via： Investment network / Ma Mujie.
As the sole institutional investor in Eastroc Beverage, Alan Song, Founding Partner and Chairman of Harvest Capital, told ChinaVenture that for a company at a certain stage of development, listing is a natural progression. The growth of national enterprises is inseparable from the support of China's capital market, and becoming a publicly listed company is not the end goal for Eastroc Beverage.
“When you’re young, stay awake and strive. When tired or sleepy, drink Eastroc Special Drink.” Now, this functional beverage that helps many recharge quickly is approaching its market debut.
On April 24, 2020, the China Securities Regulatory Commission (CSRC) disclosed the prospectus for the initial public offering of Eastroc Beverage (Group) Co., Ltd. This move brings the ambitions of the “perennial runner‑up” in functional beverages into the spotlight.
Founded in 1987, Eastroc Beverage is primarily engaged in the R&D, production, and sales of beverages. Its key products include Eastroc Special Drink, Citrus Lemon Tea, Tangerine Peel Special Drink, and packaged drinking water, with Eastroc Special Drink serving as the flagship product. According to the prospectus, Eastroc Special Drink currently ranks second in market share in China’s energy‑drink sector.
As a family‑run enterprise, Eastroc Beverage’s growth has also benefited from external capital. The prospectus shows that prior to the IPO, Chairman Lin Muqin was the largest shareholder and actual controller, holding 56.41% of shares. Tianjin Junzheng Investment Management Partnership (Limited Partnership) and Shenzhen Kunpeng Investment Development Partnership (Limited Partnership) held 10% and 7.36%, respectively.
The private‑equity institution behind Tianjin Junzheng Investment Management Partnership is Harvest Capital, which has also invested in notable companies such as Wenheyou, Laoxiangji, Qiaqia Food, Aimer, and Xiao Guan Tea.
Why is Eastroc Beverage choosing to enter the capital market now? What impact would a successful listing have on the company and the broader market? ChinaVenture reached out to Eastroc Beverage for comment but did not receive a response.
Alan Song, Founding Partner and Chairman of Harvest Capital, noted that listing is an inevitable step for a company at a certain stage of maturity. The development of national champions depends on the support of China’s capital market, and becoming a public company is not the final destination for Eastroc Beverage.
¥4 Billion in Annual Sales, Energy Drinks Make Up 90%
One beverage, billions in business.
According to the prospectus, Eastroc Beverage’s revenue from 2017 to 2019 was ¥2.843 billion, ¥3.037 billion, and ¥4.208 billion, respectively, representing year‑on‑year growth of 6.81% and 38.56%. Net profit attributable to shareholders was approximately ¥0.3 billion, ¥0.22 billion, and ¥0.57 billion over the same period, with gross margins holding steady at 47.92%, 45.97%, and 46.74%.
The growing energy‑drink market, with its attractive margins, has drawn many players. In recent years, established companies have launched new energy‑drink products, such as Uni‑President’s “Enough Fuel” and Amway’s XS. However, after years of development, the industry has consolidated around leading brands like Red Bull, Eastroc Special Drink, Lehu, Physical Energy, and War Horse. The prospectus indicates that in 2019, Eastroc Special Drink ranked second in market share, solidifying its position as an industry leader.
Despite consistent revenue growth, Eastroc Beverage’s income remains highly concentrated, with significant reliance on its flagship product, Eastroc Special Drink.
The prospectus shows that the company’s products span three categories: energy drinks, non‑energy drinks, and packaged drinking water. Energy drinks are the core offering, contributing approximately ¥2.735 billion, ¥2.885 billion, and ¥4.003 billion in revenue from 2017 to 2019, accounting for 96.19%, 94.99%, and 95.11% of total revenue, respectively.
It is worth noting that product concentration is common in the beverage industry. Many companies focus intensely on a specific segment, strengthening their brand by building scale in a particular product line—examples include milk‑tea specialist Xiangpiaopiao and Yangyuan Drink’s “Six Walnuts.”
However, Eastroc Beverage still faces the challenge of geographic concentration. Although the company has upgraded production, marketing, and channel management through digital tools like big data and QR codes—enabling refined operations and targeted marketing—sales remain heavily skewed toward Guangdong. According to the prospectus, revenue from Guangdong accounted for 66.66%, 61.10%, and 60.12% from 2017 to 2019, respectively. Expanding nationally remains a priority.
“The functional‑beverage industry offers relatively high margins. Eastroc Beverage has invested heavily in recent years, particularly in marketing, and has driven steady growth through innovation. Based on long‑term observation, I believe the next step should be to accelerate development and expand the business through a listing,” said Bao Yuezhong, a new‑retail expert. He added that the functional‑beverage track holds strong growth potential, and with Eastroc Beverage expanding its product portfolio, the IPO path looks promising.
From Near Bankruptcy to Industry Runner‑Up, Harvest Capital Becomes Second‑Largest Shareholder
Eastroc Beverage’s journey is a classic “grassroots success story.”
Its predecessor, Shenzhen Dongpeng Beverage Company, was founded as a state‑owned enterprise in 1987, initially focusing on herbal tea and purified water. In 1997, the company launched Eastroc Special Drink, though it was not a core product at the time. With herbal tea highly popular in Guangdong, Eastroc Beverage did not initially stand out in the market.
By 2003, due to poor management, the company was on the brink of bankruptcy. The leadership planned to transfer assets to employees to survive. Lin Muqin, then the sales general manager, together with his brother Lin Mugang, took over the factory.
“I wouldn’t say I was confident, but I was passionate. I’ve been in beverages for years—I just wanted to do it well!” Lin Muqin later recalled.
After taking full control, the Lin brothers accumulated the company’s early development capital through strict cost control. Public information shows that from the 2003 takeover and privatization through around 2010, the company’s output value grew from ¥15 million to ¥250 million.
But growth required more than frugality. Lin Muqin sought a breakthrough and eventually focused on the functional‑beverage market. He introduced Eastroc Special Drink in bottled format with a unique dust‑proof cap, differentiating it through packaging and competitive pricing.
Since then, Eastroc Special Drink began investing more in brand promotion, enlisting actor Nicholas Tse as spokesperson and launching a “brand rejuvenation” strategy. Sponsorships of popular variety shows and TV dramas, along with slogans like “Drink Eastroc Special Drink when tired or sleepy” and “Stay awake and strive when young,” helped the brand gain national recognition.
“No successful product is born overnight from a decision‑maker’s whim. Expanding a category’s market isn’t easy—it often takes eight, ten, or even more years of perseverance. You have to stay intensely focused to seize the moment when others grow weary. It’s the accumulation and groundwork that let you move half a step ahead,” Lin Muqin reflected on Eastroc Special Drink’s rise.
As a family business, Eastroc Beverage’s growth also benefited from external capital.
According to the prospectus, Tianjin Junzheng Investment Management Partnership and Shenzhen Kunpeng Investment Development Partnership are the second‑ and third‑largest shareholders, holding 10% and 7.1553%, respectively. Lin Mugang holds 5.8016%, making him the fourth‑largest shareholder.
Shenzhen Kunpeng Investment is affiliated with Lin Muqin, with his son Lin Yupeng as the major shareholder. The private‑equity institution behind Tianjin Junzheng Investment Management Partnership is **Harvest Capital**, which made a strategic investment of ¥350 million in Eastroc Beverage in June 2017.
“Functional beverages have always been a focus for us. Given China’s demographic dividend and consumption‑upgrade trend, the functional‑beverage market holds immense potential. As the largest national functional‑beverage company, Eastroc Special Drink naturally attracted our attention,” Alan Song told ChinaVenture, noting that Chinese functional‑beverage companies are on a fast‑growth track globally.
Notably, Lin Muqin has disclosed that he turned down dozens of investment offers. The reason for choosing Harvest Capital as a strategic investor was that Eastroc Special Drink, as a national champion, needed a business partner more than a financial investor.
Alan Song emphasized that corporate growth doesn’t happen overnight. Moving from a private to a public company and then to an industry leader requires a partner that shares a deeper alignment, not just a transactional relationship. “Whether in strategic planning, management, channel development, brand building, or consumer‑experience enhancement, Harvest Capital has extensive experience. We are the strategic partner behind China’s consumer‑brand champions.”
At the same time, Alan Song believes that while listing can serve as a second springboard for Eastroc Beverage, it is not the end goal. In his view, becoming a modern, publicly listed company is only the first step for an “industry champion.” Eastroc Beverage’s ambition is to evolve from a leading Chinese national brand to a global leader.
Balancing Expansion: The Challenge of Diversification
Industry analysis suggests that Eastroc Beverage’s listing may aim to shed the “perennial runner‑up” label with the help of capital.
On one hand, the company plans to extend its multi‑brand, multi‑category strategy into other beverage segments to enhance product competitiveness and diversify its portfolio. On the other, it seeks to further penetrate the national market and boost brand awareness.
The prospectus notes that proceeds from the offering will be used mainly for five areas: production‑base construction, marketing‑network upgrades and brand promotion, IT system enhancement, R&D center development, and headquarters construction—including projects in South China and the Chongqing Xipeng production base.
In recent years, the company has actively developed and launched new products such as Citrus Lemon Tea and Tangerine Peel Special Drink to broaden its consumer base and enrich its product line. It has also been exploring markets in Guangxi, Central China, and East China.
However, beyond South China and lower‑tier markets, Eastroc Special Drink has yet to fully penetrate northern China, and sales remain geographically concentrated.
“Although Eastroc Special Drink has been pursuing national expansion and product‑line innovation in recent years, progress on both fronts has been challenging. Moreover, with the rise of tea‑shop chains impacting pre‑packaged beverage categories, Eastroc Special Drink’s expansion space may be limited if it continues to focus solely on beverages,” Bao Yuezhong observed. He added that while Eastroc Special Drink has maintained 30‑40% growth and still has room to develop, overtaking Red Bull remains a considerable challenge.
In Alan Song’s view, Eastroc Beverage’s national expansion is just beginning, and its product‑line development is ongoing. “There is still substantial market space for functional beverages, and Eastroc Special Drink’s potential is not yet fully realized. We will advance step by step according to strategic priorities. With stronger capital backing, Eastroc Special Drink will succeed in its ‘northern expansion.’”
However, Alan Song acknowledged that Eastroc Beverage’s current challenges lie in building a truly national brand, deepening channel coverage, and meeting evolving consumer expectations. He believes that any successful consumer‑goods brand depends on three core capabilities: strong product power, comprehensive operational systems, and advanced brand‑innovation awareness. A listing would not only enhance Eastroc Beverage’s brand but also improve internal management and operational efficiency.
“All commercial competition is, at its core, management competition. We must always maintain a forward‑looking, vigilant mindset,” Alan Song emphasized. After going public, Eastroc Beverage will have the opportunity to aim for the industry’s top position.
