Cheng De Lolo Company Limited. is making moves into the increasingly popular health beverage market, which has gained traction since the rise of ginseng water. This trend has been bolstered by products like hawthorn and dried tangerine peel water, red bean and job's tears drink, and kale oolong tea. However, as the leading player in the plant protein drinks sector, Cheng De Lolo faces stiff competition from major brands like Yuanqi Forest, Master Kong, Yili, and Haowang Water, which brings challenges to its competitive edge.
Catalytic Effects of Peak Season In a recent financial report, Cheng De Lolo revealed that its revenue for the first three quarters of the year was 1.956 billion yuan, a year-on-year decline of 9.42%. The net profit attributable to shareholders was 384 million yuan, down 8.47% year-on-year. The quarterly breakdown shows revenues of approximately 1.002 billion yuan, 382 million yuan, and 572 million yuan for Q1, Q2, and Q3 respectively, with a notable improvement in Q3 performance.
Cheng De Lolo did not provide further details on the reasons behind the improved performance in Q3. According to analysis by Zhongtai Securities, the beverage industry typically sees a peak season between the end of Q2 and Q3, prompting companies to increase their promotional efforts, including freezer displays, new product launches, and terminal sales promotions, marking a testing period for operational quality.
Dongwu Securities noted that Cheng De Lolo's Q3 revenue performance surpassed market expectations, partially due to efforts to meet stock incentive assessment targets. They also highlighted that the overall gross margin rose to 44.73% in Q3, primarily due to low procurement prices for wild apricot almonds and declining prices for packaging materials, enhancing the gross margin compared to previous years.
“Channel adjustment measures may have contributed to the revenue growth in Q3,” suggested Zhang Junhao, a well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting. He pointed out Cheng De Lolo's strategic marketing on platforms like Douyin and its focus on convenience store freezers and dining channels, such as partnering with Haidilao to launch a 'hot pot relief package' and conducting pop-up events in the Sichuan-Chongqing area to boost repeat purchases.
New Products Under Development As the plant protein beverage market faces challenges, among the four publicly listed companies including Yangyuan Beverage, Weihe Holdings, Cheng De Lolo, and Huanlejia, only one reported revenue growth last year. With core business growth sluggish, leading firms are seeking a “second growth curve.”
Yangyuan focuses on walnut milk while branching into plant-based milk and functional drinks; Weihe has ventured into milk, liquor, and tea beverages; Huanlejia is leveraging its supply chain advantages to explore coconut-based drinks; Cheng De Lolo, following its nut and walnut series, launched its herbal health drink series, introducing four new flavors this year: longan ginger jujube drink, dried tangerine peel and plum drink, goji berry and mulberry drink, and loquat and autumn pear drink.
The herbal series emphasizes clean ingredients and reduced sugars. For example, the goji berry and mulberry drink contains only five ingredients: water, rock sugar, goji berries, mulberries, and chrysanthemum with a sugar content of just 3 grams per 100 milliliters, substantially lower than that of an apple. In terms of packaging, the herbal drink comes in a 330 milliliter bottle compared to the conventional 500 milliliters. The price for a pack of eight 330 milliliter bottles is 34.8 yuan, translating to about 4.35 yuan per bottle.
While the herbal product is still in its developmental phase, it has shown early signs of success. In the first half of this year, the water series, mainly comprised of herbal drinks, generated revenue of 32.8537 million yuan, accounting for 2.37% of Cheng De Lolo's total revenue, similar to the previously recognized “second growth driver,” the nut and walnut series. This success relates to Cheng De Lolo’s robust marketing strategies. The financial report indicated that sales expenses for the first three quarters were approximately 365 million yuan, a 12.38% increase year-on-year.
Of particular concern is the fact that Cheng De Lolo’s research and development expenses have decreased for three consecutive years. From 2023 to 2025, the R&D expenses for the first three quarters were approximately 18.4848 million yuan, 11.9716 million yuan, and 6.4697 million yuan, respectively.
Zhang Junhao emphasized that for Cheng De Lolo to create a sustainable competitive advantage, it needs to innovate in product positioning, packaging design, and marketing strategies, highlighting the concept of herbal health to attract health-conscious consumers and distinguish itself from its competitors.
Regarding the sales performance of the “herbal health drinks” and how traditional almond milk is facing market challenges, Beijing Business News has reached out to Cheng De Lolo for inquiries but has yet to receive a response.
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