Text | City Boundary, author | Lei Yanpeng, Editor 丨Liu Xiaoying
If you celebrate the New Year on the spot and are alone outside, how are you going to spend it?
For traditional festivals, food is naturally standard. Under the "lazy economy", "one-person economy" and "home economy", ready-made dishes that can be eaten simply and quickly into the mouth, such as instant food, instant heat, and instant cooking, have become the choice of many people.
No, under the pressure of fast-paced life, "lazy housewives" may have to eat out new listed companies.
Sichuan Baijia Akuan Food Industry Co., Ltd. (hereinafter referred to as "Akuan Food"), which owns the Internet celebrity product "Akuan Red Oil Dough Skin" and has received investment from Hillhouse Yiheng, Qianhai Investment and Moutai Jianxin, is sprinting for an IPO to be listed on the Shenzhen Stock Exchange.
Different from traditional instant noodles, Akuan Foods features "non-fried". In the face of the new consumption outlet, coupled with the epidemic's amplification of the "lazy house economy" and "live broadcast economy", Akuan Food's revenue increased by 163% in three years.
In addition to its own efforts to become an "Internet celebrity", Akuan Food also processes three squirrels, herbs, plum ziqi and other Internet celebrity brands. However, this "double-line net red" business of Akuan Food is not so profitable.
01 The "Influencer" Behind the "Influencer"
A year ago, the news that Imabari was going public was announced, and there has been no new progress so far. A year later, Akuan Foods, which regards Imabari as a competitor, has begun to sprint for an IPO and join the A-share "convenience food first stock" competition.
From 2018 to 2020, Akuan Foods' operating income grew rapidly, from 422 million yuan to 1.110 billion yuan. In the first half of 2021, its operating income was 593 million yuan, which is close to catching up with the level of the whole year of 2019.
This is inseparable from the contribution of the company's "top Internet celebrity" - A Kuan red oil skin. In 2020, the sales of the "Red Oil Dough" series of products alone will be nearly 400 million yuan, accounting for 36% of the revenue, and the cumulative sales will exceed 100 million.
In fact, this company started with chutney powder, and the red oil dough skin has only become popular in recent years. The history of Akuan Food can be traced back to 2001, twenty years of development history, has experienced a long period of hesitation and adjustment, but also because of the use of the "White Family" trademark and White Elephant Food has had two lawsuits, until the birth of the "Akuan" brand.
How did "A Kuan" become an Internet celebrity? This is related to its product iterations, but also to changes in the external environment.
The founder of Akuan Foods is Chen Zhaohui, born in 1969, Chinese nationality, with permanent residency in Singapore.
(Chen Zhaohui)
Chen Zhaohui worked as a salesman at Sichuan PepsiCo Beverage Company and founded Chengdu Yashi Advertising Company in 1994 to advertise for FMCG companies. In 2001, Sichuan Baijia Food Co., Ltd. (hereinafter referred to as "Chuanbai Food") was established, and he officially crossed the border into the food manufacturing industry, and convenient fans such as sour chili powder and fat intestine powder were launched one after another.
Born in advertising planning and well versed in the marketing of the FMCG industry, the sales of convenient fan products of the "White Family" brand soon came up. However, due to the limited market, Chuanbai Food touched the growth ceiling within a few years.
With the rapid development of takeaway and e-commerce, coupled with consumption upgrades, and the gradual rise of a new generation of consumers, after experiencing rapid development, from 2014, the convenience food industry based on instant noodles has entered a period of deep adjustment. Master Kong, Unification, etc. have encountered growth bottlenecks, and Chuanbai Food has also stagnated for a long time.
Poor is changeable, and bottlenecks also indicate transformation and innovation.
Chen Zhaohui began to plan to go from offline to online, expanded the product category, and launched a new brand "Akuan". In 2017, the company proposed the concept of "new convenience food". "Red oil dough skin" mainly "non-fried" and "lasagna skin, more energetic" characteristics, and the traditional instant noodles formed a differentiation, supplemented by marketing, it has become a net red product.
The main product types of Akuan Food include instant noodles, convenient vermicelli, convenient rice noodles, self-heating foods (mainly self-heating flour noodles, self-heating bean soup rice, self-heating barbecue) and so on. In the first half of 2021, the revenue of instant noodles accounted for 65.28%, the convenience fans were 23.07%, the convenience rice noodles were 8.68%, and the self-heating food was 1.66%.
Unlike some brands that rely on the OEM model, Akuan Food has its own factory, and also gives OEM and OEM to three squirrels, plum ziqi, Baicaowei, NetEase Yanxuan and so on.
(Super Red Man Festival, Plum Ziqi)
Judging from the products of the Tmall flagship store, Li Ziqi's red oil dough skin, pepper and hemp lasagna, etc., the red oil dough skin of three squirrels, the iron gongji flower shell vermicelli, the sour chili powder, the self-heating hot pot, etc., the herb-flavored red oil lasagnacle, the sour chili powder, the Nanchang mixed powder, the Sichuan Xiangshi loose self-heating small hot pot, etc., all appeared in the foundry of Akuan Food or its subsidiaries.
However, OEM and OEM are not the main business of Akuan Foods.
In the first half of 2021, this part of the business contributed only 10.08% of the revenue of Akuan Food, and the main customers were Three Squirrels and Hangzhou Weinian (the owner of the "Li Ziqi" brand), accounting for 7.12% of the main business income.
While striving to become an "internet celebrity", but also to other "internet celebrity" brands to provide OEM, OEM services, in the industry, Akuan Food is a relatively rare existence, can be called "the Internet celebrity behind the Internet celebrity".
02 "Net red" business money is difficult to earn
With the post-90s and post-00s gradually becoming the mainstream consumer group, the new consumption outlet has been highly sought after in recent years. As an "internet celebrity among internet celebrities", it has caught up with this outlet, and Akuan Food is also favored by capital.
Within a year, Akuan Foods completed three rounds of financing. In February 2020, the A round was completed, the B round was completed in June, the shareholding system reform was completed in September, and the C round of financing was completed in January 2021. Participating institutions include Nanhai Growth, Qianhai Investment, Hillhouse Yiheng, Moutai Jianxin, Qingdao Tongchuang...
Chen Zhaohui said in June 2020 that Akuan Foods aims to become the first convenience food company listed on the A-share market, "becoming the first chutney, non-fried instant noodles, and new convenience foods."
In fact, this "net red" business of Akuan Food is not as good as imagined.
From the perspective of gross profit margin, Akuan Food is in a downward trend. This is mainly because the company's two core products, instant noodles and convenient fans, have risen in unit costs and declined gross margins, resulting in a decline in the company's overall gross profit margin.
In terms of horizontal comparison, in 2018 and 2019, the gross profit margin of Akuan Food was even higher than that of the two giants of instant noodles, Master Kong and Unified China, but from 2020, it has been significantly lower than these two.
Since 2019, Akuan Food has begun to concentrate resources on the development of OEM and OEM business, but the added value of this part of the business is low and the selling price is low, so the gross profit margin is much lower than that of other businesses, which in turn lowers the overall level of the company.
Judging from the nearly three and a half years of disclosed data, the net interest rate of Akuan Foods is extremely low. In contrast, except for 2020, it has been significantly lower than Master Kong and Unified China, with only 3.34% in the first half of 2021.
One of the reasons why Ah Kuan Food has been able to achieve rapid development in recent years and create "net red" products is that the company has jumped out of the offline channel war and transformed into an online channel,"driving offline with online".
Since the beginning of 2019, the revenue of the company's online channels has surpassed that offline channels, and it has shown an upward trend. In 2020 and the first half of 2021, the revenue of Akuan Food's online channels accounted for 61.34% and 63.58% respectively.
In online channels, whether it is a third-party e-commerce platform or a community group purchase, they are fighting for prices with each other, and the cost of traffic is also increasing. Akuan Food has also appeared in the live broadcast room of Li Jiaqi, Luo Yonghao, Wei Ya and other anchors, and also fights for low prices, and has corresponding commissions and pit fees. These have a significant impact on net profit margins.
From the perspective of period expenses, the largest proportion of revenue is sales expenses, followed by management expenses. Management expenses account for a relatively large proportion, mainly due to the increase in the remuneration of managers and the implementation of equity incentives by the company.
Taking the first half of 2021 as an example, the sales expense ratio of Akuan Foods is 13.91%, and the management expense ratio is 8.46%. Among the sales expenses, advertising and publicity costs accounted for 2.74%, while the proportion of promotional service fees has risen to 62.45%.
The most important of the promotion service fees is the e-commerce channel service fee - the company carries out sales promotion in the e-commerce channel, and pays the sales promotion fee to e-commerce platforms such as Taobao and JD.com, as well as the anchor and live broadcast platform.
In the first half of 2021, the e-commerce channel service fee of Akuan Food expenditure exceeded 35 million yuan, while the net profit attributable to the mother in the same period was only 0.22 billion yuan. It can be seen that the money of this "net red" business, Ah Kuan Food, is very difficult to earn.
In this regard, Akuan Food is very similar to the three squirrels - cloaked in the cloak of "net red", the surface looks bright and beautiful. However, after taking off the coat of "Internet celebrity", the naked is not a muscle.
03 How long can it be "red"?
The decline in sales gross profit margin shows that the industry is fiercely competitive, and the comprehensive strength of Akuan Foods is not prominent; the net profit margin is extremely low, and unstable, and it is also lower than that of competitors, which further shows that the company lacks a strong competitive advantage.
From the perspective of products, new convenience foods such as the red oil dough skin of Akuan Foods can be regarded as an upgrade to traditional instant noodles.
Under the background of urbanization dividends and large-scale population flows, the instant noodle market experienced a golden decade of rapid development from 2003 to 2013. In 2013, the national sales of instant noodles reached 46.22 billion packs, reaching a peak. Immediately after, the national sales of instant noodles began to decline sharply, falling by nearly 8 billion bales in three years.
Akuan Foods saw an opportunity and developed rapidly with the help of online platforms. But everyone is plotting change. To this day, the scale of Akuan Food is still very small, and it still faces competition from giants inside and outside the industry.
Convenience food can be roughly divided into four types: quick-frozen food, self-heating food, brewed (instant noodle) food, and microwave food. According to Guosen Securities data, the market size of China's convenience food in 2019 reached 450 billion yuan, and if calculated according to the average annual compound growth rate of 6%, it is expected that the market size of convenience food will reach 630 billion yuan in 2025.
It can be seen that the market size of convenience foods is very large, but the overall growth rate is not fast. In recent years, changes in the demand side have promoted the innovation of the industry and brought growth vitality, especially the rapid development of brewed foods and self-heating foods.
At present, there are three main types of companies that promote the rapid development of the new convenience food industry, which can be roughly divided into traditional brands, cutting-edge brands and cross-border brands.
Traditional brands such as Master Kong, Unified China, Immalang, etc., relying on strong brand effects and large-scale production capacity, on the one hand, are looking for high-end ways to break the game, on the other hand, they are also launching new convenience foods, such as convenient fans, convenient rice noodles, self-heating food, and the ramen fan launched by Immalang is also the main "0 fried healthy noodles".
Cross-border brands such as Haidilao (Yihai International), Three Squirrels, Good Shop, Baicaowei, etc., also have brand and channel advantages.
In recent years, cutting-edge brands have emerged, such as Ramen Talk, Zi Hi Pot, Cannibal, Mo Xiaoxian, Li Ziqi, etc., as well as Ah Kuan. These brands tend to be more personalized and marketable, able to capture consumers with innovations in product categories, tastes, packaging, and more. In the new consumption outlet, it will also get the blessing of capital and develop rapidly.
In addition, there are also influx of this track, cross-border, new ones, so that the competition in this industry tends to be white-hot. Subdivided into the instant noodle industry, the rapidly growing Akuan Food has a market share of only 1.36% in 2020.
Paradoxically, large Internet red brands such as Three Squirrels, BaicaoWei, and Plum Ziqi are both competitors of Akuan Foods and their cooperative customers. Akuan Food should oem and OEM products with the same type of products as it sells, and products such as red oil dough, chutney powder, etc., are the core products of Akuan Food.
Perhaps, Akuan Food has other ideas, for example, if its own "net red" products are not hot in the future, you can take a step back and increase the OEM business. The problem is that, in contrast, the foundry business has a very low gross profit margin and is not profitable.
Therefore, under the giants, Akuan Foods still has to think of building its own moat. At present, there are more than 200 items in Ah Kuan Food, but it still relies on the "net red" single product red oil dough skin. This is probably not a long-term solution.
At the same time, due to the slow sales of some products, Akuan Food made provisions for inventory price decline of 1.1242 million yuan and 1.3016 million yuan in 2020 and the first half of 2021, respectively. It said that if the market competition intensifies in the future, the inventory price decline and loss may increase.
The fate of "net red", three squirrels have been verified. Moreover, the rapid growth of Akuan Food in the past two years is closely related to the changes in people's lifestyles caused by the epidemic. How can sustainable growth be achieved? That's the key.
Around 2014, Chen Zhaohui said that the pressure is not only the decline of the convenience food industry, but also the encroachment from the convenience food giants. "They're too big, and there's no grass under the trees."
Within a few years, the grass had grown. But to withstand the wind and rain alone, one must grow into a big tree.