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among Chinese national brands, can a brand like weihaomei, which has been standing for 100 years with the help of capital, be born?
Originally, I thought that Lao Ganma’s position in China’s chili sauce market was unshakable.
In 2020, the hot sauce brand, which shines with the aura of domestic products, achieved a revenue of more than 5.4 billion yuan. In that year, Lao Ganma even sold overseas at a price three times that of the domestic market, once boarded the luxury discount website gilt, and was known as the world’s top hot sauce.
But the same 2020 financial report shows that the revenue of a spicy sauce brand called weihaomei has reached 35.7 billion yuan, which is more than six times the annual revenue of Lao Ganma.
Weihaomei is also a name with Chinese rural style, but it is far less well known than Lao Ganma. How did this brand operate quietly in the Chinese market for 30 years without being discovered by consumers? How did it throw out six times the performance of Lao Ganma once it appeared?
Chili sauce giant for 30 years: positioning determines status
In 1989, the giant of Chinese chili sauce industry began to sprout.
This year, Tao Huabi was 42 years old. When her husband died of illness, she built a small restaurant beside a street in Longdongbao, Guizhou. During this period, children from nearby schools often came to the restaurant to eat jelly and affectionately called Tao Huabi an old godmother.
Later, Longdongbao built an international airport, the road near the store became the main road in the South Ring Road, long-distance drivers often stopped at the small store, and Tao Huabi became everyone’s old godmother.
Tao Huabi’s jelly is popular because there is a self-made Douchi spicy sauce in the mix. The spicy sauce made with this exclusive formula was once given to long-distance drivers for free and taken to all parts of the country.
Gradually, Lao Ganma’s jelly restaurant became a spicy sauce restaurant.
In the same year, a two-story compound seasoning processing plant was under construction in Shanghai, less than 2000 kilometers east along the Shanghai Chongqing Expressway. Later, a sign was pasted on the white outer wall brick of the plant, with the words “delicious” printed on it.
In the next 30 years, the two chili sauce brands walked opposite each other along different paths, and it seems that they never formed an intersection at the consumption port.
In the later analysis of Huatai Securities, they put forward four key points for the development of Lao Ganma:
The first is product features.
Lao Ganma won the taste war in the sauce market with rich and unique taste, and made a strong attack through cost advantage, the price is close to the people, and improved the consumption viscosity of consumers.
The second is standardization.
By participating in the drafting of relevant industry standards and national standards, Lao Ganma occupied the commanding heights of the industry, had more voice and influence in the chili sauce market, and established Lao Ganma’s brand position.
The third is brand synergy.
The product brand and the company’s brand adhere to coordination. Its products use the old godmother logo of Tao Huabi’s image from brand to trademark design, forming a unified brand influence and reducing consumers’ search cost and screening cost.
The fourth is to maintain the brand image.
Lao Ganma has invested 30 million special funds every year to crack down on fake and shoddy products and register more than 100 relevant trademarks in time.
The result of adhering to the four key points for more than 30 years is that Lao Ganma has become the most famous chili sauce brand in the Chinese market.
Some netizens once introduced that Laoganma chili sauce once became the most popular product in American prisons. Because there are no friends who have served sentences in the United States, this statement has not been verified so far.
In contrast, the delicious 30-year journey seems much simpler, that is, channels, channels.
From the perspective of the whole condiment industry, its channels are mainly composed of catering channels, family channels and food industry channels.
Positioning the family channel is the easiest way to build a well-known brand. Due to the long-term face of consumers, brands need to seize the minds of consumers from multiple dimensions such as advertising investment, product display and promotion, such as old godmother.
The main customers of catering channels and industrial channels are downstream b-end businesses, such as KFC, McDonald’s and other fast food brands, Master Kang and other instant noodle brands.
From the perspective of weihaomei’s channel layout, this brand positioning has become a solution provider in all fields.
The family channel mainly occupies the Ka supermarket. So far, weihaomei has always been one of the best-selling brands of condiments in international well-known chain supermarkets and supermarkets such as Wal Mart, Carrefour and metro.
In addition, it is a catering channel. In people’s daily consumption, weihaomei actually does not appear more frequently than old godmother. However, we can basically see weihaomei series of products in the back kitchen of 5-star hotels, high-end Western restaurants, western simple restaurants, cake rooms and fast restaurants.
It is reported that the global chain catering giants cooperating with this brand include McDonald’s, KFC, pizza hut, Starbucks, Burger King, etc.
Finally, it is the most unfamiliar industrial channel for ordinary people. Weihaomei has established a technological innovation center for a long time, which mainly studies the relationship between food flavor and human senses, and the research results are often to provide omni-directional flavor solutions from creativity to production to catering and food industry giants.
For example, Haagen Dazs’s ice cream, Leshi’s potato chips, Kraft’s biscuits, Simpson’s French fries, Wanchai wharf’s Dumpling wonton, etc. all these well-known best-selling foods at home and abroad have a delicious contribution to their unique flavor.
According to some data, as early as 2016, the revenue of industrial channel business accounted for 37% of the total revenue of weihaomei.
Laoganma vs delicious, a heavy warehouse in the field of family consumption, building a brand to make products; A multi-channel layout to be a water seller in the food industry… The two chili sauce giants are gradually growing.
Volume gap caused by capital leverage
Different positioning leads to different growth routes, thus creating the development trajectory of the two chili sauce brands. However, according to the data in 2020, the old godmother’s revenue is 5.4 billion, but weihaomei has won 35.7 billion. Who plays a key role behind the huge volume?
Lao Ganma is one of the few existing simple companies. Up to now, the company has always insisted on cash transactions, and can do as much as there is money. There has never been any difficulty in capital turnover.
Therefore, the old godmother is also known as the capital insulator. Tao Huabi directly said that he would not make loans, raise funds, go public, let others take shares, participate in shares and control others. She has said on many occasions:
“I am determined not to go public. As soon as I go public, I may lose my fortune. Going public is to deceive others’ money. Take the money, circle it, and call him to take shares. When the time comes, the money will be sucked away, and I will pay off the debt, so I won’t do it. So as soon as a government official talked to me about going public, I told him: don’t talk about it! Don’t talk about it! You ask me for money, I don’t have it, I’ll die.”
As a result, many old godmothers investigated by capital institutions have hit a wall again and again, and they have not even been received by the government. In the capital intensive era, old godmothers who do not lend, participate in shares, raise funds or go public are moving forward in small steps.
Weihaomei is different. Its main way of rise lies in mergers and acquisitions through capital leverage.
At the end of 2020, weihaomei announced the acquisition of chili sauce brand Cholula at a purchase price of US $800 million. Cholula is a high-end brand in the field of chili sauce, with annual sales of about US $96 million. It is expected to achieve medium to high single digit growth under the epidemic situation.
With the addition of this brand, weihaomei has a higher price definition right in family consumption channels and catering channels.
What is best known to the domestic public is that in 2017, weihaomei announced that it would acquire the food business of Mead Johnson and Reckitt Benckiser, the parent company of Durex, at a price of US $4.2 billion.
At that time, lianshang.com reported that it was expected that by 2020, the synergy brought by the acquisition would save weihaomei $50 million.
It is not only horizontal annexation of peer brand business, weihaomei also began to move upstream and downstream and integrate the industrial chain. For example, in 2017, weihaomei successively acquired botanical food company, a plant spice supplier in Australia, caijuninjector, a pickle juice supplier, and reckittbenckiser food business.
Earlier, the brand even acquired armano farms, the world’s largest leek grower and processor in San Francisco.
Under the operation of capital leverage, weihaomei’s global market share has reached as much as 20%. Looking back at the number of domestic national brands, most of them are placed at the foot of the capital lever: Huiyuan Juice, Nanfu battery, Jianlibao, Jindi chocolate
Not daring to touch capital and not being able to control capital are becoming obstacles to the leapfrog growth of many high-quality brands in China.
Thoughts on for emerging brands
From the delicious play, it is not difficult to see that this is not like a national brand. Although the word “delicious” reveals Chinese rural style everywhere, it is a real American brand.
In 1889, weihaomei company was founded in Baltimore, Maryland, by Willoughby M. McCormick. The English name of the brand, that is, the founder’s surname McCormick.
In 1989, on the occasion of the 100th anniversary of the founding of weihaomei, the brand entered the Chinese market and began to sell sauce, emulsified sauce, flavor sauce, sweet sauce, fruit sauce and other products.
In order to cater to the taste of the Chinese people, it is delicious to change from sweet sauce to spicy sauce. Therefore, from the production history of chili sauce, this brand is no longer than Laoganma.
The ultimate anti excess is capital and channels.
Nowadays, many domestic emerging chili sauce brands are also rising with the help of capital.
2017 is known as the first year of chili sauce. External capital has entered the bureau one after another. COFCO sugar, Fuling mustard, Sipu Sipu, Haidilao and Ajisen Ramen have come to this industry of less than 40 billion with the strength of the capital market.
It is very like the capital flowing into the Baijiu industry before and after 2002.
Better than the capitalization of the Baijiu industry is the empowerment of the Internet. In early 2017, the Internet hot sauce brand “spicy Sanniang” announced that the sales volume of tmall platform exceeded 70000 bottles, ranking second in the sales volume of hot sauce in the whole network.
At the same time, Internet brands such as Ni laopickle, Kaixin Zhu Xiaoer dry fried beef sauce and laoguojia shop chili sauce are also rapidly seizing online channels that Laoganma hardly involves.
The most popular is the “rice Lord” founded by singer Lin Yilun.
Sell chili sauce at a price 3-4 times higher than that of the old godmother, and 30000 bottles will be sold within 2 days after the brand goes online; Only three months after the launch, it obtained 83 million yuan of financing and a valuation of 360 million yuan.
However, from the overall market response, Hubang chili sauce, the “net red first chili sauce” penetrating into the takeout channel, is closer to the delicious playing method.
According to aiqicha, the affiliated company of Hubang chili sauce, Qingdao spicy workshop Food Co., Ltd., has registered innovative technology, catering management, food and other companies, respectively involving agricultural technology, biotechnology, catering management, catering planning, food additive sales and other businesses.
Compared with weihaomei, it is very likely to arrange channels such as household consumption, catering and industrial processing.
In the family consumption scene with the most information available, Hubang chili sauce chose to enter the takeout scene missed by the brands in order to avoid the competition of old Ganma and other brands in Ka mall.
Hubang chili sauce is particularly famous for its small packaging products of “one meal, one box”, and went into the live broadcasting room of wanghong Dawei Wang and Li Jiaqi to put forward the consumption mental scene of “standard delivery”. During the “double 11” period in 2021, the total sales volume of this brand exceeded 6.9 million cans, and the sales volume was 160% of that of the same period last year.
In the future, will there be a delicious brand in China’s chili sauce industry? Among Chinese national brands, can a brand like weihaomei, which has been standing for 100 years with the help of capital, be born?
Learning and reference is the most simple starting point.
Author: Wang Lianhua; Source: rice business school (ID: mifanmba), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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