Costs are rising, and the cheap tavern Helens has "had to" raise prices

With the recent wave of rising prices of consumer goods, the cheap tavern Helens has also had to announce price increases.

On October 27, the pinduoduo of the pub industry - Helens issued a "letter of apology", saying that due to the recent rise in raw materials, packaging, logistics and other costs, the price of products has been raised, and it is expected that the price increase will bring about 1 burden to each user's consumption.

From October 28, Helens will increase the price of some products. For example, Heineken's price increased by 9 points; Budweiser, Corona, etc. increased its price by 1 cent and 9 cents.

The following is the full text of Helens' apology letter:

Dear Kelp,

I am sorry! I am sorry! I am sorry!

We're going to raise prices.

It is expected that this price increase will bring about 1 burden to the consumption of kelp per person.

Helens has been founded so far, and it is because of the love and support of all kelp that we have the current scale. To this end, we have always been grateful and committed to giving back to kelp people the cost reduction of every piece and every dime brought about by the scale.

In the face of several increases in raw materials, packaging, logistics and other costs in recent years, we have gritted our teeth and stuck to Helens' now cost-effective price system.

In December 2018, all small beers in Helens were reduced from more than ten yuan / bottle to 10 yuan / bottle.

In June 2019, the price of Corona and Budweiser was reduced from 10 yuan / bottle to 9.8 yuan / bottle, and the Helens series of beers was reduced to 7.8 yuan / bottle.

In March 2021, 1664 was reduced from 12.9 yuan / bottle to 9.8 yuan / bottle.

But with the latest round of costs rising again, we had to make this difficult decision:

Tomorrow, Helens will increase the price of some products. For example, Heineken's price increased by 9 points; Budweiser, Corona, etc. increased its price by 1 cent and 9 cents. The price increases of the main products are detailed in the following table:

Once again we sincerely apologize to all kelp, sorry.

At the same time, please rest assured that Helens will always adhere to the customer-centric approach and make unremitting efforts to build an offline social platform for young people.

Helens Helens

October 27, 2021

<h2>Helens - Pinduoduo in the tavern world</h2>

As mentioned in previous Wall Street articles, Helens is the largest chain of pubs in China, listed on the Hong Kong Stock Exchange on 10 September 2021, with an issue price of HK$19.77 and a net proceed of about HK$2.513 billion.

Its audience is mostly young people after 95, but it is by relying on this group of young people and less than 10 yuan a bottle of low-priced wine, Helens has achieved an annual revenue of 800 million. This is rare in the extremely fragmented Chinese bar industry.

As the largest domestic offline bar chain at present, it was founded by a 70-year-old veteran. In 2005, Xu Bingzhong founded a pub in Laos, and then decided to bring the business back to China, and opened his first store in Wudaokou, positioning the location + low unit price, which was loved by the student community.

Investor He Yu believes that Helens provides users with a truly free and relaxed universal social space without thresholds, and once this atmosphere is formed, it is the biggest moat of the brand.

In terms of the number of stores, Helens also occupies an absolute leading position, with 374 at the end of March 2021, and the number of other stores in the same industry is not more than 100.

Specifically, Helens has built a mature site evaluation system: 1. the number, location and grade of surrounding shopping malls; 2. the convenience of transportation; 3. the number of similar formats; 4. the area and lease period of potential locations available for rent in surrounding shopping malls; 5. the number of nearby communities, the number of residents, and the commercial activity; 6. the number of young groups in potential locations.

<h2>The prices of consumer goods have generally increased</h2>

Since September, due to the further increase in commodity prices, the profits of downstream industries have been continuously compressed.

Wall Street News previously mentioned that a number of downstream consumer leaders have recently announced price increases, including but not limited to Qiaqia Food, Haitian Condiments, Diou Home, Dongpeng Tiles, Hollywood, etc.

On the evening of October 12, Haitian Flavor Industry issued an announcement that the ex-factory price of some products such as soy sauce, oyster sauce and sauce was adjusted, and the price of the main products was increased by 3% to 7%. The new price will be implemented from 21 October 2021.

On October 22, Qiaqia Food also issued a price increase announcement. Since the 22nd, the company's sunflower seed series products and pumpkin seeds, small and fragrant watermelon seed products have been adjusted at the factory price, and the price increase range of each category is 8%-18%.

Zhongtai Securities believes that this round of price increases is mainly due to excessive cost pressure, and the price increase is conducive to improving the scale economy of manufacturers. At present, the thrust of price increases is strengthening, the resistance is weakening, and the price increases in the industry are necessary and feasible.

Moreover, under the premise that the leader takes the lead in increasing prices, if other manufacturers choose not to increase prices, they will face greater cost and sales pressure, and the share increase will be limited. Because channel providers usually reserve more leading brand goods, even if they want to improve the products of other manufacturers that do not raise prices, they must wait until after one quarter.

Qu Qing, chief economist of Jianghai Securities, believes that the profit decline in food, home improvement and textile clothing is in the front, and the pressure on price increases is more significant, which means that the current PPI is accelerating to the CPI. Commodity prices will further increase in September, and the profit erosion of downstream industries will be more severe. At this stage, the recovery of consumption has slowed down, the overseas trade chain continues to repair, and "small profits but large sales" is not a long-term solution.

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