China Food

Nut battle between two former richest men in Anhui

if you want to be in the top position, will father squirrel agree?

Text: Lei Yanpeng; Editor: Liu Xiaoying   

Source: city boundary (ID: ishijie2018)

“Everyone in China has three kinds of doctoral qualifications: Doctor of chopsticks, doctor of coal blowing paper and doctor of eating melon seeds.” Feng Zikai, a famous painter and essayist, once mentioned in his article that eating melon seeds is the most advanced of the three technologies. He also lamented that the person who invented eating melon seeds is really a great genius.

Many years later, an Anhui native made a big deal with a small melon seed. In 2011, Qiaqia food went public and became the “first stock of speculation” in a shares. The following year, Chen Xianbao, the actual controller of Qiaqia food, became the richest man in Anhui.

After the listing of Qiaqia food, Chen Xianbao seemed to retire, resigned as general manager and his niece Chen Dongmei took over. However, since then, the company’s core business sunflower has fallen into growth difficulties, and the diversification strategy has achieved little effect. In 2015, Chen Xianbao took up the post of general manager again, Qiaqia food began to return to its main business, and vigorously developed the nut business.

However, in the first half of 2021, the performance of Qiaqia food slowed down again, and sunflower seed revenue showed negative growth again. Whether Chen Xianbao’s nut business can shoulder the growth banner of the company has once again become a discussion point.

Qiaqia food, which wants to be the leader in the nut industry, is headquartered in Hefei. In Wuhu, adjacent to Hefei, the “nut king” three squirrels are also trying to find new growth points. Coincidentally, Zhang Liaoyuan, the founder of the three squirrels, has also been the richest man in Anhui.

The war between the two former richest men in Anhui is quietly starting.

The section chief went to the sea and became the richest man in Anhui
Chen Xianbao, a native of Hefei, was born in May 1959.
After graduating from Wuxi Institute of light industry (now Jiangnan University), 24-year-old Chen Xianbao was assigned to the sugar, tobacco and wine company under the jurisdiction of Anhui Provincial Department of Commerce and served an enviable “iron rice bowl”. However, in 1995, Chen Xianbao, who was already the section chief, resolutely resigned and devoted himself to the wave of doing business in the sea.
In the early days, with limited funds, Chen Xianbao rented a small food workshop and founded Hefei Huatai cold drink factory. At that time, the domestic popsicle production was simple and the threshold was very low. How to share a share? Chen Xianbao made a bold innovation, made the fruit juice cold drink into a popsicle, designed it into a double stick shape, and named it “popsicle ice”.
Soon, the cold drink market had a place for Chen Xianbao.
There is no shortage of imitators in the market, and so is “bangbangbing”. The market tends to be saturated, and Chen Xianbao considers transformation. In 1998, relevant departments in Anhui organized entrepreneurs to visit other provinces. Wherever Chen Xianbao went, he had to buy a bag of fried goods. Friends from his peers also joked with him: Mr. Chen, why do you like snacks so much!
Once, he found that he bought a kind of melon seed, the skin is very white, it doesn’t dirty his hands, and the melon seed kernel is particularly delicious. After research, he found that this kind of melon seed should be soaked to remove the rough skin, and then “feed” the salty taste, and then fried.
Chen Xianbao has a preliminary idea on how to do the melon seed speculation business.
At that time, there were fool melon seeds and Yao Shengji melon seeds in China. Chen Xianbao wanted to give his melon seeds a loud name. One night, when he went out for a walk, a group of people were dancing cha cha. Therefore, the brand “Qiaqia” was born. Because water is used to cook melon seeds, it is Qiaqia, not Qiaqia.
Chen Xianbao once summarized the success of Qiaqia melon seeds, including technology, packaging, marketing, channels and so on.
The traditional fried melon seeds are changed to boiled melon seeds, which reduces the ingredients of ignition. The taste of Chinese herbal medicine and spices can penetrate into the melon seeds, which is clean and delicious, forming the characteristics of Qiaqia melon seeds.
In the past, most roadside fried goods were packed in newspapers and plastic bags. Qiaqia used kraft paper. Brown kraft paper combined with Chinese Red patterns has a high degree of recognition. In addition, Chen Xianbao also placed cultural cards in the packaging bags with the themes of Tang poetry, Song Ci and a dream of Red Mansions. More and more consumers named only melon seeds with cards.
In 1999, the sales volume of Qiaqia melon seeds was nearly 30 million yuan.
Looking at the hot sale of Qiaqia melon seeds, Chen Xianbao made a crazy decision to invest in advertising on CCTV. The investment cost was at least 4 million yuan. At that time, Qiaqia melon seeds had just started, and the profits of the enterprise were far from being able to pay the cost. Therefore, his decision aroused the opposition of the management.
The management believes that the product itself has sold very well and there is no need to advertise on CCTV. However, amid the opposition, Chen Xianbao insisted on his own opinion and borrowed money to put in the advertisement of CCTV.
At that time, advertising on TV and newspapers was the king of marketing, and it was of great significance to be on CCTV. Chen Xianbao didn’t bet on the wrong place. According to the Beijing Evening News, the sales revenue of Qiaqia melon seeds exceeded 100 million yuan in 2000. In 2001, the sales reached 400 million yuan.
The fast-growing Qiaqia was listed on the Shenzhen Stock Exchange in March 2011 and officially became the “first stock of speculation” in China. That year, Qiaqia food revenue reached 2.739 billion yuan, and Chen Xianbao became a real “melon seed king”.
In 2012, in the list of Chinese family wealth released by financial weekly, the Chen Xianbao family ranked first in Anhui Province with a wealth of 3.067 billion yuan and became the richest man in Anhui.
Try to diversify and find new growth
In the same year when he became the richest man in Anhui, Chen Xianbao, chairman and general manager of Qiaqia food, resigned as general manager and handed over to his niece Chen Dongmei.
Chen Dongmei, born in January 1972, has a university degree and is a senior economist. She has been the manager of the financial department of Chen Xianbao’s Huatai food company since 1998. Before serving as the general manager of Qiaqia food, she was the director, deputy general manager and chief financial officer of Qiaqia food. However, under the management of Chen Dongmei, Qiaqia food did not achieve effective growth.
In fact, as soon as it was listed, Qiaqia food was in trouble.
At the time of listing, Qiaqia food has started diversified development. Its main business composition includes not only sunflower seeds, potato chips, watermelon seeds, pies, beans, pumpkin seeds, peanuts and nuts, but also pistachios, walnuts, almonds, etc.
In the prospectus, it mentioned that in order to meet the needs of diversified consumption development in modern society, “various types of products have been developed for different consumer groups”.
In 2012, the revenue of potato chip business increased by – 29.81%, and the growth of core product sunflower seed suddenly dropped to single digits, resulting in a slight increase of 0.40% in the company’s operating revenue.
Under the management of Chen Dongmei, Qiaqia food continued to promote its diversification strategy. In 2013, Qiaqia food acquired 60% equity of Jiangsu qiakang Food Co., Ltd. for 96 million yuan and announced its formal entry into the beef sauce market; Hefei Huali, the holding company, increased its capital by 41.25 million yuan to continue to expand the jelly business
However, the attempt to diversify did not work well, and even ended in failure. The scale of the potato chip business has stagnated, the jelly business and beef sauce business have fallen into losses, and the development of other businesses is not very smooth.
Guoyuan securities analysis said that Qiaqia food is diversified and radical, has a wide range of categories, and its strategic determination is not firm, which also disperses the company’s human, material and financial resources.
In 2015, chairman Chen Xianbao returned and served as general manager again. The company began to peel off its sideline and return to its main business.
Chen Xianbao successively sold the equity of Hefei Huali, stripped off the loss jelly business, and sold the equity of Jiangsu qiakang for another 90 million yuan, gradually turning his energy to the melon seed business.
Learn from the failure experience of high-end melon seeds Kui Zhen and Huangkui launched in 2014, and Qia launched blue bag melon seeds in 2016; In 2017, Qiaqia food cut into new categories and launched a series of mixed nuts, Qiaqia small yellow bag daily nuts, to meet the consumption upgrading and solve the problem of product aging.
In 2017, potato chips and other businesses were no longer listed as “sub products” in the company’s annual report, and only sunflower seeds, nuts and others remained in the revenue composition.
In the same year, Qiaqia food’s sunflower seed income was 2.503 billion yuan, a year-on-year increase of – 1.25%; Other income was 852 million yuan, a year-on-year increase of – 2.08%; The nut income was 247 million yuan, and the high growth of 129.20% led to a positive growth of 2.55% in Qiaqia food revenue.
From 2012 to 2017, from diversification to return to the main business, and then to try new diversification, the revenue growth of Qiaqia food has always maintained in single digits.
After the return, Chen Xianbao said, “in the past few years, our life has been relatively easy and too comfortable, resulting in our lack of wolf sex.” since 2015, Qiaqia food has carried out a series of actions, such as adjusting the company’s strategy, launching the employee stock ownership plan and adjusting the organizational structure.
More importantly, Chen Xianbao seems to have found the second curve of Qiaqia food – nuts.

Battle of nuts

In the packaging and circulation melon seed market, Qiaqia food is a well deserved “King”, with a market share of 41%, and the Golden Pigeon behind it has a share of only 11%, far less than Qiaqia food.
However, the market threshold of melon seeds is low, mainly in bulk, and the competition is fierce. According to the data of Zhongtai securities, in 2018, Qiaqia food accounted for only 7.4% of the whole melon seed market. Moreover, the production and sales of edible sunflower seeds in China have remained stable on the whole, the growth is very limited, and the stock competition has intensified.
This is the background of limited growth of Qiaqia food sunflower seed business.
In the long run, if the sunflower seed business wants to continue to grow, one path is to improve the market concentration, use brand packaging melon seeds to replace bulk melon seeds, and increase the price of the product itself.
In 2018, Qiaqia food adjusted the ex factory prices of eight categories of products, including fragrant melon seeds, original fragrant melon seeds and small and fragrant watermelon seeds, with price increases ranging from 6% to 14.5%. Since then, sunflower seed business has returned to double-digit growth.
However, in the first half of 2021, Qiaqia food achieved an operating revenue of 2.381 billion yuan, a year-on-year increase of 3.76% and a growth rate of 15.46% in the same period last year; The net profit attributable to the parent company was 327 million yuan, a year-on-year increase of 10.86% and a year-on-year increase of 33.97%. In contrast, the growth rate of performance in the first half of this year decreased significantly, and it was the lowest growth rate reported in the past four years.
Especially in the second quarter, Qiaqia food achieved a revenue of 1.002 billion yuan, a year-on-year decrease of 12.70%. Minsheng securities analysis said that the decline in performance in the second quarter was mainly due to the impact of community group buying on business and super passenger flow, and the company was not prepared to enter the group buying market with fierce price competition.
In terms of business, in the first half of the year, sunflower seed revenue was 1.613 billion yuan, a year-on-year decrease of 4.29%; The nut revenue was 461 million yuan, a year-on-year increase of 50.52%, and the proportion of revenue has risen to 19.37%, second only to sunflower seeds.
So, after sunflower seeds, can the nut business carry the continuous growth of Qiaqia food performance?
Chen Xianbao once said: “we should all in and make Qiaqia’s daily nuts the first in the industry as soon as possible.”
How much is this “first”?
In the record of investor relations activities in July, Qiaqia food revealed its three-year strategic goal: in 2023, the sales revenue including tax is 10 billion, including 6 billion tax revenue from melon seeds, 3 billion tax revenue from nuts and 1 billion tax revenue from snack food; “In five years, we hope to be the first nut in China and sunflower seeds to consolidate our leading position in China”.
In May, Qiaqia food said that the sales of nut categories reached 6 billion yuan in five years. The company first targeted the daily nut categories and made them thorough, bigger and stronger. In addition to other nut products, it will become the first nut in China in five years and the first nut in the world in ten years.
Ambition is not small. What about reality?
In July 2019, three squirrels were listed on the gem of Shenzhen Stock Exchange. After a 44% rise on the first day, they went up by 10 limits, with a total market value of 22 billion yuan, making Zhang Liaoyuan, the actual controller of the three squirrels, the richest man in Anhui Province. Chen Xianbao is no longer the richest man in Anhui.
Three squirrels are the leader in the domestic nut Market.
In 2020, the revenue of three squirrel nut business was 4.848 billion yuan, more than five times that of Qiaqia food nut business of 950 million yuan in the same period. In terms of overall scale, in the first half of 2021, the operating revenue of the three squirrels was 5.261 billion yuan, more than 2.2 times that of Qiaqia food.
Compared with the three squirrels, the advantage of Qiaqia food channel lies in offline, but online is weak. Three squirrels started online, but Qiaqia food didn’t catch the e-commerce outlet at the beginning. By the first half of 2021, the revenue of Qiaqia food e-commerce was only 233 million yuan, accounting for less than 10% of the revenue. Moreover, three squirrels are also under the force line.
In the fourth quarter of 2020, Qiaqia food issued 1.34 billion yuan of convertible bonds, which were mainly used to expand the production capacity of nut business and layout related businesses.
(projects to be invested by Qiaqia food by issuing convertible bonds)
At present, nuts have become the second curve of Qiaqia food, with a good growth momentum. However, after all, this is a new business with a small base. In the long run, the nut business is not easy to do.
The nut industry is developing rapidly, but the track is crowded, there are many participating enterprises, and the product homogenization is serious.
In 2015, after Wallon launched the daily nut product, large and small enterprises followed suit, including three squirrels, liangpin shop, baicaowei and laiyifen. Of course, Qiaqia food.
Qiaqia food wants to be the first in the nut industry. The implication is to pull down three squirrels from Anhui villagers. But will the three squirrels and Zhang Liaoyuan, the “father squirrel”, agree?
reference material:
Chen Xianbao spent 1 billion yuan “Qiaqia” melon seeds, Beijing Evening News
Twenty years of contact: how to upgrade from “melon seed king” to “nut expert”? Outlook think tank
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