Chapter 381: Wang Lao Ji Cooling Tea, Thirty-Year Lease

Chapter 381: Wang Lao Ji Cooling Tea, Thirty-Year Lease

There are so many categories of beverages that if all of them were to be pursued, it would likely result in overextension and inefficiency.

Therefore, among the numerous categories, Deng Shirong definitely needs to make some choices, or prioritize certain categories while putting others on the back burner. If he can manage them later, he will; if not, he will let them go.

After all, there are so many tracks, and participating in all of them might not necessarily be a good thing.

Among the many categories of beverages, mineral water is a must. It is a product with extremely stable sales, even in the future. The patriarchs of mineral water companies, such as a certain brand, have more than once become the richest person in China, which gives you an idea of how powerful this category is.

Milk is another category on a massive scale. Currently, neither Yili nor Mengniu has been established, so this is a very suitable time to enter the milk products market.

However, producing milk products is more complex than other categories. It requires the support of a ranch.

To develop and expand milk products, it is necessary to go to places with vast grasslands, such as Inner Mongolia or Xinjiang. This is evident from the fact that both Yili and Mengniu are located in Inner Mongolia.

Therefore, although milk products have great potential for development, Deng Shirong decided to put them on hold for now, and he will consider whether to pursue them in the future.

Next is the category of energy drinks. The giant Red Bull had peak sales in the billions, and this product is incredibly profitable. In the late 1990s, when the product was launched in China, it sold for 6 yuan per can, and even in the future, it still sold for 6 yuan per can, with the price remaining unchanged for over two decades.

It's easy to see how profitable Red Bull was in its early days.

Of course, the various investments required during the early stages were substantial, and Red Bull's development was not smooth sailing. Due to its high price, which was 6 yuan per can when other carbonated drinks like Coca-Cola were only 2 yuan per bottle, many consumers found it hard to accept.

Moreover, at that time, domestic consumers did not have the habit or context for consuming energy drinks, leading to significant losses in the first year of Red Bull's launch in China.

In summary, it took Red Bull a decade to develop the market, eventually achieving a market share of 80% in the energy drink category.

Even if Deng Shirong were to enter the energy drink market now, the first challenge would be the formula. There are no energy drink formulas domestically, and they need to be sourced from abroad. The regulatory and approval procedures for imported foods, especially those containing caffeine, are strict, requiring expert evaluation and approval from multiple departments.

In the previous life, Thai Red Bull adjusted its formula to meet regulatory requirements while maximizing its effectiveness and making it more suitable for the domestic palate.

These adjustments are not simple and would require a significant amount of time and effort, as well as a massive investment in market cultivation to gradually develop the energy drink market. The human and material resources required would likely far exceed expectations.

Therefore, although he knows that the energy drink market is also very promising, Deng Shirong ultimately decided to give up, or at least temporarily give up. It would be more practical to let Red Bull cultivate the market first and then reap the benefits once the market is mature.

Another category worth mentioning is tea beverages, which are also on a massive scale. Whether it's iced black tea or cooling tea, their peak sales have reached the billion level.

First, let's talk about iced black tea. In the previous life, there was a term on the internet called "migrant worker beverage." This term originated because such beverages, priced at 3 to 4 yuan per bottle, were commonly found on construction sites.

Workers, who work outdoors and lose body fluids quickly, need to replenish their energy. They almost always have a large, cost-effective bottle of beverage, taking a few sips whenever they feel thirsty or hungry.

Among these beverages, Kangshifu iced black tea has the highest sales.

Especially the 1-liter bottle priced at 4 yuan, which not only quenches thirst and cools down but also provides sugar and hydration, quickly became the "lifesaving tea" for workers.

Therefore, iced black tea is worth pursuing.

Next, let's talk about Wang Lao Ji cooling tea. This is a 160-year-old brand that reached its peak when it secured the sponsorship rights for the popular show "The Voice of China." At that time, its annual sales exceeded 20 billion yuan, making it the true king of cooling teas.

Unfortunately, the mogul who popularized Wang Lao Ji only had the trademark license. Once the licensing period expired, everything fell apart.

In fact, as the licensing period approached, the mogul became anxious and unwilling to give up his hard-earned achievements. He resorted to bribery to renew the license.

At first, Guangyao (the owner of the Wang Lao Ji brand) did not pay much attention, as Wang Lao Ji was not yet a major player.

However, once the annual sales broke the billion mark, the attention and importance increased, as the stakes were too high.

In the end, the scandal broke, and the person who accepted the bribe was sentenced to life in prison. The mogul, due to insufficient evidence, was released on bail.

As a result, no one knew what the mogul was thinking when he made a decision that left everyone speechless.

He actually fled during his bail period!

Yes, he actually fled!

Initially, due to insufficient evidence, he could not be convicted. However, by fleeing, he became a fugitive, solidifying his guilt.

Thus, the mogul set a record by becoming the only fugitive on the Forbes list of billionaires.

Among the various beverage categories, Deng Shirong was inclined to prioritize Wang Lao Ji cooling tea.

There was no other reason; being in the Guangdong and Guangxi regions, producing cooling tea was the most suitable option. Moreover, he was well aware of the potential of this cooling tea and knew the advertising slogan that made Wang Lao Ji soar.

Therefore, Deng Shirong decided to first discuss the formula transfer with the owner of Wang Lao Ji, to see how far they could negotiate. If the result was ideal, he would start with Wang Lao Ji cooling tea. If not, he would start with mineral water.

The reason he did not rush into mineral water was that Deng Shirong wanted to play a big move. At present, Nongfu Spring had not been established. If he could launch the mineral water before the first CCTV advertising auction, and then win the first CCTV advertising bid, it would be easy to make his mineral water brand famous and successful.

After all, Deng Shirong was very clear about the value of the first CCTV advertising bid.

Pairing the first CCTV advertising bid with those two extremely classic advertising slogans would be a surefire win, making it easy to become the dominant brand in the mineral water market.

With this ace up his sleeve, Deng Shirong was not in a hurry. It didn't matter if he started the mineral water project two years earlier or later.

After thinking it through, Deng Shirong returned to the food company and convened a high-level meeting.

Those attending the meeting included the general manager of the food company, Deng Changyu, vice general manager Lin Zhongjun, financial manager Deng Changhua, marketing manager Li Guanghui, procurement manager Deng Changqing, administrative manager Zhao Wanli, human resources manager Zhou Haiming, the factory manager of Kangshifu Instant Noodles, Deng Changpei, and the factory manager of Deng Family Mooncakes, Deng Changpei.

Lin Zhongjun, Li Guanghui, Zhao Wanli, and Zhou Haiming, these four middle and high-level leaders, were all high-caliber talents recruited from outside.

As the food company grew larger, the need for talent naturally increased. However, relying solely on the Ye Deng clan was not feasible. They had to recruit more talent from outside; otherwise, the management would not keep up, and no matter how brilliant Deng Shirong's strategy was, it would be useless.

During the meeting, Deng Shirong did not rush to discuss Wang Lao Ji. Instead, he said, "Everyone, the development of Kangshifu Instant Noodles is getting better and better, and the eight-treasure porridge has achieved a good start. We have already planned the next steps, so I won't repeat them here.

This meeting is primarily to discuss two matters."

Deng Changyu asked, "Chairman, which two matters?"

Although Deng Shirong did not handle specific affairs, he always controlled the overall direction of the company's development. Previously, the company was run by the Ye Deng clan, so whether he held a position in the company or not did not matter, as the clan members would follow his instructions.

However, since the company began to recruit high-level leaders from outside, Deng Changyu and other company leaders consistently requested that Deng Shirong take the position of chairman. This way, the externally recruited leaders would know who was in charge.

Therefore, Deng Shirong is now the actual chairman of both the food company and the passenger transport company.

Deng Shirong said, "The first matter is to establish a cardboard box factory, a plastic factory, and a packaging factory. Currently, our instant noodles, mooncakes, and eight-treasure porridge packaging are all done through cooperation with others. Not only do they take a significant portion of the profit, but from a practical standpoint, it is more convenient to have our own factories."

Deng Changyu nodded and said, "Chairman, you are right. Sometimes just coordinating these matters wastes a lot of time. Establishing our own supporting factories will make the packaging aspect more secure and prevent any unexpected issues."

Deng Changpei added, "Chairman, if we are to establish these supporting factories, it will not just be in Bobai. We will need to build them in other cities where we have branches to achieve complete self-sufficiency."

"Since we are building them, we will definitely take care of all the branches."

Deng Shirong nodded and then looked at Lin Zhongjun, saying, "General Manager Lin, I will have you take charge of this. Is that okay?"

Lin Zhongjun responded, "Chairman, I have no problem. I will ensure the task is completed."

Deng Shirong nodded and said, "The next matter is about the company's new product. I intend to enter the cooling tea market. There is a 160-year-old cooling tea brand in Guangdong called Wang Lao Ji. Have any of you heard of it?"

Deng Changpei replied, "Chairman, I have heard of it. Wang Lao Ji cooling tea is quite famous in Guangdong."

Deng Shirong said, "I plan to discuss the formula transfer with the company that owns Wang Lao Ji. This century-old brand is very valuable, and I don't know if they will be willing to transfer the formula. If they are not willing, I will try another form of cooperation."

"If we can't reach an agreement, then we'll give up. But if we can, the next product of our food company will be Wang Lao Ji cooling tea."

Deng Changyu asked, "Chairman, what preparations do we need to make?"

"Only money is needed."

Deng Shirong looked at the financial manager and asked, "How much liquid capital can we use from the company's account right now?"

Deng Changhua smiled and said, "Two hundred million yuan is no problem."

Deng Shirong nodded. With such a large sum of money, he felt more confident about purchasing the cooling tea formula and the Wang Lao Ji trademark.

Two hundred million yuan in this era—there was no way the other party wouldn't be swayed by such a significant amount. Even if it was a state-owned enterprise, they likely wouldn't ignore such a large sum.

Of course, if they encountered a far-sighted leader who refused to sell the Wang Lao Ji trademark for two hundred million yuan, they could always follow the example of JDB and rent the trademark instead.

However, the rental period must be long, not just ten or eight years. They needed to ensure it was long enough to prevent the JDB incident from happening to their company.

Thinking about the trademark dispute between Wang Lao Ji and JDB, Deng Shirong remembered the concept of defensive trademarks.

Defensive trademarks refer to trademarks registered by the holder in the same or similar categories as the original registered trademark, as well as in unrelated categories, to protect the brand.

For example, Lao Gan Ma registered similar trademarks like Lao Gan Di, Lao Gan Ba, Lao Gan Niang, Gan Erzi, and Gan Nv'er. This is a defensive trademark strategy.

The main purpose of this approach is to prevent others from using the same or similar trademarks in the same or similar categories, thereby protecting the brand from infringement and imitation.

Successful registration of defensive trademarks can also provide additional revenue through methods such as trademark pledges, licensing, transfers, and auctions, while also defending against potential infringement.

Their company should adopt this strategy, registering defensive trademarks in advance to prevent the appearance of imitations like Kangshifu Red-Braised Beef Noodles, which have identical packaging and even similar pronunciation, which would be very unpleasant.

Thus, Deng Shirong instructed Deng Changyu to arrange a dedicated team to handle this.

...

The next day.

Deng Shirong took the legal team of the food company and boarded a bus to Guangzhou.

The legal team of the food company was newly established this year. As a reborn person, Deng Shirong was well aware of the importance of having a legal team, as most major companies in his previous life had their own legal teams.

Upon arriving in Guangzhou, after some inquiries, Deng Shirong learned that Wang Lao Ji was currently owned by Yangcheng Pharmaceutical Factory.

After resting in a hotel for a night, Deng Shirong set out the next day to visit Yangcheng Pharmaceutical Factory to discuss the purchase of the Wang Lao Ji formula and trademark.

Deng Shirong is usually a low-profile person, but during external business negotiations, he couldn't afford to be low-key. He needed to reveal his identity to show his importance, making it easier to conduct business.

Otherwise, a nobody going to negotiate a deal might not even get to see the factory leadership.

Deng Shirong's approach was undoubtedly correct. After revealing his identity, he was immediately invited to the factory manager's office and met with Manager Zhang of Yangcheng Pharmaceutical Factory.

After some pleasantries, they got down to business.

Deng Shirong asked, "Manager Zhang, the ownership of the Wang Lao Ji cooling tea brand belongs to your factory, right?"

Manager Zhang nodded and said, "That's correct, the ownership of Wang Lao Ji cooling tea belongs to our factory."

Deng Shirong didn't beat around the bush and directly asked, "Manager Zhang, I want to ask if your factory has any intention of transferring the Wang Lao Ji cooling tea brand?"

Manager Zhang looked at Deng Shirong in surprise and asked, "Chairman Deng, your company wants to acquire our factory's Wang Lao Ji cooling tea brand?"

Deng Shirong nodded and said, "That's right. I'm wondering if your factory is willing to transfer it. The price can be negotiated."

Manager Zhang said, "Chairman Deng, I apologize, but I can't make this decision alone. I need to consult with other leaders in the factory and report to the higher-ups for approval before I can give you an answer."

This was a state-owned enterprise, and any asset transfer would not be easy. Deng Shirong understood this and smiled, "Manager Zhang, please report to the higher-ups and see if they are willing to sell the Wang Lao Ji cooling tea brand. I guarantee the price will be satisfactory."

Manager Zhang responded, "Alright, I'll discuss it with the other leaders in the factory and report back to the higher-ups once we have a unified opinion."

Deng Shirong said, "Thank you, Manager Zhang!"

They chatted a bit more, and Deng Shirong left his contact information before departing from Yangcheng Pharmaceutical Factory.

Three days later.

Deng Shirong reappeared in the office of the manager of Yangcheng Pharmaceutical Factory.

After exchanging greetings, Manager Zhang said with a regretful expression, "Mr. Deng, regarding your intention to acquire the Wang Lao Ji cooling tea brand, I have discussed it with other leaders in the factory. Some support it, while others oppose it. I have also reported to higher-ups, and their response is likely to disappoint you."

Deng Shirong had already prepared himself mentally for this. In this era, many state-owned enterprises (SOEs) had been incurring losses for years, becoming a burden to the state. To achieve rapid development, the state had to shed these heavy burdens, leading to significant losses of state assets, which benefited certain individuals.

Yangcheng Pharmaceutical Factory, however, was still operating in a relatively stable condition. It was normal for the leadership to be unwilling to sell, as the transformation of Wang Lao Ji from a private to a state-owned brand during a special period made it politically sensitive to revert it to private ownership.

Deng Shirong was not overly attached to buying it. Not only would it require a substantial investment, but he was also concerned that if he made Wang Lao Ji a successful brand, it might be perceived as embezzling state assets, which he did not want.

Therefore, upon hearing Manager Zhang's response, Deng Shirong did not push further but immediately adjusted his strategy, saying, "Manager Zhang, if your factory is unwilling to sell, would you consider renting it to us?"

Manager Zhang was surprised, "Renting?"

Deng Shirong nodded, "Yes, our company is willing to pay a high price to rent and obtain the operating rights and trademark usage rights of Wang Lao Ji cooling tea."

This proposal was clearly unexpected by Manager Zhang. He thought for a moment and asked, "Mr. Deng, how much are you willing to pay, and for how long?"

Deng Shirong made an offer, "The lease term will be 50 years. For the first 5 years, the annual rent will be 1 million yuan; for the next 5 years, 2 million yuan per year; for the following 5 years, 3 million yuan per year; for the next 5 years, 5 million yuan per year; for the next 10 years, 10 million yuan per year; for the following 10 years, 20 million yuan per year; and for the final 10 years, 30 million yuan per year."

Although the later rent amounts were tempting, Manager Zhang still shook his head, "Mr. Deng, this lease term is too long. The leadership will not agree to it."

"At least 40 years," Deng Shirong insisted.

Deng Shirong explained, "I am optimistic about the future of Wang Lao Ji cooling tea, but that is just a prospect. It will require significant time and money to see profits. If we only lease it for ten or eight years, we might not even recoup the rent, making it unprofitable."

Manager Zhang understood this logic. For instance, the Wang Lao Ji cooling tea brand did not generate 1 million yuan in profit for the factory in a year. The rent offered by Deng Shirong increased over time, becoming higher in later years, which showed genuine sincerity.

Considering this, Manager Zhang said, "Mr. Deng, I understand your point. As usual, I need to discuss it with the factory leaders and report to higher-ups to get their approval before I can give you a definitive answer."

Deng Shirong nodded, "Alright, I'll wait for your good news, Manager Zhang."

...

Clearly, both the factory leadership and higher-ups were quite interested in Deng Shirong's proposal.

This arrangement meant a steady income without affecting the factory's operations, regardless of how well Deng Shirong managed the brand. Once the lease term ended, the factory could reclaim the brand and operate it again, making it a win-win situation.

The only point of contention was the length of the lease term.

Thus, the two parties began negotiating, and after more than a week, they finally reached an agreement that both could accept.

The agreement mainly covered two aspects: the lease term and the rent.

The lease term was reduced from 40 years to 30 years, starting from 1990 and ending in 2020.

By 2020, Deng Shirong would be well into his twilight years, so he was not overly concerned about the lease term. By then, Wang Lao Ji cooling tea would have already generated substantial profits, and there was no need to be overly greedy.

The rent was also slightly increased. For the first 5 years, the annual rent remained at 1 million yuan; for the next 5 years, it increased to 3 million yuan per year; for the following 5 years, 5 million yuan per year; for the next 5 years, 10 million yuan per year; and for the final 10 years, 20 million yuan per year.

Considering the peak sales of Wang Lao Ji cooling tea, these rent amounts were not a concern for Deng Shirong. After several discussions with the other party, he agreed to the terms.

Thus, both parties reached a mutually satisfactory agreement.

(End of Chapter)

Chapter end