-end sports scenes, Monster is targeting the e-sports community, and budget-friendly brands like Zhanma are continuously crowding out shelf space. The electrolyte drink segment is particularly crowded. In terms of sports drink sales volume, Genki Forest's Alien leads the market, with Eastroc's "Hydrate Me" holding the second position at approximately 34%. In early 2026, Nongfu Spring launched an electrolyte drink priced at under RMB 4 per bottle, leveraging its vast network of over 3 million retail points for rapid distribution. Eastroc's Chairman, Lin Muqin, stated bluntly: "This year will be an electrolyte drink war."
Rising costs and market skepticism
Eastroc is also grappling with rising costs. In the second quarter, the sales expense ratio increased by 2.4 percentage points year-on-year to 17.2%. Advertising and promotional expenses rose 44.3%, channel promotion costs increased 39.8%, and investment in cooler placements continued to intensify. Additionally, foreign exchange fluctuations generated an extra RMB 160 million in financial expenses, further squeezing profit margins. The company's response is clear. Gross margin for the first half improved by 3.22 percentage points to 48.36%, benefiting from cost advantages secured by locking in PET material prices for the entire year at the end of 2025. A high dividend plan was announced, with a cash payout of RMB 3.00 per 10 shares, totaling RMB 2.181 billion, representing 76% of first-half net profit. Operating cash flow stood at RMB 2.493 billion, a 43.22% increase, while contract liabilities were RMB 5.129 billion, up 39.9%.
Despite these efforts, the capital market remains unimpressed. In June 2025, Eastroc Beverage's A-share stock price hit an all-time high of RMB 255-256. By June 2026, it had fallen to a low of approximately RMB 110.9, representing a maximum drawdown of over 50%. On August 4, the A-share stock closed down 2.46% at RMB 126.45, giving the company a total market capitalization of RMB 92.84 billion. The market's primary concern is a "gap" in growth drivers. Analysis of the half-year report by product category suggests that energy drink growth has peaked. While tea-based beverages are growing rapidly, their gross margin is only 23.66%, far below the 54.67% margin of energy drinks. The increasing share of lower-margin new products will continue to pressure overall profitability. The doubling of tea beverage revenue is a highlight, but with a scale of only RMB 1.058 billion, it will take time to offset the slowing growth of the nearly RMB 9 billion Super Drink business.
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