Image source @ Visual China
The | brocade
We are often able to look for the historical inevitability and the adequacy of the enterprise itself in the context of industry changes.
Through the review, it can be seen that their rise is closely related to two rounds of era dividends:
The first round: the business form of the nut fried goods industry, from the family small workshop model in the 1980s/90s to the regional factory model around 2000, with the increase in the penetration of packaging in the bulk market, national brands that break through regional restrictions have begun to rise;
The second round: With the stabilization of (packaging: bulk), the improvement of residents' healthy diet level, and the penetration of the superimposed e-commerce model, the nut fried goods industry in the 2010s became a new retail model that combined platform "OEM" and Internet applications, thus achieving the transcendence of national brands.
Today, the main prerequisite for the second round of leapfrog development (network penetration rate peak) is coming to an end, the development of new categories and the explosion rate of the industry have begun to decline significantly, and the entire industry has begun to face the harshest cyclical judgment in history.
This article hopes to sort out the history of the nut leisure snack industry, locate the current tense of industrial competition, and think about the future development trend.
01 One leap: Qiaqia's packaging dividend and industrial integration
The 1980s were the first decade of the mainland's reform and opening up, and the expansion of a small workshop owner who fried melon seeds and his "fool melon seeds" brand condensed the commercial context of this era. Guazi, as a representative of the important domestic leisure speculation at that time, was also imprinted in the initial chapter of China's commodity economy.
In the 1990s, the mainland nut fried goods industry began to change from the form of a family workshop to industrial production, and the industry began to emerge a number of local melon seed brands through mechanization and scale improvement. It was also during this period that the "fool melon seed" was limited by the thinking of the family workshop, and its brand highlights basically faded during this period.
[1] Packaging, brand, supply chain
Qiaqia melon seeds were launched in 1999, compared with the characteristics of the melon seed market at that time "fried, dirty hands", Qiaqia melon seeds were "cooked, not dirty hands" as the selling point, and the cooked melon seeds were also particularly flavorful, and achieved sales of 30 million yuan that year, which also stood on the corner of the market.
But at this time, the melon seed market is still a scattered model, in most of the memory of the 80s/90s, bulk melon seeds, peanuts are essential for family new year goods. However, after 2000, our New Year goods have changed, represented by the snack package launched by Want Want, and the packaging of nut fried goods has also begun.
Perhaps smelling this market change, on the one hand, in 2000, Qiaqia melon seeds spent 4 million yuan (more than the profit of the year) to advertise on CCTV, on the other hand, Qiaqia used environmentally friendly, non-toxic and tasteless, easy to recycle, and conducive to batch cowhide wrapping paper (that is, red bags) as the first choice for packaging. This "dangerous chess" made its revenue quickly reach 100 million yuan in the current year, and its sales in the following year reached 400 million yuan. It is also through this that Qiaqia has made it a fool in the melon seed market through the penetration dividend of packaging, and no opponent has been able to shake it so far.
The data shows that in 2019, Qiaqia melon seeds accounted for 41% of the market share of packaged circulating melon seeds, accounting for 18% of the "packaging + bulk" market, which is an absolute market segment leader. In 2021, Qiaqia's annual revenue has reached nearly 6 billion yuan, of which the sunflower business accounts for 2/3.
In addition to catching up with the changing dividends of the melon seed consumer market, relying on the scale advantage of Qiaqia is also extending its own supply chain to the upstream raw material end in reverse.
Qiaqia comes from Anhui, but china's most important sunflower seed production area is Inner Mongolia, Qiaqia has long established a "golden seed" seed company in Inner Mongolia to ensure the supply of high-quality sunflower seed varieties and production raw materials; in addition, Qiaqia has also built sunflower planting bases in Xinjiang, Gansu and other places, including Inner Mongolia, including inner Mongolia, the overall planting base of more than 1 million mu; in terms of overseas expansion, it has also built a sunflower planting base of 15,000 mu in Russia, taking into account Russia's unique geographical and physical conditions. It is likely to further expand the overseas scale in the future.
At the production end, Qiaqia has 9 production bases in the world, including 8 major domestic production bases (Hefei, Fuyang, Changsha, Chongqing, Langfang, Baotou, Gannan, Harbin), as well as Thai factories for the Southeast Asian market; at the downstream channel end, Qiaqia is mainly based on offline distribution channels, with about 1,000 dealers nationwide, covering 400-500,000 terminals.
[2] High gross margin printing machine
From the above content, it can be seen that Qiaqia is the absolute leader in the field of melon seeds, and the basic disk is very stable. However, melon seeds are relatively mature categories after all, and they have the characteristics of low consumption frequency, low unit price and low threshold, and the growth rate of the melon seed market has slowed down significantly since 2008, while the compound annual growth rate in 2014-2019 is only 1.7%.
However, the melon seed category, which does not seem to have much room for imagination, actually plays the role of a cash flow machine for a leader like Qiaqia. The gross profit margin of the Qiaqia melon seed business has been stable at at least 40% (or even 50%) for many years, compared with the gross profit margin of the nut business is mostly around 25%.
In the nut fried goods industry like Qiaqia, a category is made the largest in the industry, and the upper, middle and lower reaches of the category industry are controlled through the scale advantage, that is, the market pricing power of the commodity is dragged into their own hands.
Similar to Buffett's See's Candies, although the average annual growth of candy is slow, but due to the increase in unit price has made its net profit soar, Buffett also said of this investment, "Heshi candy is much more valuable than its book value, it is a brand enterprise, its products can be sold at a price higher than the cost of production, and will continue to have this pricing power in the future." ”
This can be seen as a business philosophy of leisure snacks, making money stably in the high-margin category, without anxiety about innovation, without maintaining and purchasing equipment every year, and the performance certainty is very strong.
[1] Take the Internet Express to catch up
Judging from the changes in the market share of e-commerce models, the market share of mainland e-commerce models rose from less than 1% to 8% from 2011 to 2017, and the market share grew rapidly. In addition, the age of the original Internet residents is generally under 35 years old, and they have higher requirements for the quality of leisure snacks, nutritional balance, etc., and the consumption capacity is very strong, so tree nuts have become the growth point of this period.
Today, the three squirrels have more than 100 million online members on Taobao and Jingdong Mall (ranked first in the e-commerce snack category), and opened the channel construction of offline stores, and its commodity category has also expanded to other leisure food categories such as preserved fruits and biscuits, with an annual revenue of nearly 10 billion.
At present, its SKUs are about 1,500, covering the entire snack food industry, with revenue of 9.3 billion yuan in 2021, and the scale is also close to 10 billion yuan of revenue.
[2] Category expansion is still in full swing
In the process of continuously expanding new categories, companies need to grasp both quality control and marketing control. In fact, due to the weak control of raw materials and production links, the problem of three squirrels food occurs frequently; and in order to adapt to the changes in the preferences of consumers in different categories, frequent category marketing advertising has become the norm, but the explosive rate is very low, and it is difficult to establish user brand mentality in the long run.
In addition, the peak of Internet penetration has made the growth of e-commerce channels face stagnation, and at this time, it is necessary to increase resources to invest in offline channels, but compared with the "fast" of online channels, traditional distribution channels need time to precipitate and polish, and it is doomed to be difficult to carry the expectation of growth in a short period of time.
03 Inner Volume: A Bad Situation Determined by Industry Characteristics
Entering the middle of 2020, when the domestic situation has been effectively controlled, the country has basically resumed production and work, people's home isolation time has been greatly reduced, and the leisure snack industry has come to the end of the sales outbreak.
Today, the price of the first business philosophy has dropped from 70 yuan to near the current 60 yuan, but the three squirrels and liangping shops of the second business philosophy have fallen from near 90 yuan to the 20 yuan range, and the market has priced the above two business models.
[1] Surface: The double killing of the epidemic and the reduction of venture capital holdings
The direct reason may be that the repeated epidemics have finally dragged down the income level of the overall residents, and the impact of leisure snacks as a non-essential commodity for survival will be greatly affected, which will affect market expectations; and as the stock price peaks, the major shareholders have begun to reduce their holdings one after another.
Chart: 2010-2020 snack food market situation, source: Ai Media Data Center
But in the final analysis, the annual compound growth rate of the snack food industry in the past few years is only 6%, and if the company wants to maintain the excess growth rate in previous years, it will inevitably bring about the involution of the entire industry, and once the industry begins to fight a price war, the competition between companies is the depth of the supply chain.
A basic common sense, the closer to the raw materials of the industry (shallow processing) threshold is lower, the lower the added value of the product; in contrast, the chip, from sand to the chip to go through a series of high-tech links, the product added value is very high. Therefore, the high-end of good shops may never be realized.
In addition, with the intervention of many new retail channels such as WeChat Mini Programs, short video live streaming with goods, and community group buying, the food FMCG industry, which has no too high threshold restrictions, has become lower in its access, which also stimulates more and more small and medium-sized brands to pour into the track.
04 The Way Out: Roll to the Last Nothing?
Objectively speaking, there is no domestic food FMCG listed company like Xishi Candy, our capital market most believes in the two words is "growth", if a company is facing growth stagnation, then at most give a 7-8 times PE (such as Sinopec).
Therefore, the most domestic Qiaqia, which is most like Xishi candy, is also cut from the field of melon seeds with high gross margin to the field of nuts with low gross margin, and the fate of the leisure food industry is to roll to the end. In this process, two paths are generally deduced.
The first path: Like Jack Welch's business strategy, it puts the company in a larger space and regains its definition, waging an infinite war. Taking leisure food companies as an example, it is said that it is the penetration of various categories in a small way, and it can also expand to the food and beverage industry in the big way, such as making sugar-free drinks, the threshold is relatively low, and it may also achieve a leap.
But this path is not easy to follow, and the development of Qiaqia itself is the positive and negative sides of this path. At the beginning of 1990, Qiaqia's parent company, Huatai Group, was first engaged in "lollipops" and achieved market success. However, the product threshold is low, the homogenization competition is becoming more and more fierce, and the founder of Qiaqia finally selected the melon seed business as an important development direction for the company in the future through multi-party inspection, and the result of this decision is today's Qiaqia Food Company.
In 2008, when the growth rate of the melon seed market slowed down, In order to get rid of the dependence on a single melon seed business, Qiaqia opened a diversification strategy, and successively launched products such as "strange U taste", "crunchy crunch", "peel jelly" and other products, trying to enter other sub-categories such as potato chips, jelly and condiments, but with little effect.
The second path: to do mergers and acquisitions in large market segments, thereby increasing the concentration and reducing price competition. Coca-Cola is such an example, starting from the initial large single Coca-Cola, through the merger and acquisition of Coca-Cola has been involved in carbonated drinks, bottled water, juices, ready-to-drink tea, coffee, functional drinks and other full range of soft drinks.
If the 1.0 stage of the leisure snack industry is the era of packaging upgrading and brand building, the 2.0 stage is the era of e-commerce dividends, the 3.0 stage may be the era of infinite war and mergers and acquisitions, is it rolled to the end of the unknown, or the roll to the end should be deserved?