In 1995, after wu Zhigang retired, he founded a small bakery in Dandong, Liaoning Province, and he named the bakery "Tao Li" as a teacher.
In 1997, Wu Zhigang led the family members to establish Shenyang Taoli Food Co., Ltd. In 2005, Tao Li Bread has gained a firm foothold in the northeast region; since then, Tao Li Bread has continued to "go south" to open up more market space.
On December 22, 2015, Tao Li Bread (603866. SH) was successfully listed on the Shanghai Stock Exchange, and the company was busy adding production bases in various provinces across the country.
In this way, the once small bakery has gradually become a well-known bread brand in the country.
But "smooth sailing" has never been the norm for businesses; Red Star Capital has noticed that today's peach and plum bread is under the "stormy waves".
According to the financial report, the revenue of Taoli bread in 2021 was 6.335 billion yuan, an increase of 6.24% year-on-year; the net profit was 763 million yuan, a year-on-year decrease of 13.54%. According to the latest financial report data, the revenue of Tao li bread in 2022Q1 was 1.452 billion yuan, an increase of 9.43% year-on-year, and the net profit was 158 million yuan, down 2.80% year-on-year. That is to say, in 2021 and the first quarter of 2022, Peach and Plum Bread is in an embarrassing situation of increasing revenue and not increasing profits.
Red Star Capital Bureau will review the 27-year development process of Tao Li Bread, talk about its expansion logic, and what is the current operating status? And how long can the "bread story" be told?
Peach and plum bread according to Visual China
Part I:
From Dandong to the whole country, how does peach and plum bread do it?
From the perspective of revenue structure, the main products of Taoli include bread, moon cakes, and rice dumplings.
However, all along, peach and plum mooncakes and rice dumplings have no "presence" in the market, and consumers often have the most daily contact with only peach and plum bread.
The financial report shows that the proportion of bread sales revenue in the total income of peach and plum remains at about 98%. That is to say, Tao Li Bread is a company that relies on the bread business to support, how does a company go to the whole country with bread alone?
1. Core: "central factory + wholesale" model
The bread that our consumers come into contact with on a daily basis can be divided into three categories according to the shelf life: short shelf life (less than 10 days), such as peach and plum bread, etc.; medium shelf life (30 to 45 days), such as Gangrong Food, etc.; long shelf life (more than 6 months), such as Dali Garden, etc.
In general, the consumption attributes of medium- and long-term shelf life bread are mainly leisure snacks, and the logistics timeliness requirements are relatively relaxed; the consumption attributes of short-term shelf life products are mainly staple foods, and the logistics efficiency requirements are higher.
At the same time, short shelf life bread tends to taste better due to the lack of food additives and the short storage time of food. In the era when domestic bread is dominated by long shelf life, Wu Zhigang smelled business opportunities and launched short shelf life bread products.
However, the short-shelf life bread business is not easy, because the shelf life of the goods is short, and the goods need to be sent to the retail stores in a timely and efficient manner. If Tao Li Bread wants to go out of Dandong or Northeast China, it needs to build factories throughout the country, which is inseparable from the "central factory + wholesale" model of the enterprise.
It should be pointed out here that the current business model of short-shelf life bread can be divided into three types, in addition to the "central factory + wholesale" model of taoli bread, there is also the "factory + chain store" model and the "central factory + e-commerce + logistics" model.
First of all, the "factory + chain store" model refers to the enterprise laying out offline stores for a brand, setting up factories around the urban area, making finished or semi-finished products, and transporting them to chain stores for sale, representing the company's 85 degrees C, Holly Lai, etc.
The advantage of this model is that the product is fresher, the shape is more beautiful, the user experience is stronger, but the product price is also higher. Moreover, in this model, enterprises need to bear the high rent costs and labor costs of opening stores.
Secondly, the "central factory + e-commerce + logistics" model, the mode of operation of the enterprise often does not have offline stores, but through the e-commerce channels for sale, by the central factory unified production, and then through the cold chain logistics transport to consumers, on behalf of the enterprise has a promise cake and so on.
This model saves the operating costs of offline stores, but due to the difficulty of e-commerce distribution, logistics costs and packaging costs are also high, resulting in the erosion of corporate profits by the e-commerce performance expense rate. In addition, because the price of products is often higher, it is a low-frequency, low-repurchase rate consumption in the market.
Finally, there is the "central factory + wholesale" model of peach and plum bread. Enterprises also do not set up offline stores, but rely on supermarkets, convenience stores and other channels for sale. Set up production and processing plants in various cities to produce finished products through standardized operations, and to distribute products wholesale to supermarkets or distributors in local and surrounding urban areas through centralized logistics, and finally to end consumers.
The advantage is that due to the high degree of automation and standardization, the product production efficiency is high and the cost is lower. Under low cost, the product focuses on the low-end route, and constantly "brushes the sense of existence" by continuously going deep into the scenes of daily contact with consumers such as supermarkets, convenience stores, and community stores. Therefore, the combination of high exposure and cost performance has naturally become the expansion engine of enterprises. The disadvantage is that it is more difficult for enterprises to control terminals, and enterprises need to have stronger control.
2. Competitiveness: channel + production
The success of Tao Li Bread lies in the "central factory + wholesale" model and the efficient control and management of "channels, production and distribution" by enterprises, which makes Tao Li Bread successfully go out of the northeast and go to the whole country.
In terms of channels, at present, Taoli bread is mainly sold through two modes: direct operation and distribution.
Directly operating for large chain supermarkets (KA customers) and small and medium-sized supermarkets and convenience store terminals in central cities, enterprises directly sign agreements with them to sell products.
Distribution is aimed at convenience stores, county and township stores, and commissaries in consumer markets composed of county-level cities, counties, and townships, and enterprises distribute and sell products through distributors.
The channel advantage of Tao li bread lies in the fact that the channel broadening ability and channel control are very strong.
For example, in the management of dealers, peach and plum bread can be described as very strict. For example, it is agreed to the distributor that only the peach and plum bread series products can be sold, and the distributor ensures that the distribution is timely and reasonably handles the return and replacement of the goods. Through the "control" of distributors, the company's products are highly exclusive and the control of production and marketing rates is strong.
At present, Taoli Bread has established more than 300,000 retail terminals in the national market, the density of channel coverage is increasing, and the products have gradually formed a channel moat that is easy to defend and difficult to attack.
In terms of production, Tao Li Bread adopts the production mode of "fixed production by sales".
The so-called sales of production is to flexibly formulate production plans according to the actual needs of the market. The specific approach is that the enterprise implements the "white night shift" two-shift system, which will be produced in advance according to the estimated order volume during the day, and make up the order volume according to the actual demand at night, and start the shipment of large trucks around 8-10 pm.
This makes the actual production volume of peach and plum bread highly match the market demand, which not only improves the turnover rate, but also effectively reduces the production waste. The financial report shows that in 2018, the production and sales rate of peach and plum bread was once as high as 99.99%.
After consolidating the advantages of channels and production, Tao Li Bread finally made the company operate gears efficiently through a reasonable distribution model.
Part II:
The first strand of bread began to show fatigue
In the capital market, the stock price of Tao Li Bread showed a downward trend after reaching a high of 32.97 yuan / share in September 2020; as of the close of trading on April 27, 2022, the closing price was 13.75 yuan / share, with a total market value of 18.317 billion yuan. The mood of the capital market is naturally closely related to the operating conditions of Tao Li Bread in recent years.
1. Revenue growth slowed down and net profit grew negatively
From the perspective of the company's revenue data, the financial report shows that before 2020, the revenue of Taoli Bread will maintain a high-speed growth state, and the revenue growth rate will be as high as more than 15%. After 2020, the company's revenue growth rate has slowed down significantly, and the growth rate in 2021 has dropped to 6.2%.
Source: Company Financial Report, Red Star Capital Bureau
At the same time, the profitability of peach and plum bread has also declined. According to the financial report, the net profit of Taoli Bread in 2021 was 763 million yuan, a year-on-year decrease of 13.54%, which is also the first time that the company's annual net profit has declined.
The reason for the decline in earning power comes from two aspects, one is that the social security fee reduction in 2020 will lead to a higher net profit base, and the second is that there will be more promotional activities in 2021, sacrificing profit margins.
However, in 2022, the situation has not improved.
In the first quarter of 2022, the net profit of Tao Li Bread declined again. According to the financial report, the net profit of enterprises in 2021Q1 was 158 million yuan, down 2.80% year-on-year.
For the reasons for the decline in net profit in the first quarter of 2022, Tao Li Bread said in the performance report that it was mainly due to the increase in raw material costs and terminal distribution service fees, which made the company's costs in the first quarter increase by 10.8% year-on-year, and the gross profit margin fell by 1 percentage point year-on-year to 25.6%.
Source: Company Financial Report, Red Star Capital Bureau
In fact, the lack of revenue growth and the rise in costs have made Tao Li Bread into a profit dilemma. The dilemma itself comes from the fierce market competition, the needs of users have changed, and it has become more and more difficult to retain users.
2. Regional development is not coordinated
Peach and plum bread was launched in the northeast, although it has long been "south", but the development of peach and plum bread in the southern market for many years has not been smooth. Therefore, in terms of geographical distribution, the situation of peach and plum bread "strong in the north and weak in the south" is very obvious.
According to the financial report, in the whole year of 2021, the revenue of Taoli Bread in the northeast, north China and east China markets contributed more to its revenue, accounting for 47.7%, 22.94% and 23.16% of the total revenue, respectively, while the revenue of the central and south China markets that it vigorously expanded since 2016 accounted for only 2.92% and 8.03% of the revenue.
In addition, the 2021 financial report shows that 13 of the 39 subsidiaries of Tao Li Bread are in a state of loss, most of which are Southern Companies, Shanghai Tao Li, Hainan Tao Li, Jiangsu Tao Li, Fuzhou Tao Li, Xiamen Tao Li all lost more than 10 million yuan, on the day of the release of the annual report, Tao Li Bread also said that it intends to cancel the company's wholly-owned subsidiaries Fuzhou Tao Li and Xiamen Tao Li.
The same is true of the latest 2022Q1 financial report, with Tao Li Bread achieving a total revenue of nearly 1.3 billion yuan in the three regions of the Northeast, North China and East China markets. The central and south China markets, on the other hand, only achieved revenue of 160 million yuan in total.
Source: Company earnings
On the one hand, compared with the northeast and north China, peach and plum bread entered south China and central China later, did not eat market dividends, and faced greater market competition. On the other hand, this is also related to the consumption habits and eating habits of local consumers.
There are many difficulties, it is difficult for peach and plum bread to eat the southern market, and it is difficult to change this market pattern.
Part III:
In the second half, it was destined to be more confused
Tao Li Bread relies on short shelf life bread and successfully becomes the first share of bread. But so far, the story that peach and plum bread can tell is still only bread. The single revenue structure makes Tao Li Bread a typical one-legged walking enterprise.
According to the 2021 financial report, bread revenue accounted for 97.6% of total revenue, while the sum of revenue from mooncakes, rice dumplings and other three types of products contributed less than 3% to total revenue.
Single revenue also means that the company's ability to resist risks is weak. That is to say, once there are seasonal factors, changes in user preferences, rising prices of product raw materials and other force majeure situations, Tao Li Bread may face low profits or even losses.
And today's industry competition is also becoming more and more fierce, new and old players gathered in the short shelf life bread track, tao li bread challenges are not small.
In addition to dealing with old rivals such as Bimbo and Manhattan, Dali Foods, the leader in the field of long-term bread, has also launched a new brand "Mei Baking" and begun to enter the short-term insurance market.
In addition, capital intervention in the baking industry has also spawned a number of emerging bakery pastry brands. According to ai media consulting data, there were as many as 22 investment incidents from January to September 2021, with a total financing amount of 5.70 billion yuan. As a result, many new players in the baking industry such as Mo Mo Dim Sum Bureau, Luxi River, Papa Sugar and so on were born.
On the one hand, it is difficult to seek the second growth curve of corporate revenue, on the other hand, the fierce industry competition continues to divert consumers' attention, and the current situation of taoli bread may be described as internal and external troubles.
brief summary:
Times and markets are constantly changing, and the business model of the past is doomed to not be once and for all. How to break the game? Tao Li Bread, which has been in the industry for many years, is anxious about this.
Red Star News reporter Yu Yao Liu Mi
Edited by Tao Yueyang