China Food

Three listed companies are supported by one duck neck. Who is the next “unique flavor” in the 100 billion bittern market?

over the past 20 years, the development of Chinese bittern industry has shown an unbalanced situation. On the one hand, leisure stew relies on poultry, which breeds three listed companies, and the industry concentration is getting higher and higher; on the other hand, table stew is still in place, lacking chain brands. The emergence of the epidemic situation and the listing of Ziyan Baiwei chicken let the capital see the opportunity of table stewed flavor branding.
Recently, Ziyan food, which is known as “Ziyan Baiwei chicken”, has published a report on IPO and listing guidance on the official website of Shanghai Securities Regulatory Bureau, planning A-share listing.
This means that the state of Jue Wei, Zhou Hei Ya and Huang Shanghuang in the secondary market of stewed flavor will be reconstructed.
In the primary market, capital also saw new opportunities behind the competition to be “king of duck” through Ziyan food: the scene of stewed table may have a bright future. At this time, a number of start-up regional brands trying to brand the table stew began to enter the investors’ vision, and the news that the chain brand of community cooked food halogen products, Halon legend, was invested by the first-line fund also spread widely.
In fact, as early as 2017, after Juewei food was listed, venture capital circle had capital to pay attention to halogen track. Tiantu investment has successively invested in Shitou brand bittern Research Institute and bittern a brands; Innovation workshop has invested in xiaozudazu; Gaorong capital and Shunwei capital have invested in empress Huang; IDG has invested in chicken and chicken chicken feet; eagle fund has invested in Wang xiaohalogen; and Juewei’s netju capital has also invested in paw food, Yanjia spicy sauce duck and other projects.
Why can halogen track last for a long time in China? What are the new opportunities for the industry under the four giants? Why is it difficult for bittern to get out of the national brand? How should companies compete in the second half?
With these questions, Xiaofan table interviewed
  • Wang Xiaohai, founder and CEO of fresh brine Restaurant
  • Zheng Jinqing, founder of paw food
  • Wang Yajun, founder and CEO of creeper food
  • Lu Ming, a VC investor
The key points of this paper are as follows
1. Universality, addiction, convenience and easy replication make the halogen track lasting;
2. Although the bittern industry has a long history, the market structure is relatively scattered. In 2018, the market share of Cr5 (the top five market concentration in the industry) was about 21%;
3. New categories, new tastes, new scenes and new channels are the core opportunities for start-ups;
4. From the perspective of production technology, industrial brine is still the mainstream, but fresh brine has a rising trend;
5. In terms of products, poultry is the main source of leisure marinade, and a complete range of table stew is the most important;
6. Supply chain, store expansion and management ability are the most important indicators of capital.
Small class big market, bittern by what to become capital’s mind good?
In essence, bittern is not a category, but a kind of food cooking and processing technology, juxtaposed with frying, roasting, boiling, etc. The key to the taste of bittern products lies in the brine configuration, which is usually made of dozens of different traditional Chinese medicine spices. “From the perspective of products, bittern is just a taste bud, and if viewed from a higher level, brine can be the pre process of all processes.” Wang Yajun, founder and CEO of crawler food, a retail brand of chicken feet, believes that it is difficult to innovate food materials and categories nowadays. In the future, the “process combination” of bittern and other processes will become the mainstream, and on this basis, many new product models will be born.
As early as 2000 years ago, stewed food was put on the public table as a kind of wine and dish. With the development of technology, there are differences in bittern products themselves. According to the production method, there are sauce brine, hot brine, dry brine, etc.; according to the product color, there are three types of red brine, yellow brine and white brine; according to the region, there are Sichuan brine, Chaoshan brine, Quanzhou brine and so on. Specifically, each region has its own characteristics, such as Bangbang chicken in Sichuan sauce, stewed goose in Chaoshan, honglai chicken claw in Quanzhou.
From the 1990s to the beginning of this century, a number of brands trying to chain the industry began to appear, which is a key node in the development history of Chinese bittern. In order to achieve standardized replication as far as possible, the companies established during this period, such as Huangshanghuang, zhouheiya, jiujiujiuya, Juewei, etc., all took the route of more leisure scene, and the stewed flavor gradually moved closer to snacks from the dining table.
In 2012, Huang Shanghuang was listed on the small and medium-sized board of Shenzhen Stock Exchange as the “first stock of stewed flavor”. In the next five years, Zhou Heiya and Juewei also successively went to the secondary market. It is hard to imagine that duck products, as a small category, suddenly supported three listed companies.
Moreover, Huang Shanghuang pointed out in his annual report that the retail sales of China’s Halogen products industry will reach 110 billion yuan in 2019, a year-on-year increase of 20%. It is estimated that the retail sales of China’s Halogen products will reach 123.5 billion yuan in 2020.
Why can a mere duck produce such a big market? This is related to the characteristics of halogen products.
First, bittern has universality. Different from other consumer goods, bittern has no class label and is suitable for the poor, the rich and the young. Although it is difficult to sell such a category with high brand premium, it can expand stores rapidly. The ceiling of stores is very high, and the sales channels are diversified. At present, Juewei has more than 10000 stores in China.
Second, bittern is highly addictive. Sichuan bittern is spicy and spicy, Hubei is sweet and spicy, and Jiangsu and Zhejiang provinces are heavy oil and red sauce. All these flavors determine consumers’ addiction to bittern, thus increasing their repurchase rate. According to the survey data of Huachuang securities, most consumers buy halogen products 1-3 times a month.
Third, the sales channels of stewed meat are flexible and consumers can buy conveniently. In street markets, stations, airports, convenience stores, shopping malls and even online flagship stores, these bittern brands have penetrated into all kinds of people flow highlands.
Fourth, most of the leisure marinade is mainly poultry, supplemented by vegetables, with less varieties, and the brand is easier to copy to the store. Take Juewei as an example, as the leader of halogen track, in recent years, it has opened 800-1200 stores every year.
Combined with multiple factors and epidemic catalysis, this year’s bittern industry ushered in a major outbreak. Whether it is the listing of national brand Ziyan Baiwei chicken, or the national expansion of regional brands such as Liaoji food and shengxiangting, all confirm this point.
However, at present, the bittern market is still dominated by husband and wife shops, and the industry pattern is relatively scattered. In 2018, the market share of Cr5 (Juewei, zhouheiya, Ziyan food, Huangshanghuang and zhouheiya) is about 21%. In a mature market with fresh and short-term protection, addictive taste and category segmentation, the market share of the first place will be between 15% and 30%, and Cr5 can reach 60% – 80%.
This gives a group of start-ups the opportunity to catch up with each other, and companies are constantly entering the market relying on the combination of new scenes, new categories, new tastes and new channels.
Where is the opportunity of the next listed company in bittern industry?
The outbreak of the epidemic accelerated the reshuffle of the bittern industry. On the one hand, some small shop style stores began to close down due to capital pressure; on the other hand, the epidemic situation caused structural changes in the whole industry. Consumers did not go out but sought taste bud stimulation, which led to a sharp increase in the sales of stewed food at the table back to the community. According to Lu Ming, a VC investor, his initial purpose of focusing on this track is to find potential start-ups when the table stew has not yet formed a monopoly effect.
Of course, in addition to the start-up companies that focus on the dining table scene, there are also a number of companies that cut into the blank categories and channels, and rely on product innovation to transform the industry.
The data are from food eye, business card, etc.; the picture is from small dining table
1. New category: chicken feet catch up with each other, but stewed geese are in a corner
According to Taobao data, the sales growth of chicken snacks this year is much higher than that in previous years. Compared with November last year, sales in June increased by nearly 40%.
Among them, the rapid rise of Wang xiaohalogen shows the potential of chicken feet industry. Since he settled in Taobao in the middle of April 2019, he has become the first in this category in only one year. At present, the monthly sales are about 15 million yuan. Three squirrels and liangpin shops are also selling chicken claw products, with considerable sales.
In fact, in addition to these brands, in the chicken feet retail industry, there has always been a low-key “big brother” – youyou and Youyou, which were founded in 2007 and listed in 2019. Last year, the revenue exceeded 1 billion yuan, and the pickled pepper chicken feet alone accounted for 80% of the total revenue. Since the epidemic, youyou’s market value has been soaring, from the lowest value of 3.5 billion to the highest value of 9.5 billion.
In Wang Yajun’s view, besides Youyou, there are also great opportunities for the chicken feet industry. “With the increasing consumer demand for chicken feet, more tastes and more business models need to be explored.” According to Wang Yajun, in addition to the brand, the most valuable barrier for youyou is a set of mature dealer system, which enables consumers to buy youyou’s products from convenience stores in first tier cities to snack bars in rural areas. Youyou has also mentioned in the annual report that its dealer sales account for more than 95%, but the deep-rooted dealer system also restricts youyou’s direct sales At the same time, its price remains high.
When selling chicken feet, crawling hand food, which was established in 2020, holds more terminals in its own hands. At present, it mainly has to B and to C business lines. On to B online, crawler food will provide catering industry with chicken claw supply chain solutions; while on to C line, creeper food has its own direct stores, and pre packaged chicken feet are also sold through Ka (direct sales terminal platform), crawler food chicken claw retail stores, online tmall flagship store and other channels.
At present, there are two “catering aggregation front-end stores” directly operated by crawling food in Beijing. These two stores are a combination of four new processes: Stewed sauce, marinated roasting, marinated frying and stewing. The main products are chicken feet. The headquarters provide semi-finished products for logistics and warehousing in the form of freezing. Each crawling food shop only needs one salesman, and the operation is highly standardized. The average consumption per person is about 50 yuan. The maximum daily sales of the shop located in Xierqi can reach 3700 yuan.
In the Ka channel, crawling food has entered convenience bee, daily fresh food and HEMA fresh food. According to Wang Yajun, to sell in other retail channels, the cost is not low. The gross profit required by these channels is generally about 45%, and even 60% for the more powerful ones. However, the highest gross profit of a chicken claw brand is only more than 60%.
In terms of taste, crawling food also innovates the product. Abandon the soft glutinous image of chicken feet in the past, and make it crisp and hard, chewy and chewy. In order to achieve this taste, it is necessary to marinate the products before soaking them in the processing process. The bittern takes several hours, and then it needs to be soaked in cold water and seasoning for several days. At present, the main taste of crawling food is soy sauce flavor, avoiding youyou’s pickled pepper chicken feet and Wang xiaobrine’s tiger skin chicken feet.
Fujian chicken feet regional chain brand dance claw food is based on honglai chicken feet q-bomb taste and young people like sweet, fresh, fragrant, spicy, hemp taste. At the present stage, paw food has launched four series, such as pickled pepper with sauce, lemon pickled claw, air drying, smoking and so on. In Zheng Jinqing’s opinion, the reason why Fujian’s well-known honglai chicken feet can’t reach the whole country is largely due to the light taste of the local chicken feet.
Paw food was founded in 2017, and its products are mainly packaged in short-term (5-7 days) boxes. In order to broaden the sales channels, it intends to launch long-term products. At present, there are nearly 200 stores of paw food, of which only 7 are directly operated, most of which are concentrated in Fujian, and slightly extended in Zhejiang and Guangzhou.
“Jue Wei represents Hunan, Zhou Heiya represents Hubei, and Huangshanghuang represents Jiangxi. However, Fujian, which has always had honglai chicken feet, does not have a national representative brand in the bittern industry.” Zheng Jinqing believes that when there is no monopoly brand in the industry, regional brands rely on category innovation, and there are still opportunities to catch up.
There is also the “stewed goose pie”. Since 2016, there have been a number of Guangdong entrepreneurs trying to bring stewed geese out of Chaoshan. At that time, Shitou brand bittern flavor research institute, Chen pengpeng stewed Goose Hotel, wuzhizhi stewed goose and other stores specializing in stewed goose emerged. As an online shop, Chen pengpeng’s marinated Goose Hotel has achieved a daily passenger flow of over 1000 people, opening several physical stores in Shenzhen within a year.
Compared with other categories, stewed goose is the only one that can support a restaurant by relying on a single category. Chen pengpeng stewed goose restaurant used to separate all parts of geese into different dishes.
But in the later development, the problems faced by stewed geese gradually exposed. The supply chain problem is the most fatal. Compared with chickens and ducks, the popularity of geese is low. Moreover, the demand for Chaoshan geese is lion headed goose, which makes it difficult to obtain raw materials. At the same time, with the gradual collapse of the bubble brought by the red ring, how many consumers in the country need to continue to buy the geese is still need to be considered.
At present, each brand of stewed goose has put forward the way of improvement. For example, Chen pengpeng’s Stewed goose restaurant has transformed from a single product store for stewed geese to a comprehensive Chaoshan cuisine store focusing on stewed geese; Shitou brand stewed goose Research Institute has launched a set of roast meat stores focusing on stewed goose, hand shredded chicken and soy sauce chicken.
In conclusion, besides duck products, chicken feet have the possibility of becoming a national brand in a short period of time, while the stewed goose is still in a corner, and it still needs time to cultivate consumers’ consumption habits.
2. New scene: large dining table Market
As mentioned above, with the structural changes in the bittern industry, high expectations are placed on the table stew of the accompaniment type. “In the first 30 years of the industry, leisure is the focus, and the table is the last 30 years.” According to Wang Xiaohai, founder of “one stop table cooked food supermarket” brand of fresh brine, cooked food track, a chain of small community store business, can eventually achieve a 10 billion level brand through more large-scale chain operation and continuous improvement of operation efficiency.
Founded in 2015, fresh brine family has established its roots in the community and serves family users. At present, it has more than 50 Direct stores in Shijiazhuang. In March this year, it has officially opened to join, and has more than 150 franchise stores in 20 provinces and cities such as Hebei, Beijing, Shandong, Tianjin, Henan and Shanxi.
Lu Ming believes that for table stew, a complete range of products and innovation is very important. “The low threshold of bittern industry, and the production process is not complex, which leads to a loose and chaotic situation. When young brands enter the industry, the first thing to solve is the product problem.”
At the present stage, fresh brine restaurant has launched more than 200 kinds of table products, including cooked food stewed flavor, bean vegetarian food, duck seafood, complementary food, convenient dishes and other eight categories, of which the halogen products and non halogen products account for 50% respectively.
The legend of bittern, which also takes table stew as its starting point, will even cooperate with many research institutes to study new varieties and tastes. The pork head, pig hoof, pig ear, pork tripe and beef sold are all research results.
Whether it’s fresh brine or legend of bittern, they are extremely cautious about joining in. This is precisely because it seems that the market volume of table stew is comparable to that of leisure bittern, but it is very time-consuming and labor-consuming for start-ups to chew them down. The diversification of product categories and the adoption of fresh brine mode make it difficult for the company to carry out standardization. Unless enough Direct stores are used to make good samples, even if there are franchise stores in advance, there will be various problems for the company.
At the moment, he admits that there are still many opportunities for young people to open their own restaurants in the commercial market.
Wang Yajun holds the same view: Although the community rent is low, it is difficult to buy back. The reason is that young people only spend their leisure time on weekends, while the elderly spend in the community all the year round. On the one hand, the elderly can’t eat spicy food; on the other hand, the old people will not buy pickled vegetables out of the uneconomical mentality. “To succeed in community catering, the most basic requirement is to be a category that consumers can’t do at home.”
In conclusion, although the market for table stew is huge, whether the company has the ability to correct the single store model still needs to be put into question.
3. New channels: shopping malls are running at a high speed, and the online market is on the rise for the first time
There are various sales channels for bittern products. According to different brand positioning, there are also differences in the selection of store locations. For example, Zhou Heiya is mostly opened in high potential transportation hubs such as airports and high-speed rail. Jue Wei mostly appears in the form of street stores. Huang Shanghuang has absolute voice in Railway stations, supermarkets and other places.
As more and more shopping malls appear as new commercial consumer bodies, street stores are declining day by day, and the brand of leisure bittern relying on shopping malls has begun to rise.
As early as 2017, Liaoji food began to open stores in shopping malls across the country, and has entered nearly 200 shopping malls. This has widened the consumption scene of its products once again. Consumers can have a cup of Bong chicken when they go shopping and watch movies. The huge young customers in the shopping malls guarantee the gross profit margin of Liaoji stores. According to the media, the gross profit margin can reach 55% – 65% at this stage.
Established in 2016, the Changsha brand shengxiangting has more than 200 stores in China, covering Hunan, Hubei, Guangdong, Jiangsu and other places. The products are in small bowls, covering meat, vegetables, seafood, staple food and ice powder. The famous products include chicken feet, small wing tips, beef tendon balls, pig feet, ribs, thousand page tofu, etc.
In the future, with the sinking market, the market pattern will gradually mature, and the brand rooted in the market will rapidly realize the scale in various regions.
In addition to shopping malls, online has also become a popular channel for many brands to sell bittern. As mentioned above, Wang xiaohalogen has already ranked first in chicken feet category online, followed by three squirrels, liangpinpu, Zhen weishang, infinite food and Yuchang food.
For a long time, the sales of bittern have been relying too much on offline channels. The online channels have met the hoarding demand of fanatical fans. The rapid rise of Wang xiaohalogen also shows great potential on the line. But in Wang Yajun’s view, the majority of stewed flavor business is still offline, and online can only be used as a supplement for most brands. “Online is too dependent on the launch. Once the launch stops, the revenue will drop immediately, and the online dividend is gradually disappearing. Only the team who is very experienced in online traffic operation can make a brand and make profits.”
Core of brand survival: supply chain control and store management ability
According to Lu Ming, there are four important dimensions when he focuses on halogen brands. The first one is the comprehensive management ability of the team, which covers the management and control of the supply chain and the management ability of stores.
In fact, a similar conclusion can be drawn from the previous financing situation of each start-up. Most entrepreneurs have had catering experience before they become existing brands. For example, the founder of Halon legend was the general manager of the food business department of Yurun Group, and also had experience as a consultant for the community group buying platform; the founder of creeper food had done chicken feet foreign trade business, and had created the brand “liangbaikai”; the founder of Wuzhuo food has been trying various kinds of catering brands for 15 years, among which linghuchong roast fish is a typical case For example.
For halogen brands, especially in the early stage of development, the founder’s experience largely determines whether the company has bargaining power for suppliers.
Take chicken feet as an example. Most of the domestic chicken feet are imported from abroad, but the imported chicken feet do not have rods. Therefore, chicken feet with rods can only be purchased from domestic suppliers. However, Shandong Fengxiang Industrial Co., Ltd., which is the “big brother” in domestic production of chicken feet, is mainly engaged in export trade. It is one of the largest chicken suppliers of international fast food giants such as McDonnell and KFC in China. Even if Fengxiang does domestic sales, the price will rise from 8 yuan / kg to 14 yuan / kg, and generally only chooses youyou such a large company for cooperation. Only founding teams with resources can keep prices down.
In addition to raw materials, founders also need to have a strong ability to identify production plants. Taking chicken feet as an example, the tiger skin chicken feet of Wang xiaohalogen, liangpin shop and creeper food are all manufactured by Jiangsu Jiyang Food Co., Ltd. the cost of five pieces of crawling hand food is about 7 yuan, while that of a famous brand is about 9 yuan.
For the lock fresh brand, the number of self owned factories determines the shop expansion progress, product freshness, logistics costs and other important issues. According to Zheng Jinqing, the lack of self owned or long-term cooperative factories is one of the core reasons for restricting the expansion of regional brands across the country. Juewei now has more than 20 factories in operation and under construction. Each factory can complete the same day delivery within a 300 km transportation radius. Zhouheiya and Huangshanghuang also have 5 and 6 production bases respectively.
The front-end supply chain problem is only the foundation, the latter company’s ability to manage stores determines whether the company can have a healthy profit model.
Among the three major listed companies, Juewei and Huangshanghuang are mainly franchised. Zhou Heiya pays more attention to brand tonality. Among the more than 1300 stores, all of them are directly operated. This year, it has tried to open the franchise mode. Lu Ming believes that the franchise mode in the bittern industry is more conducive to the company’s expansion. It is the most healthy route to set a good model in the direct stores in the early stage, and gradually open the franchise in the later stage. However, joining in also requires the team management ability.
Juewei can open 800-1200 stores every year, which depends on its strong management ability. For franchisees, Juewei has a unified operation standard and a four level franchisee committee system. At the same time, it introduced ERP system in the early stage to carry out refined management of stores and implement information-based training for franchisees.
As an early company, paw food also has its own franchisee management mechanism. In dance claw, the employees with the strongest sales ability will not be left in the headquarters, but will be assigned to various regions as supervisors to help franchisees sell chicken feet. Moreover, the income of supervisors will be linked to the performance of franchisees.
In conclusion, although the bittern market has great development space in new categories, new scenes, new channels and other dimensions, there are already start-ups that have begun to rush into the layout. If new companies want to enter the market in the future, unless the team resources are very rich, it is difficult to do it again. On the other hand, on the basis of polishing products, integrating supply chain resources and polishing their own store management standards, companies in the track will become the next listed company in the bittern industry in the future.
The title of the original text: three listed companies are supported by a duck neck, and the head funds are intensively distributed in the 100 billion bittern market. Who is the next “unique flavor” and what is worth investing in
Author: Shi Suyun; source: ID: xfzmedia, reprinted with authorization.
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