China Food

The Golden Arowana is becoming the biggest enemy of the sea and the sky

in 2021, golden dragon fish increased its income without increasing its profit, and its net profit fell by more than 30%; Haitian flavor industry’s performance growth hit a new low since its listing, and even issued the slogan of “fighting against adversity”. The leaders of these two respective industries have encountered new “troubles” and began to accelerate the invasion of each other’s positions.

Guizhou Maotai, golden dragon fish, nongnongshan spring and Haitian flavor industry are often ridiculed by investors as “four divine waters”. In the past two years, the “two sacred waters” – Golden Arowana and Haitian flavor industry have begun to invade each other’s positions.

On the evening of March 23 and 24, Golden Arowana and Haitian flavor industry successively released their latest annual reports. In 2021, both “Youmao” and “jiangmao” had a bad time: the golden dragon fish increased its income without increasing its profit, and its net profit even fell by more than 30%; Haitian flavor industry’s performance growth hit a new low since its listing, and even shouted the slogan of “fighting against adversity”.

While consolidating the main business and seeking new growth, these two leaders have chosen diversification. Interestingly, in the new business layout, golden dragon fish focuses on condiments and other businesses, while Haitian flavor industry focuses on grain and oil and other businesses.

From 2021, the attack of Golden Arowana seems to be stronger. In the long run, the Golden Arowana, which seems to be on a different track from Haitian flavor industry, may be the biggest enemy of Haitian flavor industry.

Giant’s “troubles”

In the two sub markets of packaging grain, oil and condiment, golden dragon fish and Haitian flavor industry are the leaders of their respective industries. However, in 2021, the two giants encountered new “troubles”.
First look at the “Youmao” Golden Arowana.
In 2021, the revenue scale of Golden Arowana was 226.225 billion yuan, with a year-on-year increase of 16.06%, which was the highest in the A-share food industry. However, the net profit attributable to the parent company was 4.132 billion yuan, a year-on-year decrease of 31.15%.
Golden Arowana was listed in October 2020. Even if the timeline is extended to 2018, it is the first time that its annual net profit has decreased.
In terms of products, the income of kitchen food including edible oil, rice and flour was 141.979 billion yuan in 2021, an increase of 17.14% year-on-year, and the revenue accounted for 62.76%; The income of feed raw materials and oil technology was 82.515 billion yuan, a year-on-year increase of 13.83%, and the revenue accounted for 36.47%.
The decline in net profit is mainly related to the core product – kitchen food.
Golden Dragon Fish said that due to the large increase in the cost of raw materials, the production and operation cost was higher than that in the same period of last year; The intensified market competition and the factors of weak consumption have greatly affected the sales volume of medium and high-end retail products; With the recovery of the domestic catering market and the gradual recovery of catering channels, the sales proportion of catering channel products with low gross profit margin has increased.
These three factors led to the increase of sales and income of kitchen food, but the profit decreased.
In fact, at the end of 2020 and from March to April 2021, Golden Arowana adjusted the prices of different oils, with an overall price increase of 10% – 15%. However, it can be seen from the fact that the increase of 21.38% of the operating cost of kitchen food is higher than the increase of income that the price increase does not fully cover the rise of costs.
Let’s take a look at the “sauce grass” Haitian flavor industry.
In 2021, Haitian flavor industry realized an operating revenue of 25.004 billion yuan, a year-on-year increase of 9.71%; The net profit attributable to shareholders of listed companies was 6.671 billion yuan, a year-on-year increase of 4.18%.
Since its listing in 2014, this is the smallest year for the performance growth of Haitian flavor industry.
Haitian flavor industry is a product matrix of “one body and two wings”, that is, it takes soy sauce as the main body and oyster sauce and seasoning sauce as the wings. Soy sauce business accounts for about 60% of the main business income, and oyster sauce and sauce account for about 30%. In 2021, the income of soy sauce was 14.188 billion yuan, a year-on-year increase of 8.78%, and the income of soy sauce and oyster sauce increased by 5.61% and 10.18% respectively.
Haitian flavor industry mentioned in its annual report that 2021 is an extremely difficult year, with weak consumer demand, rising prices of various raw materials and vicious competition in community group purchase… “The company is facing unprecedented challenges”.
The growth of the three core businesses is not ideal, and the operating cost is still increasing significantly.
Haitian flavor industry has also raised prices. In October 2021, Haitian flavor industry raised the price of some products such as soy sauce, oyster sauce and sauce by 3% – 7%. However, similarly, the overall operating cost of the company increased by 16.36%, much higher than the increase of operating revenue.
The net interest rate of Jinyu and Haiyu declined in 2021.
If you compare the profit margin of Haitian flavor industry with that of golden dragon fish, you will find that golden dragon fish only makes “hard money”. Therefore, the revenue scale of Golden Arowana is large, but the net profit of Haitian flavor industry is higher.
In terms of revenue, one Golden Arowana is equivalent to nine Haitian flavor industries; In terms of net profit, a Haitian flavor industry is equivalent to 1.6 golden arowanas.
The biggest worry of Haitian flavor industry is that the growth of its core business is not as good as in the past. The trouble with the Golden Arowana is that its low profit margin has been exacerbated in 2021, resulting in a sharp decline in net profit.

Two kinds of business, two tycoons

As for the food around the table, there is a big gap between the profit margin of Golden Arowana and Haitian flavor industry, which is mainly due to the differences between the two business models.
For Haitian flavor industry, high threshold and high gross profit are its moat, but for golden dragon fish, on the contrary, low threshold and low gross profit are its moat.
Haitian flavor industry has a strong channel voice and brand power. It has settled in the way of “payment before goods”. The accounts receivable has been 0 for many years. Moreover, the entry threshold of soy sauce industry is high, and the leading advantage has already appeared.
The threshold of grain and oil industry is low, which is related to people’s livelihood, and the price is naturally sensitive. Therefore, different from the sea and sky flavor industry, Golden Arowana can only rely on large amount and small profit to build its own moat.
Golden dragon fish once said that for the company, the business with large volume and low profit will be a high competitive barrier, which can reduce the opportunities of other potential competitors to enter the industry. The reason is very simple. If an industry has a high profit margin, it will attract more competitors to join.
That makes sense. Many industries are not able to see a profit margin. Baijiu, a highly profitable liquor industry, has been doing a lot of capital in recent years. For example, Guo Guangchang has been carrying on the “two Baijiu” listed companies. Guo Guangchang also said earlier that industries with low gross profit are not suitable for Fosun, and enterprises should do projects with high gross profit.
From this point of view, it is better to do soy sauce business than to do grain and oil business, and it is also better to sell nongnongshan spring by the richest man, Zhong Shenzhen. The gross profit margin of the packaged drinking water of nongnongshan spring exceeds 60%, which is several times that of golden dragon fish.
The Guo family behind the golden dragon fish is another kind of thinking – to maximize the amount and profit can also form a strong competitiveness. For decades, Guo Henian has been the richest man in Malaysia for 20 years.
Not only do we need large quantities and small profits, but also “eat dry and squeeze clean”.
The business and products of Golden Arowana seem complicated, but in fact, they are closely related.
After primary processing, agricultural and sideline products in the upstream will produce primary processed products such as crude oil, brown rice and clean wheat, as well as by-products such as soybean meal, rapeseed meal, rice bran and bran; By products can be directly turned into feed materials; The primary processed products will produce edible oil, rice, flour and other products through intensive processing. Through the oil technology process, oil technology products can also be produced.
This is the so-called “eat dry and squeeze clean” of Golden Arowana. Almost all of them have become “agricultural products”.
However, in 2021, the myths of “sauce grass” and “oil grass” have faded.
In January 2021, the shares of Golden Arowana and Haitian flavor industry hit new highs one after another. Golden Arowana set a new closing price of 145 yuan / share, with a total market value of 786.131 billion yuan; Haitian flavor industry closed at 214.58 yuan / share, a record high, with a total market value of 695.3 billion yuan.
However, as of the closing on March 25, 2022, the total market value of Haitian flavor industry was 371 billion yuan and that of golden dragon fish was 263.3 billion yuan. Compared with the high point a year ago, Haitian flavor industry fell by nearly 47%, while Golden Arowana fell by nearly 67%.
Even so, Pang Kang, chairman of Haitian flavor industry, and Guo Henian, behind the golden dragon fish, are still the two super rich.
On the Hurun global rich list released on March 17, Pang Kang, 66, has a wealth of 145 billion yuan and is still the “richest man in the soy sauce industry”; Guo Henian, Malaysia’s richest man at the age of 99, has a wealth of 105 billion yuan.
Pang Kang, who sells soy sauce in China, has a lot more wealth than Guo Henian, who does global business.
The market penetration of soy sauce has been at a high level, and the competition in the stock is more intense. The grain and oil industry has entered a period of slow growth, with brands close to stock competition and low profit margin. Haitian flavor industry and golden dragon fish are trying to expand their original business leading advantages, while exploring diversification to eliminate their “troubles”.

Invade the opponent’s position

Haitian flavor industry and Golden Arowana may not expect that one day they will invade each other’s positions. At present, the attack of Golden Arowana is stronger, while Haitian flavor industry seems to counterattack more in defense.
Golden Dragon Fish said: “if an industry has a high profit margin, it will attract more competitors to join.” While confirming its moat, Golden Arowana also practiced this sentence and entered the condiment industry with higher profit margin.
In the record of investor relations activities at the end of December 2020, golden dragon fish said that the company has entered the seasoning and yeast industry, and will also enter related fields such as frozen dough and central kitchen.
Golden Arowana believes that the condiment industry has great potential, so it regards condiment as a very important new business.
By November 2021, the golden dragon fish said that in addition to the original sesame oil and pepper oil, the condiment products now mainly include soy sauce, vinegar, oyster sauce and cooking wine. Among them, oyster sauce and cooking wine are temporarily processed and produced on behalf of others, but with the completion and operation of the company’s new factory, condiment products will be mainly produced by themselves.
About soy sauce, golden dragon fish and China Taiwan famous brand pill company cooperation. With regard to vinegar, Golden Arowana launched Shanxi aged vinegar with the brand of “Liangfen”.
Golden Arowana has made rapid progress in condiment business.
Only two or three months later, golden dragon fish said that the company’s Wanzhuang soy sauce phase II project in Taizhou was under preparation, and the production capacity would double after completion. At the same time, we are preparing to build a factory in Yangjiang, Guangdong Province to produce Cantonese soy sauce. In the future, we will also adopt dual brand and dual strategy to develop soy sauce business. As for vinegar, Liangfen vinegar factory in Shanxi is also expanding its production.
Looking at the posture of Golden Arowana, Haitian flavor industry may be more anxious and anxious.
In addition to the “one body and two wings”, Haitian flavor industry has diversified in recent years and has entered the market segments of vinegar, chicken essence, cooking wine and so on.
In the 2021 annual report, Haitian flavor industry mentioned a sentence worth tasting: more big brands and enterprises participate in the competition in the condiment industry, making the competition among enterprises more intense.
The word “more” must include the Golden Arowana. The main business has fallen into the bottleneck of growth. Unexpectedly, the pace of food grabbing by bigger giants is so fast.
In 2021, Haitian flavor industry issued 9 “foreign investment announcements”, which is the most such announcements since its listing. Its investment business is mainly condiment business, followed by edible oil business.
In short, while consolidating the main business for “defense”, Haitian flavor industry also further diversified for “counterattack”.
In January 2021, Haitian launched the edible oil brand “oil commander”. Meanwhile, on the e-commerce platform, Haitian flavor industry has also quietly launched edible oil, rice and other products.
In the investor survey in March 2021, Haitian flavor industry mentioned that edible oil products are a good supplement to Haitian product structure, but edible oil products have just been listed, and specific planning and development still need some time to layout.
In the 2021 annual report, Haitian flavor industry did not mention the latest progress and sales data of grain and oil business at all, but was classified into “other” together with vinegar, chicken essence, cooking wine and other businesses. In 2021, the revenue of “other” categories was 2.211 billion yuan, a year-on-year increase of 13.37%, with a rapid growth rate. However, it was mainly driven by vinegar, cooking wine and other products.
At the 2021 annual performance presentation meeting held on March 25, Haitian flavor industry said that in the face of the rapidly changing market and diversified consumption demand, the company will continue to accelerate the innovation of products, and will gradually make efforts in cross-border products such as rice noodles, grain and oil, hot-pot/" 22375 rel="nofollow" target="_self">hot pot seasoning and so on.
Similarly, golden dragon fish did not disclose the specific sales data of condiment business in its 2021 annual report, but classified the condiment business such as soy sauce, vinegar and oyster sauce into kitchen food.
Judging from the actions in 2021, the Golden Arowana has a stronger offensive, and the Haitian flavor industry is more defensive.
In the long run, Zhongju hi tech and Qianhe flavor industry, which have been “manipulated” by Haitian flavor industry for many years, may not be enough to fear, while the “giant” Golden Arowana originally outside the circle seems more terrible and is likely to become the biggest enemy of Haitian flavor industry.
As of March 2021, golden dragon fish has more than 1.1 million end customers in China, covering all cities and counties in China. Golden Dragon Fish said that the channel overlap of condiments and grain and oil is very high, and the company’s condiment business has made rapid progress in the catering channel. After the implementation of the central kitchen project, the condiment business is expected to be promoted faster.
Haitian flavor industry is in a difficult situation. In his annual report, he mentioned that in order to cope with the changes of the external environment, “the company launched the call to fight against adversity, requiring all employees to look inward, turn their blades to themselves, and tap potential and increase efficiency through various measures…”.
Interestingly, the Golden Arowana has repeatedly “shown weakness” to the Haitian flavor industry: “we have no plan to surpass Haitian in condiments, because Haitian has established and occupied a huge market share in the existing market.”
However, after the “courtesy”, the Golden Arowana also secretly said: “we believe that our high-quality products can occupy a place in the condiment market.”
How big is “a place”, which sounds meaningful.
However, the biggest enemy may often appear in the lowest posture.

Author: Lei Yanpeng; Editor: Liu Xiaoying; Source: city boundary (ID: ishijie2018), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] in line with the original intention of providing the whole value chain and one-stop industrial innovation services for the industry, foodaily Expo 2022 (2022.05.31-06.02, Shanghai) is further upgraded. In addition to the upstream and downstream of the food industry, it also covers and gathers multiple resources such as e-commerce, social media, traffic, channels and capital, aiming to bring you an annual innovation feast. Here, products, content, technology, marketing and other aspects related to food & brand innovation will be presented in the form of “professional exhibition + innovative content + interactive experience”, breaking through and differentiating in the consistent form of industry exhibition.
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