来源 | 伯虎财经（bohuFN）
Author | Stroll through Hengtian
In the consumer industry, most of those who can achieve "brand is category" are the leaders of their respective tracks, and Weilong is an example.
Over the years, Weilong has not only made spicy noodles into childhood memories, but also made this originally cheap happiness a price, and has changed the shelves from mom-and-pop shops outside the Fifth Ring Road to high-end supermarkets in first-tier cities. At the partner conference in 2020, Liu Weiping, the founder of Weilong, boasted that the company's sales in 2022 would reach 10 billion yuan.
But even Weilong can't sell spicy strips.
On the first anniversary of its landing on the Hong Kong stock market, Weilong released a fairly good 2023 annual performance report: revenue and net profit achieved double growth, of which operating income was 4.872 billion yuan, up 5.2% year-on-year, net profit attributable to the parent company was 880 million yuan, up 481.9% year-on-year, and adjusted net profit was 970 million yuan, up 6.3% year-on-year.
Behind the beautiful performance, the sales volume of Weilong spicy noodles in 2023 will drop from 150,600 tons in 22 years to 124,400 tons, a year-on-year decrease of 17.4%. Reflected in the stock price, as of press time, Weilong closed at HK$5.68 per share, with a total market value of HK$13.355 billion, evaporating more than 10 billion compared with the first day of listing. At the beginning of March, Weilong Delicious was transferred out of the list of underlying securities of the Hong Kong Stock Exchange.
This article attempts to resolve the following two issues:
1. Why can't the spicy strips sell?
2. Can Weilong create another spicy strip?
01 Young people don't like spicy strips anymore
In January this year, the Hurun Research Institute and the global first release of the "2023 Global Debut Hurun Top 100 Chinese Food Industry List" were released, in which the value of 57 companies decreased compared with last year, and the value of Weilong decreased the most, reaching 55%.
Hurun attributed the decline in value to "the decrease in price appreciation and the lack of growth".
In the first half of 2022, the average selling price of Weilong spicy noodles increased by 8.6%, and the average selling price of Weilong seasoned noodle products increased by 27% year-on-year in 2022, which is higher than the average annual increase of 10%-20% for luxury goods.
The price increase is only one aspect, in order to sell more products, Weilong played the marketing card. From 2019 to 2023, Weilong's distribution and sales expenses will be 281 million yuan, 371 million yuan, 521 million yuan, 633 million yuan and 807 million yuan respectively, accounting for 8.3%, 9%, 10.85%, 13.7% and 16.6% of revenue respectively.
However, this price increase did not lead to the expected volume increase. On the contrary, in the first half of 2022, the sales volume of Weilong spicy noodles decreased by 13.82%, a decrease of 13,000 tons. In 2023, Weilong's spicy strip sales will decline further, and the overall sales volume will decrease by 17.4%.
In 2023, the capacity utilization rate of Weilong's seasoned noodle products will not even be half, only 48.3%, and the revenue of seasoned noodle products will also decrease from 2.719 billion yuan in 2022 to 2.549 billion yuan in 2023, a decrease of 6.25%, and the proportion of revenue will decrease from 58.7% in 2022 to 52.3% in 2023.
Why can't the spicy strips be sold? The first and foremost issue is, of course, the problem of demand.
With the improvement of the national economic level and the impact of the "black swan" of the epidemic for three years, consumers' demand for leisure snacks is undergoing significant changes.
In terms of taste, consumers are paying more and more attention to health and diversity, and spicy strips with high salt, oil and calories may no longer meet the health needs of consumers, and the taste needs have become more diversified and personalized.
Not long ago, at the 110th National Sugar and Wine Fair held in Chengdu, many participating dealers and front-line agents said that people's snack consumption preferences are changing, and spicy strips are not the highest sales category in the store.
Not only that, Weilong's spicy strips taste sweet, which is also considered by many netizens to be an important reason why they are not favored, and some netizens complained, "Weilong, your candy doesn't need money, put it hard, don't call it spicy strips, call it sweet strips!"
In addition, similar to Pinduoduo in the e-commerce industry, low price, cost performance and quality-price ratio are becoming a new outlet for casual snacks.
From 2021 to 2022, the growth rate of the snack industry will drop from 8% to 5%. At the same time, the discount format took the lead in the leisure snack track.
Discounting itself is not complicated, simply put, it is to reduce the cost of intermediate links to achieve low prices and make profits. In the early years, discount snacks were mostly soft discounts on expiring products, but now more and more discount snacks have begun to shift to a hard discount model focusing on the upstream supply chain.
Under heavy pressure, giants such as Three Squirrels and BESTORE that focus on high-end snacks have also put down their bodies and started the road of price reduction.
BESTORE has reduced prices by an average of 22% for its 300 SKUs in 2023, with a maximum reduction of 45%, while Three Squirrels has implemented a "high-end price-for-money" strategy, aiming to attract consumers by offering more competitive prices. Judging from the market feedback results, it is clear that the price reduction strategies of the two will help the product sales.
And Weilong's past set of "price increase + marketing", the combination of eating spicy strips and selling emotional value obviously hit the muzzle. Behind the sharp rise in sales prices, it is only Weilong that has upgraded the packaging and specifications of the products, and the product power and weight have not been significantly improved, that is to say, consumers spend more money to get products that are only better-looking, which is obviously a sacrifice for consumers in the food industry to pay more attention to the quality and taste of snacks.
In response to the price increase of Weilong's spicy strips, netizens' feelings are almost one-sided, "spicy strips can't afford to eat anymore", "the amount has not changed at all, and the price is rising like gold bars" and other topics frequently appear on the hot search.
02 Can Weilong create another "spicy strip era"?
At the same time that Weilong spicy strips are experiencing Waterloo, the entire leisure snack industry, an important part of the channel, is also undergoing great changes.
Previously, the snack industry was mainly based on offline channels, including supermarkets, convenience stores, and snack franchise stores with high visibility and convenience.
Nowadays, snack sales channels are more diversified, combining online and offline, especially in the offline emerging snack mass stores such as "Snacks are busy" and "Zhao Yiming" and other emerging physical retail models.
The number of mass-marketed snack stores has grown from about 2,500 at the end of 2021 to nearly 8,000 in 2022, and by October 2023, the number of snack stores in China has exceeded 22,000.
With the rapid development of online channels, O2O and content e-commerce platforms such as Douyin and Kuaishou have become important sales channels, which have greatly enriched consumers' purchase scenarios and improved the convenience of purchase through live streaming and short video promotion.
However, Weilong has always relied mainly on offline channels, especially through the dealer network for sales. According to the data, 89.5% of the 4.87 billion yuan realized by Weilong in 2023 will be obtained through offline channels.
Nowadays, Weilong has begun to try to expand online channels, such as opening official flagship stores on e-commerce platforms such as Tmall and JD.com, but in the context of the rapid development of the Internet and e-commerce, its online channel layout is still insufficient and mature, which leads to Weilong missing the rapid growth opportunity of the online market and failing to make full use of e-commerce dividends.
After the double setback of price increases and marketing, Weilong turned to vegetable products and soy products, seemingly to develop a second growth curve.
Objectively and fairly, Weilong has achieved certain results in the adjustment of product structure and channel layout in the field of vegetable products and soy products.
According to the financial report data, in 2023, Weilong's revenue from vegetable products will increase to 2.119 billion yuan year-on-year, accounting for 43.5% of the total revenue year-on-year, and the revenue growth of the other two main categories will reach 25.16% while the revenue growth of the other two main categories will decline, which also shows that vegetable products are expected to become the main growth point of Weilong in the future.
In fact, it is not difficult to see that Weilong has created the logic of the second curve, which is simple and crude, that is, with the leading enterprise label in the spicy strip industry, with the advantages of brand awareness and a huge offline dealer network, it has laid a solid foundation for its entry into the new category market.
It is also under the blessing of this advantage that Weilong has invested a lot of resources in product research and development and innovation, and currently Weilong has set up application research and development centers in Henan and Shanghai respectively.
However, at present, the competition in the vegetable products and soy products market is also very fierce, and there are already mature brands such as BESTORE and Three Squirrels in the market, which have first-mover advantages in terms of product variety, taste, brand loyalty, etc.
Moreover, compared with the uniqueness and recognition of spicy strip products, the homogenization competition between vegetable products and soy products is serious, and Weilong needs to invest more energy in product differentiation to stand out.
The author interviewed a senior clerk in a snack wholesale store, who said that customers often pay attention to the well-known brands of Weilong and Spicy Prince when buying spicy strips, but customers will not care too much about the Weilong brand when buying products such as konjac, kelp, and dried tofu, but are more casual.
Heaven and earth are working together, relying on the synonym of writing spicy strips, Weilong has written a beautiful capital story. And now Weilong needs a "new spicy strip".
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