China Food

Looking back more than a year after weizhixiang IPO, what is the core of the future development of China’s Prefabricated vegetable industry?

prefabricated food is an industry with huge potential market. If you want to broaden the market space, it depends on what market participants do.
On December 10, 2020, Suzhou weizhixiang Food Co., Ltd. (hereinafter referred to as “weizhixiang”) was approved at the 175th meeting of the 18th development and Examination Commission in 2020, which means that weizhixiang has obtained the listing qualification.
Founded in 2008, weizhixiang is mainly engaged in the development, production and sales of more than 200 kinds of semi-finished dishes in three major product categories: meat and poultry, aquatic products and others. The company has two brands of “weizhixiang” and “Shanyu”. Its main products include cowboy bones, kung pao chicken, crystal shrimp, iron plate squid and many other classic semi-finished dishes.
Semi finished dishes is not an emerging industry. Driven by the increasing pressure of fast-paced life and work, the growth of national average consumption capacity, catering chain, changes in social structure and other factors, the industry has obtained new development opportunities. In the 147th weekly, we have made a preliminary combing and analysis of taste and aroma. In this article, we will make a more in-depth analysis of taste and aroma, as well as the semi-finished vegetable industry.
First of all, we need to clarify the concept that semi-finished dishes are a type of prefabricated dishes. Generally, we divide prefabricated dishes into the following four categories:
① . ready to eat food: refers to products that can be eaten directly after being opened;
② . instant food: refers to the food that has been cooked and can be eaten only after heating;
③ . ready to cook food: refers to the food that can be eaten after cooking without cooked semi-finished products after cleaning, cutting and seasoning (or providing seasoning bags);
④ Fresh and clean vegetables: refers to small pieces of meat, fresh vegetables, etc. after preliminary processing such as cleaning and cutting.
At present, the main product type of weizhixiang is the third type mentioned above. In the following, we collectively refer to semi-finished dishes as prefabricated dishes.

business model and profitability of weizhixiang

1. The basic production process of weizhixiang prefabricated vegetables is very simple. After thawing the purchased raw materials such as meat, poultry, fish, shrimp and vegetables, drain, clean and pick them, and then marinate the ingredients with the configured seasoning for a period of time. After that, they are quantitatively packaged for sale. The above steps are completed in weizhixiang’s own factory.
Weizhixiang products, picture source: prospectus
Production process of weizhixiang, picture source: prospectus
2. From the perspective of industrial chain, the upstream of prefabricated vegetables are mainly poultry animal husbandry, aquaculture, vegetable planting, condiment industry, central kitchen and OEM; Midstream is the brand side of prefabricated dishes; Downstream are individual consumers, hotels, catering enterprises, canteens, etc. The brand of prefabricated dishes is sold to individual customers through distributors, franchisees, supermarkets, comprehensive e-commerce, convenience stores, fresh e-commerce and other channels, and to restaurants and canteens through distributors or wholesalers.
Prefabricated vegetable industry chain, source: foodplus research and analysis team
According to the prospectus, raw materials account for 90% of the production cost of weizhixiang. The company has established a supplier list and adopted different procurement strategies to optimize the procurement cost according to the nature of raw materials. (PS: cost proportion is calculated with operating income as denominator)
Production cost of weizhixiang, information source: prospectus, foodplus research and analysis team
From the above data, we can also see that weizhixiang’s gross profit is not high, but fortunately, the overall pattern of the upstream industry is relatively scattered, and the brand has a certain bargaining power. The prospectus shows that weizhixiang has three purchase accounting periods: monthly settlement, payment and delivery, and Thursday payment after invoice issuance. (make a revenue / A / P chart) from the above data, weizhixiang’s a / R assets are significantly smaller than that of a / P assets, and account for a small proportion of total assets. Therefore, it can be seen that the company’s cash collection capacity is still relatively strong.
Weizhixiang’s marketing model, information source: prospectus, foodplus research and analysis team
From the above figure, there are two sales modes: distribution and direct sales. The former is the main one. Among them, the dealer model is divided into retail channels and wholesale channels according to different sales objects. The retail channels are also divided into distribution stores and franchise stores to sell “taste knows fragrance” brand products to individual consumers. These franchise stores and distribution stores are distributed in various vegetable markets and farmers’ markets (mainly in East China at present).
It is worth noting that due to the small daily sales volume, dealers are mainly individual industrial and commercial households and do not specifically sell prefabricated vegetables. Franchisees are mainly transformed from dealers and carry out store decoration and product display according to the unified requirements of taste, knowledge and fragrance. At present, there is no difference in the purchase price between the two products.
Wholesale channels are generally customers engaged in frozen food wholesale business, with large purchase volume and certain advantages in purchase price. They mainly sell products to customers such as hotels, restaurants and canteens. In order to avoid channel conflict, weizhixiang has launched the “Cuiyu” brand for wholesale customers.
3. After talking about the business model of weizhixiang, let’s take a look at the profitability. From 2016 to 2019, the company’s operating revenue increased from 291 million to 542 million, with a four-year compound growth rate of 16.87%. The company increased its primary production capacity from 9750 tons to 15000 tons in 2018, and the output in 2019 was 12900 tons, with a capacity utilization rate of 86%.
From the perspective of profitability, weizhixiang’s gross profit margin is relatively low, generally maintained at about 25%. However, in recent years, weizhixiang has no advertising expenses and only relies on the natural expansion of points to achieve revenue growth. Therefore, the sales expense rate is very low, only about 5%. In addition, there are no financing liabilities and management expenses of up to 4%. Therefore, the net interest rate of the company is quite good, which can reach more than 15%, which is comprehensively reflected in roe, reaching 30% +.
From 2017 to 2019, weizhixiang’s key profit data, information source: prospectus, foodplus research and analysis team
From the perspective of income structure, beef products are the main profit source of weizhixiang, accounting for more than 45% of the average annual income. The unit income is 45-49700 yuan / ton, and the unit gross profit is 12300 yuan / ton (only slightly lower than the gross profit of shrimp products in 2109). Secondly, the income of poultry, fish and shrimp accounts for almost the same proportion, with an average annual income of about 15%. Among them, the unit gross profit of poultry, fish and pork is about 7000 yuan / ton.
2017-2019 (from inside to outside), weizhixiang’s income structure, information source: prospectus, foodplus research and analysis team
Sales volume of weizhixiang products from 2017 to 2019, source: prospectus, foodplus research and analysis team
From 2017 to 2019, unit gross profit of weizhixiang products, information source: prospectus, foodplus research and analysis team
In terms of subregions, the market of weizhixiang is highly concentrated in East China, maintaining around 96%. This is related to the birthplace of the enterprise, the income level in East China and the pace of life. One more thing to say here is that during the Three Kingdoms, the two Jin Dynasties and the southern and Northern Dynasties, the Soviet cuisine began to take shape, which was closely related to the political situation and economic development at that time. The immigrants from the Central Plains made the economic development and the increase of affluent people promoted the development of diet and gradually formed their own style. The formation of the prefabricated vegetable industry is also closely related to the economic level.
From the perspective of marketing, the number of customers of weizhixiang’s distribution stores has decreased significantly in recent three years (see the figure below). According to the company’s prospectus, some of them have been turned into franchise stores, so franchisees have become the main source of income of weizhixiang. From the big data, from 2017 to 2019, the total revenue of franchisees increased from 22 million to about 260 million, showing a trend of rapid growth; The total revenue of dealers decreased from 232 million to 103 million.
Number of weizhixiang customers from 2017 to 2019, source: prospectus, foodplus research and analysis team
From 2017 to 2019, weizhixiang classified customer income, information source: prospectus, foodplus research and analysis team
4. If you look at the profit data roughly, you will feel that the taste is good, but one data has attracted our attention. According to the calculation, the average revenue contribution (calculated value) of franchise stores in recent three years is 375700, 341000 and 324300, showing a decreasing situation year by year.
From 2017 to 2019, the average revenue contribution of weizhixiang’s unit customers, information source: prospectus, foodplus research and analysis team
Therefore, it is found that the average number of new franchisees contributes too much, which leads to a further reduction in the number of franchisees. In order to facilitate understanding, we directly publish the calculation results and distinguish franchisees in different years by color.
Revenue contribution data of weizhixiang franchisees in different years from 2017 to 2019. Source: prospectus, foodplus research and analysis team
First, longitudinal comparison shows that franchisees who have joined for 4-5 years or more do not show an increase in average income contribution in individual years. By horizontal comparison, franchisees in 2013, 2014 and 2015 experienced business fluctuations in some years with the extension of business time. Among them, the average income contribution of franchisees in 2015 is significantly higher than that in other years, and the income contribution decreases year by year. There may be different franchising policies.

The above calculated values are overestimated. For more than one year, the number of franchisees at the end of the year is less than that at the beginning of the year. For statistical reasons, the data published in the prospectus should be the number of franchisees at the end of the year, so the calculated value is high.

On the whole, the average income contribution of franchisees decreases year by year, which is due to the fact that the growth of the number of franchisees is higher than the growth of income contribution. However, the early franchisees did not show a good trend of increasing revenue contribution year by year. It is due to the company’s franchisees’ business experience, franchising mode problems, or other reasons, which is worthy of our attention.
In the future, weizhixiang will greatly expand its production. In addition to developing new franchisees, it is bound to increase the income of old dealers. How the company can do this is also the focus of attention. In addition, we don’t find any obvious problems in the dimension of dealers and wholesalers. Due to space reasons, we don’t do too much analysis here.
of prefabricated vegetable industry
In the first part, we analyzed weizhixiang’s past profitability and future earnings. We should not only look at the company, but also look at the future development of the industry. Here we use the value curve model to compare various dietary solutions, which can help readers have a deeper understanding of the value created by the prefabricated vegetable industry.
Home cooking process, source: foodplus research and analysis team

1. First, we split the family cooking process, which roughly includes:

Step 1: think
It involves two questions: what to eat and how to do it. In general, when thinking about what to eat, we will consider from several dimensions, such as taste, nutrition, function, satiety, and the expenditure of a meal. When thinking about how to do it, you usually think about what cooking methods to use, cooking tools, what ingredients to use, what condiments to use, and the time required for the whole cooking.
Step 2: buy ingredients
After thinking, we will start to buy food materials. At this time, we have to choose purchase channels, such as vegetable market, fresh e-commerce, community group purchase, small vegetable vendor at home, supermarket and so on. However, no matter which channel we choose, we usually consider the convenience of purchase, as well as the price and quality of ingredients.
Step 3: wash and cut vegetables
After we get the ingredients, we have to start washing and cutting vegetables, which is the most cumbersome and time-consuming part of the whole cooking process. What tools and methods do you usually want to use to prepare vegetables, which can increase the cleanliness of washing vegetables and the efficiency of washing and cutting vegetables.
Step 4: Cooking
After all the preparation links are completed, they begin to enter the cooking and frying link. For different dishes, we will use different cooking methods and tools, and when we need to cook multiple dishes, we will also consider what to do first and what to do later, and arrange the cooking process, so as to improve the efficiency of the whole cooking.
However, in the process of cooking, the most important thing is whether our cooking can achieve the expected effect through the taste, nutrition and function of the dishes. Due to unskilled cooking methods and various problems that may occur in the process of preparing dishes, it is easy to fail to achieve expectations. I believe experienced people know that it is very normal to make a waste dish, especially when the cooking time is insufficient. For example, after work on a normal working day, or when there are a large number of people eating, and multiple dishes need to be cooked, the probability of cooking failure will increase significantly. The problems caused by cooking failure can be large or small. Generally speaking, both cooks and diners don’t want to see this happen.
Step 5: eat
After cooking, start eating dishes. Usually, we will consider the pleasure of eating dishes. Since this link is not the focus of this paper, we will not do too much analysis here.
Step 6: cleaning
After cooking or eating, remove kitchen waste, clean the kitchen, and wash dishes, chopsticks and kitchenware. This is what most people don’t like but have to do. Although kitchen appliances such as dishwasher in modern life can help family chefs reduce some burden, the whole cleaning process is still time-consuming and labor-consuming. If the cooking fume is heavy and attached to the body, the home chefs have to clean themselves.

2. Value curve of dinner Diet Solution

After splitting the family cooking process and extracting the value elements in each link, we score the dinner Diet Solution to form the value curve of the solution. Through the comparison of various value curves, we can have a deeper understanding of the differentiated value created by the semi-finished vegetable industry.
Dinner solution scoring form, source: foodplus research and analysis team

① We score the value elements of each daily diet solution from an overall perspective, which is subjective to a certain extent. We do not evaluate a single case. If you find that there is obviously a score that is inconsistent with the actual situation, you are welcome to contact us through the background. After verification, we will adjust the score. ② . the score of each element is 1-10 points. The higher the score, the higher the value created by the scheme (opposite to the cost). ③ For some links not involved in the scheme, we will directly give a maximum score of 10 points. For example, if half finished dishes do not require consumers to wash or cut vegetables, we will give 10 points directly in the “efficiency” link. If other schemes have similar situations, this scoring method is also adopted.

Dinner solution value curve, source: foodplus research and analysis team
Based on the above data, we have made a value curve of dinner solution. The prepared dishes were compared with several mainstream choices in China. Through comparison, we can see that ① the greatest value of prefabricated vegetables lies in eliminating the labor of washing and cutting vegetables and improving the efficiency of this link; ② . it has certain price advantages over takeout and catering (large-scale production, no labor expenses such as chefs and waiters, and relatively low requirements for store location); ③ The taste and flavor of prefabricated dishes will have certain advantages over homemade dishes. Because the semi-finished dishes are produced in a standardized way and the seasoning is completed in advance, they can be completed simply by cooking according to the instructions, and the probability of cooking failure is small.

3. Why can prefabricated dishes be developed

First of all, let’s take a look at the situation of neighboring Japan. Japan calls cooking at home as domestic food, meals for external use as foreign food, and takeout and cooked food as Chinese food (Chinese food). After decades of development, Japanese Chinese food (Chinese food) has developed into a huge industry with a scale of 10320 billion yen. And for a long time, the growth of the scale of Chinese food industry has exceeded that of domestic food and foreign food.
From 2014 to 2019, the scale of Japanese Chinese food (Japanese cuisine) industry, data source: Japanese cuisine industry association, foodplus research and analysis team
From 2009 to 2018, the scale of domestic food, Chinese food and foreign food industries increased cumulatively. Source: Japan cuisine industry association
Among them, the market scale of general Chinese food (Chinese food) + bagged Chinese food (Chinese food) accounted for 42.4% in 2019, about 4367.4 billion yen (273 billion yuan).
Consumption proportion and market scale of various items of Japanese Chinese food (kohlrabi), data source: Japan kohlrabi Industry Association, foodplus research and analysis team

From top to bottom: rice, bread, noodles, general Chinese food (Chinese food), bagged Chinese food (Chinese food)

Photo source: Japanese cuisine industry association, foodplus research and analysis team
From the perspective of sales channels, convenience stores are the channel with the largest sales of Chinese food (Chinese food), followed by specialty stores and food supermarkets.
Photo source: Japanese cuisine industry association, foodplus research and analysis team
When buying Chinese food, consumers pay more attention to whether it is delicious, followed by the price.
Photo source: Japanese cuisine industry association, foodplus research and analysis team
Judging from the development history of the whole Chinese food industry in Japan, it can be attributed to the development of economy and retail industry, the upgrading of cold chain technology, the increase of female employment opportunities, the change of social structure and many other factors to promote the development of the industry.
Development history of Japanese Chinese food industry, source: foodplus research and analysis team
Let’s sort out the development history of domestic prefabricated dishes, which can be simply summarized as the process of prefabricated dishes from catering market to personal and family market, and from convenience to quality upgrading.
Development history of domestic prefabricated vegetable industry, source: foodplus research and analysis team
Finally, combined with our analysis of the value curve of dinner solution, as well as the development of Japanese Chinese food (Japanese cuisine) industry and the development history of domestic prefabricated dishes. To sum up, in essence, it is because the public’s time value is improving, resulting in greater demand for the convenience of cooking. At the same time, with the development of new retail and cold chain transportation, the public can buy prefabricated vegetables in vegetable farms, comprehensive e-commerce and fresh e-commerce, which also improves the convenience of the channel, which is the main factor for the development of the prefabricated vegetable industry.
Promoting and restricting factors for the development of domestic prefabricated vegetable industry, source: foodplus research and analysis team

Present situation and future development of prefabricated vegetable industry

1. At present, the prefabricated vegetable industry is relatively scattered, and the brands mainly include the following categories.

① Professional
Representative companies: weizhixiang, haodelai, lvjin food, Ruyi Sanbao, looking for ingredients, etc
This type of company only deals in the business related to prefabricated dishes, with high similarity of business models, and its products are mainly various Chinese dishes. Due to the relatively rich types of livestock, vegetables and other products. There are a wide range of customers, including class C customers of individuals and families, as well as class B customers such as catering and hotels. Sales channels are also more extensive. There are professional sales teams, agents, franchisees, wholesalers, etc. to sell in franchise stores, fresh e-commerce, supermarkets, comprehensive e-commerce and other channels.
② . catering type
Representative companies: Xinya food, zhiweiguan, Haidilao, Xibei, Xiaodong, Xiaonanguo, Guangzhou Restaurant, etc
This type of company is mainly engaged in catering business. In the process of operation, some dishes are loved by consumers, so they are developed into prefabricated dishes to increase sales. In terms of production, there are both self owned factories and OEM production. Its characteristics are: on the one hand, the brand has a certain popularity, especially famous dishes; On the other hand, due to its own chef team, it also has some advantages in product R & D. It is worth mentioning that the bottom fishing industry is a hot-pot/" 22375 rel="nofollow" target="_self">hot pot brand, and the chef resources are inferior. But the brand name is derived from the official account of a cooking teaching column “dinner”. This column contains the video of cuisine cooking process and text introduction. The content of a book can often reach over 100 thousand. At present, the prefabricated food business of catering companies is relatively mature, which is Xinya, with rich products and relatively perfect sales channels. Most of the company’s businesses are still in the exploratory stage, and the volume is relatively small.
③ Supply chain type
Representative companies: Fucheng Co., Ltd., Zhengda food, Shengnong food, Shuanghui, new hope, inventory technology
This type of company originally operated the upstream breeding industry or processing industry of prefabricated vegetables, and then gradually derived from the brand. It is characterized by operating one or more links in the upstream of the industrial chain, so it can form certain advantages in some raw materials and production.
④ E-commerce
Representative brands: box horse workshop, elephant chef, daily cooking and kitchen
This type of brand is its own prefabricated vegetable brand under fresh e-commerce. Representative include the box horse workshop under the box horse fresh food and the elephant chef under the small elephant fresh food (meituan). It is characterized by the advantages of fresh e-commerce channel sales, raw material scale and procurement cost. At the same time, it can also carry out product research and development with the help of big data of e-commerce platform, and make use of the cold chain transportation, storage, distribution and other supply chain resources of the platform.
In this category, the two brands of daily cooking and serving in the kitchen are relatively special. They all start with the content of home cooking and gradually derive the prefabricated vegetable business, which is a bit similar to the cooking of Haidilao. The reason why they are classified into e-commerce categories is that daily cooking and kitchen online will not only sell their own products, but also sell products of other brands, including other categories, such as kitchen supplies, household appliances, cleaning supplies, etc.

2. The future development of the prefabricated vegetable industry and what overseas companies can learn from it

Product innovation
First of all, we believe that prefabricated dishes are an industry with huge potential market. If you want to broaden the market space, it depends on what market participants do. Since the ceiling is high, there is enough space for differentiation. In the above, we split the daily cooking process of the family and refined each value point. In fact, each value point can create differentiation, such as increasing the richness of dishes, or focusing on dishes of a specific cuisine, increasing the convenience of purchase, the quality of the main dishes, the specific price band of the card, the cleanliness and hygiene of the main dishes, the taste, nutrition and functionality of the main dishes, etc. According to the above value points, the prefabricated dish brand can create a clear brand positioning and implant it into the minds of consumers.
Value points that can be differentiated in prefabricated dishes, source: foodplus research and analysis team
In addition, according to different scenarios and crowds, different products can be introduced, such as family banquets, holiday catering, night snack series, one person food, specific group diet (children, the elderly, weight loss groups, diabetes, pregnant women, maternity mothers) and so on.
Here are a few cases for your reference
For example, hello fresh, the world’s largest subscription clean vegetable company, adopts a multi brand strategy, which is divided according to the quality of ingredients and different price bands.
Hellofesh’s brand, image source: hellofesh

Hello fresh: provide fresh semi-finished food ingredients for consumers in 14 countries such as Europe, America and Oceania, so that they can complete cooking in 30-40 minutes, with an average of $7.49-10.99 per meal; Everyplate: provide more affordable semi-finished food packages for consumers in the United States and Australia, with an average of $4.99 per meal; Greenchef: an American brand acquired in 2018, which provides green organic semi-finished food package, with an average of $9.99-12.99 per meal; Chefsplate: the brand acquired in 2018 provides fresh semi-finished food ingredients in Canada, with an average of $8.99 per meal.

Chubi food launched four levels of care food for people with chewing difficulties.
Source: Chubi food
Xinya food launched holiday packages for the Spring Festival market.
Source: Xinya food
Daxidi adopts the strategy of large single product to create the prefabricated vegetable products in the category of steak, and launched the “baby real 6 whole Chevalier Steak” for the children’s market.
Source: Tahiti
Model innovation
From the perspective of business model, prefabricated dishes can develop from retail model to subscription system. The advantage is that it can increase user stickiness, reduce losses, improve operation efficiency and improve cash flow. For example, when cooking every day, a monthly fee plan for delivering vegetables will be launched. For example, hello fresh differentiated product pricing according to the number of diners and the number of meals ordered per week; Daily cooking launched the monthly fee plan for vegetable delivery.
Source: Hello fresh
Another development direction of the business model is to diversify into related industries. For example, weizhixiang’s future development goal is to develop from prefabricated dishes to “table delicacy solution provider”, and develop brand-new products such as “taste love madness” series high-end hotpot ingredients, “soxiang and taste” series local characteristic delicacies, “weizhixiang workshop” series hotpot bottoms and seasoning bags. For example, Xinya food sells not only semi-finished dishes, but also cooked food, cured meat products, Babao rice, frozen steamed buns, other pastries and other peripheral products in its stores.
For example, hello fresh recently acquired factor 75, a subscription based prefabricated dinner brand. Users can order different quantities of meals every week at prices ranging from $11 to $15, and can suspend or change the ordering plan at any time. In fact, this model is similar to the packages launched by “Dong eat” and “super zero” in China.
The anchor is eating the set meal of factor 75. Picture source: Network

3. On the future competition pattern of prefabricated vegetable industry

At present, the prefabricated vegetable industry is dominated by regional small and medium-sized enterprises, the market concentration is low, and a national enterprise has not been formed. What will happen to the competition pattern of the industry in the future?
In the above, we have classified the companies. Companies in each category have their own endowments. At present, professional and e-commerce have some first mover advantages. Among them, we are more optimistic about the advantages of e-commerce (hereinafter referred to as “Platform party”) brand in future competition. The reasons are as follows:
① . the platform side has the advantage of playing high frequency and low frequency, and has higher purchase convenience; ② . the new urbanization will promote more dense population, and the platform party has its own distribution team. With the superposition of synergy, the scale advantage of the platform will be more obvious; ③ . the platform side also has obvious advantages in the supply chain, with a complete variety of raw materials and more diversified products; ④ The platform has traffic advantages; ⑤ The platform side has data advantages and can carry out more effective product research and development and precision marketing for different groups; ⑥ Advantages of app and other system software development capabilities; ⑦ . the platform side can take advantage of the scale advantage to acquire more brands and carry out relevant diversified expansion, which can increase user stickiness, reduce user development costs, reduce user migration costs, etc. (similar to Hello fresh).
Of course, as long as there is enough space for the potential development of many industries mentioned above, we will also get enough space for differentiation. Moreover, this paper mainly analyzes the to C market. In fact, to B is also a huge market with many development opportunities.
The above is our preliminary analysis of weizhixiang company and the prefabricated vegetable industry. Thanks to all the users who participated in the live broadcast of the venture capital weathervane. If you are interested in the prefabricated vegetable industry or weizhixiang company for further exchange and discussion, please contact our analysts.
Original title: looking back at the weizhixiang IPO for more than a year, what is the core of the future development of China’s Prefabricated vegetable industry| Foodplus depth reread
Author: Ethan; Source: foodplushub (ID: foodplushub), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] foodaily Expo 2022 is the theme and invites 500 + the world’s most innovative brands and 4000 + middle and high-level industry decision makers… In the conference (foodaily fbic 2022) module, we set 2022.05.31-06.02. We’ll see you in Shanghai! related reading

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