This is an English adaptation of a FoodBud historical article originally published on October 3, 2021.
On September 30, 2021, Star Plus Legend Group Limited, a company closely tied to Jay Chou, submitted an application to list on the Hong Kong Stock Exchange Main Board. Jay Chou’s mother, Yeh Hui-Mei, and co-founder Yang Junrong together held 27.6% of the company.
Although Star Plus Legend positioned itself around “new retail,” its business model was built heavily around celebrity IP, fan-driven product sales, and rapid monetization of pop-culture influence.
Founded in 2017, Star Plus Legend focused on two main areas: new retail, and IP creation and operation.
Its new retail revenue came from three product streams: Motong bulletproof coffee, the Daren Yueji skincare line, and other products. Its IP creation and operation business included event planning, IP programs, licensing fees, and sales of cultural and creative products.
After June 30, 2021, the company launched Motong soda, Motong pastries, and Motong konjac luosifen, with formal distribution expected in the fourth quarter of 2021. It also disclosed products under development in its listing materials.
Star Plus Legend claimed to be the largest company in China’s bulletproof beverage market and a fast-growing new retail operator. In practice, the article characterized it as a celebrity-linked merchandise and fan monetization company.
Motong bulletproof coffee was the company’s first low-carb health management product. Its formula was jointly created by Star Plus Legend and its supplier. Each box contained seven coffee sachets.
According to a CIC report cited in the prospectus, Star Plus Legend was China’s largest bulletproof beverage company in 2020, with a 40.6% market share. Bulletproof beverages were defined as high-fat, protein-sufficient drinks designed for low-carbohydrate diet plans and target fat-to-energy ratios.
The product business was only part of the Jay Chou connection. Over the previous four years, the company had participated in multiple Jay Chou concerts in China and variety-show projects, and also had IP creation rights. Lyricist Vincent Fang, Jay Chou’s longtime collaborator, served as chief cultural officer, responsible for promotion and creative work.
Star Plus Legend had also entered into a 10-year IP licensing agreement with JVR Music, Jay Chou’s artist management company, giving it priority rights to develop various projects related to Jay Chou and his IP.
The prospectus showed revenue of RMB94.68 million in 2018, RMB86.58 million in 2019, and RMB457 million in 2020. Revenue in the first half of 2021 was RMB166 million, down 46.8% from RMB312 million in the same period of 2020.
Motong bulletproof coffee accounted for a large share of sales. For 2019, 2020, and the six months ended June 30, 2021, it contributed 83.0%, 72.8%, and 72.4% of total revenue, respectively.
The product was jointly developed by Star Plus Legend and Hangzhou Hengmei. Hangzhou Hengmei had been the only supplier of Motong bulletproof coffee since launch, and was Star Plus Legend’s largest supplier in 2020 and the first half of 2021, accounting for 48.1% and 37.4% of total procurement, respectively.
Across 2018, 2019, 2020, and the first half of 2021, purchases from the company’s top five suppliers accounted for 71.9%, 75.2%, 73.3%, and 62.7% of total procurement.
Profit was RMB8.8 million in 2018, RMB22.7 million in 2019, and RMB75.6 million in 2020, representing a compound annual growth rate of about 193.1%. Profit in the first half of 2021 was RMB8.29 million, down 87.4% from RMB65.8 million in the same period of 2020.
Star Plus Legend said in its prospectus that the decline in Motong bulletproof coffee sales revenue was due to the absence, since the second half of 2020, of sales and marketing activities comparable in scale to earlier campaigns.
The sharp rise in Motong bulletproof coffee sales in the six months ended June 30, 2020 was mainly linked to the first season of J-Style Trip, broadcast from March to June 2020 on Zhejiang TV and other platforms. Star Plus Legend promoted the coffee through advertising, on-demand exposure, and discrete product placement in the program. In January 2020, it also invested in the Ningbo Star Plus Action Super Night concert, using printed advertising, product displays, giveaways, and related venue marketing to promote the product.
As of December 31, 2020 and June 30, 2021, Star Plus Legend had networks of 575 and 673 distributors, respectively, and 16,519 and 18,677 dealers.
After launching Motong bulletproof coffee, the company expanded its distribution network, and the number of distributors and dealers rose sharply in 2020.
Kunshan Tingshe, described as an agent in which Star Plus Legend held 80% and Li Ting held 20%, also terminated 1, 29, and 33 distributors in 2019, 2020, and the six months ended June 30, 2021, respectively. It also terminated 97, 1,936, and 1,711 dealers over the same periods.
Under agreements signed with Kunshan Tingshe on January 6, 2020 and July 1, 2021, Star Plus Legend had paid and would pay sales incentives based on the total number of Motong bulletproof coffee boxes sold in the years ending December 31, 2020 and 2021, provided minimum sales targets of 2 million and 3 million boxes were met.
In 2020, the incentive was RMB5 per box for the first 2 million boxes and RMB8 per box above 2 million. In 2021, the incentive was RMB5 per box for the first 3 million boxes and RMB7 per box above 3 million.
The prospectus also disclosed two incidents in 2020 and 2021 in which certain bank-account funds were temporarily frozen. In June 2020, a local market regulator in a fourth-tier city froze certain bank accounts of four group companies, Kunshan Tingshe, and Li Ting, citing suspected pyramid selling. In May 2021, another fourth-tier city market regulator froze certain bank accounts of two group companies, Kunshan Tingshe, and Li Ting.
In response to the two temporary freezes, the Kunshan market regulator issued two inspection opinions in June 2020 and June 2021, finding that the parties were engaged in new retail activities through a lawful distribution model. The frozen funds were fully released in July 2020 and July 2021.
The prospectus also stated that in May 2021, the Xianning Municipal Administration for Market Regulation and Xianning People’s Court temporarily froze Star Plus Legend bank accounts pending investigation. As of June 30, 2021, the company recorded restricted bank deposits of RMB124.8 million. By the end of July 2021, all temporarily frozen funds had been released unconditionally.
Star Plus Legend’s core management team was mainly from Taiwan. Executive directors were Ma Xinting, Dr. Qian Zhongshan, and Lai Guohui. Non-executive directors were Yang Junrong and Chen Zhong. Independent non-executive directors were Dr. Xue Jun, Yang Dezhi, Yu Lingyan, and Zhong Jingyi.
Before the IPO, founder, controlling shareholder, and executive director Ma Xinting held 27.6%. Founder and non-executive director Yang Junrong, together with founder, controlling shareholder, and Jay Chou’s mother Yeh Hui-Mei, held 27.6%. Chen Zhong held 9.2%.
Vincent Fang, the well-known lyricist, served as chief cultural officer and was responsible for the group’s product marketing, promotion, and creative strategy planning.
Note: IPO-related figures, forward distribution timing, and future sales-incentive terms are historical disclosures from 2021.