Overseas, it is becoming a gathering place for catering supply chain enterprises.
This article is reprinted from the Food and Beverage Supply Chain Guide (ID: cygylzn), author: Liang Pan, editor: Fang Yuan.
The tide of Chinese food going overseas is intensifying, and the supply chain army behind this is also increasing.
Leading the way are hot pot, spicy hot, steamed vegetables, new tea, coffee, snacks and noodles, etc., which have a higher degree of standardization and less dependence on kitchen labor. But now, many Chinese restaurant brands have also joined the craze. At the end of February this year, the new Rong Kee store in Tokyo, Japan officially opened. In March, my grandmother's family opened its first store in the United States in New York.
Another noteworthy trend is that supply chain companies that provide supporting services for catering brands have also turned their attention to overseas markets, and many suppliers are accelerating the expansion of overseas business, or setting up overseas subsidiaries or overseas business divisions......
The supply chain has also set off a tide,
Some enterprises have doubled their export earnings
Sugar substitute supplier Ternary Bio (301206. SZ) latest first-quarter financial report shows that in the first quarter of 2024, Sanyuan Biotech achieved a net profit of 24.2477 million yuan, an increase of more than 2 times compared with the same period last year.
Regarding this performance change, Sanyuan Bio explained that it is related to its active development of foreign markets.
It can also be seen from the annual report that Ternary Biotech will add 50 new foreign distributors in 2023. Increasing the development of the international market has further widened the revenue gap between its domestic and foreign businesses. In 2023, the proportion of Sanyuan Bio's foreign revenue will increase from 68.22% to 74.24%.
In addition to suppliers with overseas business such as Sanyuan Biotech, some supply chain companies with domestic sales are also making efforts overseas. For example, quick-frozen giant Yasui Foods (603345. SH, hereinafter referred to as "Yasui").
Although overseas business accounts for only 1% of Yasui's total revenue, it has made frequent moves. In 2021, Yasui officially included overseas income separately in the financial report, and this part of the revenue increased year by year, from 35 million yuan in 2021 to 128 million yuan in 2023.
In January this year, Yasui planned to sprint to Hong Kong stocks, there were also considerations to strengthen overseas business, when it announced that in order to accelerate the internationalization strategy and overseas business layout, enhance overseas financing capabilities, the company intends to issue shares (H shares) overseas and list on the Stock Exchange of Hong Kong Limited.
In April, in response to investors' questions, Yasui said that the group's import and export department had been established in December 2023 to accelerate the promotion of import and export business, and has now developed overseas customers in Hong Kong, the Philippines, Australia, Europe and other countries.
The development of overseas business has also brought incremental growth to Yasui. In the first quarter of 2024, Anjing's overseas revenue was 41.0753 million yuan, an increase of 67.22% over the same period last year. In this regard, Yasui Food said that this is related to the increase in overseas business of its holding subsidiaries Oriental Food Express Limited, Xinliuwu and Xinhongye.
Haixin Food, which is also a quick-frozen enterprise (002702. SZ) is also deploying overseas business. At the end of 2023, Haixin Food said in response to investors' questions that its export business of quick-frozen dishes is still in the early stage of layout, but it will continue to explore overseas markets in the future, and will deploy in Southeast Asian countries such as Singapore and Malaysia, as well as European and American countries such as the United States and Canada.
In April, Qianwei Central Kitchen (001215. SZ) said in response to investors' questions that the company's existing products have been sold abroad through import and export trading companies, and whether to formulate a plan to go overseas in the future will be comprehensively considered according to the company's actual situation and business development.
Meat processing enterprise Delisi (002330. SZ), it is eyeing the business of prefabricated dishes going overseas. At the end of April, Delisi announced that it planned to invest 50,000 pounds to set up a wholly-owned subsidiary in the United Kingdom. According to its announcement, the main business of the subsidiary to be established by Delisi is the sale of prefabricated vegetable products, low-temperature meat products, quick-frozen rice and flour products and other products, as well as the import and export of goods.
Ziyan Food(603057. SH) is also expanding its overseas business. According to Ziyan Food's 2023 annual report, it established an overseas business department in May 2023, conducted research on the Australian and American markets, successfully signed an agency agreement in Australia, and reached strategic cooperation with Dahua Group and Chuangfeng Group on the development of the American market.
Chengming Food, which focuses on the production and research and development of tomato compound condiments, said that it plans to start from Hong Kong, China, and Taiwan, China, and then gradually promote it to overseas markets such as Southeast Asia, Europe and the United States.
Another supplier of tomato products, Guannong Co., Ltd. (600251. SH), has already tasted the sweetness of going to sea. In 2023, the export earnings of tomato products of Guannong Co., Ltd. will increase by 139.30% year-on-year.
Benefiting from the sharp rise in international tomato sauce prices and strong consumer demand last year, Guannong expanded production and increased income, and the production volume of tomato products in 2023 increased by 101.77% year-on-year, and the sales volume increased by 122.90% year-on-year.
This also drove the growth of its revenue and net profit, up 79.97% and 50.44% respectively. Guannong Co., Ltd. pointed out in the annual report that the export volume of the tomato industry, especially the export volume of small packaged tomato paste, will increase significantly in 2023, which is the main factor for the company's substantial growth in performance in 2023.
The market for ketchup is rising, attracting more and more ketchup producers to go out. Tianjin enterprise Laikemai Food Co., Ltd. exported ketchup for the first time in 2023. Inner Mongolia is also an important area for the export of tomato sauce from the mainland, and the local company Jintaihe Agricultural Technology has also begun to try export trade business this year, selling tomato paste to Malaysia.
More and more catering supply chain companies have begun to explore overseas layout, or have tasted the sweetness, and are constantly deepening the performance increment brought by overseas business.
The suppliers who are not moving involution have begun to "roll out".
There are many reasons behind why supply chain companies are vying to go overseas first.
First of all, the competition in the domestic catering market is becoming increasingly fierce, and the catering industry has entered the era of meager profits. After the profit margins of downstream catering businesses are diluted, the demand for cost reduction and efficiency increase is also becoming more and more intense, which is transmitted to the upstream, and the profit margins of suppliers will also be compressed.
The net profit of the leading enterprises fell by nearly 40%, and the hard days of the supply chain have just begun
△ Image source: Picture Worm Creative
Taking ternary biology as an example, in recent years, there has been overcapacity and oversupply of erythritol in China, the price of erythritol has fallen, and the gross profit margin of ternary biology has also declined. From 2020 to 2021, the gross profit margin of the erythritol business remained above 40%, bringing revenue of 617 million yuan and 1.567 billion yuan to Sanyuan, respectively. However, by 2023, the gross profit margin of ternary bioerythritol business has dropped to -1.11%, and the net profit has dropped to 58.8744 million yuan, which is only about 30% of 2022.
Haixin Food has fallen into a growth bottleneck. From 2021 to 2023, Haixin Food's revenue level will increase year by year, but its net profit will fluctuate frequently. Although it turned losses into profits in 2022, its net profit in 2023 will only be 2.2701 million yuan, a year-on-year decrease of 96.41%. The gross profit margin situation is also not optimistic, and the gross profit margin of Haixin Food has dropped to 19.68% in 2023, while this figure was 28.97% in 2019.
Delisi is facing the problem of low gross profit margin. Since 2020, its consolidated gross margin has been in the single digits. Among them, the gross profit margin of chilled meat and frozen meat, which contributes the most to Delisi's revenue, will only be 0.50% in 2023, while the gross profit margin of quick-frozen prepared food will reach 11.95%. The establishment of an overseas subsidiary by Delisi also hopes to build the export of prefabricated vegetables into a new growth point for performance.
At the same time, in order to better control costs, more and more catering brands have increased their investment in the supply chain and extended the industrial chain to the upstream. When downstream customers turn into competitors, suppliers have to start looking for new customers and look overseas.
At present, the momentum of Chinese food brands going overseas is increasing, and suppliers are also seeing business opportunities. In addition to direct export products, some supply chain enterprises also intend to provide supply chain supporting services for downstream catering customers to go overseas, which has also become another big opportunity for suppliers to go overseas.
For example, according to "Kamen", the tea and coffee raw material supplier Supin Food said that it will lay out the Southeast Asian and European markets, and has now established an overseas office in Singapore. The company not only plans to provide supply chain supporting services for domestic catering brands to go overseas, but also to explore overseas markets and provide services for local beverage brands in combination with local people's consumption and drinking habits.
Of course, some companies with earlier layouts are willing to continue to invest in overseas business when they see the business opportunities and returns brought by overseas business.
For example, lemons, which are used more in new tea drinks, are more common in Western cuisine, and the demand in overseas catering markets is greater and the returns are more lucrative.
According to China News Network, Sichuan Yibin Kaihua Ecological Agriculture Technology Development Co., Ltd., a lemon producer and processor, said that the cake of the domestic lemon market is not too big, and the main consumer market is still overseas. The profit of lemon going overseas is 10% to 15% higher than that in China, and the customers are relatively stable.
△ Image source: Picture Worm Creative
In recent years, many tomato product suppliers have increased their overseas weight, which is also the same reason. With the strong demand for ketchup in the international market and the continuous rise in the price of ketchup, exporting ketchup is a lucrative business.
Zhongji Health (000972. SZ), admitted in the annual report that in 2023, domestic tomato processing enterprises will generally expand production, and the total amount of domestic tomato product processing will increase by nearly 30% year-on-year, but due to the continued high international trade price of tomato products, the order price of the company's large-package tomato sauce production is also at a historical high.
Driven by profits, there will definitely be more supply chain companies exploring overseas business in the future.