In recent years, many emerging brands have surfaced domestically. Some categories originally from abroad have also given birth to new brands in the country through localization, with cocktails being a typical example. Among them, RIO cocktails are undoubtedly the most well-known domestically. However, recently, RIO's parent company, Reignwood Investments, has found itself embroiled in controversy.
On February 28, 2024, Reignwood Investments officially released an announcement regarding a significant matter, starting with a bolded statement for clarification:
The company and all members of the board of directors, except Mr. Liu Xiaodong, guarantee the truthfulness, accuracy, and completeness of the information disclosed, with no false records, misleading statements, or significant omissions.
From the beginning, it is clear that the issue lies with Liu Xiaodong, the chairman of Reignwood Investments. Sure enough, the second paragraph directly reveals what happened to Liu Xiaodong: Shanghai Reignwood Investment Holdings Group Co., Ltd. recently received a notice from the Supervisory Committee of Nanzheng District, Hanzhong City, stating that Mr. Liu Xiaodong, the company's chairman, legal representative, and general manager, is under investigation and has been detained on suspicion of bribery.
The rest of the content is essentially standard rhetoric, stating that Reignwood is operating normally and that no others are implicated. The main content lies in the previous paragraph.
The founder, chairman, legal representative, and general manager of a well-known domestic company being taken away for alleged bribery is no small matter. Although the charges have not yet been proven and sentenced, the fact that he was detained suggests that the accusations are highly probable.
Born in 1967 in an ordinary family in Lanzhou, Gansu, Liu Xiaodong worked his way up from an ordinary cigarette factory worker to owning a fortune of billions, not just through luck but also through sharp judgment and decisiveness. By securing advertisements in various popular variety shows and dramas, he successfully revived RIO cocktails and topped the domestic pre-mixed cocktail brand rankings, but whether he used illegal means in this process remains unknown.
Liu Xiaodong's life can be described as legendary. Starting as an ordinary worker in a cigarette factory in Lanzhou, Gansu, he boldly moved to Shenzhen in the 1990s, eventually amassing a fortune of billions.
Some might wonder how a tobacco industry worker turned to the pre-mixed cocktail arena. In fact, above the tobacco industry lies another industry, that of essence. Nowadays, cigarettes are not made purely of tobacco but are added with various essences. These essences serve many purposes, some to ensure the consistency of tobacco flavor across different batches and conditions, others to add extra aroma to cigarettes.
In June 1997, Liu Xiaodong co-founded Shanghai Reignwood Flavors & Fragrances Co., Ltd. Reportedly, the company's main client was Liu Xiaodong's former employer—Lanzhou Cigarette Factory, essentially providing him with his first pot of gold from the tobacco industry.
Later in his career, Liu Xiaodong saw the profit potential in the beverage industry and started RIO cocktails in 2002. Despite initial low sales and minimal fame, causing the brand to struggle, Liu Xiaodong did not give up on the pre-mixed cocktail track and continued persistently.
By 2010, RIO cocktail formally joined the China Alcohol Association, finally gaining a solid footing. Subsequently, Liu Xiaodong began planning a product transformation, shifting the focus from bars to the increasingly wealthy younger generation. For most young people, cocktails were a novel product. After identifying the target consumers, Liu Xiaodong began to expand aggressively.
In 2012, RIO cocktails started to spread rapidly through celebrity endorsements and endorsements from various variety shows and dramas, leveraging famous works such as "Silent Separation" and "Running Man," among others. RIO quickly became a nationally recognized pre-mixed cocktail brand, replacing the former leader Bacardi Breezer and becoming the new king of the industry.
In June 2014, Liu Xiaodong led the IPO of Reignwood Shares, with an issue price amounting to 5.563 billion yuan for the acquisition of 100% of the shares of RIO's producer, Bacchus Beverages. Reportedly, the company was sold to Liu Xiaodong for a symbolic 100 yuan, treated as disposing of garbage assets at that time, but now those "garbage" assets have transformed into a gleaming money tree.
In 2023, the revenue of Reignwood's pre-mixed cocktails was estimated to be around 3 billion yuan. While this figure isn't large in the liquor industry, with several baijiu brands surpassing this number, the gross profit margin for pre-mixed cocktails stood at 66.61%. This indicator is comparable only to a few high-end baijiu brands, with even the leading beer brand, Tsingtao Brewery, having a gross profit margin of less than 40%. Although both belong to the liquor industry, pre-mixed cocktails and beer and baijiu obviously operate in different arenas.
In 2023, 56-year-old Liu Xiaodong, with a net worth of 17 billion yuan, ranked 1346th on the "2023 Hurun Global Rich List."
In the 2023 annual report released by Reignwood, they revealed the expected net profit attributable to shareholders of the listed company to be 7.56 billion yuan to 8.6 billion yuan, representing a year-on-year increase of 45% to 65%. In 2023, the company expected the net profit excluding non-recurring gains and losses to increase by 50% to 70% compared to the same period last year.
In the foreseeable future, RIO cocktails are set to maintain their peak position in this arena, continuing to thrive until a groundbreaking new product replaces them.
However, neither investors nor other practitioners expected that competitors wouldn't bring down RIO or Liu Xiaodong; rather, it was his own greed and desires that led to his downfall.
Although the announcement released by Reignwood on February 28 avoided mentioning whether bribery would affect the company, it is clear that there would be an impact. The highest manager and controlling shareholder, holding over 40% of the shares, being suspected of bribery undoubtedly represents a significant blow to the company.
Upon the announcement, Reignwood's share price immediately began to plummet, with a drop close to 10%.
It's not hard to imagine that this downturn will continue and it will be difficult for the share price to rise again shortly. Liu Xiaodong and Reignwood serve as a warning to all, reminding everyone not to violate the law, as violations will inevitably lead to arrest.
