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Wei Long is on the hot search again, this time because of the price increase. According to the news of many spicy noodle head enterprises such as Spicy Prince and Weilong, due to the rise in raw material costs, the company decided to adjust the prices of some products accordingly, which made many people sigh that spicy noodles could not afford to eat.
Wei Long's last hot search was because the packaging printed with words such as "about" was suspected of vulgar marketing, playing pornography and rubbing the edge ball and was accused by market opinion, which faded with Wei Long's apology and said that it would stop the production of controversial copywriting packaging.
Weilong has always paid attention to advertising, has relied on marketing out of the circle several times, when the food crisis to establish a fully automated factory live broadcast spicy strip production process, circle powder countless; Apple 7 conference defender dragon and take the opportunity to market, get rid of the "earthy" hard rub high-end; and to the Olympic champion Quan Hongchan who likes to eat spicy strips sent dozens of boxes of spicy strips to earn enough heat.
This can be described as "success and marketing, failure marketing", especially in the early stage of efforts to prepare for listing.
It is reported that in May 2021, Weilong completed the Pre-IPO round of financing, and then Weilong officially submitted a listing application to the Hong Kong Stock Exchange. However, half a year later, the prospectus entered a state of invalidation. On November 12, 2021, Weilong once again handed over the form to the Hong Kong Stock Exchange, successfully passed the hearing of the Hong Kong Stock Exchange, and sprinted towards the "spicy first share".
How much can a spicy stick make? How can Wei Long sit firmly in the "Spicy Stripe Circle" and sit firmly in the first chair? What secrets are hidden behind Weilong's listing?
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How profitable are spicy strips?
Earned 358 million yuan in half a year
With the development of productivity, people's consumption level continues to improve, the snack industry began to develop rapidly, in recent years to meet different needs of snacks have also been born, industry segmentation is becoming more and more obvious. From 2015 to 2020, the size of the mainland snack food industry has increased by 38%, and it is expected to reach 1.1 trillion yuan in 2025.
A number of snack brands such as Cha cha, Pan Pan, BaiCao Flavor, Three Squirrels, WeiLong and so on have grown up with the east wind.
In the trillion-dollar market, the share of spicy food expanded from 18.3% in 2015 to 20.3% in 2020, and it is expected that the retail sales of spicy food will reach 257 billion yuan in 2025, and the proportion will further increase to 23.3%.
From the perspective of Weilong's prospectus, from 2018 to 2020, Weilong achieved revenue of 2.752 billion yuan, 3.385 billion yuan and 4.120 billion yuan, respectively, with a compound annual growth rate of 22.4% in three years, far exceeding the compound annual growth rate of 4.1% in the same period of China's leisure food industry.
From the perspective of net profit, Weilong's net profit in 2018, 2019 and 2020 reached 476 million yuan, 658 million yuan and 819 million yuan respectively, and the net profit margins in the same period were 17.3%, 19.4% and 19.9%, far exceeding the net profit margin of less than 5% of the three squirrels and the good shop in the same period.
In the first half of 2021 alone, the net profit reached 358 million yuan, and the earning power of spicy noodles can be imagined.
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Why are spicy strips so profitable?
The birth time of spicy noodles is not long, and the target group at the beginning is not the sea of stars, but the main group of students. Weilong spicy strips were born in Luohe, Henan, in the early stage of the product even let students taste spicy strips for free, the marketing effect was immediate, Weilong spicy strips firmly grasped the stomach of young people, primary and secondary school students.
In 2005, CCTV exposed the scandal of the black workshop producing spicy strips with poor production environment, unhygienic materials, and the addition of prohibited additive mold busters, and the label of "junk food" has since been deeply tied to spicy strips, deepening consumers' negative impressions of spicy strips.
In order to reverse the image, Weilong layout scale, spend millions of dollars to build factories, the use of fully automatic packaging machines, and with the rise of social platforms, Weilong also followed the trend of live broadcast of spicy manufacturing lines, attracting countless fans for a time.
In recent years, with the help of the East Wind of the Internet, Weilong, who is good at marketing, is even more successful, imitating the apple conference packaging high-end spicy strips, launching classic emojis with comic brands, and jointly producing fashion items with sports brands... Time and again, cross-border marketing has mingled with young people with a strong sense of network.
▲Image source: Screenshot of Weilong's official website
▲Image source: Weilong Guanwei
Weilong marketing team has conducted research on major user groups and found that the purchase of its spicy strips is mainly junior high school students, high school students and other groups, such people are easy to accept new things, highly new media, and diversified interest preferences.
According to a prospectus submitted to the Hong Kong Stock Exchange last year, 95% of Weilong's consumers are under the age of 35, of which 55% are under the age of 25.
The consumer market determines the consumer population, spicy snack food is generally affordable, addictive, from birth to expand the market, Weilong has been focusing on the sinking market through close cooperation with distributors.
From the data, in 2018, 2019 and 2020, Weilong's offline channel revenue reached 91.6%, 92.6% and 90.7% respectively, of which dealers in lower-tier cities contributed the vast majority of sales.
As of December 31, 2020, Weilong has signed more than 1,900 dealers, covering more than 570,000 retail terminal outlets, of which about 70% of the retail terminal outlets are located in lower-tier cities.
However, although the number of Weilong offline dealers is large, the intensive changes of its dealers also pose a challenge to Weilong's sales system. For example, in 2018, Weilong terminated the cooperation of 430 dealers, 554 in 2019, and 2132 in 2020, although there is an impact of the epidemic, these changes also affect Weilong's control over dealers.
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Food safety issues
Affecting the dream path of earthy spicy strips
Although Weilong's revenue and profit are growing, the hidden problems behind its development are also eroding Weilong's enterprising ambitions.
On the one hand, Weilong's product line is too single, according to its prospectus, from 2018 to 2020, at least 65% of Weilong's revenue comes from "spicy food".
Although Weilong has been expanding its product boundaries in recent years, the proportion of sales of vegetable products such as konjac cool and spicy kelp has been increasing, but it is still dominated by seasoned noodle products, and the business is not balanced, which is not conducive to the long-term development of enterprises.
It is precisely because of this product development architecture that Weilong has become the head in the spicy strip track, but it is not prominent in the entire snack industry.
At present, consumers' requirements for snacks are getting higher and higher, low oil, low fat, low sugar, greener and other health elements are becoming more and more popular, and these are contrary to the current product characteristics of Weilong, so for a long time, the main market of Weilong is still in low-tier cities.
With the development of snack industry brands, many companies have also focused on the spicy strips of this product, such as Zhou Black Duck, Good Shop, three squirrel brands are involved in the spicy market, in addition to some new brands have also begun to make efforts to this spicy strip, for now, the development situation of Weilong is not as good as imagined.
On the other hand, it is a clichéd food safety problem, although Weilong has struggled for 20 years, it is still difficult to completely get rid of the label of "junk food" and "unhealthy", and the information on the Internet that frequently breaks out of the foreign body from Weilong products continues to affect consumers' desire to buy.
On the complaint platform, as of April 8, 2022, there were more than 600 complaints related to Weilong, most of which were related to food safety issues, of which eating foreign bodies, expired deterioration and other issues were the most complained.
In January this year, some netizens reported that they ate foreign bodies in Weilong spicy strips, but then Weilong said that the company had contacted consumers and introduced the production process and quality control of Weilong to consumers, and the consumer recognized Weilong's factory management, and consumers and companies could not confirm that the incident was caused by factories. The incident has aroused strong public concern about the food safety status of Weilong.
At the same time, according to media reports, Weilong has been found by the market supervision and administration bureau and food and drug administration of Zhejiang, Guizhou, Shanxi, Hubei and other provinces, and its products have added sorbic acid and its potassium salt and dehydroacetic acid and its sodium salt preservative. It was not until December 10, 2019, when the State Administration for Market Regulation issued a document, that the dispute over the use of additive standards for spicy strips was settled.
In the face of these issues, Weilong said in its prospectus: "Failure to maintain food safety and consistent quality may have a material adverse impact on the brand, business and financial performance".
From its birth to the upcoming listing, Weilong's journey has not been smooth, through the use of the Internet, close to young people to get rid of the label of "junk food", but the sword-walking bias marketing will also have the risk of falling into vulgarity, and the corresponding marketing costs will also increase greatly.
Weilong's current main market is still dominated by low-tier cities, and the main products are mainly based on spicy strips, under this structure, it is more important to cultivate the products themselves, and it is the foundation of food hygiene and safety to do a good job.
Duty Editor Lee plus minus