China Food

“War” caused by a bottle of dry rice sauce

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billion level compound condiment market is waiting for the dark horse.
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Simply a bowl of white rice, drenched with a spoonful of spicy beef sauce, can be transformed into a rice man.
Dried rice sauce, dried rice soul.
Sauce is the soul of seasoning. The rice dressing here is not as simple as a spoonful of soy sauce and a pinch of salt.
It is spicy, delicious and has a long aftertaste. This spoonful of compound taste integrates the essence of Chinese food. It is convenient, fast and delicious. Compound condiments have become an artifact for young people to cook and eat.
Frost Sullivan data show that the scale of China’s composite seasoning market will be about 150 billion yuan in 2020 and is expected to reach 400 billion yuan by 2030, 2.7 times that of the current market.
Zhiyan consulting report predicts that from 2016 to 2021, as a new force in composite condiments, Chinese composite condiments and hot pot seasonings will become the two fastest growing segments, with an annual compound growth rate of 16.5% and 13.8% respectively, faster than the traditional single condiment market.
Like many consumer goods, the growth of compound condiment market benefits from the improvement of people’s quality of life and consumption.
It does not need too high cooking technology to make delicious dishes, which is cheaper than takeout and healthier than takeout. It is precisely because these demands are met that people’s demand for compound condiments is increasing day by day.
At the same time, with the full outbreak of COVID-19 in 2020, the life of homeowners gave birth to a large number of consumption growth points under the home scene. The compound condiment just catered to the lazy economy.
So, what is the current demand of the compound condiment market? How will various enterprises compete with each other? Is this blue ocean field with good growth momentum really plain sailing?
Battle of the blue ocean  
To say how to occupy the domestic compound condiment market, domestic enterprises have natural advantages to a certain extent.
The choice of condiments between Chinese food and Western food is very different. It is hard to imagine that a foreign brand can create a authentic Sichuan butter hot pot condiment.
It can be understood that a single condiment is a necessary consumption in the condiment industry, while a compound condiment is an optional consumption.
From the perspective of penetration, a single condiment is like a stock game, while a composite condiment is closer to incremental competition. Compared with the universality of a single condiment, the new composite condiment needs to pay more attention to precision marketing.
Although there is a certain degree of competition and substitution between compound condiments and single condiments, they can still complement and penetrate each other. For example, people who eat rice will have to eat coarse grain.
From the perspective of market structure, the market share of two leading companies of compound condiments – Yihai international and Tianwei food is about 2.61% and 1.37%.
Even if you are the leader, the market share is still very low, and the market pattern is scattered, leaving a huge imagination space for new enterprises.
However, can entrants really roam comfortably in the blue ocean of compound condiments?
We might as well speak with data.
In the first half of this year, the performance of major condiment enterprises was somewhat obscure.
Taking Tianwei food as an example, in the first half of 2021, the company realized a net profit of 75.64 million yuan, a year-on-year decrease of 62.1%. In the second quarter of 2021, the company realized a revenue of 495 million yuan, a decrease of 15.4% and a net profit loss of 4.52 million yuan, a decrease of 103.4%.
Coincidentally, Qianhe flavor industry not only saw a sharp year-on-year decline in the company’s net profit in the first half of the year, but also its share price had fallen by more than 53% compared with the highest point of the year by the end of September.
Enterprises want to create online red single products, but how easy is it to create a sudden explosion in a short time? Then, marketing is the only way to quickly improve sales.
Taking Tianwei food as an example, starting from the product side, the company began to innovate in small items (light food and ready to eat) and develop the products to functionality (low salt, low sugar and low fat); from the marketing side, the company referred to the advertising means of FMCG industry to get close to consumers at the terminal, so as to improve the market share, continue to take measures to remove inventory and strengthen channel management.
In addition to the compound condiment enterprises, the traditional condiment enterprises will not let go of this blue ocean. The “sauce grass” Haitian flavor industry has begun to develop the compound condiment SKU. Even cross-border people have poured in, and three squirrels, Shuanghui and Longda meat have announced their entry into the condiment market.
It can be seen that although the compound seasoning is a good track, the flocking competitors may soon dye the blue ocean red.
Battle of end B  
Compared with the C-end, the b-end business is often more attractive.
First of all, the cost of condiments accounts for only 5% of the raw material cost of catering enterprises, so catering enterprises are not very sensitive to the price of condiments.
Secondly, catering enterprises pay more attention to quality stability and food safety. Once suppliers are changed, it will be a very high conversion cost for catering enterprises, and there may be a risk of unstable subsequent supply quality.
Some people may feel strange when it comes to Yihai international. But when it comes to Haidilao, it is a household name. Yihai international and Haidilao belong to the same actual controller, and Yihai international is the largest supplier of Haidilao hot pot seasoning, which is also the key for Yihai international to become a leader in composite seasonings.
From the perspective of Haidilao alone, there are several sub brands, such as Qiao Qiao’s powder, which is mainly engaged in potato powder, Meng Xiaojiang, which is mainly engaged in rice noodles, and Shiba, which is mainly engaged in noodles. These brands all need compound soup and sauce.

Looking at the chain restaurants all over the country, there is no lack of prefabricated seasoning bags, and even play a role in replacing some chefs.
Prefabricated seasoning bag can reduce the raw material cost of catering enterprises, reduce the number and space of back kitchen, realize product standardization, and improve the serving speed.
According to statistics, in chain catering, the purchase amount of unified distribution commodities accounts for more than 70%. With the improvement of China’s urbanization rate, the change of population structure and the improvement of consumers’ attention to brands, the revenue growth of chain restaurants is higher than that of the industry as a whole.
It can be seen that the demand for compound condiments at the B end will increase in the future.
Almost all the first echelons in the compound condiment camp have “golden master dad” who cooperate happily.
For example, the products of richen Co., Ltd. cover soup, Chinese dishes, Japanese sauces and hot pot bottoms. The company deeply cultivates the b-end channel and is a supplier of well-known catering enterprises such as Xiabu Xiabu, Yuku, Xiaonanguo and Ajisen ramen.
In 2019, the net interest rates of Yihai international and richen shares were 18.51% and 29.85% respectively, higher than most food and beverage enterprises, indirectly indicating that the competition of compound condiments at the B end is not fierce.
B-end competition is more customized.
Customization not only refers to the products provided by suppliers for catering enterprises, but also a series of supporting fine services, including dish research and planning, cost budget control, cooking process optimization, consumer taste trend research, etc.
As a participant in catering solutions, suppliers can help catering enterprises make suggestions and achieve the goal of cost reduction and efficiency increase. Therefore, the truly powerful customized compound seasoning enterprises have bargaining power.
In addition, suppliers can strengthen their profitability by introducing high-end products.
Taking richen Co., Ltd. as an example, Weiqian ramen, one of the company’s main customers, has long provided Ramen soup, sauce and other products, and its product categories have increased from 13 in 2015 to 17 in 2017. Moreover, the proportion of the total raw materials provided by richen in the raw material cost of Weiqian Ramen has increased from 2.48% in 2016 to 4.43% in the first half of 2019. The development of customized products makes the company’s gross profit margin ahead of its peers.
C-end battle  
Although the b-end is good, there is a lot of competition. Condiment enterprises such as Li Jinji and Haitian flavor industry have a large number of high viscosity customers, and it is difficult for new brands to grab share. Therefore, they aim at the C-end one after another.
For the competition of C-end, first, there should be products and second, there should be marketing.
First, from the perspective of products, what we pay attention to is the popularity of brands and products.
When you mention soy sauce, you think of Haitian. This conditioned reflex is the natural publicity power of the brand and the goal pursued by new brands.
However, for compound condiments, building a star single product is a matter of “knowing that there are tigers in the mountain and leaning towards the line of Tiger Mountain”.
Different from daily necessities such as soy sauce, the optional attribute of composite condiments weakens the repurchase rate and consumption frequency of products to a certain extent, and then affects the formation of brand power.
Moreover, single condiment depends more on fermentation production, which requires enterprises to have excellent fermentation and brewing technology, long production cycle and complex processing technology, so the entry threshold is high; At present, compound condiments are mainly completed by mixing raw materials, with low technical barriers, serious homogenization and strong product substitutability.
How to create a truly competitive product like Laoganma needs repeated polishing by enterprises; Moreover, the single product of compound seasoning should not only have depth, but also breadth.
The seasonings of Chinese restaurants vary greatly, and the tastes of people from east to west, north to South are also very different. Even for the category of “spicy hot pot”, people also love green vegetables and turnips.
Therefore, this puts forward requirements for compound condiment enterprises: the product line must be long enough and the consumer group covered must be wide enough.
For example, Tianwei food has four brands of “good family”, “Dahongpao”, “crown block” and “ignition”, 9 categories and more than 100 products. In addition, the company will launch 1 ~ 5 new products every year, and 13 new products will be launched in 2019.
Second, from the perspective of marketing, what we pay attention to is the channel and conversion rate.
Different from the catering channel, the supermarket, the main offline purchase channel for C-end customers, is highly sensitive to brand and price. Shangchao has a certain threshold for the brand’s goods turnover rate and sales volume. If a new brand wants to enter the circulation channel smoothly, it needs to make a reputation first.
In the face of a variety of products, consumers often lack the ability to identify the quality of condiments, and most of them can only establish their awareness of brands and single products through marketing activities.
In other words, condiments should pay more attention to marketing in supermarkets. Correspondingly, large-scale cost investment will lead to lower gross profit margin.
The same situation will also occur in online channels. Advertising and live broadcasting require cost investment. If it is the top stream with goods, the cost will rise further.
On the one hand, whether marketing can work and whether channels can be opened up will become the key to reverse the decline of performance; On the other hand, if the investment in marketing and channels fails to achieve the expected results, the sales expenses will eat back the company’s profits.
Last year, Tianwei food invested large-scale human and material resources in online e-commerce channels, including online red goods and the laying of e-commerce platform, but the effect was not satisfactory. On the contrary, the huge promotion efforts and advertising expenses continued to decline the company’s net profit.
Product R & D and channel marketing are indispensable, and both need to burn money.
The way of balance in shopping malls is also the foundation of survival.
Compared with developed countries such as Europe, America and Japan, China’s compound condiment market has just started, and the business opportunities are full of endless imagination.
With people’s yearning for a better life reflected into reality, perhaps in the near future, part of the compound seasoning will be transformed from optional consumption to mandatory consumption. Moreover, Chinese compound condiments will also go abroad and appear in family kitchens all over the world.
Challenges and opportunities blend in this blue ocean. Even if the blue ocean will one day become a red ocean, a real leader will be born in the red ocean, leading the domestic compound condiment market in line with international standards, and making the world taste the Chinese flavor on the tip of the tongue.
Author: koala is a deer; Source: new retail business review (ID: xinlingshou1001), reprint authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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