Image source @ Visual China
Text | Pencil road, the author | Zhang Xuan, editor | Wu Jinna
The oral care track may be running out of another public company.
Recently, Shuke's parent company Vimax Co., Ltd. officially handed over the form to the Hong Kong Stock Exchange. If Vichy is successfully listed, it will have the opportunity to become the "first domestic toothpaste stock" in Hong Kong stocks.
Founded in 2006, Vimax is an innovative high-tech enterprise integrating R&D, production and sales.
Compared with many bloody Internet and new consumer companies, Shuke is a company that is really making money. However, even if it is at the head of the industry, Vimax does not dare to take it lightly, the industry competition is fierce, shuke is not only facing the competition of giants, many new players are also seizing its market.
From the packaging to the taste, the players' innovations have become more and more inward-looking, but in fact, these are far from enough. Brands want to break through, relying on micro-innovation, far from enough.
According to the data, the retail sales of China's oral care track in 2005 will reach 152.2 billion. For both new and old brands, this is a market where opportunities and challenges coexist.
01 Impact on Hong Kong stocks "domestic toothpaste first stock"
Shuke, who sells toothpaste, is going to go public.
On the evening of February 8, Schücker's parent company, Vimax Co., Ltd., officially submitted a form to the Hong Kong Stock Exchange, and ABC International and BNP Paribas were its co-sponsors for the IPO. In view of the fact that domestic toothpaste brands such as Yunnan Baiyao are concentrated in A shares, if Vimax is successfully listed, it will have the opportunity to become the "first domestic toothpaste stock" in Hong Kong stocks.
Founded in 2006, Vimax is an innovative high-tech enterprise integrating R&D, production and sales, with oral care brand "Shuke" and children's oral care brand "Shuke Baby".
In the 16 years of development, Vichy has become more than just a toothpaste maker. Shuke has positioned itself as a "one-stop oral care brand" since its inception, and now shuke's brand product line has covered toothpaste, mouthwash, tooth patches, mouth sprays, electric toothbrushes, toothbrushes and other categories.
Wang Ziquan, the founder of Vimax, is a legend in the field of daily chemicals and was once a key figure in the development of Blue Moon. Enterprise investigations show that Wang Ziquan is 55 years old this year and held 15.58% of Vichy's shares before the IPO. Co-founder Cao Ruian also worked at Blue Moon, and the investigation showed that Cao Ruian was 52 years old and held 14.86% of the shares.
The promotion of capital has accelerated vivitz's growth. Since its establishment, Vimax has completed two rounds of financing, in September 2014, Vimax obtained a round of financing of hundreds of millions of yuan from Legend Capital, and in April 2016, it once again obtained hundreds of millions of yuan of B financing from Orchid Asia Investment Fund and Zhong Ding Venture Capital, which also made Vichy the most invested enterprise in the domestic daily chemical industry at that time.
Vichy's ambition to go public has already been expressed last year. At Vichy's annual meeting in early 2021, co-founder Cao Ruian released the 2021 strategic plan, saying, "In the short term, it is necessary to successfully go public, become the preferred high-end oral care brand in all categories for Chinese young people, and reach the top of the sales champion; in the long run, it will become a professional oral care brand chosen by 800 million consumers for a long time." ”
Behind this inspiring speech is Vimax's steady growth in revenue in recent years. According to the prospectus, Vimax's revenue in 2019 was 1.662 billion yuan, which fell slightly to 1.616 billion yuan in 2020. Revenue for the first nine months of 2020 was RMB1.072 billion, with a year-on-year increase of 14.7% in 2021 to RMB1.23 billion.
In addition, Vimax's gross profit margin also shows a trend of increasing year by year. According to the prospectus, in 2019, 2020 and the first nine months of 2021, Vichy's gross profit margin was 53.8%, 58.1% and 62.8%, respectively. This has benefited from an increase in the average unit price of products (from 36 to 42 yuan per unit price for electric toothbrushes), a reduction in the cost of manual toothbrushes, the introduction of higher gross profit products (children's probiotic toothpaste, toothpaste), differentiated marketing activities, etc.
It is worth noting that Vimax incurred a loss for the first time in the first nine months of 2021, with a loss of 494 million yuan, compared with a profit of 134 million yuan in the same period last year. For the question of huge losses, Vimax's answer in the financial report is that in 2021, a change in the book value of 574 million yuan of redeemable capital injection was included, and the reason for this change was mainly due to the conversion of redeemable capital injections with other preferential rights by early investors into equity. If this influence factor is put aside, Vimax's adjusted net profit in 2021 should be 129 million yuan.
In this sense, compared to many bloody Internet and new consumer companies, Shuke is a company that is really making money.
02 How to make the "fourth place toothpaste brand"
After decades of industry development, the domestic oral care market has been relatively concentrated. According to Vimax's prospectus, according to the retail statistics of all oral care products in 2020, the five major oral care companies together accounted for 33.9% of the market share. They are Yunnan Baiyao, Hollywood (black), Colgate, Crest, and Shuke.
According to O&O Consulting's October 2019-September 2020 statistics, Yunnan Baiyao ranked first with 13.9% of retail sales, and Shuker ranked fourth with 7.2% of sales, ranking behind blacks and Crest.
As a veteran company established for 16 years, SHUKE's way of becoming the "4th toothpaste" is quite traditional.
At the beginning of the establishment of the brand, Shuke wanted to take the high-end route and test the water hypermarket with products with a unit price of more than 20 yuan. At that time, in the toothpaste products with a price of 20 yuan, Yunnan Baiyao was favored by consumers because it mastered the top-secret secret formula of traditional Chinese medicine to stop bleeding and relieve pain, activate blood and reduce stasis, and formed a huge difference with other whitening, fresh breath and anti-allergic toothpaste.
At that time, Shuke did not have too prominent selling points and memory points, nor was it unable to put advertising endorsements, and tested the water for 6 months without seeing a splash. Founder Wang Ziquan and the management decided to target the gap that Yunnan Baiyao was unwilling to reduce prices, and formulated a "binary price" strategy, not only to provide customers with high-priced products of more than 20 yuan, but also to launch medium-priced products of seven or eight yuan. The purpose is to expand the audience of the product while competing for the middle and high-end consumer groups.
At the same time, Wang Ziquan upgraded the tactics of selling people in the Blue Moon to "city battles". That is, concentrate on creating a "model" city, hire a large number of part-time shopping guides to carry out fancy marketing in the terminal, such as carrying out free oral testing at the terminal, placing cannons, tanks, aircraft and other special-shaped piles in hypermarkets to attract attention, so that sales competitions between teams and teams can be carried out. In order to let consumers understand the brand in the short term, the sales volume is larger, so that dealers can see the potential of the market.
At its peak, Vimax's sales team once exceeded 10,000 people, and the curve of sales performance began to climb all the way. From the initial sales of millions of yuan, it increased to 220 million yuan in 2009 and then to 360 million yuan in 2010.
However, the tactics of the sea of people brought extremely high labor costs, so later Shuke began to implement downsizing, and the cost of the reduction was used for TELEVISION advertising. In mid-2011, Shuke officially launched the patented product "Morning and Evening Toothpaste", which has a prominent selling point, and at the same time joined hands with charity to invite Beckham, who has never endorsed a Chinese brand, as an image ambassador.
Beckham's "platform" allows Shuke's high-end positioning to find an image to rely on, and also makes it much more difficult for Shuke to enter the supermarket. Then, in 2012, Vichy's annual sales exceeded the 1 billion mark.
Wei Meizi, who tasted the sweetness of celebrity endorsement, frequently acted on star endorsement, and the spokespersons of its products included actor Li Bingbing, Wu Moufan, who was on fire at the time, etc., and there was no shortage of advertisements implanted in popular dramas, and marketing actions were frequent.
However, high-profile marketing has also become an important factor limiting the growth of the company's net profit. The data shows that in 2019 and 2020, the company's sales expenses were 734 million yuan and 631 million yuan, accounting for 44.17% and 39.06% of the company's total revenue in the current period, respectively. As of September 2020 and September 2021, the proportion was 41.17% and 41.31%. It can be seen that during the reporting period, the company's marketing expenses as a proportion of revenue remained above 40%.
03 The inner volume is fierce, and the player needs to break through with explosives
Even if it is at the top of the industry, Vimax does not dare to take it lightly. In its prospectus, it is mentioned many times that due to the fierce competition in the industry, the emergence of new players will bring risk factors to the company's own development.
According to Frost & Sullivan, China's oral care market is characterized by a large consumer base and great growth potential: driven by the increasing awareness of young consumers of the importance of oral care, hygiene and aesthetics, as well as their consumption upgrades and preferences, the retail sales of China's oral care market will be 88.4 billion yuan in 2020, and is expected to grow at a compound annual growth rate of 11.5% from 2020 to 2025, and will further reach 152.2 billion yuan in 2025.
"The overall oral care track is not really too big, but this track is growing and there are opportunities." Liu Ling (pseudonym), an investor in a consumer circuit, said to Pencil Road.
He explained that whether it is Shuke or Colgate, these traditional toothpaste brands have faced the problem of aging, which is essentially a traditional, standardized industrial product. "Many people overseas have exclusive dentists, while China does not. So now consumers need to have a brand stand up, make a product with high appearance, content, and real understanding of Chinese oral problems. ”
In the past two years, new brands of oral care such as Samson, BOP Pop, Ice Spring and Qingzhi Scientific Research, and usmile have emerged and obtained financing. According to incomplete statistics, in the first half of last year, there were a total of 33 financing incidents in the oral primary market, with a total financing amount of more than 5 billion yuan, reaching the highest in history.
Summary of investment events in the 2021 oral care track
With the rise of new consumer brands in recent years, in order to seize young consumers, new oral care brands have made articles in category expansion, taste, packaging, efficacy and other aspects, and launched explosive products.
Mouthwash is the category of wrestling among players. Last year, the half of the four consecutive rounds of financing was from the pain point of the traditional mouthwash "spicy mouth". It uses probiotics to create alcohol-free formulas and beverage-style flavors that make the palate milder and closer to the need for fresh breathing. The product became the second place in the Taobao mouthwash category in the month of launch, and rose to the top of the list the following month, pressing Li Shidelin and becoming a super item in the oral care track.
There are also some new brands that further innovate the category of mouthwash in terms of packaging, product form, taste and so on. For example, the cutting-edge oral care brand moqi, which uses jelly cup portable mouthwash as the first product according to the consumption sensitivity of users eating out and fresh breath, attracts young consumers with high-value packaging and convenient and fast scene experience.
In addition, Dr. Bei's propolis mouthwash outer packaging includes vermicelli and blue, corresponding to the two flavors of fresh peach and green bamboo, respectively. Qingzhi Scientific Research launched the "Bubble Mouthwash Pill", which changes the mouthwash to a mouthwash pill, which will produce a dense clean bubble after chewing, and spit out the bubble after 15 seconds.
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From the packaging to the taste, the players' innovations have become more and more inward-looking, but in fact, these are far from enough. "Brands want to break through, or there must be big innovation, just micro-innovation is not enough, must be in the product packaging design, product composition, product story and other the whole system of big innovation, in order to have the opportunity to attract young people." Liu Ling thinks.
In his opinion, the new oral care brand still needs to concentrate on making a blockbuster product first, such as oral spray or mouthwash. "Relatively speaking, it is still not easy to make toothpaste explosives, because there are too few use cases of toothpaste and too few functions that can be done."