Image source@Visual China
文 | 观潮新消费，作者 | 王叁，编辑 | 杜仲
The controversial bird's nest track finally ran out of a listed company.
On December 12, Xiamen Yanzhiwu Bioengineering Co., Ltd. (hereinafter referred to as "Yanzhiwu") was listed on the main board of the Hong Kong Stock Exchange, becoming the "first bird's nest stock" in China.
A year ago, Yanzhiwu also took the initiative to withdraw the A-share declaration under the 10,000-word questioning of the China Securities Regulatory Commission, and in 2023, Yanzhiwu has completed the Hong Kong stock IPO sprint in just half a year. The successful listing of Yanzhiwu means that the story of bird's nest has finally begun to be recognized by the capital market, and the 10 billion bird's nest market is also waiting for the arrival of new players.
As Huang Jian, founder, executive director and chairman of Yanzhiwu, said at the listing ceremony, "this is a new starting point". At this starting point, the controversy of "whether bird's nest is an IQ tax" will usher in a more rigorous scrutiny.
marathon
It took 13 years for Yanzhiwu to ring the bell as it wished when it hit the IPO for the fifth time.
In 2011, Yanzhiwu prepared to go public in Hong Kong for the first time, but was forced to run aground due to the "poisonous blood swallow" incident, and closed hundreds of stores one after another, falling into business difficulties.
In the same year, the Zhejiang Provincial Administration for Industry and Commerce (now known as the Zhejiang Provincial Administration for Market Regulation) found that the nitrite content of most blood bird's nest products on the market was seriously exceeded.
The "poisonous blood bird's nest" incident is a negative typical case in the field of food safety, which has seriously affected the image and development prospects of the industry. According to the data of the National Bird's Nest Committee, the sales scale of the national bird's nest industry fell from 6.5 billion yuan in 2011 to 2.2 billion yuan in 2012, and although it rebounded to 6.05 billion yuan in 2013, it has no previous growth rate and has remained at 6 billion yuan for four consecutive years.
(Note: The full name of the National Bird's Nest Committee is the Bird's Nest Market Professional Committee of the National Federation of Urban Agricultural Trade Centers, which is an industry-based, national and non-profit community organization engaged in the bird's nest industry and related production, processing, circulation, testing, scientific research, teaching and consumption.) ）
In the past few years when the industry was facing the ceiling, Yanzhiwu invested a lot of money in marketing, in order to reverse its own and even the industry's image, and also laid the groundwork for the new "negative evaluation" later.
Since 2017, the bird's nest industry has reopened its growth space and maintained growth for 4 consecutive years, increasing from 10 billion yuan to 40 billion yuan. The tide rises, and the house of swallows once again starts the sprint of "the first share of bird's nest".
In 2019, Yanzhiwu prepared to go public in Hong Kong for the second time, but it failed again, and the reason was not disclosed. At that time, some media reported that "the reason for the failure may be that Yanzhiwu has not obtained the corresponding qualification to operate bird's nest in Hong Kong." ”
I thought the sprint was a 100-meter race, but it turned out to be a marathon. Yanzhiwu transferred to A-shares and submitted a prospectus to the main board of the Shanghai Stock Exchange at the end of 2021. But A-shares are not marathons, they are triathlons.
In April 2022, Yanzhiwu was questioned by the China Securities Regulatory Commission, with 19,000 words and 57 follow-up questions, covering the "poisonous bird's nest" incident, product value, authoritative source of bird's nest nutritional value, whether the performance is supported by a large number of advertising and marketing, as well as related party transactions, and the actual controller's VAM.
In September 2022, Yanzhiwu had already arranged to be reviewed by the Issuance Review Committee, but voluntarily withdrew the declaration on the eve of the meeting. However, only two months after the IPO failed, Yanzhiwu submitted listing guidance and filing materials to the Xiamen Regulatory Bureau to restart the A-share listing plan.
The fourth impact IPO did not make any new progress, but returned to Hong Kong stocks in June 2023, passed the hearing of the Hong Kong Stock Exchange on November 19, and officially IPO on December 12, finally completing the 100-meter sprint.
The final offer price of Yanzhiwu was HK$9.7 per share, and the net proceeds from the IPO were HK$256 million.
According to the prospectus, about 10% of the proceeds will be used for research and development activities to expand the product portfolio and enrich product functions, about 25% will be used to expand and consolidate the sales network, about 15% will be used to strengthen brand building and marketing efforts, about 35% will be used to strengthen supply chain management capabilities, about 5% will be used to strengthen digital infrastructure, and about 10% will be used for working capital and other general corporate purposes.
As a consumer goods company in the rising stage of the industry, Yanzhiwu's thirst for IPO and the proportion of fundraising allocation are relatively reasonable. Judging from the data presented in the financial report, the most scarce thing in Yanzhiwu during the development and expansion period is not capital.
As early as 2018, the media's doubts about bird's nest recovered with the re-growth of the industry, Yanzhiwu invited the media to visit the site in an official letter, and core executives such as Chairman Huang Jian, CEO Li Youquan, General Manager of the Production Center Huang Danyan, and Technical Director Fan Qunyan were interviewed to respond to the doubts in an open and transparent manner.
In this interview, Yanzhiwu revealed a set of data, its advertising investment in 2017 reached 100 million yuan, and plans to grow at a rate of 15% every year. In 2017, Yanzhiwu's sales revenue was 668 million yuan, and the net profit was about 40 million.
In other words, as early as this invitation to prove its innocence, Yanzhiwu made it clear that high marketing investment will not affect the attitude of operation. Li Youquan said bluntly: "What's wrong with paying 5 million yuan a year? I sell 5 million bowls a year, and the average is less than 1 yuan for 1 bowl, can you say that this has increased the burden on consumers? Is it a huge profit? Because this bird's nest has become more expensive? I think it's normal!"
According to the prospectus data, from 2020 to 2022, Yanzhiwu's revenue will be 1.301 billion yuan, 1.507 billion yuan and 1.730 billion yuan respectively, with a compound annual growth rate of 15.3%, and its net profit will be 123 million yuan, 172 million yuan and 206 million yuan respectively, with a compound annual growth rate of 29.2%.
(Source: Yanzhiwu Prospectus)
In the first five months of 2023, Yanzhiwu's revenue increased by 12.3% year-on-year to RMB783 million, while its net profit increased by 20.0% year-on-year to RMB101 million.
While maintaining rapid growth, the net profit growth rate of Yanzhiwu has been higher than the growth rate of revenue for a long time, and it has passed the stage of tightening the belt to engage in marketing, and now it is already increasing revenue and profits.
In addition, from 2020 to 2022 and in the first five months of 2023, the net profit margin of Yanzhiwu was 9.5%, 11.4%, 11.9% and 12.8%, respectively, which was higher than the industry average estimated at 5.0% to 9.0% for the same period.
However, after the new consumer industry has entered the stage of digital growth, attaching importance to supply chain transformation and R&D investment has become the consensus of the long-term development of enterprises.
From 2020 to 2022, the marketing expenses of Yanzhiwu will be 318 million, 399 million, and 504 million respectively, and the marketing rates will be as high as 24.43%, 26.48%, and 29.13%, of which advertising and promotion expenses will account for 74.3%, 67.4%, and 64.8% respectively.
In the same period, the R&D expenditure of Yanzhiwu was 18 million, 19 million and 24 million respectively, and the R&D expense rate was only 1.4%, 1.3% and 1.4%.
As a comparison, from 2020 to 2022, Yanzhiwu paid dividends three times, with an amount of up to 120 million yuan, 100 million yuan, and 80 million yuan, and in March this year, Yanzhiwu paid another dividend of 160 million yuan, with a cumulative dividend of 460 million yuan.
During the same period, the total net profit of Yanzhiwu was 602 million yuan.
Bonus period
In 1986, Huang Jian graduated from the Department of Mathematics of Fujian Normal University and was assigned to a high school in Zherong County, Fujian Province as a mathematics teacher.
At the end of the 90s of the 20th century, Huang Jian threw away the "iron rice bowl" that he had only held for a few years and went to Xiamen in the spring breeze. But after working for a few years, Huang Jian did not find a suitable entrepreneurial opportunity, and went to Singapore to start sales. In Singapore, he found that the bird's nest market in Southeast Asia was very hot, but it had not yet taken shape in China, which opened his mind to start his own business.
In 1997, Huang Jian returned to Xiamen and founded Xiamen Shuangdanma Industrial Development Co., Ltd. with his family, engaged in the import trade of dried bird's nest.
Bird's nest refers to the saliva secreted by some swifts of the swift family and several swiftlets of the genus Swiftlet, mixed with seaweed, plant fibers, feathers and other substances to build a nest. Because the main ingredients contain water-soluble proteins, carbohydrates, sialic acid, calcium, phosphorus, iron and sodium and other trace elements and amino acids, bird's nest is believed to have the effect of stimulating the growth of human immune system cells, promoting metabolism and enhancing function.
Bird's nest is mainly produced in Southeast Asia, from the Philippines in the east to the desert islands near the coast of Myanmar in the west, with Indonesia, Malaysia, Sandakan, Singapore and Thailand and other Southeast Asian seas in the majority, and the coastal areas of Fujian and Guangdong in the mainland. Among them, Indonesia's natural environment is the most suitable for swallows to live in, and bird's nest production is the highest.
Huang Jian seized the dividends of the initial stage of the domestic bird's nest market, and adopted the model of an import trader to import dry bird's nest from Southeast Asia and sell it at the counter of the shopping mall in Xiamen.
At the same time, Huang Jian began to think about how to get bird's nest out of the pharmacy. In 2002, when China's business moved from consignment sales to chain operation, Huang Jian introduced the franchise chain business model and opened a bird's nest store, which improved the convenience of bird's nest and pushed bird's nest to a broader consumer market with the chain business model of "order, eat, stew and delivery".
In 2008, Huang Jian visited Anta, which was also in Fujian, and was inspired by marketing and promotion, and quickly took the step of brand promotion, hiring the well-known Hong Kong actress Carina Lau as the brand spokesperson. The aforementioned "5 million paid in 1 year" may be the contract fee of the brand spokesperson.
However, in 2018, when Li Youquan mentioned this topic, Yanzhiwu's ten-year contract with Carina Lau expired, and the new spokesperson Lin Chiling was about to be officially announced. Since then, the spokespersons of Yanzhiwu have also included Zhao Liying and Jin Chen, but the marketing strategy of taking women's beauty and health care needs as the entry point has been consistent.
After Carina Lau endorsed Yanzhiwu, Yanzhiwu's sales exceeded 1 billion yuan within three years and quickly embarked on the road to IPO.
However, in the initial stage of the domestic bird's nest market, the market was mixed, and a large number of bird's nests dyed through feces or pigments evaded supervision and smuggled into the Chinese market. In 2011, the "poisonous blood bird's nest" incident broke out, and China restricted the import of bird's nest for two consecutive years, and the domestic bird's nest industry entered a bottleneck period.
Huang Jian began to think about corporate transformation. He launched the individually packaged and standardized ready-to-eat product "Bowl Swallow" and launched a new brand name "Swallow House".
In order to compensate for the negative incidents, Huang Jian improved the safety and standardization of the products on the one hand, and on the other hand, he also disclosed the production process of the factory, implemented transparent management, and accepted the inspection of the media and the public, which largely reversed the market's perception of bird's nest products and the attitude of the regulatory authorities.
In 2014, the "Bird's Nest Quality Grade" was implemented, standardizing the operating standards of the bird's nest industry, in the same year, Huang Jian optimized the company's structure and introduced external investors to upgrade Yanzhiwu from the brand name to the company name - Xiamen Yanzhiwu Bioengineering Development Co., Ltd., and in 2015, Yanzhiwu production base passed the national CNAS laboratory accreditation.
Regulation tends to be formalized, and China's bird's nest imports have recovered rapidly. According to the data of the CAIQ 2022 Bird's Nest Traceability Report, the import volume of edible bird's nest included in the CAIQ traceability increased from 3.1 tons in 2014 to 451.6 tons in 2022.
In addition, the high-flying marketing strategy has attracted the favor of many franchisees for Yanzhiwu. According to the prospectus data, as of May 31, 2023, Yanzhiwu's offline sales network consisted of 91 self-operated stores and 214 offline dealers, covering 614 dealer stores in China.
According to the Frost & Sullivan report, Yanzhiwu is the largest bird's nest product company in China's traceable bird's nest market in terms of retail sales in 2022, with a market share of 14.0%, and in China's bird's nest product market in 2022, Yanzhiwu also ranks first in terms of the number of bird's nest franchise stores and the number of imports certified by the Chinese Academy of Inspection and Sciences.
Price
Behind the fact that Bird's Nest House has become the "first stock of bird's nest", it is not a single branch, but a group of heroes.
According to the Frost & Sullivan report, the market size of the bird's nest industry in terms of retail sales will grow from RMB 12.9 billion in 2017 to RMB 43 billion in 2022 at a CAGR of 27.2%, and is expected to reach RMB 92.1 billion in 2027, with a CAGR of 16.5% from 2022 to 2027.
In 2022, China's market share in terms of global consumption of bird's nest was 70%, ranking first in the world.
With the popularization of the concept of homology of medicine and food, the idea of "medicine is not as good as food supplement" is rapidly transforming the tonic industry, looking forward to the 100 billion bird's nest market, has ushered in a number of new players, and has entered the stage of fierce brand competition.
According to the "2021-2022 White Paper on Bird's Nest Industry" released by the National Bird's Nest Committee, the number of enterprises in the bird's nest industry has continued to increase in the past decade, and from 2015 to 2019, the number of registered bird's nest enterprises has surged, of which 2018 has the largest number of new ones, reaching 1,556. From 2021 to 2022, the bird's nest industry has entered a period of reshuffle, with head and shoulder companies relatively strong, large pharmaceutical companies, food companies, and real estate companies entering the market across borders, and competition among middle and waist enterprises intensifying.
According to the "2023-2029 China Bird's Nest Industry Market Assessment and Investment Prospect Assessment Report" released by Zhiyan Consulting, as of December 2022, there are 125 domestic processing enterprises and 21,742 distributors included in the CAIQ traceability.
(Source: Yanzhiwu Prospectus)
Company B mentioned in the prospectus of Yanzhiwu may be Xiaoxian Stew, which was established in October 2014. In 2021, Xiaoxian Stew publicly stated that it ranked first in the sales volume of freshly stewed bird's nest for three consecutive years, with a compound growth rate of more than 300%.
According to the company's data, Xiaoxian Stew has completed 6 rounds of financing since its establishment, and the investors not only include Hongtai Fund, Zhou Hongyi, GF Securities, IDG Capital, CMC Capital and other star capital and Internet bigwigs, but also entertainment stars Zhang Ziyi, Chen Shu and others.
Whether it is the market share of the leading enterprises or the rapid rise of new brands, it shows that bird's nest is a relatively scattered industry with low thresholds. As a "tonic", bird's nest has been endowed with multiple effects such as beauty and blood benefit at the publicity level. From a scientific point of view, the main components of bird's nest are proteins, polysaccharides and minerals, and there are no particularly prominent tonic components.
At this stage, the sales of bird's nest brands and the fans of bird's nest products are facing the same problem: how to screen and prove the efficacy of bird's nest in a long cycle and complex diet? If you can't justify yourself, you can only quote scriptures and classics, and then fall into the inherent discourse system of "what you believe".
When the nutritional value of bird's nest is compared with that of eggs, its market potential is confined to the affordable consumer market, and it is endowed with social value because of its high-end attributes, carrying the symbolic meaning of luxury goods, and having the characteristics of social hard currency.
From the perspective of products, the prospectus shows that Yanzhiwu now has three main product categories - pure bird's nest products, "bird's nest +" and "+ bird's nest".
(Source: Yanzhiwu Prospectus)
Among them, pure bird's nest products mainly include bowl bird's nest product series "Bowl Bird's Nest", bottled bird's nest product series "Freshly Stewed Bird's Nest" mainly for e-commerce consumers, bottled rock sugar flavored bird's nest product series "Rock Sugar Official Bird's Nest", and traditional bird's nest product series "Dried Bird's Nest" that can be processed by customers themselves.
"Bird's Nest+" products refer to bird's nest products that are based on bird's nest and add additional ingredients to enhance flavor and adapt to different consumption scenarios, while "+Bird's Nest" products include foods that use bird's nest or bird's nest extracts to enhance flavor and function (e.g. bird's nest porridge), as well as bird's nest skincare products that use bird's nest peptides as the core ingredient.
As of the end of 2022, Yanzhiwu has a total of 250 SKUs and 194 pure bird's nest products, accounting for 95% of the revenue.
(Source: Yanzhiwu Prospectus)
In terms of price, from 2020 to 2022, the price of bowl bird's nest (pure bird's nest) increased from 163 yuan per bottle to 174 yuan per bottle. However, the efficacy of bird's nest needs to be taken for a long time to be reflected (if any), unlike the high-priced consumer goods represented by Moutai, which have an "effect" after taking a sip.
From the perspective of product layout and sales channels, Yanzhiwu is trying its best to get closer to young consumer groups. In 2022, Yanzhiwu has 23 self-operated online stores and 13 dealer online stores on mainstream e-commerce and social platforms, with online channels accounting for 54.2% of sales, surpassing offline channels.
However, the pressure on online channels is even greater, and it is the most enthusiastic battlefield for new consumer brands that are starting with light assets. Taking Tmall Mall as an example, as of September 21, 2022, there are nearly 10,538 stores selling bird's nest products, nearly 200 brands, and 9,355 related products, with well-known brands including Yanzhiwu, Tongrentang, Xiaoxian Stew, Yan Xiaochu, Yan'anju, Qingdao Zhengdian, etc.
Yanzhiwu's way of expanding online channels is to exchange price for volume. Freshly stewed bird's nest products specially designed for online business, with lower bird's nest content and unit price than the fist product Wanyan, are mainly aimed at younger and more convenient consumer groups, with sales of 485 million yuan in 2022.
Accelerating the transformation of touching the Internet and rejuvenation means that bird's nest products should be cut from luxury attributes as soon as possible, and the doubts of IQ tax should be broken as soon as possible. However, in the context of the weak consumption upgrade and the prominent consumption stratification, "it is not that bird's nest cannot afford to eat, but that white fungus is more cost-effective" is no longer a simple ridicule, but the pressure that bird's nest companies must face.
For young people who cherish their lives and money, money and health have risen to the general philosophical proposition of "chicken and egg", and everyone has a different answer, but what remains unchanged is the pursuit of cost performance, and it is also a forbidden area that has not yet been broken into by bird's nest companies known as "high-priced canned food".
(Cold knowledge: According to the website of the State Administration for Market Regulation, Yanzhiwu has not obtained the batch number of drugs, health foods, and formula foods for special medical purposes, and Yanzhiwu's business categories are canned food and beverages.) ）
Therefore, the strategic deployment of "heavy marketing, light R&D" is no longer desirable, especially in the market environment where the traffic dividend has peaked, new consumption is cold, and the competition of bird's nest enterprises has intensified.
epilogue
During the Tang Dynasty, bird's nest was introduced to China from North Borneo (now Sabah, Malaysia), and with the rapid development of navigation technology in the Ming Dynasty, the supply increased and the number of people who consumed bird's nest increased, and then further expanded during the Qing Dynasty. Traditional Chinese medicine believes that bird's nest is flat and sweet, and after eating, it can be attributed to the lungs, stomach and kidneys, and has five major effects, such as nourishing yin, moisturizing dryness, invigorating qi, tonifying the middle, and nourishing the skin.
In the new consumption era of the rise of the national tide and the popularization of health awareness, the luxury goods of the ancient court nobles have been built into nutritional products on the public table, and a number of tracks with tens of billions of prospects have been opened.
However, how to truly connect this business with the needs of the mass consumer market for health and wellness is still a problem that Yanzhiwu needs to continue to think about.