In June 2017, Harvest Capital invested RMB 350 million in Eastroc Beverage, becoming its second‑largest shareholder and sole institutional investor.

Standing at the forefront of China’s economic structural transformation, the global influence of national brands has become the aspiration of every investor. Harvest Capital remains committed to empowering Chinese consumption, walking side by side with the country’s finest companies and entrepreneurs.

The following article on Eastroc Beverage is sourced from *Investment Community*.

*Original Author: Yang Jiyun  
Source: Investment Community PEdaily*

When you think of energy drinks, what brand comes to mind?

Recently, the China Securities Regulatory Commission disclosed that **Eastroc Beverage (Group) Co., Ltd.**, the parent company of **Eastroc Special Drink**, has completed the first phase of listing guidance after submitting its IPO application in June. This move brings the energy‑drink heavyweight one step closer to the public market.

“Tired or sleepy? Drink Eastroc Special Drink.” This slogan once filled streets across China. Founded in 1987, Eastroc Beverage Group is a time‑honored beverage manufacturer based in Shenzhen. After three decades of development, it has grown into a leading domestic functional‑beverage company. In 2018, Eastroc Beverage’s total sales exceeded **RMB 5 billion**—a remarkable achievement.

Behind the functional‑beverage sector lies a fiercely competitive landscape. Red Bull has long held the “top spot,” while Eastroc Special Drink, consistently ranked second, has been dubbed the “perennial runner‑up.” In recent years, Red Bull has been entangled in trademark disputes, creating an opening for Eastroc Special Drink to rise rapidly and embark on its IPO journey.

Behind Eastroc Special Drink stands **Lin Muqin**, the leader who rescued the company from the brink of bankruptcy, as well as support from investors such as **Harvest Capital**. Its capital‑market plans may reshape the functional‑beverage arena amid challenges from coffee and new‑style tea drinks.

Selling RMB 5 Billion in a Year: The Comeback Story of a Chaoshan Entrepreneur

Eastroc Beverage Group was founded in 1987 as a state‑owned, heritage beverage manufacturer, though its now‑famous Eastroc Special Drink was not launched until a decade later.

In the 1980s and 1990s, functional drinks proliferated. Red Bull, which entered the Chinese market in the early 1990s, quickly gained popularity, inspiring many imitators. Eastroc Special Drink, launched by Eastroc Group in 1997, was one of them. Lehu, with packaging strikingly similar to Red Bull’s, debuted in 1998, followed by Wahaha’s Qili in 2012.

Yet Red Bull’s momentum was formidable, leaving most functional drinks in its shadow. Eastroc Special Drink’s turnaround was a long journey, closely tied to Lin Muqin, Chairman of Eastroc Beverage.

Before taking over Eastroc Beverage, Lin Muqin spent ten years at a joint‑venture beverage company, working his way up from the production line to roles including production manager, R&D manager, and sales manager—experience that gave him an intimate understanding of every operational link.

In 2003, Eastroc Beverage transitioned from state ownership to privatization. Drawing on his years of expertise, Lin Muqin acquired the company’s brand and production equipment and began leading its beverage operations. From 2003 to 2010, the company’s output value grew from RMB 15 million to RMB 250 million.

Lin Muqin always believed functional drinks represented a market breakthrough. In late 2009, he advocated for packaging and pricing differentiation, introducing bottled Eastroc Special Drink with a distinctive dust‑proof cap—still used today—and focused promotion in its home base of Guangdong Province to establish a foothold.

In 2013, Eastroc Special Drink enlisted actor Nicholas Tse as brand ambassador and began a large‑scale push into the national market. In 2015, seeking further differentiation, it launched youth‑oriented slogans such as “Stay awake and strive when young” and ramped up brand promotion, sponsoring variety shows like *Happy Comedian* and *Rapid Advance*. Today, Eastroc Special Drink’s market share has climbed steadily, achieving annual sales of RMB 5 billion in 2018.

Looking back, every step Eastroc Beverage took after restructuring proved crucial. In a functional‑beverage market long dominated by leaders like Red Bull, strategies such as targeted youth engagement, regional expansion, and differentiation were indispensable.

Sole Institutional Investor Harvest Capital: “The Brand Most Likely to Rival Red Bull in China”

As a family‑run business, Eastroc Beverage’s equity structure is relatively straightforward.

Founder Lin Muqin holds 56.85% of Eastroc Beverage and is the company’s actual controller. Additionally, Tianjin Junzheng Investment Management Partnership holds a 10% stake, and Shenzhen Kunpeng Investment Development Partnership holds 7.36%.

In June 2017, Harvest Capital invested RMB 350 million in Eastroc Beverage, becoming its second‑largest shareholder. At the time, Eastroc Beverage operated nearly 20 beverage production lines with an annual output of 850,000 tons. Alan Song, Founding Partner and Chairman of Harvest Capital, later stated publicly: “In the functional‑beverage industry, which brand is most likely to rival Red Bull in China? It’s Eastroc Special Drink. Eastroc Special Drink has grown rapidly, outpacing many peers—a rare feat in today’s market.”

Harvest Capital is the only institutional investor in Eastroc Beverage. Prior to this investment, Harvest Capital had already built a strong track record in the consumer sector with successful investments in food companies such as **Qiaqia Food, Jiajia Food, Laiyifen, and Babi Food**. After investing in Eastroc Beverage, Harvest Capital facilitated introductions between Eastroc Special Drink executives and the leadership of Qiaqia Food, leading to comprehensive cooperation and full access to Qiaqia’s distribution channels.

Furthermore, Harvest Capital helped Eastroc Special Drink partner with Laiyifen to enter the Shanghai market—a long‑desired goal. These collaborations sparked what might be called “chemical reactions” among portfolio companies, creating industrial synergies.

Winning Over the Young: A Key Challenge for Functional Beverages

In recent years, coffee and new‑style tea drinks have often stolen the spotlight. Yet over the past three decades, bottled beverages have remained the undisputed leader of the industry.

The domestic beverage market has undergone dramatic changes in the last ten years, with traditional channel‑driven bottled beverages facing numerous challenges. Bottled milk tea, mineral water, fruit‑juice drinks, NFC juices, tea beverages, dairy drinks, functional drinks—each sub‑segment is crowded with competitors.

Functional drinks alone face intense competition. Red Bull, in particular, stands out. Yan Bin, Chairman of Red Bull China, once proudly noted: “At its peak, Red Bull sells 6 billion cans annually and operates 50 factories.”

However, strong performance often masks underlying tensions. Thai‑Chinese entrepreneur Xu Shubiao founded T.C. Pharmaceutical in Thailand in 1956 and later invented the functional drink Red Bull, co‑owned by the Xu family and another Thai‑Chinese businessman, Yan Bin. Yan Bin played a key role in bringing Red Bull to the Chinese market. After Xu Shubiao’s death in 2012, disputes between the Xu family and Yan Bin escalated, leading to trademark conflicts between Chinese Red Bull and Thai Red Bull.

Thus began a turbulent period in the functional‑beverage market. Despite internal strife, Red Bull remains the leader in China’s functional‑beverage sector. However, T.C. Pharmaceutical later launched the functional drink “7 Kinetic Energy” with Chinese manufacturers, posing further challenges.

Meanwhile, Eastroc Special Drink—long the number‑two player—has begun advancing its capital‑market plans. Third‑place Lehu was originally part of listed company Dali Group. Other functional beverages like Pulsation, Hydrodynamic Music, Wahaha, and Nongfu Spring have also carved out their niches, creating a lively and competitive arena.

Some analysts believe Eastroc Beverage’s listing may not immediately alter the competitive landscape, but it will consolidate Eastroc Special Drink’s second‑place position and widen the gap with third‑ and fourth‑tier brands.

No player in this lucrative market is willing to step aside. According to the “2016‑2020 China Functional Beverage Industry Market Survey and Investment Decision Report,” by 2020, China’s functional‑beverage retail volume is projected to reach 15.037 billion liters, with retail sales hitting RMB 163.528 billion.

Facing post‑90s and post‑00s consumers—who often stay up late—demand for functional drinks continues to grow. Young people remain the “battleground” for consumer brands, especially in functional beverages. Capturing the preferences of personalized, younger consumers will determine a company’s position and influence in the functional‑beverage market.

Lin Mugang has also remarked in an interview: “Post‑80s and post‑90s consumers are becoming the mainstream force in the market, seeking quality products that meet new demands, offer higher standards, and better express their individuality. These trends present a great opportunity for Eastroc, which will continue to advance its brand‑rejuvenation strategy.”

Yet the path to listing for beverage companies often moves slowly. Accepting listing guidance is only a small step in the IPO journey. Eastroc Special Drink still has a long road ahead before its final listing. As a spokesperson for Eastroc Beverage noted: “To us, listing guidance is more like honing our internal capabilities—it’s a standard practice within the company.”