Image source @ Visual China
Text | Tidal Business Review
Lisa's refrigerator was already filled with all kinds of food and drink, but she still held her mobile phone, walked around the grass planting platform, and her eyes lit up:
"A hot pot restaurant with the same small crispy meat?" buy! ”
"A dessert shop's explosive chocolate dumplings? buy! ”
"A variety of ways to eat hand-grabbed cakes! Buy hand grabs! ”
……
This is the spiritual fun of Lisa after work, she always hovers between takeaway and convenience store food every day, always thinking that she can make a big show in the kitchen, but she is born without cooking cells, and has repeatedly lost battles, but she never dies in the kitchen, from frozen semi-finished products to freshly cooked pre-made dishes, Lisa always wants to have a sense of ceremony at dinner.
"Not enough cooking, semi-finished products" - Lisa helplessly put in the semi-finished products, dumplings and tangyuan 108 cooking methods, everything can be hand-grabbed cakes and various food and beverage brands of ingredient suppliers. The presence of quick-frozen foods completely satisfies Lisa's sense of ritual in cooking.
With the improvement of people's living standards and the popularity of various household appliances, quick-frozen food has gradually become a common ingredient in everyone's refrigerator, and this seemingly normal thing is subtly making the quick-frozen industry usher in another spring.
According to the "2020 China Frozen Food Industry Chain and Consumption Trend Research Report" released by Ai Media Research Institute, the scale of the mainland quick-frozen food market continues to expand, and it is expected to increase to 198.6 billion yuan in 2024. Flash freezing-related products have not only begun to gradually enter the mainstream vision, but related companies have also ushered in a wave of market value growth in the secondary market.
What is the sacredness of quick-frozen food? Is the frozen industry the next rising star in the catering track?
01 Revolution in the frozen food industry
In 1920, the world's first fast freezer was successfully trial-produced in the United States, and quick-frozen processed products were also introduced. In the following three decades, the United States systematically studied all aspects of frozen food, and also proposed the famous T.T.T theory (that is, time-temperature-quality tolerance) and formulated the "Frozen Food Manufacturing Regulations".
Since then, quick-frozen foods have been industrially produced and entered supermarkets, which are favored by consumers.
The mainland quick-frozen food industry started in the 198.90s, with the rapid development of China's economy, people's living standards continue to improve, the frozen food industry also ushered in new business opportunities.
Looking at the development process of the frozen food industry in mainland China, it can be roughly divided into 4 stages:
The Industrial 1.0 Era (80s-90s): At the beginning of reform and opening up, the social productive forces were backward, and food, clothing, and security were urgent problems to be solved in society at that time. The embryonic stage of the development of the quick-frozen industry should start from this moment, because the quick-freezing equipment is not advanced enough, and the number is quite rare, "product is king" became the propaganda slogan at that time.
At that time, the product was not bad, and there was a chance for further development.
Commerce 2.0 era (late 90s - 2010): the gradual advancement of reform and opening up, the changes in people's living standards can be described as earth-shaking, the frozen food industry has also ushered in a stage of rapid expansion, at this time the rise of Sanquan, Miss, Wan Chai Wharf and a large number of excellent traditional quick-frozen brands, but subject to historical limitations, at that time to seize the sales channels has become the key to the competition of quick-frozen enterprises.
"Channel is king" was the main theme of the quick-frozen industry during that time.
Internet 3.0 era (2010-2015): At this time, it is the explosive stage of Internet e-commerce, the continuous rise of personalized demand, how to position brands and products has become the main problem, the supply-side channels and brands have rapidly differentiated, the industry leader has gradually risen, and the hot pot catering brand has ushered in a blowout stage, and the entire catering industry, including quick-frozen food, has entered the fast lane.
Mobile Internet 4.0 era (2015-present): This era is a bit divided, not only to "traffic is king", but also to meet the individual needs of the public on the basis of ensuring highly standardized ingredients, the quick-frozen industry must not only break through the bottleneck of its own needs, but also conform to the needs of the catering industry on a large scale and process, and move in the direction of standardized supply brands.
Today's frozen food track is not as good as in the past, new brands have sprung up like mushrooms, they are more in line with the personalized needs of this era, they are more dynamic and more innovative, and for traditional brands, how to break the circle to keep up with the pace of the new era needs to be pondered.
02 Products or Brands? Competition in the frozen food industry
The epidemic has promoted the development of convenience foods, ready-to-eat products, snack foods, and semi-finished dishes, and quick-frozen foods are undoubtedly also benefiting. It is the emergence of this black swan that makes the originally unknown frozen food a kind of "obvious learning" in the market.
In the entire frozen food industry, frozen rice noodles are a small category that cannot be bypassed. In the past two decades, the domestic frozen rice noodle food market has been growing in a good trend, and now the market share accounts for 52.4% of the entire frozen market, and has become the largest category of frozen food.
Due to the huge consumption base of the mainland, this provides a sufficiently broad test field for domestic enterprises engaged in the business of quick-frozen rice noodles, and currently forms a three-legged situation: as the industry leader's Sanquan, Si Nian, wan chai wharf, CR3 is about 50%, brand, product strength has built a certain barrier, the competitive landscape is basically stable. (CR3: Market share of the top three companies by business size or the top three companies by business size)
But this is just one aspect of the quick-frozen industry. In recent years, the rise of hot pot culture has made the new face of quick-frozen hot pot ingredients quickly rank among the second largest categories of quick-frozen foods with a market share of 33.3%, and the development momentum is approaching the first frozen rice noodle products. As a result, many high-quality enterprises that mainly engage in quick-frozen hot pot products have been born.
For example, Fujian Anjing, which was listed on the Shanghai Stock Exchange in 2017, became the leader of the quick-frozen hot pot products market with a market share of 9%, followed by Haibawang and Huifa Food, but unlike the rice noodle market, the CR3 of the top three in Yasui is only 16%, and the market concentration of quick-frozen hot pot products is evident.
A competitive pattern has been determined, a market is extremely fragmented, it seems that the entire category of frozen rice noodles has developed a little more moist than the frozen hot pot ingredients? This is not the case.
Let's take the comparison of the product revenue of the two leading enterprises: the revenue of Yasui food products, which is mainly engaged in quick-frozen hot pot ingredients, has increased year by year from 2016 to 2020, from 2.01 billion yuan to 4.62 billion yuan, with a compound growth rate of 23.13%, while the main frozen noodles of Sanquan Foods has increased from 4.77 billion yuan in 2016 to 5.97 billion yuan in 2019, with a compound growth rate of 7.8%, less than half of the quick-frozen hot pot ingredients. Quick-frozen rice noodles seem to have entered the era of stock, but the spring of the quick-frozen hot pot market has just begun.
Although the huge consumer group is an opportunity, once it enters the stock era, the further growth of consumption will inevitably slow down, and the entire market will also show new variables.
According to relevant survey data, more than 90% of consumers have purchased frozen food in 2021, and only a very small number of respondents have never purchased frozen food. This shows the high penetration rate of the quick-frozen food market.
However, the star track never seems to have a shortage of deer runners. Zhong Xuegao launched a new brand "LiXiangguo" with 6 yuan / piece of chicken silk matsutake quick-frozen dumplings into the hot search, refreshing everyone's cognition of quick-frozen dumplings. What everyone did not expect was that the brand became the first place in sales in the Tmall dumpling industry within 99 days of its launch, and won the "2020 Innovation Breakthrough Award" of Tmall Food.
On the other hand, the cutting-edge brand Pot Circle Food Exchange has taken a different path, from hot pot ingredients to barbecue ingredients and other different fields to enter the quick-frozen track.
The Qianwei Central Kitchen, which was born out of thoughts, aims at the B-end frozen product track, which is different from the C-end main tangyuan, dumplings, wontons and other products.
With fritters, sesame balls, egg tart skins, pumpkin cakes and other products, Qianwei Yang Kitchen has opened up pizza, KFC, Burger King, Haidilao, which are the leaders of the catering industry and become its suppliers. In September last year, Qianwei Central Kitchen was successfully listed on the A-share market, becoming a successful case in the frozen food track.
In addition to traditional quick-frozen food brands, there are also many "semi-crossover" expanders. For example, the leader of the noodle track, White Elephant Food, has opened up the frozen pasta market in addition to instant noodles and noodles, and launched more than 50 products such as old noodle steamed buns, steamed dumplings, and frozen cooked noodles, and quickly laid out the frozen food market.
It is worth mentioning that most of these quick-frozen food companies are from Henan. According to statistics, in 2020, Henan has more than 6,000 quick-frozen food enterprises, becoming the most important force in China's frozen food territory.
Having said that, although the sudden emergence of the epidemic has injected an irresistible thrust into the frozen industry, the hidden worries that have already appeared cannot be ignored. On the one hand, the diversification of products, on the other hand, the continuous influx of new brands, it seems that the frozen industry presents a good scene, but for the players on the track, the problem is also obvious.
According to the "2021-2027 China Frozen Food Industry Development Research Analysis and Market Prospect Forecast Report", the mainland frozen food industry has bred a number of large enterprises, and to this day most of the enterprises include some large enterprises, either the brand positioning is not clear, or there is no beneficial difference and connection between the brands, and everyone is still in the primary and similar marketing stage.
To put it bluntly, enterprises lack core competitiveness. China's quick-frozen industry has entered the situation of homogenization of products, publicity and business models. Homogenization means that the product lacks characteristics, resulting in a small price difference, and as the degree of homogenization becomes higher and higher, the entire industry will fall into the quagmire of meager profits. The continuous rise in raw materials, labor, energy and other costs in 2021 has further compressed the profit margins of enterprises.
For traditional established giants, how to improve their own innovation and anti-risk ability, and for new players, how to meet the real needs of customers to solve pain points is the next step for them to think about.
03 Where do we go from here?
For a long time, quick-frozen food has been labeled as "not fresh enough" and "no time to cook and make it up", but in fact, with the blessing of fast freezing technology and developed cold chain logistics, these two stereotypes should have been dissolved long ago.
The quick-frozen food we buy in the supermarket every day is not directly thrown into the freezer to save the food (such as the home version of quick-frozen dumplings), but through a special quick-freezing process, the fresh food is quickly cooled to about minus 35 degrees, and then refrigerated under minus 18 degrees, during which it enters the market through cold chain logistics.
Due to the rapid cooling rate during quick freezing, the ice crystals formed inside the food are very small, so it will not only not break the food cells, but also maximize the preservation of the original taste of the food. More importantly, in the low temperature environment, bacteria cannot reproduce, and consumers are actually healthier and safer to use.
As the dividends brought by the epidemic gradually fade, quick-frozen food companies are returning to normalized marketing. The epidemic has also helped the frozen industry educate the market, and in the future, people willing to buy frozen food are more abundant than ever.
On the one hand, it is an inevitable decline trap, on the other hand, it is an increasingly vast market, how will it evolve further?
From the perspective of the entire catering industry, whether it is the current fast-growing head chain catering enterprises, or the catering shops of various brands in the streets and alleys, or even the prosperity of the takeaway industry, they are promoting the upstream suppliers of raw materials to develop in the direction of scale.
The head catering enterprise is promoting the standardization of the entire chain brand, and the corresponding food collection will inevitably be standardized on a large scale, in order to meet the demand for downstream catering collection, the supply side of raw materials is expected to show higher concentration and is expected to go out of a number of large supplier companies.
This is an opportunity nurtured by the 2B industry, and the 2C side is still promising.
As of 2019, the size of China's quick-frozen market is 146.7 billion yuan, but the pattern is still scattered. Directly to the consumer C-end, the industry leader Sanquan Foods also only accounts for 15% of market sales, and the list of missed foods on this track and Wan Chai Wharf, a brand of General Mills, account for 8%, and the top three in the industry only eat one-third of the market.
With such low market concentration, frozen food companies are likely to focus on scale expansion for quite some time to come.
At the same time, the frozen food industry is an asset-heavy industry, and operational efficiency and cost control are also the core competitiveness of enterprises. Improving operational efficiency, expanding channels, and even increasing prices to fight for profits for enterprises are all cards that enterprises may play in order to survive and advance.
Quick-freezing technology is itself a disruptive technological innovation.
The development of cold chain logistics not only allows inland people to eat seafood and coastal people to eat Mongolian sheep, but also provides the basic conditions for expansion for quick-frozen brands.
The new retail model in China has opened up the last kilometer of quick-frozen food, everything is ready, coupled with the east wind of the home economy, the single economy, and the lazy economy, which reminds people of the new consumption field that said a lot in previous years: In this new era, all consumer brands are worth doing again.
In the frozen food industry, this sentence can become: In China, every ingredient you eat is worth doing again with quick-freezing technology.
"The quick-frozen dumplings I bought have finally arrived, and I plan to try the fried dumplings from the short video, so I am looking forward to it." Lisa, who had just gotten the courier, said excitedly.
You see, business is like that.