Plummeted by 50 billion! The king of Chinese durian stepped on a huge thunder

Golden wrong knife

2024-05-30 17:14Published in Beijing

In previous years, a single durian was able to tear off the decency of many families.

At that time, on the short video platform, I could see my wife buying durian home from time to time, which became the last straw that overwhelmed her husband - tired and tired to make some money, how can I always buy such expensive fruits?!

There should be fewer and fewer scenes that destroy harmony like this in the future.

This year, the price of durian has been greatly reduced, and it is the norm to pay less than 30 yuan per catty, and there are also floor prices such as "10 yuan per catty" and "5 pieces of 100 yuan" that people can't help but chop their hands.

But some people rejoice and some people worry.

China's durian king "Hong Jiu Fruit" (hereinafter referred to as Hong Jiu) has wanted to cry without tears since this year.

Hongjiu is China's largest durian distributor, selling 25 million durians in 2022, claiming that "for every 10 durians eaten by Chinese, one comes from Hongjiu." ”

The strange thing is that it is such a fruit king that Chinese cannot live without, and the market value has plummeted by more than 50 billion this year from its peak, and it has been suspended because of the delay in issuing the 2023 financial report.

The impact of durian price reduction on the fruit king is so great? Of course not.

Hong Jiu's misery was because he stepped on a thunder that he had to step on.

China's most hidden fruit king,

Laying mines while taking off

Many people have not heard of Hong Jiu because it does not do ordinary people's business.

Its customers are major supermarkets, wholesale markets, fresh e-commerce, community group buying, etc., and its figure is hidden behind thousands of fruit stores.

It was the founders who decided to take this path.

The founder of Hongjiu is called Deng Hongjiu, who was originally a member of the Chongqing Bangbang Army. In 1987, he used his savings to buy more than 2 tons of red oranges from his hometown, picked them up at Chaotianmen Wharf in Chongqing and sold them at Chaotianmen Wharf in Chongqing, which was sold out in two days and earned more than 100 yuan, more than he had earned in the previous month.

Since then, he has never looked back to start a fruit wholesale business, and the business has become bigger and bigger, and in 2002, he and his wife established Chongqing Hongjiu Fruit Co., Ltd. together.

To do today, Hong Jiu's energy is beyond many people's imagination.

Its customer base covers many well-known supermarkets and e-commerce, such as China Resources Vanguard, Yonghui, Carrefour, C.P. Lotus, Hema Fresh, and Aunt Qian......

It also has several staple products – mangosteen, longan, dragon fruit, cherries, grapes – that are no less influential than durian.

Hong Jiu is not only the king of durians, but also the largest distributor of imported dragon fruit, the second largest distributor of imported longan and the market-leading distributor of mangosteen, imported cherries and imported grapes. Most of the "noble fruits" such as Thai durian, mangosteen, longan, Vietnamese red heart, white heart dragon fruit and Chilean cherry are seen by Chinese people.

Because of this, there is a saying in the market: as soon as Hong Jiu made a move, the entire Thai durian market began to rise in price.

Countries and regions in Southeast Asia are rushing to cooperate with it.

During the harvest season, there is even a special train to transport the fruits it buys to the country.

Relying on the growing wholesale business, on September 5, 2022, Hongjiu was successfully listed and became the first fruit stock in China.

There are countless fruit wholesalers in China, why did it run out?

This is inseparable from its caution and a killer feature.

Hong Jiu's six core items are all imported fruits, because these fruits are either rarely grown in China or can be made out of season, in short, there is a lot of potential. In 2022, the revenue of the six major single products will account for more than half, and nearly 4 billion durians alone will be sold, with a gross profit margin of 24.5%.

More important than the careful selection of products is its business model: end-to-end.

The founder, Deng Hongjiu, once called this "the most effective business model that I spent 36 years precipitating".

The so-called "end-to-end" means direct procurement at the place of origin, processing and sorting in its own factory, and finally selling to B-end customers. From the place of origin to the terminal, there is only one middleman in Hong Jiu.

On the one hand, the advantage is that the bargaining power is stronger, and on the other hand, the intermediate links are reduced, which can continue to reduce costs. For example, in 2021, Hongjiu's loss rate is 1.3%, while the industry average loss rate is 1%-5%.

In order to achieve "end-to-end", when Hong Jiu first arrived in Thailand, in order to reassure the fruit farmers and the local government, he not only invested 100 million yuan to set up a factory in Thailand, but also hired Chinese and Thai bilingual talents as professional managers, and even paid cash a year in advance to purchase fruits in the form of futures.

Such sincerity allowed it to take off successfully, but it also planted a huge thunder that could not be avoided.

Plunge of 50 billion:

The scenery is real, and the misery is real

It stands to reason that Hong Jiu's future days should be infinitely beautiful.

First of all, Chinese consumers are becoming more and more willing to buy fruit.

Last year, an authoritative report pointed out that China had imported US$6 billion worth of durian in the previous two years, accounting for 91% of global demand. The Thai media is even more unabashed, bluntly saying that nearly 80% of durian growers rely on Chinese money to "feed".

In addition, in recent years, new formats such as community group buying and fresh e-commerce have emerged, and Hongjiu's customer base has been further expanded, such as Dingdong Grocery and Hema Fresh are its customers.

However, it backfired, a year and a half after Fengguang was listed, on March 19 this year, Hong Jiu actually announced that the publication of the 2023 annual report may be delayed.

To this day, Hong Jiu has not been able to issue an annual report.

For a time, rumors such as "financial fraud", "layoffs and suspensions", and "accountants leaving" were flying all over the sky, and the market value also kept falling.

In fact, the reason why the situation has taken a sharp turn has a lot to do with the "end-to-end" that it is proud of.

Those fruit retail stores that directly face C-end consumers pay with one hand and deliver with one hand, and sometimes they can also ask consumers to recharge a membership card and collect a large amount of money in advance.

In comparison, Hong Jiu, who is doing 2B business, is not so easy.

In order to ensure a stable supply of fruits, before the fruits in the orchard were ripe, Hong Jiu had to pay for orders in advance.

At the same time, it is a headache that it sells the harvested fruits to customers such as supermarkets, but it takes months or even longer to get the money. Hong Jiu also mentioned in the financial report: some customers, especially regional terminal wholesalers and small supermarket customers, have encountered difficulties in their daily operations, and the payment cycle has been extended.

As of the end of the first half of last year, Hong Jiu still had 9.35 billion yuan not recovered.

You can't owe money to the upstream, and you can't stop the downstream customers from "defaulting on the debt", so Hong Jiu's fruits are sold more and more, but the money in his hand is getting less and less.

In order to keep the company running, Hong Jiu was forced to borrow money to pay off the old.

As of June 30, 2023, Hongjiu's bank loans reached 2.776 billion yuan, a year-on-year increase of about 49.22%. Earlier, Hong Jiu even borrowed from P2P......

However, this treats the symptoms but not the root cause, and the more you borrow, the poorer you become, and the annual interest alone makes people feel a lot of pressure.

In addition to the difficulty in collecting money, there is a secondary reason why Hong Jiu is not favored by the capital market: the rise of domestic fruits.

When Hong Jiu initially decided to import six major items, such as durian and cherry, the original intention was to avoid competition in the domestic mass market and ensure that the category would be difficult to find substitutes for domestic fruits. This is their selection principle of "looking all over the world, only here".

But the plan can't catch up with the changes, and Hong Jiu probably didn't expect that domestic fruits would rise so quickly.

Some of the previous high-end imported fruit categories can now be cultivated in large quantities in China, and some of the quality is not inferior to that of imported fruits. For example, the Hainan Academy of Agricultural Sciences predicts that the output of domestic durian will exceed 250 tons this year and will land on the market in May.

Fruits such as cherries, dragon fruit, and sunshine roses are no longer on top now, and they are inseparable from the blow of domestic fruits.

The fruit king, who is looking for someone to ask for an account every day, looks back and looks: his home is about to be raided.

To become a true fruit king,

You have to get through the hard times

The fruit business has always been difficult to do, and the fruit king is often only superficial.

This is because the fruit is far away from the planting end to the retail end, and it has to go through multiple procedures such as picking, sorting, packaging, preservation, storage, and transportation, and each link has losses. Moreover, the production area is too scattered, the planting technology is uneven, and the quality is difficult to unify.

Therefore, China's other fruit king, "Hundred Fruit Garden", although it is always complained of being a "fruit assassin", its founder once said: selling fruit is "bowing his head to pick up steel hammers".

From 2021 to 2023, Baiguoyuan's gross profit margin will only be 11.2%, 11.6%, and 11.5% respectively, which is indeed making hard-earned money.

Hong Jiu is not much better, and the highest gross profit margin in these years is only 18.9%.

Every family has a scripture that is difficult to read, and the model of Baiguoyuan and Hong Jiu is different, but when it comes to making money, they are the same disgraced.

In order to see the money in time, Hong Jiu made a decision against his original intention last year and began to develop the C-end business.

For example, start online marketing to attract consumers to flagship stores such as Tmall and Douyin.

At the same time, keep up with the trend and increase the intensity of live broadcasting.

Hongjiu also held exhibitions and sales promotion and picking experience activities in many offline cities, which were also directly aimed at ordinary consumers.

It's just that Baiguoyuan, which has been in the To C business for many years, is struggling to make money, its market value is sluggish, and Hong Jiu, who is still groping for transformation, is currently stumbling.

On the one hand, I was already shy in my pocket, and now I have to spend a lot of money. In the first half of last year, Hongjiu's sales and marketing expenses were about 121 million yuan, a year-on-year increase of 22.34%.

What's worse is that the money is spent, and it still fails to open up the situation well.

The accounts related to Hong Jiu on Douyin have only 57,000 followers. Hong Jiu's Tmall flagship store has only more than 1,000 fans and few sales.

In August last year, Hong Jiu cooperated with a certain company to store fruits in each other's offline stores, and planned to complete the layout of 4,500 stores across the country in 2024. As a result, in February this year, the partner was suspected of illegal fundraising, and the dream of joining forces came to naught.

If nothing else, Hong Jiu still has a lot of hard days to endure.

But if you're mentally prepared, these setbacks aren't necessarily a bad thing.

The fruit business is a difficult business to do, but it also means that there is still a lot of room for improvement.

Whether it's reducing wastage, improving quality, or developing new varieties, small improvements at every step can make a real fruit king.

For example, when Chinese consumers buy fruits, they generally recognize the origin and do not recognize the brand, but Zespri, Dole, Chu Cheng and other brands are exceptions, the reason is that they have all survived a long period of hard life, during which they have spent money on research and development, research technology, and transformation of landscapes, and finally their product quality has been recognized by the vast majority of people.

After surviving the hard days, you can really make a fortune in silence.

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