Dongpeng Beverage: The myth of rapid growth and difficult hydration is gone forever?

Ask AI · How can Eastroc Beverage’s organizational adjustments unlock regional market potential?

In the evening of March 30 Beijing time, Eastroc Beverage (605499.SH) released its 2025 Q4 earnings. Overall, with the core energy drink business continuing to slow down, the company’s performance was still average; multiple key operating metrics were below market expectations. The specific highlights are as follows: $Eastroc Beverage (605499.SH) $Eastroc Beverage (09980.HK)

1. Revenue continues to decelerate: In 4Q25, Eastroc Beverage achieved revenue of 4.04 billion yuan, up 22.6% year over year. From the trend, it has experienced continuous “gear shifts” and deceleration starting from the first quarter. The core reason is still what the Dolphin has emphasized repeatedly: Eastroc Beverage is facing a growth bottleneck in special drinks, and the “second curve” cannot fill the “gap in effectiveness” stage where special-drink growth has slowed down due to the low base.
2. Energy drinks first slip to single-digit growth: By product category, energy drinks generated revenue of 3.0 billion yuan, up 8.5% year over year, and the quarter’s growth rate further hit a new low. Besides the natural slowdown in growth, the Dolphin also speculates that it is related to the company’s organizational structure adjustment in the fourth quarter and that internal teams were in a transition/settling-in period, during which Eastroc voluntarily slowed its shipment cadence. Electrolyte drinks achieved revenue of 430 million yuan, up 50%. Although it isn’t particularly impressive, it still met the full-year sales target of 3.0 billion yuan. The only segment that outperformed expectations was the other beverages segment, with revenue of 560 million yuan, up 166% year over year, and quarter-over-quarter acceleration continued. The Dolphin speculates that this is mainly because major products such as big-name beverages and Guozhicha are still in the fast rollout stage through channel reuse.
3. Base market enters saturation. Looking by region: because the company changed its disclosure framework (the Guangdong “base camp” was merged into the South China battle zone), but the Dolphin, based on research information, speculates that in the two Guangdong provinces where outlets are extremely mature, growth is only in the low single digits; meanwhile, in the North China (Beijing-Tianjin-Hebei, Shandong, Henan) and West China (Sichuan-Chongqing, Northwest) battle zones, since outlet density is far lower than in the south, they are still in a stage where penetration rates are rapidly increasing.

4, Fee spending rises in phases, putting pressure on profitability. Looking at gross margin: because of the increased volume of low-gross-margin electrolyte water and other beverages, the company’s overall gross margin fell slightly by 0.2 percentage points to 43.9%. On the expense side: in the fourth quarter, the company increased its placement of ice freezers, and the selling expense ratio rose by 0.5 percentage points year over year. Meanwhile, management expenses also rose somewhat during the transition stage of reorganizing into the “five major battle zones.” Ultimately, Eastroc’s core operating profit margin fell by 1.5 percentage points to 20.2%, which was below expectations.

5、Financial metrics overview

The Dolphin’s overall view:

Since the third-quarter report, Eastroc’s stock price has fallen by more than 25%. The core issue is that the performance has exposed the fundamental base that supported Eastroc’s rapid rise over the past few years—energy drinks are facing a growth bottleneck and growth is slowing, while other categories cannot make up for it in the short term, bringing valuation-downgrade risk; and the fourth-quarter performance can only be said to further validate this trend.

To solve this growth dilemma, Eastroc made its biggest internal organizational structure adjustment in history in the fourth quarter. Simply put, it can be understood as separating the six business divisions (Guangxi, Central China, East China, North China, Southwest, and the North) that used to be under the national marketing headquarters, and after the Guangdong “base camp” was re-integrated, reorganizing into five battle zones—South China, East China, Central China, North China, and West China—reporting directly to headquarters.

In the Dolphin’s view, in fact, this adjustment officially marks Eastroc’s shift from the past, where growth was driven by a single big product and a relatively extensive nationwide expansion, to being mainly driven by multi-category coordination and refined deep cultivation in regions.

Compared with the earlier organizational structure, the two core changes are:

a）Giving leaders of each battle zone greater financial and marketing decision-making power: Under the previous organizational structure, the authority of provincial and regional managers was generally relatively limited. Key decisions within a region—such as large-scale marketing activities, new product promotions, and channel expense allocations—required approval through multiple layers submitted to the national marketing headquarters or the Shenzhen headquarters, resulting in a long decision chain and slow market response.

After adjusting to the five battle zones, the company scientifically divided each region according to market capacity, consumption characteristics, and competitive landscape. At the same time, it pushed down core operating decision-making rights—such as personnel appointments and removals, expense allocations, and channel operations—fully to the battle zones. Each battle zone can then, based on local market competition conditions, competitor dynamics, and differences across various consumption scenarios, formulate and implement targeted marketing and operating strategies more quickly. b）Switching from special-drink-focused assessment to full-category assessment: Compared with the previous emphasis on assessing only Eastroc Special Drinks as the single core product, the five new battle zones now fully implement comprehensive assessments across all categories. The battle zones no longer only focus on the energy drink base, but also simultaneously take on promotion tasks for three product lines: Eastroc Special Drinks, Bupingshilä electrolyte water, and other new products; this helps push regional teams to shift from single-product-driven execution to multi-category coordinated operations, accelerating the cultivation of the second and third growth curves.

Taken together a & b, it can be seen that under immense growth pressure, Eastroc is trying to fully activate the subjective initiative of first-line teams in each region by shifting from organizational delegation to an assessment-oriented approach—breaking through the growth bottleneck of its single core special-drink big product. By relying on multi-category coordinated operations, expanding target audiences & new consumption scenarios, and uncovering incremental growth at the single-store and regional levels, it will ultimately achieve deeper national market expansion and stable overall performance growth.

From a valuation perspective: assuming that the organizational structure adjustment above leads to an increase in output from individual terminal outlets, under the scenario where special drinks grow by 15% in 2026 and electrolyte water and other beverages still maintain high-speed growth of more than 50% under a low base, the net profit of 5.3 billion yuan in 2026 corresponds to 24x. Compared with the Dolphin’s estimate of a 21% CAGR for 2026–2029, this is still relatively high. Therefore, in order to leave enough safety margin, the Dolphin suggests reverting to 20x and considering entry only after the market cap falls back to 106 billion yuan.

Below is a detailed breakdown of the financial report:

I. Revenue continues to decelerate

In 4Q25, Eastroc Beverage achieved revenue of 4.04 billion yuan, up 22.6% year over year. From the trend, it has experienced continuous “gear shifts” and deceleration starting from the first quarter. The core reason is still what the Dolphin has emphasized repeatedly: Eastroc Beverage is facing a growth bottleneck in special drinks, and the “second curve” cannot fill the “gap in effectiveness” stage where special-drink growth has slowed down due to the low base.

II. Energy drinks fall back to single-digit growth

Breaking it down by product category: in 4Q25, energy drinks generated revenue of 3.04 billion yuan, up 8.5% year over year, and the quarter’s growth rate hit a new low. Besides the natural slowdown in growth, the Dolphin also speculates that it is related to the company’s organizational structure adjustment in the fourth quarter and that internal teams were in a transition/settling-in period, during which Eastroc voluntarily slowed its shipment cadence.

From the perspective of launching new products: in 2025, Eastroc’s newly launched sugar-free Eastroc Special Drinks (adding L-α-glycophosphocholine) successfully entered consumption scenarios with higher health requirements, such as for office workers and fitness customers. This broadened the consumption profile of energy drinks, and also became more suitable for emerging scenarios such as gyms, esports venues, and shared office spaces. Overall, based on research information, the growth of sugar-free special drinks is significantly higher than the growth of the entire energy drink market.

Next, let’s look at the growth of Eastroc’s “second growth curve,” electrolyte water, which the market cares about most. In 4Q25, electrolyte beverage revenue was 430 million yuan, up 50.4% year over year. Although it isn’t particularly impressive, it still met the full-year sales target of 3.0 billion yuan.

Besides the natural channel increment brought by outlet expansion, the growth of Bupingshilä relies more on expanding consumption scenarios and introducing more targeted packaging specifications for different scenarios:

Specifically, the big idea is that Bupingshilä’s positioning has shifted from the early professional sports electrolyte water to fully moving toward daily, high-frequency hydration drinks:

For outdoor workers who do physically demanding work, in Q4 Eastroc strengthened in-depth collaboration with Meituan, Ele.me, SF Express, and JD Logistics. It set up dedicated display stacks and ice freezers at stations. In the charging/rest areas for ride-hailing drivers, it also increased the deployment of vending machines, further deepening coverage of the “last 100 meters.”

For white-collar office workers, Eastroc added 20,000 office-building ice freezers. It displayed special drinks together with small Bupingshilä water in the same freezer, and labeled it “Energy Refill Station at Your Workstation,” which effectively improved purchase conversion rates.

For students, at postgraduate exam sites and in university commercial districts, Eastroc set up “study/prep energy stations.” Through check-in interactions (scanning to receive coupons and free tastings) and distributing exam “success upon landing” packages (including special drinks + Bupingshilä + study materials), it not only precisely captured high-frequency brainpower consumption scenarios, but also more effectively completed the accumulation of private-domain traffic for the student group and conveyed brand value.

Although the company did not disclose specific data, based on research information, the growth rate of the 380ml Bupingshilä is far higher than that of 555ml and 1L. Behind this is incremental growth brought by everyday use.

Other beverages achieved revenue of 560 million yuan, up 166% year over year, with quarter-over-quarter acceleration and performance above expectations. One of the latest actions is that starting in December, Eastroc began rolling out 500ml packaged fruit tea nationwide. According to research information, as of December, there are 200,000 to 300,000 outlets that have been stocked, but sell-through is slower than the initial 1L rollout. In the Dolphin’s view, this is because consumers have already developed a sense of value-for-money with large-bottle products.

III. Base market enters saturation

Looking by region: because the company changed its disclosure framework (the Guangdong “base camp” was merged into the South China battle zone), but the Dolphin, based on research information, speculates that in the two Guangdong regions where outlets are extremely mature, growth is only in the low single digits; meanwhile, in the North China (Beijing-Tianjin-Hebei, Shandong, Henan) and West China (Sichuan-Chongqing, Northwest) battle zones, since outlet density is far lower than in the south, they are still in a stage where penetration rates are rapidly increasing.

In addition, on the overseas front, in the fourth quarter Eastroc reached a deep cooperation with the Indonesian Chinese-business heavyweight Sanlin Group (Salim Group). It established a joint venture company in Indonesia, indicating that Eastroc’s presence overseas is no longer only about “stock clearance” to distributors, but has begun localized production and sales—something worth looking forward to in the future.

Finally, looking at the number of distributors over the full year, the South China and East China battle zones have already entered a stage of distributor reduction. This shows that Eastroc has already passed the phase that relied on distributors to open up new territories; currently, it places more emphasis on distributor quality. Based on research information, the company is continuously carrying out a survival of the fittest process among distributors in each major region. Through this “cleanup” of distributors, Eastroc’s operating quality per distributor will be higher in the future.

1. Phase-based increase in fee spending, putting pressure on profitability

Looking at gross margin: because of the increased volume of low-gross-margin electrolyte water and other beverages, the company’s overall gross margin fell slightly by 0.2 percentage points to 43.9%. On the expense side: on one hand, the company increased its placement of ice freezers in the fourth quarter; on the other hand, based on research information, after the organizational structure adjustment, Eastroc increased the salary levels of its sales personnel. As a result, selling expenses increased 27% year over year, and the selling expense ratio rose by 0.8 percentage points to 19.6%.

Meanwhile, management expenses also rose somewhat during the transition stage of reorganizing into the “five major battle zones,” increasing by 0.5 percentage points to 4.1%. Ultimately, Eastroc’s core operating profit margin fell by 1.5 percentage points to 20.2%, which was below expectations

Dolphin’s historical articles:

In-depth:

September 23, 2025: Eastroc Beverage: Tear down Red Bull, kick away monsters—why did this homegrown “lifesaving water” manage to stage a comeback and become the winner?

October 10, 2025 Eastroc Beverage: After special drinks, where is the next “hundred-billion-dollar password”?

Earnings report commentary:

October 24, 2025 Eastroc Beverage: Special drinks growth slows down—can the myth still be sustained?

Risk disclosure and statement in this article: Dolphin Research’s disclaimer and general disclosure