after juewendian, the next step in the standardization of halogen flavor.
Text: he Qianming, Lu ran
Source: latepost (id:post)
In 1986, a special interview was held in Hunan. The interviewer was Professor Peterson, an agricultural expert from the Federal Republic of Germany (West Germany at that time), and the interviewer was a university graduate who applied for the aid project of “developing Hunan fruit and vegetable processing experimental demonstration” of the European Community (the predecessor of the European Union).
Among the interviewees, Shan Yang, a 23-year-old university graduate from Youxian County, Hunan Province, passed the examination and was selected to go to the Institute of Agricultural Chemistry and food technology of the National Research Council of Spain for exchange and study. There is a vast amount of knowledge about food technology. Among them, Shan Yang caught a small matter that is closely related to his hometown, Hunan: Spain is also rich in Citrus like his hometown, but the local citrus processing and production chain is very professional and standardized, making Spain the world’s largest citrus exporter.
With abundant simplicity and enthusiasm in that era, Shan Yang chose a direction for his scientific research life: Research on citrus processing.
From 7 people at the beginning to cooperating with a local citrus processing enterprise in Hunan. In 2021, Shan Yang, who has been elected as an academician of the Chinese Academy of engineering, has been studying this field for 36 years. The industrial production of Citrus in China has already embarked on an economic, efficient and highly standardized road in the past 36 years. By 2019, citrus will surpass apple and become the largest fruit exported by China.
Citrus is no longer just a fresh fruit that must be sold out within three months, or it will be overstocked and rotten. It is an industry that includes orange juice, canning, extracting essential oil, pectin and other products.
Resource recycling, raw material storage (freezing) technology and access to global certification standards are the basic requirements for the standardization and industrialization of citrus production.
Academician Shan Yang, 59, found another stage goal besides citrus, and applied the standardization of fresh food processing to a place closer to the stomach of Chinese consumers. He chose Luwei and also cooperated with a local company in Hunan.
On May 19, Juewei food held its annual general meeting in Changsha, and Shan Yang sat on the scene. Daiwenjun, chairman of Juewei, announced the official unveiling of academician Shan Yang’s workstation. Academicians of the Chinese Academy of engineering are the authority in the field of applied research. Each academician can only choose one enterprise to settle in the academician workstation.
Standardization is the only way for food companies to pursue scale competition.
The best food companies in the world are those that make standardization to the extreme. From McDonald’s to Coca Cola, standardization enables these companies to provide food without any deviation in taste anywhere in the world, and bring scale and expansion through strong production efficiency. The unified taste represents unlimited market space.
However, standardization has always been the most difficult problem for Chinese food: the cooking process is complex and it is difficult to keep fresh. Compared with the Internet platform business, which monopolizes the industry through capital and technology, the replication growth of catering relies more on the traditional store opening mode.
In the whole catering market, the taste of leisure marinated food is fixed, which may also be the most easy to start the standardization of Chinese food.
Better standardization is also a necessary condition for Juewei group to realize its expansion ambition.
After the outbreak of the epidemic, many large catering enterprises expanded against the trend, such as Haidilao, which opened more than 500 stores, but today, two years later, many fewer continue to expand.
At the annual general meeting of shareholders, daiwenjun, chairman of Juewei, announced that under the premise of financial stability and system stability, the company would continue to promote the company’s store opening strategy, maintain the original plan of opening 1000~1500 stores this year, and “will timely improve the pace of store expansion”. If it is successfully opened, the number of Juewei stores will be close to 15000 this year.
This will be an overall transformation. It will be more difficult to optimize a series of links from upstream raw materials to taste, processing, refrigeration, transportation, preservation and store sales. Juewei group faces great challenges. Whether it succeeds or not, it will become an important experiment in the standardization and scale of Chinese food.
Every link needs to improve efficiency
Zhou Heiya and Juewei, a bittern company with duck by-products as the core, spent more than 80% of the cost on purchasing raw materials for fresh products such as duck neck, duck paw, duck clavicle, duck intestines, duck wings, etc.
Last year, Juewei sold 142000 tons of halogen products. If the raw materials were cheaper by 1 yuan per kilogram, 280million yuan could be saved and the profit could be increased by nearly 30%.
Like soybeans and pork, the price of these raw materials will fluctuate due to various factors, which will directly affect the profit space of downstream enterprises and promote the change of industry structure.
In 2018, in the second year of Juewei’s listing, the net profit attributable to the parent company increased by nearly 30% to 640million yuan, surpassing Zhou Heiya for the first time and becoming the most profitable company in the bittern industry.
Zhouheiya said in his annual report that the rising cost of raw materials had dragged down profits. Sunhongliu, chairman of Jiangsu wuxiangju food, told the media that from the second half of 2017 to the end of 2018, the price of duck neck and other raw materials rose by 30%~40%.
Juewei food with more stores and larger purchase volume has more bargaining power. In 2018, both Zhou Heiya and Juewei food purchased duck neck and other raw materials from Yike food. Juewei purchased 31000 tons, at rmb1392 per kilogram, which was 1 yuan cheaper than the 16000 tons of Zhou Heiya.
Juewe mainly relies on centralized procurement to negotiate with upstream suppliers. In 2020, Juewei purchased 113000 tons of duck by-products, about half of which were duck necks, and more than 95% were purchased uniformly.
In addition, Juewei also invested in meat duck enterprises to reduce supply chain risks, such as Inner Mongolia Saifeiya agricultural technology development company, which specializes in meat duck breeding, breeding and processing.
In the food processing industry, raw materials will also affect the profit margin through another way: the taste and flavor of finished products. In order to ensure the taste of the finished French fries, McDonald’s will screen the raw materials according to the length and starch content of the potatoes.
In the bittern industry, raw materials have a greater impact on the cost, not only on the quality of raw materials, but also on storage and transportation. The breeding farms that supply raw materials on a large scale are concentrated in a certain area, while the processing plants of bittern are close to the consumer market in order to quickly distribute finished products.
Quick freezing storage and cold chain transportation of raw materials are the only methods, but they will inevitably affect the meat quality. How to improve the quality of raw materials in the current industry situation is one of the research focuses of Juewei’s newly established academician workstation.
It is difficult to standardize the taste
Large scale food companies will require uniform tastes, so that consumers can form a fixed taste expectation and induce repeated consumption. Especially for addictive food.
Coca Cola uniformly produces Cola puree in the United States, then transports it to concentrate plants around the world to make concentrate, and finally transports it to bottlers for water, sugar, gas and canned production. Except for different water quality, different sugar standards and different local health supervision requirements in different regions, Coca Cola tastes the same. McDonald’s and KFC not only have a fixed recipe for French fries, but also have a unified frying time each time.
In the bittern industry, the “puree” that determines the flavor is bittern, but it is difficult to standardize like Coca Cola: according to the Juewei prospectus, at least 10 spices are used for the bittern duck neck, which is usually wrapped together according to the formula.
Although the proportion of raw materials can be strictly controlled during the halogen process, it is difficult for them to accurately control the taste – spices from different batches and places of origin will have different tastes. Just like the upstream of most food chains in China, spices cannot be unified.
Over the past years, Juewei has been trying to standardize and set the production place and sunshine time requirements for spices. For example, the altitude of Zanthoxylum bungeanum is 1500 meters and the annual sunshine is 2600 hours. However, there are still differences in the brine.
In addition, the determination of the flavor of the brine mainly depends on experienced masters, and the best flavor time of different spices is different, so it is difficult to find a standardized brine formula. In the bittern industry, some companies have tried to make spice into powder to make bittern, but the result is not ideal. At present, Juewei is exploring plant extraction technology, extracting flavor from spices and quantitatively applying it to bittern flavor.
This is a technology widely used in the field of coffee. Soluble compounds in coffee include fruit acid, caffeine, lipids, melanoids, carbohydrates and plant fibers. Different flavor substances can be extracted from coffee beans at different extraction times. Although the final taste of coffee varies according to the production area, baking and production, the tens of thousands of store chain coffee enterprises such as Starbucks can basically unify the taste.
Still in the stage of mechanized production
60% of employees are on the production line
In 2010, daiwenjun, the founder of Juewei duck neck, and others applied for the patent of “a complete set of equipment for mechanized production of halogenated food”, describing a complete set of mechanized production equipment, including a cleaning tank that uses the waste heat of a steam boiler to melt ice, a belt conveyor for conveying the materials to be halogenated, a steam heated sandwich pot, a machine for screening and spreading halogenated food, etc.
They said in the patent that this invention can change the halogen production from manual operation to mechanization, and improve the production efficiency. From the original two workers can operate one halogen pot to 3.5 pots, the efficiency is increased by 3.5 times.
Although the efficiency has been improved, the halogen products industry is still in the primary stage of mechanized production, and the processing process is still driven manually.
By the end of 2021, Juewei has a total of 4853 employees, nearly 60% of which are in its 19 production bases, with an average of more than 100 employees in each base.
In contrast, many food production plants, such as some steamed dumpling production lines of Chia Tai Group, have been completely unmanned. They are all automated from mixing noodles to stuffing to packaging.
People on the production line are not only the costs that are difficult to reduce during expansion, but also the factors that are difficult to standardize and the risks that are difficult to control in bittern production. It is one of the research topics of Juewei academician workstation to promote the halogen industry from mechanization to automatic production and form a replicable factory template.
It is understood that Juewei also plans to establish a clean production workshop. In the beverage industry, there are clear cleaning requirements for the filling area, but there is no unified requirement for the halogen products industry.
Distributed production base and cold chain
The core competitiveness of the bittern industry lies in how to send the fresh bittern from the production base to the stores and sell it to consumers. It is not a problem when the bittern is still a roadside stall.
Stores are opened in residential areas or around restaurants and other places where consumers live. The amount of bittern produced each time is not large, and it is not a problem to sell it in a fresh state. But if you want to scale up, you have trouble.
It is a completely different business logic to open one store to sell stewed flavor and to open 100, 1000 or 10000 stores to sell stewed flavor. Teacher Fu can be a store with a good reputation, but if you want people with less experience to open a store, so that the production is efficient and the cost is lower, you must focus on mass production, and how to send the bittern fresh-keeping to the store has become a competitive breakthrough.
Under normal circumstances, the shelf life of stewed food is 5 days at 0 ℃ -4 ℃, and doubling the temperature will shorten the shelf life by half. At present, there are two common packaging methods to extend the shelf life of bittern flavor. One is vacuum packaging. The food can be kept fresh for 90-180 days by putting it in an airtight packaging container and pumping out the air. However, the residual oxygen level in the packaging is difficult to control. Some packaging needs high-temperature instantaneous sterilization, resulting in a decline in food flavor.
The other is modified atmosphere packaging, in which inert gas is filled into the packaging, and a certain proportion of nitrogen and carbon dioxide mixed gas is filled into the packaging to block the infiltration of oxygen, so as to slow down the propagation of microorganisms, extend the shelf life to 5-7 days, and have less flavor loss. The problem is that the cost is high.
Zhou Heiya, with a higher price, mainly adopts modified atmosphere packaging, accounting for nearly 90% of its sales. Juewei, which is more cost-effective and whose unit price is more than 30% cheaper than zhouheiya, applied for the modified atmosphere packaging patent in 2013, but still sells in bulk – more than 95% of the products sold last year were in bulk.
The way to keep Jue Wei fresh is to shorten the delivery time from the base to the store. The most direct way is to build the production base near the consumer market and physically reduce the delivery distance. At present, Juewei has 19 production bases in normal operation nationwide, and two more are under construction, with a distribution radius of 300~500 km, supplying 13000 stores.
At the same time, Juewei also controls the order volume and transportation process, and requires stores to reduce stock up and improve the turnover efficiency of goods according to the world order. In 2008, juewe began to build its own cold chain distribution system, aggregate third-party cold chain resources, conduct digital management, ensure stable delivery every day, and quickly deliver brine products to various stores. The goal is to sell them within 24 hours after production.
Cold chain transportation also has limits. If the store is far away from the production base and the delivery time is long, Juewei food can only stop the pace of opening the store and consider whether to invest in establishing a new production base, or work hard on preservation, extend the preservation time, and strive for time for long-distance distribution.
How to standardize management
In the snack food industry, people spend a limited number of times in a fixed time, and the core growth comes from covering more people.
Juewei said in the prospectus that the company aims at “impulsive purchase”, that is, young users may stop to buy some when they see a store on their way to the mall or home. The store is not only a consumption channel, but also the core of building a consumption scene.
Chain brands above China’s ten thousand stores are all franchised, and Juewei is no exception. How to open more stores and manage them well is the last step of the business model.
The franchising model can find more responsible store managers – it is difficult for employees employed by large companies to be as responsible and try their best to solve business problems as shopkeepers funded by themselves. But shopkeepers sometimes violate the brand norms in order to make more money now, which will damage consumers’ trust in the whole brand. The food safety problem is particularly serious. When franchise stores use fake goods or sell expired food, it will have an irreparable impact.
To this end, some chain brands have studied many ways. For example, the franchisee is only responsible for the operating costs of renting houses and employing people, and the management and supply are all in the charge of the franchisee, so as to minimize the uncertainty of the franchisee.
Zhou Heiya, who has long insisted on its own stores, also opened its franchise in the early stage of its business. According to Zhou Fuyu, the founder of Zhou Heiya, “opened 11 stores at one go and quickly earned more than 200000 yuan, but fakes are flying everywhere and the food quality is difficult to control”. It was not until 2019 that Jiameng was allowed again, but the products sold are mainly packaging.
Juewei values bulk sales, which can attract price sensitive consumers and give franchisees operating space. In juewe’s franchising mode, juewe is responsible for producing brine and then delivering it to the store. The franchisee sells the goods and is responsible for its own profits and losses. Then, we must rely on a series of standardized measures and supervision measures to reduce the risk of joining.
A fundamental principle is that when the brand’s own factory achieves the highest quality and price, small shopkeepers will not look for cheaper goods. When the food is generally sold within the retention period, the shopkeeper will not sell expired food.
The greater risk comes from the whole industry. Big brands can control the risks of franchisees as much as possible, but it is difficult to control the risks of other participants in the industry. For example, the CCTV 3.15 evening party this year exposed that some enterprises’ pickled cabbage production was unsanitary, which had a huge impact on the whole pickled cabbage processing industry and downstream instant noodle enterprises. As a result, Master Kong’s share price fell by more than 10%. Once there is negative news about Luwei, juewe, as the largest company, will also be impacted.
When Juewei was listed in 2017, the food safety of smaller halogen products workshops was listed as an important risk factor. In order to better expand and reduce the risk of uncertainty, Juewei plans to take the lead in establishing the standard for halogen flavored bulk food through the establishment of the academician workstation.
Need more extreme standardization
Bittern is a rare large-scale category in Chinese food. Since the 1990s, companies with more than 1000 stores have been born. Although there are personal factors of the founder, what is more important is the promotion of the times.
From 2000 to 2021, the per capita disposable income of China’s urban residents has increased nearly seven times, and the consumption of stewed food and other optional food has caught fire, and the market space has become larger.
In addition to the perfect construction of China’s cold chain logistics system, from 2011 to 2019, the number of road cold chain transport vehicles in China increased nearly six times to 215000.
The market space is larger and the infrastructure is continuously improved. Juewei duck neck, zhouheiya, Ziyan Baiwei chicken, etc. are becoming larger, turning the bittern production from manual production to mechanized mass production. In a less standardized industry, thousands of stores have been opened, turning the small workshops into a listed company with a revenue of billions of yuan.
The concentration of the whole bittern industry is not high. According to frost Sullivan’s research data, the top three shares of the industry last year totaled 17%, and the largest Jue Wei accounted for 9%. More are individual stores. Juewei believes that there is still room for growth. In addition to the impact of the epidemic, the accelerated integration of catering enterprises and the price reduction of commercial real estate are opportunities for expansion.
After the expansion, the new stores will be presented to consumers, but after each store, the whole system will change from raw materials to production and then to fresh-keeping transportation. According to the statement of Juewei’s general meeting of shareholders, the capacity utilization rate of Juewei’s multiple production bases exceeded 90%, and even reached 100% in some time periods.
According to the previous research report of Tianfeng securities, Juewei can open up to 38000 Stores – 25000 more in China’s market space. At present, McDonald’s is the only single brand with more than 38000 stores in the world. If Juewei wants to reach this number and operate effectively, it will depend on whether the standardization of bittern can really go further.
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