China Food

Mustard finally couldn’t help it

“  
the price of Fuling mustard products increased by 3% – 19%.
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The price of soy sauce, vinegar, melon seeds, soymilk and quick-frozen products… Mustard is finally out of control, and the price increase is greater than that of other FMCG products.
On November 15, “pickled mustard grass” opened sharply and sealed the trading limit.
Substantial price increase
In a few days, careful consumers will find that the price of Wujiang mustard they often buy has increased.
On November 15, Fuling pickled mustard (002507. SZ) announced that due to the continuous rise in the cost of main raw materials, packaging materials, auxiliary materials and energy, the company decided to adjust the ex factory price of some products. The price increase range of various products was 3% – 19%. The new price was implemented at 17:00 on November 12.
In late August this year, when accepting the institutional research, the company made it clear that under the background of the price rise of agricultural and sideline products and the upstream of the industrial chain, the company has no arrangement to raise the price of products. When the cost rises, the company stabilizes the product price, takes it as a way of competition, speeds up the industry shuffling, takes the opportunity to deepen and penetrate the market and squeeze competitive products. After the market layout is completed, the company will continue to raise the price in the future Carefully consider the next product strategy.
As the absolute leader of pickled mustard industry, Fuling pickled mustard has pricing power and can flexibly deal with the competition in the industry.
The company dares to take the lead in raising the price when the same industry wantonly seizes the market at low prices, vicious competition and dare not raise the price; when the same industry is faced with CPI transmission and rising costs, the company can strategically not raise the price temporarily and take the opportunity to squeeze the other party’s market.
According to media statistics, Fuling mustard has raised its price at least 12 times since 2008. The terminal price of a package of mustard has risen from 50 cents to about 3 yuan.
From 2016 to 2018, the company improved the delivery of products for three consecutive years, with an increase of 8% – 17%. Just when the outside world thought that there was no room for price increase for small pickled mustard, Fuling pickled mustard came again, and the price increase this time was the highest in the company over the years. In this round of FMCG price rise, Fuling pickled mustard ranked first.
Performance decline
The most direct reason for the price increase of Fuling mustard is the rise in the purchase price of qingcaitou, the main raw material.
It is understood that at the beginning of this year, due to natural disasters in some areas, there was a shortage of green vegetables and the price of raw materials rose, which is an unconventional price fluctuation under special circumstances.
To this end, Fuling mustard has established a raw material operation Department this year to strengthen the cost control ability through the development, acquisition, processing and operation of bulk raw materials.
Judging from the sowing and transplanting of qingcaitou, the company expects that the price of raw materials will return to a reasonable range next year.
The rising cost of raw materials has directly affected the company’s performance. In the first three quarters of this year, the gross profit margin was 60.07%, 58.85% and 51.64% respectively. In the second and third quarters, the company’s performance fell sharply, 27.57% and 39.07% respectively.
The transmission of rising costs will continue. The processing and pickling of green vegetable head will take a certain period. For the products of Fuling mustard in the second half of this year and the first half of next year, the cost pressure will gradually appear by using the green vegetable head raw materials purchased in the first half of this year.
Fuling pickled mustard said that the company purchased raw materials according to the empty pool volume and the current raw material price throughout the year. At present, the price of semi-finished raw materials has dropped, and the impact on the gross profit margin will be determined by the annual raw material purchase cost.
At that time, Zhang Tielin, the “emperor’s professional”, devoted himself to acting. The sentence “Wujiang mustard, my grandfather’s grandfather said good”, pushed Wujiang mustard to the national market.
With the improvement of brand awareness and the growth of income level, Fuling mustard suddenly changed its strategy, reduced advertising and invested advertising expenses in other marketing means.
This year, Fuling pickled mustard started advertising again. In the first half of the year, the company invested a total of 167 million yuan in advertising in CCTV, ladder media and new media, the largest amount in the company’s history.
However, the centralized advertising did not drive the product sales in the short term, but dragged down the company’s performance. In this regard, the company said that this advertising investment did not directly stimulate sales, but paid more attention to the effect of brand building, and achieved the phased objectives. The company has suspended the advertising investment of ladder media in the third quarter.
Grab the market
As an appetizer, mustard has a small market scale. In 2020, the market scale of packaged mustard in China was about 7.786 billion yuan, and the Wujiang brand of Fuling mustard ranked first.
From 2008 to 2019, the market concentration of packaged mustard increased continuously, and Cr5 increased from 46.15% to 72.2%. In the same period, the market share of Fuling mustard increased from 21.28% to 36.41%.
In the short term, mustard will not produce large demand changes. Therefore, the industry competition has fully entered the stock market competition.
Fuling pickled mustard said that since this year, it has seized the competitor’s market and obtained a certain market share, which has a great impact on small and medium-sized enterprises in the industry.
Previously, Fuling pickled mustard was mainly intensively cultivated in the first and second tier market, and has woven into an intensive sales network through more than 2000 first-class dealers.
In recent years, the company has put forward the channel sinking strategy. Conducted office fission, sales staff sinking and sales policy tilt guidance. At present, the distribution of about 1400 county-level markets in China has been completed, and corresponding dealers have been set up. The sales proportion of county-level markets has gradually increased, but generally speaking, the proportion is still small. The company said that in the next step, it will continue to invest resources targeted, improve the fit and enthusiasm of dealers, explore market demand and promote large-scale sales.
In the face of single dependence on pickled mustard products, Fuling pickled mustard has cut into radish, kelp and other categories, and entered the kimchi market through the acquisition of Huitong food industry. After many years of operation, diversified categories have always been stagnant.
The company changed its strategy, focusing first and then diversifying. First of all, adhere to focus, concentrate strategic resources to do a solid job in mustard category, and maintain the existing policy support and dealer channels for other categories at this stage. When the focused categories accumulate to a certain market scale and have sufficient market, channel and brand foundation, make a diversified breakthrough.
On November 15, Fuling pickled mustard opened sharply and was immediately sealed on the trading board. Even so, the price of 35.44 yuan, compared with the high price of 54.20 yuan on February 19 this year, still fell by more than 30%.
Original link: mustard is more crazy
Author: Chen Xiaojing; Source: Zebra consumption (ID: banmaxiaofei), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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