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"Investor.com" Hou Shuqing
Just look at Weilong delicacy (hereinafter referred to as "Weilong", 09985. The main financial indicators in the 2023 financial report, revenue and net profit have increased, but when we look at the company's business level and on its offline shelves, we will find that the former "king of spicy noodles" is now in a difficult situation. Compared with many competitors, Weilong has been trapped in "spicy strips" for too long.
Most of the time, the market's vision is bright, although this financial report did not bring Weilong's stock price a growth that matched the growth rate of net profit, but it brought the company's management the confidence to pay dividends: in 2023, the company's total dividend payout ratio is as high as 90%, of which more than 8 dividends fell into the pockets of Liu Fuping and Liu Weiping, the actual controllers.
Weilong's ability to achieve today's industry status has a lot to do with its excellent marketing strategy of taking the lead in solving the "food safety anxiety" of target consumers. However, it is difficult to establish a strong moat for the company, and it is important that the fist product is hard enough, but no matter how hard the fist is, it is difficult to change the fact that "consumers like freshness and always have the right to choose".
Spicy strips don't sell well?
After reading Weilong's 2023 financial report, the most unexpected discovery is: such a famous spicy strip is actually not easy to sell.
Weilong's total revenue in 2023 will be 4.872 billion yuan, a year-on-year increase of 5.2%, and its net profit for the year will increase by 481.9% year-on-year. The company explained in the annual report that the significant increase in the company's net profit was mainly due to the increase in gross profit, and in 2022, the company had share-based payments of 629 million yuan related to the pre-public offering investment, and the adjusted net profit was about 970 million yuan, a year-on-year increase of 6.3%.
From a macro point of view, Weilong's revenue and net profit growth are synchronized, but the contribution of the company's main revenue business has seen quite interesting changes in 2023. The company's main products include seasoned noodle products, vegetable products, soy products and other products, among which seasoned noodle products are commonly referred to by consumers as spicy strips, which are also the main source of income for Weilong, and vegetable products include konjac, kelp and other products.
In 2023, the sales volume of seasoned noodle products, which contributed 52.3% of revenue, will be 124,400 tons, a year-on-year decrease of 17.4% compared with 2022, and 26,200 tons less sold. In 2022, the sales volume of such products will decline by 22.23% year-on-year, with 43,000 tons less sold. Along with the decline in sales, the capacity utilization rate of seasoned noodle products fell from 57.1% to 48.3%.
Compared with these, the revenue decline of seasoned noodle products was not large, from 2.719 billion yuan to 2.549 billion yuan, a decrease of only 6.2%. Behind this is the increase in the unit price of the product for five consecutive years, with the average selling price per kilogram rising from 14.3 yuan in 2019 to 20.5 yuan, an increase of about 43.36%.
At the same time, in recent years, vegetable products have become the main direction of Weilong, and the data also shows that such products may have received a more ideal market response. In 2023, the design capacity of vegetable products will increase from 84,400 tons to 96,200 tons, the capacity utilization rate will also increase from 64.44% to 72%, the sales volume will increase by 31.1% year-on-year to 71,500 tons, and the average selling price per kilogram will decrease from 31.1 yuan to 29.6 yuan, which will also become Weilong's second largest source of revenue in 2023.
This also leads to the most contradictory phenomenon reflected in Weilong's financial report: if Weilong's spicy noodles still have enough competitive advantages, why would the company choose to reduce production? If Weilong's spicy noodles lack competitive advantage, why would the company choose to increase prices?
Judging from the results of offline research, the competitiveness of Weilong's products is not as good as before, the production reduction is due to weak market demand, and the price increase is to maintain the scale of performance.
Exclusive shelves are actually protection
According to the financial report, Weilong's offline channel revenue will account for 89.5% in 2023, and the sales status of supermarkets and convenience stores is very critical for Weilong. After conducting an on-the-spot survey of 3 large supermarkets and 4 convenience stores in Shanghai, Investor.com found that compared with 2016, Weilong's iconic spicy strip products no longer have obvious advantages offline, and they are also facing a completely different competitive environment.
On the snack shelves of a Lawson convenience store in Shanghai's Putuo District, the spicy strips of Weilong and Spicy Prince are placed in the most conspicuous position. Limited by the size of the store, the selection of convenience stores is very streamlined, and the price is higher than that of large supermarkets. Below the spicy strips, there are the new products that Weilong is currently promoting: wind eating kelp and konjac shuang.
In the scene of convenience stores, it can be found that compared with the single brand that appears on the shelves, Weilong's product line is the most abundant, and the unit price is a uniform 6.8 yuan. Compared with 9.9 yuan for 80 grams of sweet chestnut kernels and 7.5 yuan for 25 grams of mixed nuts, Weilong has obvious cost-effective advantages in the same price segment. In front of the spicy prince who was furnished together, Wei Long was not pulled apart.
When the scene was switched to offline large-scale supermarkets, the situation changed significantly.
First, at a Hualian supermarket in Putuo District, Weilong was treated completely differently from other similar snack brands — instead of displaying Weilong with other products like a convenience store, the supermarket gave it an exclusive shelf.
At this point, Weilong can avoid direct competition with competitors in the offline scene, which is a good thing: because if Weilong and peer products are put together, consumers will most likely not choose Weilong.
This supermarket has opened a separate shelf for spicy strip products, and spicy strip brands such as Brother Xian, Saiyi, and Wu Lama compete for beauty. In terms of the richness of products and flavors, Weilong is difficult to compare with any of them. In addition to the spicy strips, the bottom of the shelf is also full of marinated foods such as duck feet and braised eggs, and the crispy noodles of Zhang Junya's little sister also appear on the top.
From the perspective of product richness alone, it is difficult to reflect all the challenges faced by Weilong in this supermarket, and the biggest problem is reflected in the cost performance.
Unlike convenience stores, Weilong lowered its selling price in large supermarkets, dropping the price of 78 grams of spicy noodles to 4.9 yuan per pack, and the unit price was only 5.5 yuan for 90 grams of spicy prince. The unit price of other brands is evenly distributed at the level of 4 yuan to 4.8 yuan, and the net content is more than 100 grams.
Regarding the issue of exclusive shelves, a salesperson in an offline supermarket told "Investor.com" that arranging separate shelves for Weilong is a requirement of the leadership. From this point of view, Weilong's exclusive shelves seem to be a special treatment on the surface, but it is more likely to be a kind of protection. Weilong's unit price is the second most expensive in its class, but the net content is the least, and compared with a large number of peers, Weilong has no advantage in product richness.
War reports can be faked, and the front will not deceive. If the rising unit price of Weilong spicy strips is the battle report, then the output and capacity utilization rate are the battle line. Combined with Weilong's offline performance, it can also be found that Weilong's products are indeed not as good as before. "Exclusive shelves" may be an affirmation of the company's industry status by supermarkets, but it is more likely to be an avoidance of market competition by Weilong.
The times of consumption have changed
Spicy strips can become a topical snack, which is the result of Weilong and its target consumers "going both ways".
Weilong's target group is the post-90s. The childhood of this group of people coincides with the "reckless era" of the spicy strip industry, spicy strips do not dislike the children's small pocket money, and the children do not dislike the spicy strips with high oil and high salt are not clean, and you can buy a bag of spicy noodles for five cents to share with your friends after school. The post-90s generation became the "angel investors" of the industry during this period.
Weilong can become the "first stock of spicy noodles" because it is the first company in the industry to introduce specialized production equipment and improve the image of spicy noodles products, which can be called a "dimensionality reduction blow" for its peers at that time. But having said that, using specialized production equipment to produce spicy noodles that meet industry standards is within the business of spicy noodles enterprises. With the introduction of industry standards, the industry will only become more and more perfect, and Weilong is only a pioneer, but not necessarily a leader.
"Clean and hygienic spicy strips" are becoming more and more difficult to become a competitive advantage in the industry, Weilong can still maintain its position in the industry today, relying on the brand potential energy brought by the first-mover advantage, and there are more and more new opponents on the shelves, and the company is gradually tired of coping. The most intuitive point is reflected in Weilong's channel structure: in 2022, the company's online and offline channels accounted for 10.5% and 89.5% respectively, while the 2023 annual report shows that this proportion has not changed in the slightest.
Such a channel proportion is unimaginable for a snack company in 2023. In 2023, Three Squirrels will achieve a revenue of 4.951 billion yuan on the e-commerce platform, exceeding all of Weilong's revenue in 2023.
Whether it's the packaging design of a technology product, the discussion on social media or a variety of fashionable marketing methods, Weilong gives people a sense of "Internet celebrity snacks". However, judging from the company's financial reports and operating performance, its marketing skills seem to be out of touch with the company's channel construction and ability to track industry trends.
Weilong still has not jumped out of the core of traditional snack companies, it has produced epoch-making spicy noodles, but compared with its peers who have embraced the Internet era, it seems to be still living in a small store at the school gate. (Produced by Thinking Finance)■