Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 166 Electrolyte Water (Seeking monthly votes, recommendations, and subscriptions!)
Although Chen Bingwen asked Zhou Zhiyuan to develop SKU products for pulse therapy, he also knew that more SKUs were not necessarily better.

Instead, they use different SKUs to capture different consumption scenarios or different channels.

For example, for energy drinks targeting students, the name could be changed from "Pulse" to "Night Owl".

The driver version can also be called "Yilufa".

For dance halls, casinos, and nightclubs, it can be called all-night service.

Each SKU can precisely target a specific scenario, creating an omnipresent brand illusion.

The same product can also be targeted at different consumption scenarios.

They can be made into different models, specifications, and flavors.

In addition, according to Chen Bingwen's plan, while consolidating the core of functional beverages, it is necessary to start increasing product reserves and opening up new growth curves.

A normal consumer goods company should never rely on a single product category, even if that category is currently booming.

Normal beverage companies rarely rely on a single blockbuster product like Red Bull; instead, they typically have a pyramid-shaped product structure.

Use one or two super products to stabilize the basics and capture mindshare.

We should continue to broaden our reach by targeting different groups and scenarios, thereby expanding the market and diversifying risks.

Functional beverages are undoubtedly the core business and cash cow that Chen Kee must adhere to for a long time to come.

However, the company's future requires more diversified growth engines.

In Chen Bingwen's strategic blueprint, after functional beverages, the next high ground that must be seized is the electrolyte water market.

The electrolyte water market, from Pocari Sweat of Japan to the upstart "Bu Shui La", has demonstrated the huge market potential of this category.

It perfectly meets the needs of post-workout hydration, post-sweating, and even daily health hydration, making it a golden track that combines functionality and versatility.

Functional drinks primarily focus on energy replenishment and mental alertness, while electrolyte water focuses on the efficient replenishment of water and electrolytes. The two complement each other perfectly in terms of function, covering a wider range of needs from high-intensity work and exercise to daily health hydration.

In this way, Chenji has occupied two blue ocean markets: functional beverages and electrolyte beverages, forming a strategic pattern driven by two core elements.

So, after arranging the development of the Pulse SKU, Chen Bingwen turned the conversation to new product research and development.

"Professor Zhou, I've come here today because I have a new idea I'd like to discuss with you."

"Oh? Another new idea?" Zhou Zhiyuan immediately perked up.

He had long admired Chen Bingwen's imaginative yet always insightful ideas that hit the mark in the market.

"Hmm." Chen Bingwen nodded, organizing his thoughts, "We've been making energy drinks that 'replenish energy and refresh the mind,' targeting recovery after mental and physical exertion."

But I'm wondering if there's a product that focuses on 'replenishing water and electrolytes', specifically for situations where the body loses water and salt rapidly?

For example, sweating profusely.

Zhou Zhiyuan pushed up his glasses and asked in confusion, "Sweating a lot?"
After exercise?
Working in high temperatures?

Diarrhea and dehydration?

“Yes, those are the scenarios.” Chen Bingwen nodded. “Ordinary water can quench thirst, but it cannot quickly replenish electrolytes such as sodium, potassium, calcium, and magnesium lost through sweat.”

If there were a beverage that tasted refreshing, quickly hydrated, and had a scientifically balanced electrolyte ratio, what do you think of the market potential for it?

Zhou Zhiyuan thought for a moment and asked, "The simplest way to replenish electrolytes is to drink lightly salted water. Even getting an IV drip at the hospital can solve the problem. Is it necessary to produce beverages specifically for replenishing electrolytes? Would the market accept them?"

Chen Bingwen smiled and said, "Diluted saline solution, or even intravenous infusion in the hospital, can indeed replenish electrolytes, but they fall under the category of treatment."

What I want to do is prevention and routine maintenance.

Just like people take medicine when they have a cold, they also strengthen their immunity and prevent colds by exercising and supplementing with vitamin C.

My target users are not patients who are already dehydrated and need to go to the hospital for intravenous infusions, but people who are about to or are currently losing a lot of water and electrolytes.

Imagine an athlete who has just finished a marathon. Would they rather drink a refreshing and sweet beverage that can quickly restore their energy, or drink a bowl of salty and bitter water?
Would a worker sweating profusely on a construction site prefer to buy a thirst-quenching and salt-replenishing drink from a convenience store, or bring his own salt water bottle?
Hospital IV drips are for repairing the body after problems have occurred, while our product provides a more convenient and better-feeling protection and rapid replenishment before or during problems.

These are two completely different markets.

Zhou Zhiyuan nodded thoughtfully: "Just like our 'Pulse,' you can drink coffee to refresh yourself, but we offer a better-tasting and more portable option."

This is what you mean by upgrading consumption scenarios and user experience.

“That’s right!” Chen Bingwen affirmed. “More importantly, treatment is passive, while prevention and daily maintenance are proactive, and have greater market potential.”

What we need to do is create and define this new category of daily, scientifically-based hydration.

Zhou Zhiyuan couldn't understand how to match market demand with product positioning, but he knew how to develop new products.

Having figured out what effect Chen Bingwen wanted to achieve, he looked at Chen Bingwen and asked, "Mr. Chen, do you already have a specific idea?"

Chen Bingwen pondered for a moment, seemingly organizing his thoughts, but in reality, he was recalling the core formula framework of several electrolyte waters from his previous life, such as Pocari Sweat, Gatorade, and Hydra-Ease.

He couldn't directly state the specific proportions, but he could provide directions and key components.

“I’ve looked up some information on physiology and sports medicine,” he said, carefully choosing his words to avoid being too qualitative. “The core idea is to simulate the electrolyte composition of human sweat, but with a slightly lower concentration to ensure rapid absorption.”

Key components should include sodium chloride and potassium chloride, and possibly small amounts of calcium and magnesium.

Some sugar is needed, but not for energy; it's to promote the absorption of water and electrolytes in the intestines. Glucose is best, as it's absorbed the fastest.

Zhou Zhiyuan took the notebook and wrote down, saying as he wrote, "The idea of ​​sodium, potassium, and glucose is very scientific!"

The concentration is lower than that of sweat, ensuring efficient absorption! Taste is indeed a big issue; it needs to contain these electrolytes and sugars, but it also needs to be palatable, not like drinking medicine.

“This is the difficulty of research and development.” Chen Bingwen nodded. “Therefore, for this project, I want to use a more ‘clumsy’ but potentially more effective method.”

"what way?"

"Human testing," Chen Bingwen said. "The laboratory can produce countless formulas that match theoretical data, but which one is the most effective and has the most acceptable taste can only be determined by people drinking it."

Our company has so many workers, especially warehouse staff, who lose a lot of moisture every day while handling large quantities of products. We can ask them to drink and test the product, and record their physical reactions and subjective feelings.

If employees are unwilling, they can be given a small subsidy as encouragement.

Zhou Zhiyuan's eyes lit up: "This is a good idea! Theoretical data is the foundation, but the final effect must be verified by human trials."

We can organize a testing team to conduct regular exercise tests and compare different formula samples.

"Yes. You will take the lead in this matter, establish a new project team, and specifically tackle this 'electrolyte supplement drink'."

Chan Ping-man made the decision, saying, "If medical support is needed, we will contact experts at the Faculty of Medicine of the University of Hong Kong or Baptist Hospital and hire them as consultants."

Zhou Zhiyuan nodded, "Okay, I'll organize people to develop the theoretical framework and basic formula first."

Chen Bingwen added, "The R&D budget is applied for separately. The amount needed is reported directly to Director Fang. I have already spoken to him about it."

This product is worth our investment.

Before leaving, Chen Bingwen remembered something and asked, "By the way, Professor Zhou, are the patent applications for the functional chewing gum and energy bars going smoothly?"

Zhou Zhiyuan snapped out of his daze and quickly replied, "Successfully! The microencapsulation technology for chewing gum and the ingredient ratio patent for energy bars have been applied for in the United States, Japan, and major European countries, and the approval for Hong Kong Island has been granted."

Attorney Gu's team is following up on the subsequent international applications.

"Very good." Chen Bingwen nodded in satisfaction. "Complete the process solidification in the laboratory stage as soon as possible and determine the production parameters."

After leaving the R&D center, Chen Bingwen made a phone call to Zhong Qiang, the deputy manager of the production department.

"Brother Qiang, we can start preparing for small-batch trial production of the functional chewing gum and functional energy bars. Please arrange and implement this as soon as possible."

Zhong Qiang replied, "Okay, boss. The production workshop was renovated a week ago."

"We have enough raw materials in stock, and we can start production at any time." After thinking for a moment, Chen Bingwen decided, "Let's start by producing 5,000 samples from each side."

Once the samples are ready, they are immediately sent to the quality control department and simultaneously distributed to colleagues in the marketing department and overseas companies for internal testing and feedback collection.

"Understood! I'll arrange it right away, and we can produce a sample within three days!"

The next morning, not long after Chen Bingwen entered his office, Ali knocked on the door and came in to report: "Mr. Chen, the representatives from PepsiCo have arrived."

The team was led by a Mr. Robert Miller, who said he was the sales director.

Chen Bingwen raised his wrist to check his watch; it was only 10 a.m.

It takes at least seventeen or eighteen hours to fly over from the United States. Based on that time, Robert Miller would probably already be on the plane when Pepsi requested to restart negotiations on the bottle cap patent.

"Looks like they're really in a hurry."

Chen Bingwen smiled and said, "Please invite them to the conference room. I'll be there in ten minutes."

Ten minutes later, Chen Bingwen pushed open the door and walked into the conference room.

There were three people sitting inside. The one in the lead was a white man in his forties, dressed in a well-tailored suit but looking tired. He was Robert Miller, the sales director of Pepsi.

Beside him was an assistant with an Asian appearance and a serious-looking legal representative.

“Mr. Miller, welcome.” Chen Bingwen stepped forward, extended his hand, and greeted him in a calm tone.

“Mr. Chen, I apologize for the intrusion.” Robert Miller immediately stood up, shook hands firmly with Chen Bingwen, and said with a smile, “We are here with the utmost sincerity, hoping to restart negotiations regarding the licensing of your company’s diamond-shaped anti-slip bottle cap patent.”

Chen Bingwen gestured for Robert Miller and the others to sit down, and then said, "Mr. Miller, we have received your telegram."

We are open to resuming negotiations.

Chen Bingwen looked at Robert Miller and said seriously, "Our conditions are very clear: Chen's 'Pulse' energy drinks and related new products in the future must be fully integrated into PepsiCo's core sales network in North America and Europe."

What we need are long-term, stable channel cooperation terms that take precedence over those of other similar products.

He paused, then added, "This is the basis for negotiations."

If we can't reach a consensus on this, I don't think we need to waste each other's time.

Robert Miller's facial muscles twitched slightly.

He anticipated that Chen Bingwen would make demands, but he did not expect him to be so direct and forceful, leaving almost no room for negotiation.

The legal representative next to him instinctively wanted to speak, but Miller stopped him with a look.

“Mr. Chen,” Miller took a deep breath, trying to keep his voice steady, “your conditions are very challenging.”

PepsiCo’s distribution channels are one of our most core assets, and opening them up to third-party brands is unprecedented in the company’s history.

The board is being very cautious about this.

Under Coca-Cola's franchised bottling model, sales channels are primarily developed and maintained by franchised bottling plants in various regions.

In PepsiCo's system, sales channels are directly controlled by PepsiCo's self-built or controlled bottling plants, adopting a model that is more inclined towards direct operation or self-owned bottling + direct sales.

Therefore, unlike Coca-Cola's "light asset + franchised bottling" channel strategy, PepsiCo focuses more on direct control and deep involvement in sales channels.

“Mr. Miller,” Chen Bingwen said, ignoring what Miller was saying, “all the precedents in business history were created by the first person to try something new.”

I believe PepsiCo's board is more concerned with market share and profit statements.

He picked up the teacup on the table, took a small sip, and continued, "My patent can directly improve the consumer experience and solve the pain points that Coca-Cola is currently dealing with."

It can give Pepsi products a real competitive advantage and help you win back the market share lost from Coca-Cola.

I believe you understand this situation better than I do.

“Otherwise,” Chen Bingwen put down his teacup, his voice low but carrying great weight, “you wouldn’t be in such a hurry to personally fly across the Pacific and sit in my conference room.”

There was a brief silence in the conference room.

Robert Miller stared at Chen Bingwen with a grim expression.

Chen Bingwen's words were tantamount to exposing Pepsi's wounds to the public.

This left him with no room for maneuver.

If not, how could he have flown from the United States to Hong Kong Island overnight and sat down at Chan Kee's negotiating table, given the pressure to meet performance targets and the relentless pressure from Coca-Cola?

“Mr. Chen,” Miller spoke again, his tone much softer, “we acknowledge the value of your patent.”

However, full access and priority terms involve extremely complex channel management and profit distribution.

Can we first discuss the patent licensing itself?

For example, a more competitive licensing price, or…

“Mr. Miller,” Chen Bingwen interrupted him, “I think you may have misunderstood me.”

What I need is not a simple patent licensing fee.

That amount of money wasn't very appealing to me.

Just kidding, the HK$300 million syndicated loan is about to be secured, and we're still short a few hundred thousand US dollars in patent licensing fees?

He smiled and said, "What I value is Pepsi's well-established global sales network."

It can help my 'Pulse' and future new products reach millions of consumers as quickly as possible.

This is a strategic value that cannot be measured in money.

He paused, looking at Miller: "And you, you need my patents to solidify or even increase your market share."

This is a strategic collaboration, not a simple patent sale.

Therefore, my conditions will not change.

This is the foundation of cooperation; without it, nothing else matters.

Chen Bingwen's attitude was exceptionally firm, showing no sign of wavering.

He knew that the initiative was entirely in his own hands at this moment.

Pepsi can't afford to delay; every day it delays, Coca-Cola's advantage will increase.

Robert Miller's expression changed several times.

He had prepared several bargaining strategies, but they all became useless in the face of Chen Bingwen's tough stance of "accept or leave".

He was silent for a moment, then let out a long breath, as if he had made up his mind.

"Mr. Chen, I need to report your conditions to headquarters immediately."

This is beyond the scope of my authorization.

"Please proceed." Chen Bingwen gestured. "I look forward to your final reply."

However, please remember that time waits for no one.

The market won't wait for anyone.

Robert Miller nodded emphatically and hurriedly left the conference room with his team.

They needed to find a place immediately to call back to headquarters in the United States and report the results of this highly impactful meeting.

(End of this chapter)