Looking at the financial reports of condiment listed companies in 2022, it is not difficult to find that in addition to raw material companies, the profit margins of other condiment companies have decreased to varying degrees. However, with the decline in the cost of raw materials and packaging materials that restrict the entire industry, coupled with the gradual recovery of the catering industry, the double buff is full, is the era of profit increase in the condiment industry coming?
F&B recovery Demand increased
The catering industry is an industry with strong recovery momentum, so that arguments such as "the catering market has reached the level of three years ago" can often be seen recently, which also shows that the catering industry has indeed ushered in a recovery. In terms of total volume, according to the retail sales data of social consumer goods disclosed by the Bureau of Statistics, according to the Wind Data Information Network, from January to May 2023, the cumulative domestic catering revenue reached nearly 2 trillion yuan, an increase of 22.6% year-on-year.
Specifically, taking Guangzhou Restaurant as an example, the company's catering industry achieved revenue of 338 million yuan in the first quarter of 2023, equivalent to 184% and 155% of the same period in 2019 and 2022, respectively. In the first quarter of 2023, the company's revenue increased by 19.13% to 1.457 billion yuan. In addition, Xiabu Group has also recently officially launched a paid membership model, and predicts that this model will bring at least 600 million yuan in membership fee income to the group by the end of this year, which shows its confidence in the recovery of the catering market this year.
Nearly 50% of the consumption of the condiment industry is in the B end of the catering industry, while household and food deep processing account for only 30% and 20% respectively; At the same time, considering the attribute of "heavy oil and salt" seasoning at the catering end, it means that the reduction or even disappearance of this outing scene in the past three years is difficult to make up for the demand gap through the family side, which indirectly forces the leading competition strategy to shift from the B side to the C side, bringing about a decline in the C-end cost-effectiveness ratio.
In other words, the collective decline of the condiment industry in the past three years is inevitable. It can be seen that the industry generally has a narrowing of the gross sales margin. For example, the soy sauce faucet Haitian Taste Industry, the gross sales margin decreased from 33.24% in 2021 to 30.30% in 2022, and for example, the rice flour oil faucet Arowana, the gross sales margin also decreased from 5.25% in 2021 to 3.35% in 2022. With the recovery of the B-side scenario, condiment companies are also actively responding, increasing product research and development and market penetration for B-side, and will gradually improve the profit margin performance of condiment companies.
The industry pointed out that in the B-end market, with the development trend of restaurant chain and standardization, the "central kitchen + store" model is widely used, providing more opportunities for the development of customized compound condiments. A number of leading condiment companies also believe that in the future, China's condiment industry will be led by big brands, and the trend of differentiated development between various segments and brands - in fact, from the recent announcement of listed companies, major condiment companies are grasping to enrich the B-end product line and seek new increments of differentiation.
Looking ahead, in the catering recovery cycle, the demand for condiments is rigid. Especially in the field of compound condiments for B-end customers, its high growth rate has continuity.
Costs have fallen and margins have rebounded
In terms of costs, including the decline in raw material and packaging material prices, it will also help the recovery of gross sales margin. In the past three years, in addition to reducing and disappearing dining scenes, it has also significantly increased the costs of condiment companies. According to the relevant data disclosed by Haitian Taste Industry, the cost of soybeans and soybean meal accounts for about 18% of the total cost; The cost of white sugar accounts for about 17% of the total cost; The cost of plastic bottles accounts for about 11% of the total cost; The cost of glass bottles accounts for about 12% of the total cost; The carton cost accounts for about 5% of the total cost. The above total has accounted for about 63% of the total cost, and the remaining costs are mainly edible salt, monosodium glutamate, wheat flour, manufacturing costs, labor costs and freight. Translated to the same industry, the cost ratio of Chubang, Qianhe and Jiajia will probably not be very different from Haitian.
Taking soy sauce as an example, according to data from Wind Information Network, the average price of the main raw material soybeans in 2022 will increase by 71% compared with 2019, and the average price of the main packaging material glass will increase by 20%, so the result is that the gross profit margin of the leading Haitian Taste Industry has decreased from 45.44% in 2019 to 35.68% in 2022, Zhongju High-tech has dropped from 39.55% to 31.70%, and even Qianhe Wei Industry, which focuses on high-end and C-end, has also decreased from 46.21% in 2019 Dropped to 36.56% in 2022.
Nowadays, the prices of raw materials and packaging materials have fallen. In March, the cost growth rate of soybeans, the main raw materials of the mainland seasoning industry, was -5%, the growth rate of white sugar was 7%, the growth rate of monosodium glutamate in February was 9%, the growth rate of PET chips was -12%, and the growth rate of glass was -29%.
Taking soybeans and glass as examples, the average price of soybeans in the first quarter of this year fell by 6.35% compared with last year. It is worth mentioning that soybean prices are currently very stable, as of today (June 26), the 60-day trading price of all varieties of soybeans has remained at 2.94 yuan / kg, which also indicates that the fluctuation of bulk agricultural prices caused by the fluctuation of the global situation has ended, and the national macro-control policy has achieved results. Glass continued to fall by 3.48% on the basis of last year's overall decline of 25.14%.
Coupled with the aforementioned improvement in capacity utilization rate and cost-effectiveness ratio, the first quarterly report operation of condiment companies began to improve: for example, the gross profit margin of Haitian Taste Industry in the first quarter of 2023 improved by 1.25 percentage points compared with last year, and the improvement rate of Qianhe Taste Industry reached 2.47 percentage points. Considering the acceleration of channel destocking speed after the improvement of mobile sales, it is expected that condiment companies will accelerate the improvement in the following quarters.