China Food

China’s top three meat producers: the despairing pig, the counter attacking “ugly duckling” and the self revolutionary chicken

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a local catering Innovation story.
 
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Text: Ba Jiuling   

Source: Wu Xiaobo channel (ID: wuxiaobopd)

 
The most common meat eaten by Chinese people are pigs, chickens, ducks, cattle, sheep, geese, etc.
 
In the past three years, their output has changed significantly.
*The above-mentioned production capacity is mainly produced and consumed by 1.4 billion Chinese
 
It can be found that in 2018, the pork output was about 54 million tons. In fact, before that, the pork output remained at this level for a long time, up to 56 million tons. However, due to factors such as classical swine fever, the pork output has directly decreased by about 12 million tons in the past two years.  
Chicken and duck meat became the main substitutes, increasing by about 3 million tons respectively since 2018. The production capacity of chicken increased from 11.7 million tons to 14.85 million tons. The production of duck increased from 6.82 million tons to 10.5 million tons.
 
The more obvious growth is duck meat. In particular, the difference between the output and beef scale in 2018 is small, and now it has risen to 10 million tons, opening the gap with beef.
The counter attack of “ugly duckling”
 
Ducks are playing a higher and higher role in people’s diet, which seems to be an “ugly duckling” counter attack.
 
Pork and chicken are more universal meat among livestock and poultry. Since childhood, every family seems to have a “habit”: for the sake of their children’s growth and appetites, they often cook chicken soup and braised meat. Duck soup and duck meat with obvious smell of mutton are not considered.
 
Of course, ducks are not good for nothing, which is reflected in common local delicacies and classic practices such as duck blood vermicelli soup, pickled duck, salted duck and beer duck. In particular, roast duck, the royal family explored the roast value of duck in the imperial city with poor natural environment in the Ming and Qing dynasties. Roast duck has become a unique and continues to this day, so that it has become the most popular food in the capital. But generally speaking, in February Before 018, the output and consumption of ducks were still significantly lower than that of pigs and chickens.
 
According to the financial report data of Quanjude, the “first brother” in the roast duck industry, which originated in 1864, the future is not optimistic:
It is halogen snacks that take over the “baton” and promote the re emergence of duck food.
 
More and more chain stores of duck brine products are distributed in transportation hubs, surrounding communities, commercial centers and commercial streets, which has become common. If you pay a little attention to their scale, you will find that they often appear in the scale of thousands of stores that are difficult to break through for general catering chain brands, which has almost become a “spectacle” in today’s catering industry.  
 
As a leader in the duck deep processing industry, compared with Quanjude, juewe food (i.e. juewe duck neck), Zhou Hei duck and Huangshanghuang, the three listed companies of duck brine products, the financial report data of revenue scale and net profit are “beautiful” and have greater potential. Take juewe food as an example:
 
The first “explosion” of duck brine products It’s marinated duck neck, which was originally a traditional snack in Hunan, Hubei, Jiangxi and other places. It’s mainly used as a snack for people to drink. The raw materials of marinated food need to be resistant to cooking, so it’s not easy to rot, and the more they cook, the more delicious they taste. It’s found that because ducks can swim, duck meat, especially duck neck, is more compact, and ducks quite meet the requirements of marinated food.
 
When discerning entrepreneurs promoted duck stewed products such as duck neck, duck clavicle, duck wing and duck head from local to national, they unexpectedly generated great commercial value. It can be found that the price of duck stewed products has increased significantly compared with frozen duck and roast duck, and the “ugly duckling” has really become a “white swan”:
 
The daily price of a 520g frozen duck leg is 12.3 yuan, and the price of a 1180g Quanjude roast duck gift box is 135 yuan, which is equivalent to about 2.3 yuan and 11.4 yuan per 100g, respectively. In the official self operated store of zhouheiya Taobao, the price of a 100g duck leg is 25.8 yuan.
Chicken’s “self revolution”
 
The rise trend of duck brine products is obvious, and the new development of “chicken” is also full of stories.
 
For a long time, the deep processing value and premium space of chicken are mainly reflected in fried products, which is mainly affected by foreign eating habits and catering chain brands.
 
Globally, chicken is the largest meat product, with the largest breeding scale, consumption scale and processing history. Western fast food giants such as KFC and McDonald’s were born.
 
After KFC entered China in 1987, western fast food chain expanded rapidly in China, which played an important role in cultivating consumer market and local supply chain. For example, it supported China’s white feather broiler industry chain. Compared with China’s local yellow feather broiler, the marketing cycle of white feather broiler was at least 58 days faster, and the meat production was higher and the meat quality was more fresh and tender.
 
Accordingly, local catering giants such as Zhengxin chicken chops and Wallace have been born. In recent years, large-scale chain brands continue to be born, such as “ordered fried chicken”, “the first good chicken chops”, etc.
 
Under the halo of fried chicken, the development potential of chicken brine products has been covered up for a long time, and now the market has begun to explode.
 
Following the listing of Jue Wei food, Zhou Heiya and Huang Shanghuang, the “chicken” halogen product brand “Ziyan Baiwei chicken” is expected to become the fourth listed company of halogen products in China.
 
According to the prospectus data of Ziyan Baiwei chicken in July this year, from 2018 to 2020, the operating revenue was RMB 2.002 billion, RMB 2.435 billion and RMB 2.613 billion respectively, and the net profit was RMB 124 million, RMB 138 million and RMB 389 million. As of September 6, 2021, the number of stores has reached 5192. Its number of stores can rank as the second largest brand of halogen products. The main products are husband and wife lung slices (beef, tripe), Baiwei chicken, rattan pepper chicken, etc.
 
In addition, the well-known brands of chicken stewed products also include: Liao Ji Bangbang chicken, stewed human armour, Wang Xiaolu, etc. Among them, Wang Xiaolu, a brand of marinated chicken claws established in 2019, has an annual sales volume of 20 million yuan. After a year, the annual sales exceeded 200 million yuan, and the momentum is fierce.
 
It is worth mentioning that the brine snacks represented by duck brine products and chicken brine products are now known as “leisure food”, which can be comparable with the common leisure food categories. According to Frost & Sullivan data, in the category of leisure food (mainly candy, candied fruit, baking, puffing, etc.), the growth rate of leisure brine products has maintained the fastest in recent ten years.
 
In 2019, the market scale of leisure brine products was 106.5 billion yuan, accounting for 9.22% of leisure food. By 2020, it may reach 10%, close to 13% of puffed food, more than 8% of fried goods and 8% of biscuits.
 
Behind it is a local catering innovation case
 
Compared with fried chicken and other fried products, it can be noted that brine products are more food with Chinese cultural characteristics. It is said that Qu Yuan, the great poet of the state of Chu in the Warring States period, ate “stewed chicken” and wrote it in his poem, but it was called “dew chicken” at that time.
 
The characteristics of bittern flavor are: strong plasticity, which can enrich and quickly innovate taste. In the words of Wang Yajun, founder of chicken claw retail brand crawling food, “halogen can be the pre process of all processes.” but in terms of taste, it is generally addictive.
 
In terms of product design, different from traditional halogen products such as Dezhou grilled chicken and Daokou roast chicken, today’s halogen product chain brands generally adopt the practice of splitting the “parts” of chicken and duck for independent packaging, so the products are more suitable for people to eat in leisure scenes.
 
Many large-scale chain catering enterprises at home and abroad adopt the business model of “front store and back factory”:
The pre-finished products made in the central kitchen are transported to the store through the cold chain, and the staff can sell them after simple treatment (re frying, heating, etc.).
 
Halogen products chain the first mock exam is a better “practitioner” of this model, with higher business efficiency and lower input cost. Due to the lack of on-site food, the cost of store location and decoration is low. High degree of product standardization, store employees do not need secondary processing. Less equipment investment, low training cost and short training cycle.
 
According to Kaiyuan securities, the initial investment of leisure halogen products franchise stores is generally 100000-200000 yuan, with 1-2 employees.
 
Pan Qi, a senior person who works for a head catering chain brand focusing on “Hunan snacks”, told the minibus, “it is easy for a stewed snack brand to achieve thousands in a few years, which is basically impossible in the dinner field”. It goes without saying that the processing procedures for dinner are often more cumbersome, with higher labor cost investment, higher requirements for store area and decoration, and higher total investment. It is an asset oriented business.
The founders of the enterprise brand have nearly 20 years of experience in the catering industry, and their plan is to open 1000 stores in five years. At present, the number of stores is 200.
 
The market scale of Western fast food industry represented by Yum China and McDonald’s is obviously stronger than that of duck brine products represented by Jue Wei food and Zhou black duck. For example, yum China’s revenue reached US $8.263 billion in 2020.
However, the brine products market, especially the duck brine products market, should not be underestimated in the future. Among the three main meat of chickens, ducks and pigs, the supply chain of ducks has a unique advantage: breeding ducks are less dependent on foreign countries and have the shortest growth cycle.
 
In fact, white feather meat ducks, white feather meat chickens, Duroc pigs, Landrace pigs and big white pigs, which bear the main production capacity of chickens, ducks and pigs, are all imported varieties and are easy to be “stuck” by foreign enterprises.
 
In comparison, in the field of duck breeding, China’s self-developed varieties have developed rapidly. For example, “Zhongxin white feather meat duck” is expected to reach 395 million in 2021, accounting for 9.7% of the domestic meat duck market. Moreover, the slaughter time of meat ducks is only more than 30 days, the fastest time for white feather broilers is 38 days, generally 42 days, and the slaughter time of meat pigs is from April to May.
Why not a pig? And cattle, sheep and geese?
 
If chicken and duck are two mature meat in the field of deep processing. The “pig”, which is absolutely dominant in production and consumption, has hidden worries of dragging its feet.
 
In addition to a few local fast food brands that focus on pork products (such as Longjiang pig foot rice), husband and wife stores selling stewed pig feet, pig elbows and pig large intestine in local vegetable markets have not produced large-scale catering chain brands (fast food, leisure snacks, etc.) with pork as the main ingredients and products.
 
Pork plays a more important role as a “universal ingredient” scattered in every catering enterprise, warehouse in family kitchen and refrigerator.
 
According to the analysis of tmall Taobao meat snacks market, the share of pork snacks is equivalent to that of chicken snacks, lagging behind duck and beef.
 
 
Zhenmei Co., Ltd., the IPO of halberd gem in August this year, was founded in 1945. It is one of the largest professional preserved meat and meat floss suppliers in China. More than 81% of its revenue in recent three years has been contributed by preserved meat products. According to the financial report data in the prospectus, from 2017 to 2019, the operating revenue was RMB 252 million, RMB 259 million and RMB 255 million respectively. The net profit was 45 million yuan, 51 million yuan and 42 million yuan respectively. In the past three years, there has been no significant growth in scale and net profit.
 
Generally speaking, the output scale of pork means rich raw materials and supply chain. For a counter example, China’s goose production has been maintained at about 1.5 million tons. It is difficult to obtain raw materials when halogen goose stores want to expand on a large scale.
 
Tan ye, co-founder of restaurant owner’s internal reference, visited Shuanghui last year. Shuanghui can divide a pig into 120-130 “parts”, and there are obviously more SKUs than chickens and ducks. This also means that the space for deep processing is very large.
 
If there is a counter attack story of “ugly duckling” in the market, shouldn’t the pig with “treasure all over” have more prospects?
 
In this regard, the reason generally talked about is the cost. The price of pork is generally more expensive than that of chicken and duck. According to the data of jintou.com, in the past month, the average price of broiler is 8 yuan per kilogram, the average price of duck is 7.38 kilogram, and the average price of pork is 11.97 kilogram. According to the highest price in the past year, the price of pork is 2-3 times that of chicken and duck meat.
The reason why the pig price is more expensive is that the pig has the longest marketing cycle and the input cost is often large. In the event of an epidemic, farmers often lose a lot, resulting in unstable market supply, which is finally reflected in the large fluctuation of pork price and obvious periodicity of the industry.
 
In the past year, the highest price of pork has reached 52.65 yuan per kilogram. Now it is a “bargain” price. A friend of Tan Ye is a large pig farmer in Hunan, with nearly 200 sows. In July this year, the price of hairy pigs (live pigs) fell sharply from more than 30 yuan a kilogram last year to more than five yuan a kilogram, and the breeding cost was 8 yuan a kilogram. It was simply cruel to “birth control” sows.
However, around 2010, Jue Wei food spent 50 million yuan (announced) to introduce a set of SAP cold chain system from Germany. “This shows that they have prepared for thousands of stores and thousands of stores more than ten years ago,” panqi said. In addition, halogen products have short shelf life, easy to change taste and high requirements for preservation. Industry enterprises generally adopt the cutting-edge and high-cost “nitrogen filling” fresh-keeping method in the catering industry, and the fresh-keeping period is 5-7 days.
 
These enterprise innovations play an obvious role in promoting and demonstrating the market, and are an important link in the promotion and popularization of duck brine products. The catering and leisure food enterprises focusing on pig products may still lack core innovation. By analogy, the deep processing industry behind cattle, sheep and geese is in a similar situation.
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