KKR Rumored to Plan Acquisition of Dayao Drinks: Wall Street "Hunter" Sets Sights on Dark Horse in China's Food and Beverage Channel. Is the Signal of Industry Integration Emerging?
Recently, it was reported that KKR, a US private equity firm, is planning to acquire an 85% stake in a Chinese beverage company. The market speculates that the target of the acquisition is Dayao Drinks. According to people familiar with the matter, the deal has been secretly negotiated for a year but was unexpectedly exposed in the current market environment, quickly attracting extensive attention and arousing multiple speculations in the industry.
In response, Dayao Drinks said, "No comment." Previously, foreign media reported that Dayao Drinks is preparing for an initial public offering (IPO) in Hong Kong as early as the second half of 2025.
Source: Official website of Dayao Drinks
KKR: A Steady "Hunter" on Wall Street
Founded in 1976 and headquartered in New York, KKR is one of the oldest and most experienced private equity investment firms globally. It is known as the "Wolf of Wall Street" and is listed among the "Four Global PE Giants" along with Blackstone, Carlyle, and Texas Pacific Group. Today, it is also one of the most active international PE giants in China and the Asian region.
Since establishing an office in Hong Kong in 2005, KKR has actively carried out investment business in China. So far, it has invested in more than 40 companies in multiple fields, with a total investment of over $6 billion. The investment in a single project is generally between $250 million and $300 million.
In the agricultural and food sector, in 2008, KKR invested in Modern Dairy, which was relatively small at that time, with negative profits and cash flows, and was in the trough of the industry under the impact of the melamine incident. KKR recognized the advantages of its large - ranch and centralized breeding model and the urgent need of Chinese consumers for dairy product safety, believing that it had great development opportunities.
In 2014, KKR joined a consortium with COFCO Meat Investment Co., Ltd. (hereinafter referred to as "COFCO Meat"), Baring Asia, Hopu Investment, and Boyu Capital and announced a strategic partnership. The consortium will invest in COFCO Meat together with its existing shareholders to build and manage large - scale modern pig farms and meat processing plants in China. According to Reuters, the consortium will invest approximately $270 million in COFCO Meat, holding up to 70% of its equity.
In 2015, KKR invested in Sunner Development. At that time, Sunner Development was the only large - scale, fully integrated broiler production enterprise in China and one of the best - managed agricultural enterprises. It had stable customer resources and a complete supply chain system, ensuring the quality and safety of food, which met KKR's high - standard requirements for investment projects.
In the investment in beneficiaries of the urbanization process, in 2013, KKR invested 3.382 billion yuan in Qingdao Haier, acquiring approximately 10% of its equity. As a leading enterprise in the Chinese home appliance industry, Haier has a strong brand influence and a high market share, and is a beneficiary of China's urbanization process and consumption upgrade. KKR's investment helped Haier achieve further development in global market expansion and technological innovation.
In 2019, KKR acquired a 70% stake in the Chinese lighting business of NVC Lighting for $794 million. NVC Lighting is a well - known enterprise in the Chinese lighting industry, with extensive sales channels and a strong brand influence. Its products are widely used in urban infrastructure construction and residents' lighting needs, closely related to the urbanization process.
As KKR deepened its understanding of technological innovation and the technological empowerment of traditional enterprises, it invested in ByteDance in 2018 and continued to increase its investment in subsequent rounds of financing.
It can be seen that this investment fully demonstrates KKR's keen insight into the development trends of emerging industries. If KKR acquires Dayao Drinks, it will undoubtedly be another important layout in the Chinese consumer sector.
Dayao Drinks: A "Breakout Player" in the Catering Channel
Founded in the 1980s, Dayao Drinks is a modern beverage enterprise integrating R & D, production, and sales.
The company is named after the "Dayao Culture" originating from the Paleolithic site. To meet the needs of consumers in different regions, it has invested in building seven intelligent production bases in Inner Mongolia, Liaoning, Jilin, Ningxia, Shaanxi, Shandong, and Anhui.
The company's investment and expansion in the past decade have been mainly concentrated in the northern region. In 2014 and 2017, the company built production bases in Inner Mongolia and Ningxia respectively. In 2020, it set up contract - manufacturing bases in Ulanhot and other places. In 2021, it built new factories in cities such as Shenyang. In 2023, the company signed an agreement with a Shandong base, with an expected output value of approximately 1 billion yuan. In 2024, the Baoji factory in Shaanxi was officially put into operation, with an expected annual output of 500,000 tons.
Since 2014, Dayao has entered the catering channel neglected by "Coke and Pepsi" and successfully captured this channel with its unique positioning and strategy. In 2023, more than 70% of its sales revenue came from the catering channel, and 78.4% of consumers chose to buy in restaurants.
Specifically, Dayao Drinks adopted the strategy of "encircling the cities from the countryside", gradually penetrating from third - and fourth - tier markets to first - tier cities. Its 520ml large - bottle design achieved a "triple - win" situation: consumers get a sense of ceremony at a lower price, restaurants get higher gross margins, and the brand reduces costs.
In terms of market expansion, Dayao Drinks has completed its layout in 31 provinces, autonomous regions, and municipalities directly under the Central Government, established a team of thousands of distributors, and built millions of terminal channels. In the summer of 2024, Dayao launched a large - scale subway advertising campaign in Beijing, covering more than 80 stations and more than 270 locations, with an exposure of approximately 1.6 billion person - times.
In recent years, Dayao Drinks has shown excellent performance in sales and finance. In 2022, its sales revenue reached 3.2 billion yuan, ten times that of Bingfeng and three times that of Beibingyang. In 2023, the company's sales revenue reached 3.2 billion yuan, with more than 80% of the sales revenue coming from the catering channel.
KKR May Bet on Dayao: The Capital Game of a Dark Horse in the Catering Channel
For KKR, the acquisition of Dayao Drinks is not just a simple financial investment but has important strategic significance.
In the current wave of the booming global consumer market, consumers' pursuit of health, personalization, and diversification is becoming more intense, and the beverage industry is naturally deeply influenced by this trend. The low - sugar, sugar - free, and uniquely flavored and functional beverage products developed by Dayao Drinks precisely meet the expectations of contemporary consumers for healthy and personalized beverages.
KKR can rely on Dayao Drinks' innovative advantages to inject new vitality into its global beverage investment portfolio, thereby accurately meeting the diverse needs of different markets and various consumer groups.
In addition, Dayao Drinks' development process in the Chinese market provides KKR with a valuable textbook on local operation. In China's vast and complex consumer market, foreign - funded enterprises often face challenges in achieving brand localization, channel penetration, and building a deep emotional bond with local consumers.
Dayao Drinks has achieved rapid brand promotion and steady market share growth by closely collaborating with local distributors, deeply cultivating the catering channel, and accurately understanding consumers' taste preferences. If KKR can apply the core elements of this successful operation model to the operation of other consumer brands, it will help improve the operational efficiency and market competitiveness of its overall investment portfolio.
However, despite the significant strategic advantages of the acquisition of Dayao Drinks, there are still many risks and challenges in the actual implementation process.
As an internationally renowned investment institution, KKR has developed a relatively mature and standardized management style and decision - making process over a long period. As a local enterprise, Dayao Drinks has its own characteristics in corporate culture and management mode, which are different from those of KKR. After the acquisition, how to promote cultural integration and enable the management teams of both sides to achieve stable and efficient collaborative cooperation under the new cooperation model is a key issue that needs to be addressed.
The intense market competition may pose certain challenges to the post - acquisition integration work. As the Chinese beverage market becomes more open, both domestic and foreign brands are pouring in, and the market competition is becoming increasingly fierce. During the acquisition process, it may arouse the high alert and strong reaction of competitors, who may take measures to significantly impact Dayao Drinks' market share and business expansion.
In addition, multiple external factors such as the unpredictable macro - economic environment, timely adjustment of policies and regulations, and fluctuations in raw material prices may bring unpredictable uncertainties and risks to the post - acquisition integration and daily operation to varying degrees.
Conclusion
The rumor that KKR is to acquire an 85% stake in Dayao Drinks is an important milestone in the development of the domestic beverage industry. It reflects the further attention and layout of foreign capital in the Chinese beverage market and also shows the integration and development trend of the Chinese beverage industry under the background of market competition and consumption upgrade.
For enterprises, whether they choose independent development or seek external cooperation, they need to continuously improve their competitiveness and innovation ability to adapt to market changes and challenges. For the entire industry, this is an era full of opportunities and challenges. Only through continuous integration, innovation, and development can the industry achieve sustainable development and meet consumers' growing needs for a better life.
In the future, with more similar acquisition and integration events, the domestic beverage industry will gradually become more mature and internationalized. In this process, more beverage brands with international competitiveness are expected to emerge, providing Chinese consumers with higher - quality, healthier, and more diversified beverage options and contributing Chinese strength to the development of the global beverage market.
This article is from the WeChat official account "Morning Whistle M&A" (ID: MW - Group), author: Zhao Zihan, published by 36Kr with authorization.