Produced by One View Commercial
Author/Meng Jiayi
Editor/Xue Xiang
The recent snack track is very lively. In the past, there were snacks that were very busy to achieve a revenue of 20 billion, pointing at 10,000 stores, and then three squirrels released the largest increase in financial reports since their listing, claiming to return to 10 billion. However, in stark contrast to it, is the "first share of snacks" Laiyifen. In 2023, Laiyifen will have an embarrassing situation of declining revenue, which is the first time since its listing in 2016 that its revenue has declined, and its net profit is close to halving, with a decrease of 44.09%.
In addition, since reaching a high of 25.81 yuan/share in December 2022, Laiyifen's share price has been "falling endlessly", and as of April 29, 2024, Laiyifen's share price closed at 11.25 yuan/share, and its market value has shrunk by more than half.
On the one hand, profits have fallen sharply, and on the other hand, the market value has shrunk sharply. What happened to Laiyifen?
Laiyifen did not perform well
Since 2023, Laiyifen's share price has gradually declined, which is directly related to its sluggish performance.
First of all, Laiyifen's revenue growth slowed down significantly. Compared with its peers, Yanjin Shop's revenue in Q3 2023 increased by 52.54% year-on-year, 26.83% year-on-year in 22, and 16.47% year-on-year in 21. In contrast, since 2018, Laiyifen's revenue growth rate has never exceeded 10%, and its revenue will decline significantly in 2023. Although the growth rate of BESTORE has also slowed down, the revenue amount is significantly higher than that of Laiyifen.
In addition, Laiyifen's revenue from 2019 to 2023 will be 4.002 billion yuan, 4.026 billion yuan, 4.172 billion yuan, 4.382 billion yuan, and 3.977 billion yuan respectively, which is far from the revenue scale of BESTORE and Three Squirrels, which are also listed companies. In 2022, BESTORE's revenue will be 9.44 billion, more than double that of Laiyifen, and in 2023, the revenue of Three Squirrels will be 7.115 billion, more than double that of Laiyifen.
Secondly, among the 10 listed snack companies, Laiyifen has the highest gross profit margin, but its net profit ranks last. Yilan Business has counted the gross profit margin and net profit of Laiyifen, Ganyuan Food, Yanjin Shop, and BESTORE Store, and found that since 2021, Laiyifen's gross profit margin has "peaked", but the net profit is basically at the bottom. In the third quarter of 2023, for example, the gross profit margin of Laiyifen was 42.48%, and the gross profit margin of Ganyuan Food was 36.32%. In the same period, Laiyifen's net profit was 4.54 million yuan, and Ganyuan Food's was 214 million yuan, a difference of more than 47 times.
Moreover, Laiyifen invested a lot of money in sales expenses, but the returns could not match it. A look at business statistics found that Laiyifen's sales expenses accounted for about 31% of revenue, ranking at the forefront of the industry. Taking 2022 as an example, the sales expenses of Laiyifen, Three Squirrels, BESTORE and Yanjin Shop accounted for 27.44%, 21.02%, 18.60% and 15.81% of operating income respectively. The amount of revenue is in the middle and lower reaches of the industry, but the sales expense ratio is the highest among the peers of listed companies.
In this regard, Laiyifen said: "Some friends and the company's overall sales channels are quite different, so the sales expense structure is different; compared with some friends, the company's offline direct store proportion is different, sales areas are different and other factors, so that there is no comparability between them. ”
In the view of Yilan Business, Laiyi is also directly operated, and defeat is also directly operated. It also operates more than 3,000 stores offline, and about 70% of BESTORE stores are franchised stores, while Laiyifen is mainly directly operated, and as of December 2023, Laiyifen's direct sales still account for 51.83%.
In summary, in 2023, the gross profit margin of BESTORE will be 27.88% and the net profit margin will be 2.24%. The gross profit margin of Laiyifen is 40.75%, but the net profit margin is only 1.43%. After deducting non-recurring gains and losses, in the first three quarters of 2023, Laiyifen has lost 31.4552 million yuan, and BESTORE has made a profit of 122 million yuan.
In fact, as a predecessor in the leisure snack industry, Laiyifen does have a certain strength, and in recent years, it has also been carrying out self-"redemption".
Self-help rules are messy
Yilan Business believes that Laiyifen has been looking for new performance growth points, but has not yet formed a systematic strategic approach and has not achieved obvious results.
In 2017, Laiyifen launched a light coffee area - "LYFEN COFFEE" in Laiyifen Life Center, and in 2023, Laiyifen announced that its coffee brand will be upgraded to "Laicup coffee". Laiyifen said that Laijia has entered more than 400 stores in Shanghai, Jiangsu and Zhejiang, and is expected to lay 800-1,000 stores by the end of 2023. But until press time, Hangzhou still can't find "Laika Coffee", and Laiyifen has not promoted its own coffee.
In 2020, Laiyifen entered the sauce-flavored liquor industry and launched the "Drunken Love" series of sauce-flavored liquor. From 2021 to 2022, the revenue will be 8.5719 million yuan and 5.6139 million yuan respectively. The liquor business is almost negligible in the company's revenue.
In 2022, Laiyifen announced the launch of its first sparkling water product, "Pai Pai Lemon", featuring the concept of "0 sugar, 0 fat and 0 calories", benchmarking against Yuanqi Forest. It took a lot of effort to invest in research and development, but now the whole network is off the shelves.
In addition, Laiyifen has successively entered many food categories such as grain and oil seasoning, wine and beverages, fresh fruits, etc., and has even set foot in non-food fields such as beauty and skin care and daily necessities. Judging from the current development, Laiyifen's cross-border basically ended in failure.
What exactly caused the former big brother to lose his bearings?
Zhan Junhao, founder of Fujian Great Aim Brand Positioning Consulting, told Yilan Business that there are two main reasons why Laiyifen lacks "determination" in business strategy.
First, the results are not good, whether it is the scale of revenue, revenue growth or net profit, it is the bottom among its peers, and the stock price is also at the bottom. In the face of dismal financial figures, Laiyifen's move is not surprising.
Second, the market competition is fierce, the industry trend has changed, and snack wholesalers have become the main "disruptor". A glance at business statistics found that 4 of the 10 listed snack companies had a year-on-year increase in revenue, and the fastest growth was Yanjin Shop, Jinzai Food, and Ganyuan Food.
And these three companies have a deep bond with snack wholesale brands.
In the first half of 2023, the company achieved revenue of 1.894 billion yuan, a year-on-year increase of 56.54%, and a net profit of 246 million yuan, a year-on-year increase of 90.69%.
Jinzai Foods has been listed in snack mass stores such as Snack Busy, Good Want, and Wife. In the first three quarters, the "bulk weighing" track achieved rapid growth, with a revenue growth rate of more than 230%.
Ganyuan Food's 2022 financial report shows that a snack store brand has become the third largest customer of Ganyuan Food, bringing sales of more than 30 million, accounting for 2.1% of the annual sales in 2022.
Zhan Junhao said that Laiyifen may be hoping to find new growth points by expanding into new business areas. However, such frequent strategic adjustments can also lead to problems such as fragmentation of corporate resources, ambiguity of brand positioning, and confusion of consumer perceptions. If you want to recreate the old scenery, Laiyifen must clarify the brand positioning and market positioning, and cannot "go from day to night".
Focus on your core business
In fact, the traditional snack brand is not only confused, but the three squirrels have also fallen into a trough.
In 2016, Three Squirrels entered the offline market and once expanded thousands of stores, spending money without mercy, such as opening a 300-square-meter store, and the decoration cost and rent were often nearly one million. Now, these directly-operated stores are gone. After 2019, the revenue of the three squirrels has not exceeded 10 billion, and the market value has evaporated by more than 20 billion.
The three squirrels began to reflect. On the one hand, we will dig deep into the supply chain, make efforts in the three links of raw materials, processing and manufacturing, and from the factory to the consumer, and gradually move from the sales end to the manufacturing end and the planting end, connecting the primary, secondary and tertiary productions, and effectively promoting the quality and efficiency of the entire industrial chain. On the one hand, it will change itself and put forward the strategy of "high-end cost performance" in 2022, that is, to remove the brand premium and benefit consumers.
It is worth mentioning that since the implementation of the "high-end cost-effective" strategy at the end of 2022, the profits of the three squirrels have increased significantly. The financial report shows that for the whole year of 2023, the revenue of Three Squirrels will be 7.115 billion yuan, a year-on-year decrease of 2.45%, the net profit will be 220 million yuan, a year-on-year increase of 69.85%, and the non-net profit will be 102 million yuan, a year-on-year increase of 148.72%.
In the first quarter of 2024, Three Squirrels achieved operating income of 3.646 billion yuan, an increase of 91.83% year-on-year, a net profit of 308 million yuan, an increase of 60.80% year-on-year, and a non-net profit of 263 million yuan, an increase of 92.84% year-on-year, and a net profit margin of 8.45%.
In the view of One View Business, compared with blindly pursuing various complicated directions, Laiyifen should give full play to the existing resources and advantages to seek breakthroughs.
One is to bring the price down. Looking at Pinduoduo, Luckin Coffee and Miniso, which have excellent performance and stock price performance in 2023, they all bear the labels of "low price" and "high cost performance". For the daily consumer goods track in the snack industry, low prices are undoubtedly the main theme of the next competition. Open the social platform to search for Laiyifen, and many consumers say that Laiyifen is too expensive. Laiyifen, which lacks cost-effective advantages, is difficult to attract new consumers.
Yu Fenghui, an expert consultant of the Hong Kong Top 100 Research Center, pointed out that as a traditional snack company, Laiyifen has advantages in the supply chain, and if it can optimize supply chain management and reduce operating costs, it will naturally improve the cost performance. In addition, Laiyifen has signed a strategic cooperation agreement with Tencent, covering cloud computing, big data, AI and other technical fields. Laiyifen can use new technologies to improve decision-making accuracy and operational efficiency, strengthen brand building and consumer stickiness, create a new retail model that integrates online and offline, and improve consumers' brand loyalty.
The second is omni-channel development. With the gradual maturity of the business model of the live streaming industry, consumers' dependence on online channels has further increased. Laiyifen saw the potential of online channels, but chose the wrong direction. When other brands were panning for gold in the public domain traffic pool, Laiyifen turned around and started the private domain, using the official app of "Laiyifen" as the carrier to provide consumers with various online business models. Reflected in the results, Laiyifen still relies heavily on offline channels.
According to the financial report, from 2018 to 2021, Laiyifen's online e-commerce revenue accounted for 10.50%, 12.90%, 14.75% and 13.01% of the company's total revenue, respectively. In comparison, in 2021, Three Squirrels' online revenue accounted for 66.31%, and BESTORE's online revenue accounted for 53.13%.
Most importantly, product innovation. Bao Yuezhong, a new retail expert, pointed out that Laiyifen's business situation is not satisfactory, mainly because no significant breakthrough has been made in product innovation, which has also become a problem faced by the snack industry as a whole. He predicts that the future growth potential of the snack industry may be above the trend of catering snacking. Chicken feet, for example, used to be mainly served as a dish on the table, but now it has evolved into a snack that can be eaten at any time. However, to develop large single products, companies need to invest more.
It is obvious that Laiyifen can't do it well. Taking the first half of 2023 as an example, Laiyifen invested 6.6277 million yuan in R&D, with a R&D expense rate of 0.31%. In contrast, BESTORE, Three Squirrels, and Yanjin Shop invested 25.0389 million yuan, 12.6241 million yuan, and 45.3702 million yuan respectively, and the R&D expense rates were 0.63%, 0.44%, and 2.40% respectively - Laiyifen was once again at the bottom.
It has been more than 20 years since Laiyifen was founded, and it is commendable that Laiyifen can stand tall in the fierce market competition. As latecomers catch up, the former "No. 1 snack stock" is gradually losing its lustre, and whether Laiyifen can regain its former glory remains to be tested by time.