China Food

Short bread revolution, 100 billion war in new consumption!

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The scale of China’s leisure snack market is as high as 1.25 trillion, of which baked food accounts for the largest proportion, with a market scale of 260 billion.
According to the data, the revenue of Enterprises above Designated Size in China’s pastry and bread industry increased from 52.64 billion yuan in 2011 to 131.623 billion yuan in 2017, with an annual compound growth rate of 16.5%, much higher than the overall growth level of 5.44% in the food industry in the same period. At present, the consumption scale of China’s bread and pastry industry ranks first in Asia and second only to the United States in the world.
In the process of high growth in the baking industry, the revolution in the bread shelf life market has continued. According to the shelf life, bread can be divided into three categories: long-term bread, with a shelf life of more than 6 months, many additives and poor freshness and taste; Medium quality bread, with a shelf life of 30-60 days; Short guaranteed bread, with a shelf life of 3-7 days, is fresh, healthy, convenient and fast, and has a short sales radius.
▲ picture source network
Peach and plum bread is the first enterprise to reduce the shelf life of bread. Peach and plum bread was established in 1997.
It originated from the fact that when the founder Wu Zhigang was walking around the corner, he heard a quarrel between his neighbors and the bakery. The neighbors thought that the taste of bread was becoming more and more wrong, which was intolerable for a food. Through this matter, Wu Zhigang saw the demand for the taste of bread and the growing vacancy market.
So Wu Zhigang decided to make short-term bread. The shelf life is the life of food. If the shelf life is compressed, the delivery speed must be improved.
In the 1990s, without the current logistics infrastructure and cold chain technology, if you want to distribute before the small store is open, you can only advance the transportation time. Like selling newspapers, you can start distribution around 3 a.m. and ensure that all goods are delivered before 6 a.m.
In addition, Taoli bread also adopts the strategy of “helping outlets put bread on the shelf”, which is also mentioned in Coca Cola’s marketing strategy. Helping outlets place shelves is not only an additional supporting service, but also allows their own bread to occupy the C position of the shelf. It is seen to be very important for the sales conversion rate.
In this way, peach and plum bread takes the northeast as the base to realize national expansion. At present, it has formed seven business areas in the northeast, North China, East China, northwest, southwest, South China and central China, and sells more than 300000 tons of short-term bread every year.
In 2015, Taoli bread was listed and successfully ranked among the first shares of China’s A-share bread.
So, how does peach and plum bread do it?
    
“Fast” revolution of peach and plum bread
   
The barrier of peach and plum bread in the industry is inseparable from its business model. Reduce cost and increase efficiency, maximize production capacity, and complete the game of race against time in the process of expanding the market.
1. Comply with the market and create cost-effective products
Since its establishment, Taoli bread has been taking “providing cost-effective products for the society and making more people fall in love with bread” as its mission.
Peach and plum bread has made a fortune with the strategy of “less but better”. The sales of its star products mellow, milk stick and natural yeast exceed 100 million yuan. The revenue and profits brought by these mass-produced products will be the driver of the company’s growth.
Cost performance is the moat of peach and plum bread. Compared with competitors mankton and binburg, the price of peach and plum bread is significantly lower than them, which is similar to meibaochen born after 2018. The price advantage can gather middle and low-end users to the greatest extent, and can also realize the rapid growth of scale in the initial stage of establishment. Based on this, peach and plum bread has become a leading enterprise in the field of short-term guarantee baking.
At the same time, Taoli bread has not stopped its R & D investment, and the market is changing rapidly. The new products launched continuously can not only obtain new increment, but also maintain the enterprise’s sense of youth and competitiveness.
In 2019, the expenditure on R & D of peach plum bread reached 8.8428 million yuan, a year-on-year increase of 56.49%. At the same time, Taoli bread will arrange personnel to study experience in mature markets such as the United States, Europe and Japan every year to keep up with the development of the baking industry.
2. “Central factory + wholesale” mode
The shelf life of short bread is short, which leads to high requirements for logistics distribution efficiency.
China’s bakery production and operation mode is divided into two modes: “central factory + wholesale” and chain store mode. The chain store mode has high requirements for funds. The “central factory + wholesale” mode can greatly save costs and run the production capacity full in the feedback.
Peach and plum bread adopts the mode of “central factory + wholesale”. Build a central factory in the city to wholesale bread and cakes for retail terminals with the largest radius. Realize point-to-face coverage.
The shelf life of peach and plum bread is generally about 3-7 days, and the radiation range of the central factory is 200-300 kilometers, which is equivalent to the city and a circle of surrounding towns. By 2019, peach and plum bread has established central factories in 18 regions of the country.
In this supply chain, Taoli bread is sold in the mode of “direct sales + distribution”. Under the direct sales mode, the company directly signs agreements with large supermarkets, small and medium-sized supermarkets and convenience stores to strengthen the control of sales terminals in the direct sales mode. Tongtong will adopt the distribution mode in the county-level and town level markets, let the nearest central factory supply for it, and the dealers will supply supermarkets and small stores.
At present, there are 719 dealers in Taoli bread, and Taoli bread requires that dealers cannot sell their own competitive products in the designated area.
The mode of “central factory + wholesale” has extremely high requirements on the logistics system. Most of the sales expenses of peach and plum are used for logistics distribution. In 2019, the company’s product distribution service reached 709 million yuan, accounting for 57.71% of the sales expenses. At the same time, the combination of primary and secondary logistics is mainly entrusted to professional third-party logistics companies, supplemented by self built Fleets for the distribution of retail terminals.
▲ picture source: Huaxi Securities
The flexibility of this model is that it can better control the cost for more than 20 years. It connects with retailers and agents every day to make it very clear about the sales data and adjust the production plan according to the sales volume.
3. Nationalization and accelerated expansion
In 2006, peach and plum bread began to be distributed nationwide. The northeast is the headquarters of peach and plum bread, accounting for nearly half of the revenue. Then, central factories were opened in Shanghai, Shenzhen, Xi’an, Wuhan and other places. Starting from the northeast, it gradually covers the markets in East China, South China, central China and Northwest China.
At present, peach and plum bread has established production bases in 18 regions of the country, with an annual output of nearly 400000 tons.
Another reason why the production capacity of peach and plum bread is full, which can accelerate the expansion is that the pastry shop can greatly save costs by using the central factory of peach and plum bread. If the bakery is built by itself, it will need more than twice the store, and the store rental cost and labor cost will rise. The use of peach and plum bread not only saves its own funds, but also returns when it can’t be sold out, which provides double insurance for the operation.
   
New consumption wave, industry reshaping
     
After the continuous expansion of peach and plum bread and seeking to be listed, it has maintained the status of the first brother in the national short-term baking for a long time.
After 2018, a new national brand meibaochen appeared. Meibaochen belongs to Dali group. Dali group is very good at following the strategy, making egg yolk pie with haoliyou, launching Lehu with red bull and canned herbal tea with Wang Laoji.
At the same time, the short bread brand is naturally suitable for big players to follow up. The game of time track has always been the world for those who get the “supply chain system”. High turnover can ensure the distribution batch and the freshness of terminal products. Only big players can have the strength to build multiple central factories. If they fail, the sunk cost they need to bear is not a small number.
Even high-end players such as HEMA Xiansheng use the OEM mode of finding local brands when making fresh milk for daily distribution.
Meibaochen is the biggest competitor of peach and plum bread. At the same time, we mentioned above that the bread market is in an upward growth trend. At the same time, according to wind statistics, the gross profit margin of baked food has shown an upward trend in the past four years. By the end of 2018, the average level of the whole industry has reached about 50%.
New cross-border players continue to enter the baking field. For example, Starbucks, Ruixing coffee, Xi tea, Naixue’s tea and other brands are developing the bread business in Dali. With “tea + bread” as the new business strategy, the scene of Starbucks has high user stickiness. Naixue’s tea is matched with the standardized soft European bag in the same kitchen, which is also building a business model in line with Starbucks Third space.
At the same time, with the acceleration of the Internet model in the bread industry, brands such as happy pastries have accelerated their rise.
The new retail baking of happy pastry, which develops both online and offline, adopts the responsibility structure of one chef managing one store. With the help of modern logistics, big data and cloud computing, it can effectively obtain user information, adjust production plans, personalized push, and effectively clean up inventory. At the same time, it takes the intelligent process background intelligent monitoring, operation specifications and food safety as the driving force in the process of digitization On this basis, it has broken the pain point of the industry where product innovation is weak and production is difficult to scale.
In the process of facing customers, we promise to buy anytime, anywhere, and ensure that the takeout is the freshest and delivered in 30 minutes.
If Taoli bread and meibaochen want to become baking workshops in the whole Chinese market, they need to fight on various battlefields. In addition to competing against the new online Red stores, they also need to overcome the taste differences in different regions. Under the new traffic performance situation, they need to realize the Internet and e-commerce layout, and connect with the consumption demands of new consumer groups.
    
Summary
     
Baking is a big market and is in a growing trend. It will certainly be an important innovation goal of new consumption in the future. For short-term bread, there is still a lot of space to extend. Starbucks and Naixue’s tea all start from space to occupy the market.
Scene consumption and mixed operation have become the new development trend of the baking industry. If short bread wants to seize the wave of new consumption, it must seize new people from both products and channels, such as structural adjustment in product raw materials, such as expanding more rich and diverse auxiliary materials in addition to core raw materials, whole wheat and miscellaneous grains, and realizing product diversification based on personalization.
With the development of new media, traditional channels have been unable to cover the whole population. New retail channels such as tiktok, jitter and other electronic business platforms have become new shopping channels. Under the background of centralization, the traditional short bread companies need to accelerate the development of the times, seize the fragmentation channels, and integrate the consumer groups through digitalization.
The revolution of short bread has come.
reference material:
[1]   Peach and plum bread: leader in the field of short-term insurance and Xiaosheng values
[2]   Short term bread industry benchmarking, cost-effective to create competitive barriers, Huaxi Securities
Author: Xiao Meng; Source: consumer (ID: xiaofeijie316), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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