Today, Yizi, a snack giant with Oreo, xuanmai and other products, shows that it will grow faster in the next 10 years.
Yizi expressed this determination at today’s 2022 investor day event. According to the latest announcement, Yizi has set its long-term organic net income growth target at 3% – 5%, which is higher than the previous performance guideline of more than 3%. The company also expects that the adjusted earnings per share on the basis of fixed currency will maintain a high single digit and gradually increase free cash flow of more than $3 billion in the long term.
In addition, Yizi also announced the divestiture of some businesses, and one of the planned divestiture brands, “Lotus”, also has products for sale in China. Next, let’s have a look.
Focus on chocolate and biscuits
The organic net income excluding exchange rate and M & A factors is a financial index that Yizi attaches great importance to. In 2021, Yizi’s total revenue was $28.72 billion, of which the organic net revenue increased by 5.2%, and the sales volume and pricing contributed 2.6 percentage points to the latter respectively.
“Our competitive advantage in the market and our strategy of focusing on the leading position of global snacks make us confident in our future revenue and profit growth ability.” Dirk Van de put, CEO of Yizi international, said today that based on Yizi’s position in the category, favorable market portfolio and the power of iconic brands, the company is ready to achieve stronger growth in the next 10 years.
It is reported that Yizi will continue to focus on growth, implementation and culture as the three pillars of its strategy, invest in differentiated marketing and sales capabilities, and strengthen the local priority operation mode to further empower employees and promote the growing culture. In addition, Yizi also said to promote sustainable development as the fourth pillar of long-term growth strategy.
Dirk Van de put, CEO of Yizi International (historical materials)
The growth of multinational companies with various brands is always inseparable from the adjustment of product portfolio. So, what is Yizi going to do?
According to the latest announcement today, Yizi made it clear that it is reshaping its product portfolio. Its long-term plan is to accelerate growth and bring 90% of the company’s revenue through chocolate and biscuits (including baked snacks). The snack giant believes that chocolate and biscuits are attractive in both developed and emerging markets and can stand the test of the market. They have great room to improve penetration and per capita consumption.
Yizi also pointed out today that in the future, it will expand high growth channels on the basis of existing distribution channels, and use its iconic brands to establish a multi category leadership position and strengthen its influence in the core categories of major markets.
It is worth noting that Yizi made it clear today that it will continue to “buy”. Yizi said that as it continues to reshape its business portfolio, the company will create value through organic growth and targeted acquisitions. According to reports, the focus of future acquisitions is to fill their own geographical gaps and expand to less representative market segments and price bands; The purpose of the acquisition is to expand its influence in chocolate, biscuits and baked snacks.
According to statistics, since 2018, the eight acquisitions completed or announced by Yizi have increased its revenue by US $2 billion a year, and the average growth rate of relevant acquisitions has reached a high single digit.
Peel off the “Lotus” mint
Xiaoshidai also noticed that Yizi also announced the stripping plan. The company pointed out today that after a strategic evaluation over the past year, Yizi will spin off its chewing gum business in developed countries, and announced its intention to spin off the “divide the global halls business” globally.
“We will continue to operate other candy brands and products, as well as the chewing gum business in emerging markets.” Yizi said today. According to the company’s data, Yizi’s current candy brands mainly include clorets, halls, Maynards bassetts, sour Patch Kids, strike and Trident.
In order to realize the above growth strategy, Yizi also announced today that it will invest more than $1 billion to become a snack leader in the field of digital commerce. The goal is that digital channels will contribute 20% of revenue by 2030, up from 6% in 2021.
So, what is the impact of Yizi’s latest announcement on the Chinese market? Although Yizi didn’t mention it at the same time today, in March this year, the senior management of the company reiterated that there are huge growth opportunities in the Chinese market.
In the field of chewing gum, Yizi started from scratch and ranked second in the category in nine years.
He said that in the Chinese market, Yizi’s financial formula is very clear, driven by sales and revenue growth, accompanied by higher gross profit margin and operating revenue growth than revenue growth.
For the Chinese market, Yizi plans to increase its product portfolio and brand penetration in the field of biscuits and chewing gum. At the same time, it will use market channels to reach new consumers and enter Yizi’s blank market in China, such as the field of baked snacks. Fan Ruisi described entering the bakery dessert and cake market as the “third driving force” for future growth in China.
Last November, Yizi China signed and reached a strategic cooperation and investment agreement with bakery Enxi village industry in Shanghai. Yizi China will make a minority equity investment in Enxi village industry, which is also the first time Yizi has invested in Chinese local food enterprises.
Now it seems that Yizi’s statement on China coincides with the newly announced strategic direction of global growth today. As for the chewing gum business that will be stripped off in developed countries, because Yizi has stressed today that it will not affect its emerging markets, xuanmai will certainly continue to sell in China.
In addition, for “halls”, which Yizi intends to spin off globally, the data show that the product has long been introduced in China. Xiaoshidai saw on an e-commerce platform today that the main product of “Ho’s” is mint candy, which is produced and imported from Thailand. It has three flavors (above). The specification is 140 grams and 50 capsules, and the price is 15.80 yuan.
Although the “Lotus” brand has a certain popularity in China, it does not seem to be the focus of Yizi’s business in China. The company’s official microblog shows that the last release of “Lotus” brand information can be traced back to 2019.