Recently, the veteran instant noodle brand White Elephant has been "spoiled" by the majority of netizens.
Red Star Capital Bureau noted that in recent times, news about the white elephant "1/3 of the employees for the disabled, refuse foreign acquisitions, low-key public welfare" and other news spread on the Internet, netizens have said that they were moved by this national enterprise, calling it "the light of domestic goods". With the continuous fermentation of public opinion, the white elephant has returned to the public eye.
With the exposure of the "Lao Tan Sauerkraut" incident at the 315 evening party, the white elephant responded quickly: "No cooperation (flag planting vegetable industry), rest assured to eat, the body is not afraid of the shadow oblique", making the white elephant circle countless fans again.
In order to support the white elephant, netizens do not skimp on their wallets, the sales of the white elephant began to soar, and the company even directly called on consumers to consume rationally on the e-commerce platform.
Source: White Elephant Tmall flagship store
This kind of "looting" shopping method of consumers has also been "experienced" by domestic brands such as Hongxing Erke and Bee Flower before the white elephant. In the face of over-enthusiastic netizens, these companies are inevitably mixed; what is happy is that this sudden way out of the circle is the marketing effect that many companies can't smash out of the circle, but the worry is that after this wave of enthusiasm has passed, will the "light of domestic goods" be forgotten by consumers again?
White elephant, how far can you fly this time to ride the wind?
(i)
Wild consumption that will eventually "disperse"
White Elephant was officially established in 1997, when with the background of the migrant work tide and competitive pricing, White Elephant gradually gained a foothold in the domestic instant noodle market.
In 2003, White Elephant launched a new product " bone broth noodles " , which was greatly welcomed by the market. According to public information, in 2004, the annual output of white elephant reached 5 billion packs, sales reached 2.3 billion yuan, and the market share of white elephant rose to the third place in the country, when the four giants of domestic instant noodles were Unification, Master Kong, White Elephant and Huafeng.
However, in the more than ten years since then, the domestic instant noodle market has undergone tremendous changes. According to the data of the 2020 convenience food conference, the sales of Master Kong, Unity and Jinmalang occupy the top three, of which Master Kong's sales share in China has reached a staggering 46%, while the share of white elephants is only 7%, and white elephants have gradually lost their market discourse.
There are many reasons why white elephants are gradually forgotten by consumers, and the refusal of foreign acquisitions is the fuse, followed by 5 years of restructuring and internal consumption in the industry, which slowly make the voice of white elephants smaller and smaller.
Looking back at this round of white elephants once again returning to the public eye, since March, one time node after another has continuously pushed up the relevant topics of white elephants.
According to the Baidu Index, the number of searches related to white elephants showed explosive growth on March 6 and March 16, and on Sina Weibo, topics related to white elephants were also repeatedly rushed to the hot search.
Source: Baidu Index
As the popularity increased, netizens also began to translate their support for white elephants into purchase actions.
According to Vipshop data, after March 4, the sales of white elephant products at Vipshop soared by nearly 200% in three days. In the Douyin live broadcast room, "wild consumption" is even crazier. According to cicada mother data, before March this year, the single-day sales of the official flagship store of the white elephant in the vibrato live broadcast room were basically below 100,000 yuan; and on March 6, the single-day sales of the live broadcast room reached 670,000 yuan, an increase of 650% over the previous day; on March 16 and March 17 after the 315 party, the single-day live broadcast sales of the official flagship store of the white elephant exceeded 2 million yuan. Red Star Capital Bureau noted that the White Elephant Tmall flagship store has been shown to be out of stock, mainly for store pre-sale, shipping within 15 days after payment.
Source: Cicada Mother Data
In addition, the number of fans of white elephants is also growing rapidly. As of noon on March 18, the number of fans of the official flagship store Douyin account of Baixiang has received 1.2 million, and about 400,000 users have been added within 15 days.
This free "tap water" flow did make the white elephant win a double harvest of heat and sales; but companies may also know that this lively "party" will eventually end.
Before the white elephant, in late July 2021, due to "bankruptcy" donations, Hongxing Erke successfully went out of the circle. Public information shows that in just 3 days of Hongxing Erke's popularity, sales reached 200 million yuan, and many offline physical stores were "robbed" by consumers.
However, two months after Hongxing Erke became popular, the company's situation began to take a sharp turn.
According to Feigua data, from October 4, 2021 to October 31, 2021, in less than 30 days, the official Douyin live broadcast of the Hongxing Erke brand "rose powder" by 66,000, but during the same period, the "powder" was 430,000, almost 10,000 per day.
The same is true of the domestic veteran shuffling brand bee flower, in mid-November 2021, with the "good quality and low price", "10 years only rose 2 yuan" and other labels of bee flowers successfully out of the circle, the bee flower anchor said during the live broadcast: "Sold 20,000 orders in one day, which is the amount of the usual whole month.". However, when consumer enthusiasm receded, the brand's attention and sales also returned to calm.
The reason is that many consumers either pay for their feelings or simply follow the trend, and wild consumption behavior is not sustainable. In the consumer market, it is also difficult for consumers to maintain brand loyalty.
After the "rejuvenation", the white elephant is likely to be like the first two; and the white elephant wants to be "evergreen", and more importantly, it is still necessary to enhance its own brand competitiveness, after all, "playing iron also needs its own hardness".
(ii)
The instant noodle business is in decline
In 2008, White Elephant had prepared for listing, and according to a number of media reports, White Elephant had already considered that the instant noodle industry was facing problems such as lower profits and slower growth. Subsequently, since 2013, the domestic instant noodle market has shown a saturation trend, and there has been a decline in the compound annual growth rate.
According to the data of Zhiyan Consulting, in 2018, the domestic production of instant noodles fell off a cliff, falling by more than 4 million tons in just one year, a year-on-year decrease of 36.6%; since then, the output of instant noodles has still shown a downward trend year by year, with output decreasing by 18.04% in 2019 and 2.89% year-on-year in 2020.
Source: Zhiyan Consulting, Red Star Capital Bureau
The same is true on the demand side, according to zhiyan consulting data, since 2018, the demand for instant noodles has begun to decline, and the demand for instant noodles in 2019 was 5.3741 million tons, a decrease of 1.2628 million tons compared with 2018, a year-on-year decrease of 19.03%, and in 2020, due to the impact of the new crown pneumonia epidemic, the demand for instant noodles has rebounded.
Why don't consumers love instant noodles?
Externally, with the rise of the takeaway industry, consumers' pursuit of health, high quality and other preferences have brought a lot of impact to the traditional instant noodle market; in addition, in the past two years, pre-made dishes have also begun to seize the market space for instant noodles, diverting some consumers.
From the perspective of the fast food industry, consumers are now choosing more and more widely in the field of convenient fast food, and in recent years, new convenience foods such as self-heating hot pot, snail powder, and sour chili powder have also become new choices for many young consumer groups. The convenience fast food track is extremely crowded, further shortening the living space of instant noodles.
Taking snail powder as an example, according to the data of Tianyancha, in 2020 alone, the number of registered enterprises of snail powder reached 6736, an increase of 68.85% over the previous year, and in the first quarter of 2021, the number of new enterprises registered by snail powder reached 2422, more than 1/3 of last year, and it is conceivable that the popularity of new categories represented by snail powder is continuing to rise.
In such an industry background, the life of instant noodle head companies is not good.
According to the financial report of Unification Group China (00220.HK), the revenue of The food business of Unity Group China in 2021 was 9.525 billion yuan, an increase of 1.1% over the same period last year, but the revenue of instant noodle business decreased by 47.8 million yuan compared with 9.055 billion yuan in 2020. The decline in instant noodle sales has also led to a decline in corporate profitability, and the financial report shows that the gross profit margin of The Unified Group's China food business has dropped from 31.2% in 2020 to 25.3% in 2021, and the net profit margin has dropped from 5.5% to 1.6%.
The same is true of another instant noodle giant, Master Kong. According to the financial report, in the first half of 2021, master Kong Holdings (00322.HK) revenue increased by 7.47% year-on-year, gross profit margin fell by 2.38% year-on-year, and net profit fell by 14.50% year-on-year; the main reason for Master Kong's increase in revenue and no profit was also "dragged down" by the instant noodle business, and master Kong's instant noodle revenue in the first half of 2021 was 12.722 billion yuan, down 14.67% year-on-year.
Instant noodles, once one of the "greatest inventions of the 20th century," now seem to have lost their former glory and are no longer the only choice for consumers.
(iii)
White elephants "change" several times
Nowadays, white elephants have returned to the public eye again, and in these years of low volume, many consumers believe that white elephants are too "low-key" and "traditional". In fact, it is not, these years of white elephants have not stopped the pace of innovation.
White Elephant first tried offline transformation. In March 2011, a number of senior executives of Baixiang, including Chairman Yao Zhongliang, established Beijing Sunshine Jinsui Investment Co., Ltd. Half a year later, Beijing Sunshine Jinsui invested 5 million yuan to establish Henan Sunshine Jinsui, mainly engaged in Fuxi steamed buns, noodles and so on.
The business model of the project is a staple food chain called Fuxi Noodle Workshop. It mainly sells noodle products such as fresh noodles, steamed buns, dumpling skins, wonton skins, and various condiments. White Elephant positions Fuxi Noodle Workshop as a high-end fresh pasta, and adopts unified production, packaging, distribution, and cold chain distribution.
However, after opening several direct stores, it could not be accepted by the masses because of excessive commodity prices, and finally ended in a loss.
Since then, in 2012, White Elephant began to develop the beverage market. In fact, the white elephant's move to the beverage market is not a blind move, after all, instant noodles and beverages belong to the star combination of the consumer market. However, at that time, the "competitive enterprises" of white elephants such as Master Kong, Unity, and Jinmalang had already made certain achievements in the beverage business, and the white elephants did not seize the opportunity to enter the beverage industry.
Nowadays, white elephants have entered the beverage business for nearly a decade and have launched a variety of beverage products, but consumers seem to have a hard time seeing white elephant beverages.
Red Star Capital Bureau browsed the White Elephant Tmall flagship store and the White Elephant Jingdong flagship store, but did not see beverage-related products sold in the flagship store. Subsequently, I searched for "white elephant drink" on Taobao, only to find that a small number of merchants were selling related products, and their product sales were low.
Source: Taobao
Regarding the problem of "difficult to find" white elephant beverages, the relevant person in charge of white elephants once said in an interview with the media: "The reason for the failure to achieve national shopping is due to the low pricing of products, and offline white elephant drinks are mainly concentrated in the second, third and fourth-tier cities in central China. It is not widely distributed online, but also because the price of beverage products is low, the profit is relatively low, and after drinks are purchased through online channels, it will lead to higher transportation costs for enterprises."
In general, today's white elephant drinks have neither brand advantages nor channel discourse, and development is still difficult.
In addition, in recent years, the general environment of instant noodles has not been optimistic, which has also forced white elephants to make many changes in basic business. In 2019, Baixiang launched new products with the idea of "net red products", such as old Beijing popcorn, Sichuan-style spicy flavor of "noodles", salted egg yolk flavor of "pan noodles", "can drink soup" as the selling point of the sour chili powder and so on. Subsequently, The White Elephant invested in single grain and also launched a high-end Chinese-style instant noodle "Fresh Noodle Transmission", but the overall performance was not satisfactory.
It is undeniable that the white elephant has been trying to break the game, but under the fierce market competition and its own layout strategy and many other factors, the white elephant's several attempts have not aroused too much market waves.
brief summary
The traditional instant noodle track has been cold, and many times the search for new growth points has not been successful, and the pressure in front of the white elephant is still not small.
As for how much corporate value can the white elephant achieve with the help of this traffic leverage? At present, it is still unknown, which depends on the direction of traffic, but more still depends on the product strength and brand strength of the white elephant in the later stage.
Red Star News reporter Yu Yao Liu Mi
Edited by Yang Cheng
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