The "0 sugar" trend has obviously rolled out of bottled water led by the Yuanqi Forest.
Yogurt, milk tea, cakes, and even potato chips on the outer packaging began to boldly enlarge the word "0 sugar".
In fact, in order to take into account the taste and calories, behind many so-called "0 sugar" diets, the use of "sugar substitutes", that is, a kind of sweetener.
How much do you know about the "sugar substitute" market? Is its safety guaranteed, is it really sugar-free and calorie-free, behind the new trend of hot drinks, which manufacturers are dividing up the market, and have these companies made money?
On August 11, Sanyuan Biologics, a giant in the production of "sugar substitutes" and one of the raw material providers behind Yuanqi Forest, passed the audit of the Listing Committee of the Shenzhen Stock Exchange and will soon land on the ChiNext board. From the prospectus it disclosed, perhaps we will know more about the sweet world behind "0 sugar".
1. How high is the "gold content" of the sugar substitute track
The most popular "sweet" taste comes from the sugar in the food, with exceptions, and in some other foods, the sweetness comes from the "sweetener".
Sweeteners can be simply divided into low-power sweeteners and high-power sweeteners. Among them, high-power sweeteners are divided into natural sweeteners and chemical synthetic sweeteners (saccharin, acesulfame potassium, aspartame, new sweeteners, etc.); low-power sweeteners are divided into sugars and sugar alcohols (erythritol, xylitol, etc.). Some functional sweetener products have low calories and good taste, and have been highly sought after in recent years.
The main product of the upcoming ternary biologics is the natural low-power sweetener erythritol, which has the advantage of zero calorie and zero sugar, but its sweetness is not as good as sucrose, and the cost of use is higher.
According to the prospectus, from 2018 to 2020, erythritol revenue accounted for 84.65%, 59.87% and 78.80% of the operating income of ternary biologics, respectively.
The growth of domestic erythritol is closely related to the "sugar-free trend" that has blown up in recent years, and the most direct driving factor is the sudden emergence of a series of "sugar-free drinks" represented by Yuanqi Forest. The sweeteners used in the sparkling water of the Yuanqi Forest are erythritol and sucralose.
"Sugar control" has become a term on the lips of almost every health-seeking consumer. Players on the food track will no doubt need to cater to this need from consumers. Not only Yuanqi Forest, traditional dairy companies and beverage manufacturers such as Yili, Jianlibao, Wahaha, Nestle, Nongfu Spring and so on are running to follow the "sugar-free" track.
According to the data of Zhiyan Consulting, the size of the sugar-free beverage market increased from 1.66 billion yuan in 2014 to 11.78 billion yuan in 2020, with a compound growth rate of 38.69%, far exceeding the overall growth rate of the beverage industry. With the rising tide, there is naturally a rising consumption of erythritol.
As one of the main manufacturers of erythritol in China, Sanyuan Bio was established in 2007, listed on the New Third Board in 2015, and terminated its listing in October 2020, with a total market value of about 7.48 billion yuan when delisted.
Benefiting from the rise of the "sugar-free" trend and the large number of applications of erythritol behind it, Ternary Biology has also ushered in a wave of rapid growth. Behind the food brands such as Yuanqi Forest, Xicha, Coca-Cola, Pepsi Cola, Nongfu Shanquan, Unification, Jinmalang, Hankou Second Factory, Perfect China, Southern Black Sesame Paste, etc., there are all its products.
According to the financial report, its revenue growth rate from 2018 to 2020 was 144.35%, 63.95% and 64.27%, respectively, and the year-on-year growth rate of net profit during the same period was 260.98%, 98.71% and 70.62%, respectively.
Ternary Biologics' erythritol revenue changes
In this fundraising arrangement, Sanyuan Bio plans to raise 900 million yuan, of which 770 million will be used for the company's expansion of production capacity, that is, the 50,000 tons of erythritol and technology center projects.
After several previous rounds of industry reshuffle, the competition in the sweetener industry is relatively less fierce, and the large domestic producers mainly include ternary biology, bowling treasure (002286.sz) and Jinhe Industry (002597.sz), of which ternary biology and bowling treasure are the main producers of erythritol, while Jinhe Industry is the production giant of synthetic high-magnification sweetener acesulfame and sucralose.
According to Sullivan research data, in 2019, the production of ternary biological erythritol accounted for 54.90% of the total domestic erythritol production and 32.94% of the global total output, making it the largest enterprise in the global erythritol industry.
Compared with Bowling's sweetener industry, the gross profit margin of Ternary Bio remains at a high level, in 2018, 2019 and 2020, the company's comprehensive gross profit margin is 36.85%, 45.77% and 42.27%, respectively, if the financing plan is successfully completed and the production capacity is further expanded, it is obvious that its unit cost will continue to decline, and the gross profit margin will continue to increase.
2, how to dig gold in the $40 billion "sweet" schedule
Since the beginning of this year, the new consumption track can be described as a hot spot on the outlet, and the speed of "gold absorption" is not the same. So, for the raw material big guy behind the "sugar-free" trend, does this law still work?
There is still a long way to go before Ternary Bio officially logs on the GEM, and this answer is estimated to take a while to be revealed.
It is undeniable that erythritol has become a sweetener for many sugar-free beverages with the advantages of "natural" and "zero calorie", providing sufficient impetus and brand effect for the company's revenue growth, Tianfeng Securities data shows that in 2019, the domestic erythritol consumption reached 11,000 tons, close to 4 times that of 2017, and the growth rate far exceeded that of Europe and the United States.
However, at present, the domestic market is still in the early stage of cultivation, accounting for only a small part of the downstream applications of the entire industry.
China is the world's main producer of erythritol, but domestic erythritol is mainly used for export. Taking Ternary Biologics as an example, its customers are mainly concentrated in North America, Europe and other places. In 2018, 2019 and 2020, the proportion of sales revenue of Sanyuan Bio's overseas market in the main business income was 82.25%, 89.53% and 71.86% respectively.
In a research report by Dongxing Securities, it was mentioned that about 70% of Japan's tea drinks in 2019 were sugar-free tea drinks, and the proportion of sugar-free tea drinks in Australia also reached 44.4%. The proportion of sugar-free tea in China is only 5.2%, similar to the early days of the rise of sugar-free drinks in Japan.
This also means that the domestic "sugar-free" market is still being cultivated, and although the growth rate is gratifying, the total amount is still not large.
Since the "0 sugar" consumption wind blows up, for the major manufacturers to promote "no sugar, no calories, no metabolism", "0 sugar and 0 fat" and other slogans, there is no lack of doubts, about the user's market education, is also a major problem in the development of the industry, after all, for the food track, safety is always hanging overhead The sword of Damocles.
Erythritol is often labeled as "natural" and "zero sugar", but in fact, as a low-power sweetener, it is often used as a compound sugar with high-power sweeteners such as sucralose to mix sweetness.
Sucralose is a kind of synthetic high-sweetness sweetener, starting from the first generation of product saccharin, synthetic high-sweetness sweetener has been updated six times such as cyclamate, aspartame, acesulfame potassium, sucralose, and new sweet.
Among them, traditional sweeteners such as saccharin and cyclamate have been shown to have certain health risks, but it is also important to note that they are still the most widely used sweetener products on the current market, accounting for about 58% of the total output.
Public data show that the current global sweetener market reached 40 billion US dollars, of which sucrose and fructose, glucose accounted for 90%, synthetic sweeteners accounted for only 9%. With the gradual improvement of consumers' awareness of 'sugar reduction' and health, the replacement of sucrose and primary sweeteners by new sweeteners will surely bring about a subversion of the industry.