The first share of Zongzi is planned to be listed, how can the "old-fashioned" Wufangzhai be rejuvenated? The market size is small, many spoilers have poor sales, and the price increase is to make up? Why is the food long-established brand inferior to the rising star?

According to data from the Ministry of Commerce, there are currently 1128 Chinese time-honored brands in China, mainly involving pharmaceutical manufacturing, brewing and food and beverage industries.

These long-established brands involve as many as 60 listed companies, such as Guizhou Moutai (600519.SH) for brewing, Yunnan Baiyao (000538.SZ) and 600436.SH in the field of traditional Chinese medicine, Gui Faxiang (002820.SZ) and Quanjude (002186.SZ) in the food and beverage sector.

Recently, Wufangzhai, another long-established brand in the field of food and beverage, pinched the time, and on the occasion of its 100th anniversary and the Dragon Boat Festival, Wufangzhai knocked on the door of the Shanghai Stock Exchange with rice dumplings. On June 8, the official website of the China Securities Regulatory Commission showed that Wufangzhai's listing application was accepted, and it was getting closer and closer to the "first share of Zongzi".

Wufangzhai is known as the "King of Jiangnan Zongzi", known for its glutinous but not rotten, fat but not greasy, tender and fragrant meat, moderate salt and sweet. As a master of Traditional Chinese food culture, can Wufangzhai, like Guizhou Moutai and Yunnan Baiyao, chase the sea of stars in their respective fields and become a "potential stock" sought after by investors?

<h1 toutiao-origin="h3" > the market is small and there are many spoilers</h1>

Zongzi products are the most important source of revenue for Wufangzhai, and the revenue brought by Zongzi in 2020 is 1.644 billion yuan, accounting for more than 70% of the total revenue. In order to broaden the source of revenue, Wufangzhai also dabbled in mooncakes, meals, egg products, pastries and other products.

Wufangzhai, which relies on the Zongzi market, can it achieve good results on the Zongzi Track? Is there much room for growth in the future?

From the perspective of consumption, although Zongzi is an important traditional food in China, how many times a year do we eat Zongzi except for a few festivals such as the Dragon Boat Festival? And the people who eat rice dumplings for breakfast are mainly in the south, but the consumption demand is far less than that of breakfast staples such as buns and steamed buns. Therefore, it seems that even if China's population base and consumer market are huge, the zongzi market cannot be compared with liquor with stronger consumption attributes and Chinese medicine with stronger rigid demand. This means that the scale of China's rice dumpling market will not be large.

The data also illustrates this point, according to the data of "Attaching importance to the development of the traditional food industry to bring China's traditional food to life", although the growth space of China's rice dumpling market is stable, the market size is not large, less than 8 billion yuan in 2019.

In 2019, China's liquor consumption reached 600 billion, and the scale of the Traditional Chinese medicine market exceeded 500 billion, and the Zongzi market was not comparable to the former two. In 2020, the size of China's bun market is also 60 billion, and the market share of mooncakes, the fourth largest source of revenue of Wufangzhai, is also about 20 billion.

Judging from the market size of the industry of 7.337 billion yuan in 2019, the market share of Wufangzhai is 21.94%, which is the industry laurel. But at the same time, the zongzi market, which has a small market size, is a red sea, which is another difficulty for Wufangzhai.

In addition to the competition of Enterprises with Zongzi as the main product of Beijing Daoxiangcun, Zhenzhen Laolao, Zhiweiguan and so on, Wufangzhai is also facing more and more challenges from enterprises in other fields, such as the domestic bread dragon Tao Li Bread (603866.SH), the quick-frozen food leader Sanquan Food (002216.SZ), the chain catering brand Guangzhou Restaurant (603043.SH), etc., the latter three also pose a challenge to Wufangzhai in the field of mooncakes.

In view of the fact that zongzi is a seasonal food and the consumption rigidity is insufficient, many food companies will not take zongzi as a key category, which is the case of the above three listed companies. During traditional holidays such as the Dragon Boat Festival, these food companies concentrated on production some time before the festival holiday, and during the festival, they flowed into the market and seized the position of Wufangzhai in the category display of supermarkets and e-commerce platforms.

Therefore, it is not easy for Wufangzhai to achieve growth in the market by relying solely on a few categories such as rice dumplings and mooncakes. To this end, Wufangzhai also wants to try to get rid of the dependence on Zongzi products, and said on its official website that it is necessary to take "glutinous rice food" as the core, focus on creating high-value product lines, and form a brand reputation of "Wufangzhai = Chinese Seasonal Cuisine". But what are the high-value products? Wufangzhai did not mention it.

According to the analysis of professionals, the high-value products referred to by Wufangzhai should be upgraded around the main business of zongzi and take the high-end route to enhance product strength and price. However, the threshold for the production of high-value rice dumplings is not high, and it is not difficult for other competitors to increase the value of rice dumplings, so the optimization of brand influence and sales channels is the key.

< h1 toutiao-origin="h3" > sales are not good, raise prices to make up? </h1>

Judging from the above market size and competition pattern, Wufangzhai may face greater growth difficulties. Let's take a look at the sales volume and revenue of Wufangzhai zongzi.

According to the prospectus, the sales volume of Wufangzhai's Zongzi series products has declined year by year, reaching 366 million in 2020, down 11% from 2018.

Although Wufangzhai's e-commerce channels performed well, it was still difficult to hide the embarrassing situation of declining sales, and the company's declining sales were undoubtedly preempted by other brands.

Sales declined, and prices were raised. Wufangzhai achieved revenue growth in the two types of products by raising prices for zongzi series products and mooncake series products. Among them, in 2020, the unit price of the company's Zongzi series products was 3.68 yuan / 100g, an increase of 23.1% over 2018, and the increase was much higher than the decline in zongzi sales in the same period. As a result, Wufangzhai's Zongzi series products maintained a slight increase in revenue, with revenue of 150 million yuan, 161 million yuan and 164 million yuan from 2018 to 2020, respectively.

At the same time, however, the company's revenue growth stagnated last year due to the poor performance of the company's meal series, egg products, cakes and other products. From 2018 to 2020, the company's revenue was 2.267 billion yuan, 2.375 billion yuan and 2.323 billion yuan, respectively, and the net profit was 0.97 billion yuan, 163 million yuan and 142 million yuan, respectively.

From this point of view, in the face of the company's growth dilemma, the price increase can only alleviate the pace of the company's revenue and net profit recession, and can not fundamentally drive the company to achieve growth. Moreover, the price increase is a double-edged sword, if the price increase is greater than the increase in raw materials, then consumers may choose other products with higher cost performance, which is not conducive to boosting the company's sales.

<h1 toutiao-origin="h3" > why is the food old brand inferior to the rising star? </h1>

In recent years, the long-established brands in the food field have gradually entered the abyss of being abandoned by the times, closing their doors, falling sharply in performance, losing money, being complained about, etc. Many long-established brands are facing growth difficulties, which cannot help but make people sigh.

In addition to the growth quagmire of Wufangzhai, the listed Quanjude (002186.SZ), Tongqinglou (605108.SH), Xi'an Catering (000721.SZ), Gui Faxiang (002820.SZ), the four food-related long-established brands have also encountered various problems, including declining performance or losses, stagnant stock prices, and obstacles to transformation.

As can be seen in the figure above, from 2015 to 2020, only Tongqinglou of the above four long-established listed companies in the food field achieved revenue growth, and the revenue of the remaining three companies declined to varying degrees. In terms of net profit, Xi'an Catering has been losing money for many years, Quanjude turned from profit to loss of 265 million yuan in 2020, and the net profit of Tongqinglou and Gui Faxiang declined.

Since the listing of Quanjude and Gui Faxiang, the stock prices have fallen below the issue price, with a cumulative decline of more than 20%, while Tongqinglou and Xi'an Catering have double-digit increases.

Compared with KFC, Haidilao (06862.HK), Jiumaojiu (09922.HK), Sipping (00520.HK) and other emerging catering brands that are rapidly expanding and trusted by consumers, the old brands are extra lonely.

The success of these emerging food and beverage brands has a lot in common, such as:

1. Actively embrace online, successfully use online to narrow the distance with consumers, and enhance operational efficiency through the Internet, save consumers time, and obtain more traffic from it;

2. In terms of innovation and service, it has almost achieved the ultimate, such as KFC in "based on China, unlimited innovation", constantly innovating, haidilao has won in the meticulous service and supply chain system;

3, good at grasping the stomach of young people and young people's yearning for "beautiful", to the upcoming Listing of Nai Xue's tea in Hong Kong stocks as an example, Nai Xue's tea is a high-end ready-made tea drink, set fashion, culture, social and delicious in one, in just 6 years the store blossomed everywhere in the country, the annual revenue exceeded 3 billion, the Wufang Zhai and the above four old brands in 2020 revenue left behind.

Obviously, the old brand is far behind the emerging brand in these aspects, and many old brands have lagged behind the times in terms of products, brands, diversification and overall operation. Achieving sustainable development based solely on authenticity, authenticity, and consumer service is clearly outdated.

Wufangzhai also saw this, these years are also actively embracing the new consumption in the new era, in the field of e-commerce to strive to be an Internet celebrity, online sales network has covered Tmall, Jingdong, Douyin and other major e-commerce platforms, trying to promote the brand to young, fashionable; in addition, the company in recent years also tried to develop high-end, healthy and light food series of products, and the construction of Wufangzhai digital industry wisdom park, explore the digital industry.

Whether Wufangzhai can usher in the second spring still needs time to verify.

Author: Distant

This article originated from Caihua Network