Li Ziyuan, which once sold 1.4 billion yuan in a year, was a childhood memory of countless people, and is now facing the test of life and death.

This celebrity product, supported by "milk powder and sugar water", has declined in today's environment where everyone pursues health.

Do you still dare to drink it after reading it? How long can this sweet sugar water last?

All contents stated in this article are reliable sources of information and detailed in the article

Business Information on "Milk Powder + Sugar Water"

I once sold 1.4 billion yuan a year, but now I am deeply trapped in the quagmire of revenue decline. The sweet milk you couldn't put down when you were a child is essentially a milk-containing beverage with "milk powder and sugar water". A product has supported a business empire and contributed more than 93% of the company's revenue. Now, it is this product that is becoming a "sweet shackle" that cannot be broken away.

Back in Jinhua, Zhejiang in 1994, the founder Li Guoping did not think about what high-tech dairy products to do. At that time, there were two big pits in China's dairy industry: one was the unstable supply of raw milk, and the other was the backwardness of fresh preservation and cold chain technology.

Li Guoping's choice can be said to be quite "chicken thief". He directly gave up raw milk and made a new thing with milk powder, white sugar and drinking water - sweet milk drinks. This formula perfectly avoided all the pain points of the industry at that time.

It does not require grabbing milk sources, nor does it require complex cold chains, with a long shelf life and a low production threshold. More importantly, it has found its own customer positioning. Its price is cheaper than pure milk at that time, and its taste is accurately captured by sweet MSG.

Many people's memories of Li Ziyuan are tied to the misty hot air of the breakfast stall. A fried dough stick, a bun, and a bottle of Li Ziyuan have almost become the standard childhood configuration for children in Jiangsu, Zhejiang and Shanghai. This kind of scenario-based consumption has made it firmly occupy the minds of a generation.

Product alone is not enough. Li Ziyuan's channel strategy is even textbook-level. When dairy giants kill to the death in supermarkets, Li Ziyuan devotes all their energy to those inconspicuous breakfast shops, convenience stores and husband-and-wife stores.

In order to make these middlemen work hard for themselves, Li Ziyuan gave nearly 40% of dealers' rebates. This simple, crude but extremely effective way makes its products quickly spread like dandelions to the corners of Jiangsu, Zhejiang, Shanghai and even more sinking markets.

As early as 2002, the company had an advanced brand awareness and spent a lot of money to invite Fan Bingbing and Ruby Lin to endorse the then popular. The star effect and omnipresent channels allowed Li Ziyuan's annual sales to exceed 500 million before the industry earthquake came in 2008.

One move failed

However, what makes you will eventually trap you.Li Ziyuan's success is essentially a victory of brand positioning. Founder Li Guoping has a famous saying: "Do only one thing in your life and make this bottle of milk well." This original intention is worthy of respect, but it also laid the foreshadowing for the subsequent dilemma.

As the times change, people's consumption concepts are also constantly improving.The mainstream people care about at present are "healthy" and "anti-sugar". When people pick up a bottle of drinks, they will subconsciously look at the ingredients list and nutritional ingredients. The protein content of sweet milk in Liziyuan is only 1%, which is less than half of the national pure milk standard (≥2.8%).

The label of "milk powder and sugar water" was a successful skill in the past, but now it has become an original sin. Negative evaluations of high sugar and low nutrition are coming, and some people even criticize it for affecting children's teeth and vision. Even its name "Sweet Milk" is accused of misleading consumers, making people think it is milk.

Li Ziyuan has thought of changing. Since 2022, it has been learning crazily. It has been learning crazily. It has zero-fat lactic acid bacteria drinks, sugar-free sweet milk, oat milk, bubble milk, and even AD calcium milk have almost copied all the popular categories on the market, but the result is not satisfactory., none of these new products can be used to fight, most of which are loud thunder and light rain, and they will soon be submerged in the ocean of shelves. 0

This "follow-style" innovation exposes the company's shortcomings in innovative products, and brand awareness has been firmly welded to death. When talking about Li Ziyuan, what comes to mind about consumers is the bottle of small fat bottle of sweet milk, as well as labels such as "unhealthy" and "for children to drink". This solidified impression makes it seem out of place no matter what new healthy products it launches, and it is difficult to gain market trust.

What's worse is that the company seems to have also fallen into a dependence on its inherent products. After the growth stagnates, the most direct method is to raise prices for old products, rather than finding ways to upgrade and transform them to regain the hearts of customers.The series of cash-out behaviors by founder Li Guoping after the company went public made the market even more doubtful. Does the person who said he wanted to "make a handful of milk for life" want to "get it and leave."

The new card game of the second generation

At the end of 2024, Li Bosheng, the founder's son, officially became the general manager. The task facing the new leader is very clear: he must find a way to "dilute" the absolute dominance of sweet milk and find a way out for the company.His first knife was cut to the channel. The offline, which Li Ziyuan was proud of in the past, also showed its drawbacks in the new consumption era. Li Bosheng turned his attention to the online and vigorously developed e-commerce and live streaming to sell goods.

This move was immediately effective. In 2024, Li Ziyuan's e-commerce revenue reached 76 million yuan. Although the total amount was not large, it also injected a trace of vitality into a stagnant performance, which can be said to be an important breakthrough.

In order to get rid of the impression of old age and younger age, Li Ziyuan changed the spokesperson to Cheng Yi, who is more popular among young people, and formally proposed a new strategy of "younger + health". The intention of this move is very obvious, which is to say goodbye to Li Ziyuan, who only belongs to "childhood memories" in the past.

But all the above are just repairs. Li Bosheng's real big move is hidden in the wind and sand of the desert in the northwest. The company decided to invest in and build a large-scale raw milk processing project in Ningxia. It means that this company, which started with "milk powder + sugar water", will finally fundamentally change its genes. This move is full of ambitions and unknowns, and let us consumers wait and see!