TAIPEI (Business Today/TVBS News) — On the morning of May 3, 2023, Yu Chung-min (于忠敏) entered his office in Sanchong, New Taipei City (新北市三重), as he had for more than two decades. Yet, that day, his steps were notably heavy, for it was his first day as general manager of Oceanic Beverages Company (大飲), the manufacturer of Apple Sidra.
Just the day before, Yu was the marketing director, but he felt no elation at his promotion. He understood the daunting operational challenges ahead: a halted factory, products pulled from shelves, enormous debts, and a workforce on the brink of departure. While Yu went from department to department, rallying spirits with messages like, "I hope everyone can face these tough times together... for this historic brand. I believe we can overcome these challenges," he harbored deep uncertainties.
How Bad Was It? Food Safety and Debt Crises
For more than six years, this iconic Taiwanese drink, with a 60-year legacy, had disappeared from the market due to its parent company's troubles. Yet, in a December 2024 investor meeting, Yu declared the complete return of Apple Sidra after over 18 months, announcing, "All debts have been settled, and distribution channels will be fully restored."
Achieving this milestone was no small feat for Oceanic Beverages.
During a period of governance turmoil, Oceanic Beverages encountered food safety management problems. In 2023, Apple Sidra was once again found with sediment, prompting the Department of Public Health, Taoyuan (桃園市衛生局), to halt operations at their Pingzhen (平鎮) factory.
The production halt exacerbated the company's financial decline, with revenue dropping from NT$600 to NT$700 million before the 2017 scandal to just over NT$100 million by 2023. A once modest but steady profit of approximately NT$10 million evaporated, culminating in a historic NT$140 million loss in 2023 and speculation about possible delisting.
Transitioning from substantial losses to relaunching products, Yu played a pivotal role in steering Oceanic Beverages. What motivated him to shoulder this responsibility, and what actions proved successful during his leadership?
Now 56, Yu has been with Oceanic Beverages for over two decades, serving in sales and marketing leadership positions and witnessing its profitable era. In April 2023, as the company faced severe losses and another food safety scandal, the general manager, plant manager, and other top executives resigned. The remaining senior employees were reluctant to take on management roles, making Yu, then the marketing director, one of the few viable options for the board.
Despite being dismissed over allegations, former General Manager Sun still holds over 70% of Oceanic Beverages shares. Though the board, entirely composed of her affiliate representatives, insisted on respecting managerial decisions, Yu understood that the general manager position was a hot potato amid internal and external turmoil, causing him to hesitate.
"Between April and December 2023, we had no income, only expenses, over 100 employees awaiting salaries, and tens of thousands of boxes to recall and destroy," Yu, with his thin-framed glasses and refined demeanor, recounted in an exclusive interview with Business Today (今周刊), reflecting on the daunting situation that would have deterred anyone.
Nonetheless, he chose to undertake the formidable mission, securing an agreement with the board to restart Apple Sidra production in the shortest possible time.
"Without resuming production, existing personnel costs and loan interest will escalate losses, leaving no funds for salaries, prompting employee departures and a vicious cycle," Yu candidly acknowledged, highlighting that the company lost nearly a third of its employees during the shutdown.
Once in charge, Yu swiftly evaluated the workforce, appointing replacements in crucial roles. He personally convinced indispensable accounting and technical personnel to stay, while offering bonuses to those who chose to remain, encouraging them to assume extra responsibilities.
Rescue Efforts: Retaining Talent, Raising Funds for Equipment
After organizing manpower, Yu turned to addressing food safety concerns and restarting production.
Used to office work, Yu began wearing work clothes from his fifth day in the role, conducting daily factory inspections, supervising production lines, and evaluating machinery and processes. "It wasn't easy to pinpoint contamination sources. At first, I was bewildered, spending three months grasping the situation and systematically replacing old equipment," he remarked.
Securing funds emerged as Yu's urgent task.
Initially, Yu sought bank loans, but Oceanic Beverages' persistent negative news deterred banks from taking risks. "We nearly secured funds multiple times, but reports of delayed salaries or duplicate payments causing bounced checks emerged, altering banks' decisions. We approached five or six banks, all of which declined," he recounted with frustration.
Reports of Oceanic Beverages' poor credit rating reached upstream suppliers, leading some to hasten the collection of overdue payments, while several companies required cash transactions or refused to ship. This predicament risked leaving Oceanic Beverages with no options, possibly unable to endure until production resumed.
Confronted with financial limitations, Yu evaluated the company's assets, ultimately deciding that selling land was the only feasible solution. "This was an inevitable decision; we genuinely couldn't obtain loans!" he declared.
Drawing on his business acumen, Yu recognized the delicacy of asset disposal. He first explained the necessity of the decision to each board member before formally presenting it at a board meeting. The board unanimously concurred that it was the sole resolution, approving it without dissent.
In September 2023, Oceanic Beverages sold real estate in Tainan, generating around NT$138 million. With the funds to acquire equipment, they passed a health bureau inspection in December 2023 and restarted limited production.
To swiftly recover cash, Oceanic Beverages allocated its limited Apple Sidra production to faster-turnover restaurant channels. Due to its scarcity, numerous distributors competed to pay cash for supplies. "Many consumers complained about its unavailability in standard outlets, having to purchase it at restaurants. We sincerely apologize for this inconvenience," Yu recounted the sales frenzy.
Understanding the need to bridge the funding gap for large-scale production, Yu facilitated the sale of Kaohsiung real estate in July 2024, securing NT$960 million and a NT$591 million profit. By late November, these funds were sufficient to settle all debts.
As a result, Oceanic Beverages financial statements reflected losses for the first three quarters of 2024, yet debts were eliminated in the fourth quarter. Their stock is anticipated to resume regular trading in the first quarter of 2025. This means that from December 2024, Apple Sidra finally secured the funds for mass production and was restocked in PX Mart (全聯), FamilyMart (全家), Carrefour (家樂福), and RT-Mart (大潤發).
Goal: Full Resumption of Production, Boost Overseas Revenue
Following product restocking, the focus shifts to fully restoring production capacity. With his marketing expertise, Yu seeks to revive co-branding initiatives stalled by financial woes, utilizing online influencers (KOL) for promotion. The objective is to raise overseas market revenue in Europe, the U.S., Japan, and South Korea from 15% to 25%.
Chang Chun-hung (張君鴻), the northern district public affairs manager at Carrefour, observed that Apple Sidra, as a national brand, consistently attracts significant consumer interest and boasts a loyal customer following. Yet, with the expanding variety of beverages available, whether sales can return to their former heights is yet to be determined.
"Following the December 2024 investor meeting, the news garnered over 3,000 comments, with 80-90% from delighted consumers welcoming our return, expressing sentiments like 'Apple Sidra must not fail' and 'Come back quickly.' This inspires our company to continue striving," Yu shared with pride, showing his phone.
While everything appears to be on track, Chen Ching-shyang (陳清祥), the former president of Deloitte & Touche (勤業眾信集團) and Chairman of the Taiwan Corporate Governance Association (中華公司治理協會), noted that Oceanic Beverages currently relies predominantly on the general manager for significant decisions. The chairman lacks substantial authority, and most directors are affiliate representatives. Although this complies with regulations, the professionalism of these directors and the ability of independent directors to perform supervisory roles remain uncertain.
The return of Apple Sidra marks a notable triumph for Yu and Oceanic Beverages. Yet, the uncertainties in corporate governance present an unpredictable factor for the company's future trajectory.
This article is excerpted from the January issue of Business Today; for more articles, please visit their website: https://www.businesstoday.com.tw/
Here is the link to the Chinese story: 大飲老員工銜命救援：我們沒收入 還有一百多員工等領薪 他用六百天扭轉蘋菓西打下架命運
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