Northwest Beer Giant Bets Big on Beverage Business with Majority of Assets
Amid industry volume contraction and channel penetration pressure from industry giants, former northwest market leader Lanzhou Huanghe Enterprise Co.,Ltd. (000929.SZ, "Lanzhou Huanghe") has issued two consecutive announcements demonstrating its determination to bet on the beverage sector.
On the evening of September 3, Lanzhou Huanghe disclosed that it plans to sign a "Joint Venture Agreement" with Chongqing Chengbiao Agricultural Development Co., Ltd. ("Chongqing Chengbiao") and Yancheng Silk Road Anli Equity Investment Partnership (Limited Partnership) ("Yancheng Anli") to jointly establish Lanzhou Huanghe (Chongqing) Beverage Co., Ltd. (tentative name) ("Beverage Company"). The company intends to invest 35.7 million yuan from its own or raised funds, holding a 51% stake.
Another announcement shows that Lanzhou Huanghe plans to acquire 50.6329% equity of Wuzhong Yiwang Juice Co., Ltd. ("Yiwang Juice") from Xi'an Chunguo Beverage Co., Ltd. ("Xi'an Chunguo") for zero consideration, and fulfill all capital contribution obligations corresponding to Yiwang Juice's equity with 26.9175 million yuan from its own or raised funds, of which 5 million yuan will be credited to Yiwang Juice's registered capital and 21.9175 million yuan to its capital reserves.
Lanzhou Huanghe stated that both establishing the beverage company and acquiring Yiwang Juice are aimed at further strengthening business expansion in the beverage industry. The former focuses on increasing investment and development in the juice sector, while the latter will strengthen upstream and downstream synergies, optimize existing business structure, expand business scale, and cultivate new profit growth points.
The capital market reacted swiftly. On September 4, Lanzhou Huanghe opened higher at 9.06 yuan per share, then rose to a high of 9.29 yuan before fluctuating downward, closing down 2.47% at 8.69 yuan per share. During the midday session on September 5, Lanzhou Huanghe continued declining 0.12% to close at 8.68 yuan per share.
Major Moves Following Change in Actual Controller
Lanzhou Huanghe is not a newcomer to the beverage sector.
While primarily engaged in beer and malt production and sales, Lanzhou Huanghe has developed ginger beer, fruit-flavored beer, and compound-flavored sodas in its beverage segment.
Once upon a time, with "Huanghe" and "Qinghai Lake" beer as flagship products, Lanzhou Huanghe held over 70% market share in Gansu province. However, years of shareholder infighting dragged down the main business, with the company's net profit falling into losses for consecutive years, tarnishing the "Northwest Beer King" halo.
Until November 22 last year, Lanzhou Huanghe's years of internal strife finally came to an end. The company's former second-largest shareholder, Hunan Yucheng Investment Co., Ltd., indirectly controlled 21.4954% of Lanzhou Huanghe's shares, becoming the indirect controlling shareholder, with the actual controller changing from Yang Shijiang to Tan Yuexin.
At Lanzhou Huanghe's 2024 summary meeting in January this year, Tan Yuexin proposed that 2025 would be a crucial year for the company's phoenix-like rebirth and turnaround to profitability. Now, two major transaction projects have been successively launched.
The announcement shows that the beverage company to be established will be registered in Zhong County, Chongqing, with registered capital of 70 million yuan. Lanzhou Huanghe, Chongqing Chengbiao, and Yancheng Anli will contribute 35.7 million yuan, 21 million yuan, and 13.3 million yuan respectively, holding 51%, 30%, and 19% stakes respectively.
The two investment partners chosen by Lanzhou Huanghe focus on different aspects: one specializes in production, while the other provides support in industrial chain coordination and financial restructuring.
It's noted that Chongqing Chengbiao is also located in Zhong County and is a citrus cultivation company.
According to the National Enterprise Credit Information Publicity System, Chongqing Chengbiao owns the Chongqing (Zhong County) Modern Agricultural Citrus Industrial Park project and has obtained a construction land planning permit from the Zhong County Planning and Natural Resources Bureau. The industrial park is located in Zhong County's Mozi Industrial Park, with a total construction land area of 84,508 square meters.
The other investor, Yancheng Anli, is a private equity fund. According to Tianyancha, Yancheng Anli previously invested in Yiwang Juice, which is exactly the company Lanzhou Huanghe intends to acquire.
The announcement shows that Yiwang Juice is a professional manufacturer specializing in the research, development, production, and sales of concentrated apple juice. It has established a mature raw material procurement system and stable sales channels, with its core product concentrated apple juice being an important basic raw material for the beverage industry. In 2024, Yiwang Juice achieved revenue of 52.664 million yuan and net profit of 3.6949 million yuan, with net assets of 26.2446 million yuan as of the first half of this year.
Betting 70% of Assets on Beverage Business
In the first half of this year, Lanzhou Huanghe focused on R&D investment in the beverage segment. On one hand, it promoted beverage product upgrades, category expansion, and innovative R&D work, adding three new flavored sodas: peach, sweet orange, and pineapple. On the other hand, it advanced R&D work for the "Qingqing Jieyou" tea beverage brand.
Regarding Lanzhou Huanghe's two transactions, beverage industry analyst Cai Xuefei believes this is a strategic breakthrough attempt by the company facing sustained decline in its main business and delisting risks, driven by urgent transformation needs and exploration of new growth points.
"The company's beer business has declined for consecutive years and has been subject to *ST treatment, with high delisting risks. The new actual controller urgently needs to reverse the situation through business expansion. Juice beverages, as part of its 'beer + beverage + tea drink' strategy, are expected to optimize industrial layout and create a second growth curve," Cai Xuefei analyzed.
In January this year, due to Lanzhou Huanghe's negative total profit, net profit, and non-recurring gains and losses adjusted net profit for 2024, plus operating revenue below 300 million yuan after adjustments, it was subject to delisting risk warning by the Shenzhen Stock Exchange.
Notably, as of the first half of this year, Lanzhou Huanghe's monetary funds totaled 91.9128 million yuan, while the two new transactions will consume 62.6175 million yuan. This means Lanzhou Huanghe is betting nearly 70% of its assets on the new projects. If the transactions succeed, they will increase financial pressure on the company but also demonstrate the company's intention to allocate resources and prioritize the beverage segment as a strategic development direction.
Cai Xuefei believes Lanzhou Huanghe's main advantages in juice business layout lie in the northwest region's industrial chain foundation and regional brand recognition. "The company has deeply cultivated markets like Gansu and Qinghai for many years, possessing good distributor networks in the northwest region. Channel resources can be partially reused, and the company's existing beverage R&D and production experience can provide certain foundations for new product development."
Under the sustained channel penetration pressure from giants like Budweiser and Tsingtao Brewery, regional brand Lanzhou Huanghe faces persistent risks of further market share erosion.
Recently disclosed financial reports show that in the first half of this year, Lanzhou Huanghe's revenue declined 15.81% year-over-year to 96.8357 million yuan, with attributable net profit declining 45.29% to a loss of 11.9132 million yuan; non-recurring adjusted attributable net profit was -14.0265 million yuan, up 12.14% year-over-year. Although the company's main business operating conditions improved compared to the same period last year, structural analysis reveals underlying concerns.
Specifically, the company saw revenue declines in both beer and beverage segments. In the first half, Lanzhou Huanghe's beer business revenue was 71.3162 million yuan, down 21.09% year-over-year; beverage business revenue was 11.5577 million yuan, down 20.64% year-over-year. In-province revenue, accounting for over 70%, declined 26.16% year-over-year, while out-of-province revenue increased 37.88% year-over-year.
Lanzhou Huanghe stated that in recent years, the company's beer business has faced challenges. Although the company completed large-scale commercial terminal coverage construction, channel penetration depth remains insufficient, and market expansion and channel coverage capabilities lag behind competitors, leading to revenue decline.
More importantly, in the beverage sector, attacks from beer industry peers are intensifying. For example, Beijing Yanjing Brewery Co.,Ltd. (000729.SZ)'s new product Best soda has begun nationwide deployment, driving the company's beverage revenue up 98.69% year-over-year in the first half of 2025. Chongqing Brewery Co.,Ltd. (600132.SH)'s launched Tianshan Fresh Fruit Manor orange-flavored soda and Dianchi energy drinks are aggressively targeting regions like Chongqing and Xinjiang, focusing on non-ready-to-drink channels.
Cai Xuefei believes that for Lanzhou Huanghe to create differentiation in this crowded sector, it needs to focus on "regional characteristics + health" innovation, avoiding direct competition with giants.
"On one hand, the company can leverage its unique ecological environment advantages in the northwest region, deeply explore northwest specialty fruit resources to develop niche juices, combine with 'Ganwei' and other wellness concepts to create health labels, increase product differentiation, and enhance premiums. On the other hand, it can explore 'juice + tea drink' or 'juice + low alcohol' hybrid categories in products, creating synergies with its beer main business and deeply cultivating the northwest base market," Cai Xuefei pointed out. Lanzhou Huanghe can utilize local brand recognition, leverage new technologies like internet live streaming, and enhance exposure through cultural tourism cooperation and event sponsorship, using flexible and innovative strategies to find survival space in niche markets.
Regarding transaction-related matters, on September 4, when contacted by phone, Lanzhou Huanghe's securities department stated that everything should be based on official announcements.
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