This is the 2106th issue of the New Consumer Think Tank
New Consumption Guide
Guarding the "halogen flavor of the rivers and mountains", or hitting the new rivers and mountains?
Author: Li Yuxing
Editor: Zhu Tian
Review: Single, ZZ
Source: New Consumption Think Tank
Banu hot pot, auspicious wontons, Momo dim sum bureau, Liao Kee stick chicken, shuyiyao xian grass and other familiar brands are all standing behind the same figure - delicious food.
That's right, it's the delicious food that is known as the "Duck Neck Three" together with Zhou Black Duck and Huang Shanghuang. Although the stock price has fallen endlessly in the past two years, it has fallen by 60% from the high of 105.5 yuan / share in 2021, and the market value has evaporated by more than 42 billion yuan. But in fact, with 14,000 chain stores across the country, Absolute Taste is not only to be the "duck king", but also to transform into the "invisible Tencent" in China's food and catering consumption field over the years.
In a recent response to an inquiry from the Shanghai Stock Exchange, the huge investment territory of these years has been "made public". By the end of 2022, the company had invested in 59 catering and food enterprises through 9 investment funds, with a total investment of 1.847 billion yuan. The field involves the marinade track, new catering, compound seasonings and the upstream and downstream of the industrial chain.
Image source: New Consumption Think Tank
As the helmsman behind the taste, Dai Wenjun, a 55-year-old native of Wuhan, has turned it into a business with an annual revenue of 6.6 billion yuan by relying on a small duck neck. As everyone knows, after creating a brine giant, Dai Wenjun has been trying to use the power of capital to continuously incubate "new forces" and create a second growth curve for the company.
But now is different, it is not only necessary to keep the "brine taste", after all, the trend of "everything can be halogen" has allowed consumers to have richer choices in brands and categories. On the other hand, in the road of building a "new force brand", diversified layout, multi-category, and multi-brand operation are undoubtedly another test for Absolute Taste.
18 years of the "Duck King" road
Once upon a time, before crayfish and snail powder seized the "C position" of the young people's table supper, duck neck was definitely the proper "king of supper". Because of its spicy and fresh flavor, exciting taste, addictive and other characteristics, it was a favorite of young people at that time, even 20 years ago.
But now the duck neck is no longer the original "duck neck". The duck price of "just two or three hundred yuan" is dissuading young people. You know, the consumption concept of young people after 95 has long changed, not to mention the gold "rich" and cute "cute" of Generation Z.
Their young people no longer believe in big brands, and pursue the cost performance of products. "The flower should be spent in the province" is their purpose, after all, you can buy expensive but you can't buy expensive.
The most important thing is that the current duck neck market from scratch is no longer the market of 20 years ago, and now young people need more products from there to excellent, not only reflected in the price of "excellent".
It can be said that Dai Wenjun was initially able to highlight the encirclement from the duck neck market, that is, to grasp the core secret of becoming a chain giant - "fast", that is, quickly seize the dividend, quickly start, and quickly gain a foothold through joining.
Behind this, in fact, the market for duck necks is not saturated. You must know that the duck neck market at that time was still the era of their own king. In 2005, when Dai Wenjun founded Superb Duck Neck. Gu Qing, the founder of Jiujiuya, brought Duck Neck to Shanghai to take root; Rooted in Jiangxi's Huang Shanghuang, its revenue has exceeded 10 million; Zhou Black Duck, born in Wuhan, has also made a name for himself locally.
In addition to "fast", Dai Wenjun also grasped the essence of scale competition, that is, chaining. In the early days, Dai Wenjun decided to "expand franchise-based channels", and in the first year after its establishment, Juwei opened 61 stores in Hunan. A year later, breaking the "geographical limitations" of the unique taste out of Hunan, Jiangxi, Shenzhen and other places, the number of stores increased to open the "snowball" mode.
Those years were the era of quacks in the duck neck market. No one would have thought that in 2011, after receiving investment from Jiuding and Fosun Venture Capital, Juwei opened the "open and listing" mode. After the successful listing in 2017, with the help of the excellent taste of capital rocker, the battle for national layout was the first to start. Today, the number of Delicious stores has exceeded 14,000, making it one of only four 10,000-store brands in China.
Source: Oriental Wealth Choice data
Image source: New Consumption Think Tank
The company's revenue also increased from 2.9 billion yuan in 2015 to 6.6 billion yuan in 2022. It far exceeds Zhou's Black Duck's 2.34 billion yuan and Huang Shanghuang's 1.95 billion yuan. During the same period, net profit tripled from RMB300 million to RMB967 million in 2021.
But the duck neck market, which has been running wildly for 20 years, cannot escape the laws of the industry cycle. Zhu Danpeng, an analyst in the Chinese food industry, told the New Consumption Think Tank that "great tasters" need to face the reality of overall aging categories and consumer fatigue.
He believes that the development of Superb Taste has reached a bottleneck of "double ceiling", that is, the ceiling of the industry and its own ceiling.
In fact, since 2019, Juwei has begun to change the marketing strategy of "racing and opening stores with saturation", and has taken the route of "deep coverage and channel intensive cultivation". However, refined operations have not raised the profitability of Amazing Taste to a higher level.
Source: Oriental Wealth Choice data
Image source: New Consumption Think Tank
From the data point of view, the net profit growth of Amazing Taste has continued to decline since reaching 31.93% in 2017, and only 25% growth rate in 2019. Affected by the epidemic, it has become more and more difficult to make a profit, and the company's net profit in 2022 has reached the "trough" since its listing, with only 173 million yuan.
Dai Wenjun may also feel that after the infinite expansion of the exquisite taste, he has completed the stage from 0 to 1. It's time to open up a new battlefield for the taste.
As early as 2018, Dai Wenjun said that on the basis of the dominant position in the existing product field, Absolute Taste will integrate excellent domestic catering and food chain enterprises, share the dividends of food and catering consumption upgrading, and accelerate the establishment of a gourmet ecosystem.
Growing anxiety
Faced with the bottleneck of excellent growth, Dai Wenjun chose to break the circle and expand the circle.
In 2013, Juwei invested 168 million yuan in the upstream industry chain and invested in Sefia, an enterprise in meat and duck breeding, breeding, slaughtering and processing, becoming its second largest shareholder with a shareholding ratio of 24.17%.
With stable upstream supply, superimposed store scale and supply chain advantages, as well as the production and operation model of "one market, one production base, one distribution chain", this distributed production capacity brings absolute cost advantages to Zhuwei. In 2021, the company's unit cost was 25.87 yuan/kg, which was lower than that of peers Huang Shanghuang 29.97 yuan/kg, Zhou's Black Duck 34.36 yuan/kg and Ziyan Food's 34.34 yuan/kg.
Image source: Guoyuan Securities
From opening up the industrial chain, Dai Wenjun tasted the sweetness of foreign investment, and also let him see that the power of capital can help him achieve a larger "gourmet capital territory". In 2014, Delicious Food invested in the establishment of Shenzhen Wangju, which became a dedicated investment platform under the company.
According to Dai Wenjun's vision, the second growth curve of creating a superb taste around "marinade", and the third growth curve of infrastructure layout around the head chain enterprises of new catering and specialty condiments. This is also the gastronomic ecological strategy of the company's foreign investment, covering four aspects: marinade, new catering, compound seasoning, and the upstream and downstream of the industrial chain.
In fact, in the halogen track that he is good at, he has been cultivating the excellent taste for 18 years, and he has played the chain standardization model perfectly, and investing in these new halogen brands is more to help them find new growth points in different sub-categories. For example, in addition to directly participating in Halogen Jiangnan, it also reinvested in Liao Ji Stick Chicken, as well as brands such as Aman Passion Chicken and Sheng Xiangting, and increased the hot brine track.
Image source: Guoyuan Securities
In addition to the brine, after 2017, Amazing Food established the Absolute Fund with Ele.me through Netju Capital, established Tomato No. 3 with Tomato Investment, and established nine funds such as Xinjin Lang Yiwu with Tencent, Keming Noodle Industry, Yanjin Shop and Qiaqia Food. Through these funds, Juwei has invested in "star brands" such as Qianwei Central Kitchen, Hefu Lao Noodles, Liao Kee Stick Chicken, and Shuyiyao Xian Cao.
However, such a huge gastronomic territory has not yet brought huge investment returns to Juwei. From 2017 to 2022, the company's net cash flow from investment activities was negative for six consecutive years. Not only that, the company's long-term equity investment income in the past three years has accumulated a loss of 285 million yuan.
Do you want both?
For the 18-year-old, it is not easy to not only want to keep the brine rivers and mountains, but also to incubate a "Internet celebrity explosive" brand, and maintain performance growth.
Since Dai Wenjun began to find the second and third curves for the layout of Delicious as early as 2014, the decision to find the second and third curves for the layout of Superb Taste is undoubtedly correct, but the diversified layout, multi-category, and multi-brand operation are undoubtedly a greater test for Delicious Taste.
In fact, new brands that have captured new consumer trends in recent years are emerging. Including marinated snack brands Wang Xiaohao, Hot Halogen Food Light, Halogen Aunt, Yanhao Hall, etc. In addition, snack food brands such as Three Squirrels and Hundred Herbs have also deployed marinated snacks.
These players not only have new gameplay, but also are constantly changing and innovating more explosive flavors. What made Dai Wenjun even more unexpected was that the "Wang Xiaohao" who rushed out would become a dark horse on the brine track.
In recent years, the "Internet celebrity snack marinade" brand Wang Xiaohao can be said to be infinitely beautiful. "Explosive success" is one of the labels put on the new brand of marinated snacks - Wang Xiaohao, from "Menghualu", "The Gate of Rebirth" to "Long Moon Ember Ming", "Anle Chuan", etc., Wang Xiaohao is stealing the limelight in the marketing of big dramas.
How big can a chicken feet business be? Wang's founder has said that there should be at least 3 billion.
To paraphrase a common saying, it is not necessarily the duck neck that beats the taste, but also the chicken feet.
Whether it is to create a marinated explosion or innovate, the absolute taste tends to be more conservative. From the perspective of the excellent product matrix, it is still mainly based on poultry and duck by-products such as duck neck and duck collarbone, supplemented by vegetable products such as edamame and lotus root chips, aquatic products such as shrimp balls and squid, and bean products such as Qianzhang. Its innovation also mainly focuses on taste innovation, and has created signature flavors, such as black duck, sauce duck, five-spice, rattan pepper and so on.
If we say, in the originally strong brine track, Absolute Taste not only has to find another way, but also continue to create "explosive models" to face the challenges of new players. In the field of investment, although the layout is extensive, it seems that it has not yet touched the doorway to make money. Brands that contribute the main investment income are still losing money.
Image source: Guoyuan Securities
For example, Hefu Lao Noodles, Su Ri'an stores have spread to more than 60 cities, with more than 400 directly operated stores, but in the past three years, the revenue of Hefu Lao Noodles has only increased from 1.1 billion yuan in 2020 to 1.25 billion yuan, but the loss is expanding, and the cumulative loss in 3 years has exceeded 700 million yuan. In addition, the upstream aquaculture enterprise Saifei invested in it also lost money for three consecutive years, accumulating nearly 300 million yuan.
According to one investor, the elements needed to be able to go far and bring returns to investors include: unique products or services that meet the needs of consumers; Clear brand positioning and strategy, able to occupy a place in the market; Efficient operation capabilities and management team to ensure the sustainable development of the brand; A healthy financial position and profitability can bring stable returns to investors. At the same time, brands need to keep up with the times, constantly innovate and adapt to changes in the market.
According to the book "Second Curve: Secondary Growth Across the "S-Curve", the second curve must start growing before the first curve reaches its peak, so that there are enough resources (money, time and energy) to withstand the initial decline during the second curve investment period.
If you start the second curve after it has reached its peak and has already turned down, it will not work either on paper or in reality, because the second curve cannot grow high enough unless it is allowed to twist significantly. However, judging from the 76% year-on-year decline in net profit in 2022, its own operation is facing a lot of pressure, and most of the brands it invests in are still in the incubation or loss stage, and have not yet become the pillar of the company's net profit.
An industry insider said that the current domestic catering market is fiercely competitive, and many brands have emerged, but there are not many brands that can really run out.
It is rare to plan ahead, and breaking new ground is a new challenge for 55-year-old Dai Wenjun and 18-year-old Juwei.
Source of the head picture: Superb Duck Neck official Weibo.
The images in this article are for image purposes only and are not for any commercial use.