China Food

Peking University pork man sells apple vinegar. Tiandi No. 1 is going to have an IPO




After Dongpeng special drink, another beverage IPO is coming.

The investment community – Tiantian IPO learned that the Guangdong securities regulatory bureau of Tiandi No. 1 has issued the acceptance completion letter, and the Guangdong securities regulatory bureau has completed the acceptance of CITIC Securities for the company’s application for IPO and listing on the main board of Shenzhen Stock Exchange. On June 15, Tiandi No. 1 issued a stock suspension announcement, which means that the IPO horn has been officially sounded.

Chen Sheng, founder of Tiandi No. 1, has a legendary life experience. Graduated from Peking University in his early years, Chen Sheng is often called “Peking University pork guy” in the industry. He is a continuous successful entrepreneur. In 1997, he founded Tiandi No. 1 in his hometown Zhanjiang, Guangdong Province, and then swept through the hotels in urban and rural towns in the province. In 2020, he sold nearly 1billion cans, creating the first brand of fruit vinegar drinks in China. In addition, he also founded “No. 1 native pig”, the largest chain brand of native pork in China, and sits on the community fresh brand “meat Lianbang”.

The rise of Tiandi No. 1 has once again proved a truth: any “drinking” business in China is incomparably huge.

From rural areas to Peking University, quit the civil servant post

He’s going to ring the bell for the IPO

In the early 1960s, Chen Sheng was born into an ordinary rural family in Zhanjiang, a coastal city in Guangdong Province. In 1979, when Chen Sheng took the college entrance examination for the first time, he failed. In desperation, his mother had to let him go home to farm. In the hot summer, when he was sweating in the farmland, Chen Sheng deeply felt the hardship of farming and began to study harder.

The next year, after unremitting efforts, Chen Sheng was unexpectedly admitted to the school of economics of Peking University, becoming the first college student in the village. After receiving the admission notice from Peking University, the Chensheng family had a difficult time: how can they make up for the cost of going to university?

In that simple age, the village elders launched a call to mobilize the whole village to donate money to Chen Sheng. The villagers gave you a share and I took a dime out of the cloth bag to collect the expenses. Chen Sheng finally set foot on the green train to Beijing.

After graduating from Peking University in 1984, Chen Sheng was assigned to the general office of Guangzhou municipal Party committee. At that time, the spring breeze of reform and opening up was blowing all over China. Guangdong was the center of the tide of the times, and there were opportunities to get rich everywhere. Unwilling to take the salary of death all his life, Chen Sheng resolutely went into business.

After all, he is a top student in Peking University. Chen has a keen sense of business opportunities. After going to the sea, he sold vegetables and wine. When the domestic real estate market began to rise, he also made efforts in the real estate business. Before the establishment of Tiandi No. 1, Chen Sheng was already the leading real estate tycoon in Zhanjiang.

In 1997, two phone calls from different friends aroused Chen Sheng’s interest in vinegar drinks. On the phone, the two friends coincidentally recommended a vinegar drink that was very popular in southern Guangdong at that time. That year, a leader from other places visited Zhanjiang and ordered a bottle of Sprite and a plate of Shanxi vinegar to drink during dinner. Under the leadership halo effect, this drinking method became popular in southern Guangdong and became all the rage.

Chen Sheng at the other end of the phone felt that there was much to be done about this, so he immediately took action and produced a canned vinegar drink named “Tiandi No. 1” by using the previous wine selling machine.

(picture source: screenshot of Tiandi No. 1 official website)

At that time, the local vinegar beverage already had a certain consumer base. In addition, there was no such beverage in the market. As soon as the “Tiandi No. 1” was launched, it was very popular. It took only three months for Chen Sheng to recover the cost. In the future, it opened up a new beverage track.

In addition to Tiandi No. 1, Chen Sheng also has another well-known identity – Peking University pig killer. After realizing wealth freedom in real estate and vinegar beverage business, Chen Sheng, who was born in rural areas, turned his eyes to his childhood dream – raising pigs.

This is not just feelings. During a visit to the vegetable market, Chen Sheng found that there were few native pork, but pork from abroad could be seen everywhere. After some research, Chen Sheng believes that the trillion dollar pork market is huge, and it is difficult to eat native pork with better meat quality in big cities. On the contrary, the quantity of native pigs in rural areas is high and the price is low, in which there is an inversion of value. Therefore, he decided to create his own pork brand – “No. 1 native pig” came into being, focusing on the medium and high-end consumer market in the first and second tier cities.

In 2016, Chen Sheng contacted a junior brother of Peking University and strongly invited him to join “No. 1 native pig”. This alumnus of Peking University is lubuxuan, the “butcher of Peking University”, who was widely reported by the media in the summer of 2003.

At the gracious invitation of Chen Sheng, lubuxuan left the county archives and returned to the pork industry. A few years later, “No. 1 native pig” gradually became a well-known national chain pork brand. By 2019, No. 1 native pig has opened more than 2000 chain stores in 35 cities across the country.

Today, Chen Sheng’s “No. 1 food” in the breeding industry has expanded from pork to chicken and duck. In addition, Chen Sheng also aimed at the community fresh food retail track, created the “meat union” brand, and obtained the exclusive investment of meituan Longzhu.

Over the years, Chen Sheng has frequently made headlines because of “giving away villas”. Out of his own pocket, he invested 200million yuan to build 129 villas with a total of 258 sets, and gave them to the villagers of Guanhu village, Zhanjiang, his hometown, free of charge. In an interview with the media, he said that he was the first Peking University student to go out of Guanhu village. At that time, the travel expenses to Peking University were all collected by the villagers. This is to repay the kindness and hope that the villagers can live a good life.

Drinks sell 2.5 billion a year and posters are posted all over the streets

But I can’t get out of Guangdong Province

Similar to Dongpeng special drink, Tiandi No. 1 is also a household name in Guangdong.

The most prominent label on Tiandi one is apple vinegar drink. Before the emergence of Tiandi No. 1, vinegar had always appeared as a condiment in China. At first, apple vinegar did not have any advantages. In order to get the product into the market, Chen Sheng came up with the positioning of “the fifth healthy dish, Tiandi No. 1”, which immediately aroused the interest of Cantonese. Less than 10 months after it was put on the shelves, Tiandi No. 1 was sold out in the market.

In terms of channels, Tiandi No. 1 takes the route of “encircling the city from the countryside”, focusing on hotel channels rather than C-end supermarkets and convenience stores. At that time, walking in every county town in Guangdong, no matter which hotel you enter, you can probably see the green poster of “Tiandi No. 1” in a prominent position. This differentiated play has also successfully avoided competition with other peers.

Nowadays, during the Spring Festival, Cantonese dining tables often have “three treasures” — red can Wanglaoji, green can Tiandi No. 1, and gold can JDB.

It is worth mentioning that the enterprise of Tiandi No. 1 is also highly standardized. In the Tiandi No. 1 team, there are 17000 sales teams including dealers, most of which are from rural families. They are put into production after unified training. This measure has attracted the favor of many state-owned assets such as SDIC Chuangyi.

In 2015, Tiandi No. 1 landed on the new third board. At that time, the company’s revenue growth and net profit growth reached 98.79% and 74.8% respectively, hitting a record high.

But it is also a red flag. In 2016, the vinegar beverage market of Tiandi No. 1 in Guangdong Province has become saturated, accounting for 90% of the market share, and the growth began to slow down gradually. To this end, Chen Sheng launched a vigorous “North expansion plan”.

In fact, most domestic beverage brands have been plagued by regional problems. The coconut juice of coconut tree brand in Hainan, Lulu in Chengde, Hebei, and Wanglaoji, a herbal tea in Guangdong, all have distinctive regional characteristics and flavor. While expanding a larger market, they also carry heavy shackles and are often acclimatized.

Tiandi-1 was not spared. Up to now, the company’s “North expansion plan” has not yet borne fruit. Until december2020, Chen Sheng still said in an interview that the market outside the province of Tiandi No. 1 was still in a loss state.

(picture source: Research Report of Anxin securities)

More than that, the offline catering industry has been deeply impacted by the epidemic in the past three years, and Tiandi No. 1 has also been dragged down. Tiandi-1 missed the development bonus of mobile Internet e-commerce channels and relied heavily on traditional offline Hotel dealer channels. The problem was magnified under the epidemic, and the revenue and profit continued to decline.

According to the company’s annual report, from 2019 to 2021, the revenue of Tiandi No. 1 was RMB 2.585 billion, RMB 1.899 billion and RMB 1.817 billion respectively, with revenue growth rates of 22.37%, -26.52% and-4.33% respectively; The net profit attributable to the parent company was RMB 382million, RMB 251million and RMB 255million, and the growth rate of net profit attributable to the parent company was 11.11%, -34.23% and 1.64% respectively.

In addition, Tiandi No. 1 is often criticized for its single category. Although the company has been established for many years, what we remember is an apple vinegar drink. For this reason, Tiandi No. 1 launched three kinds of drinks “Chongfeng No. 1”, “Baicao No. 1” and “Bama No. 1” in 2012, aiming at the functional beverage market, fruit juice beverage market and purified water market respectively, but the effect is not ideal. Chen Sheng even thought about establishing a joint venture with Huiyuan fruit juice, which was deeply in the debt crisis of 10 billion yuan in 2019, to alleviate the embarrassment of the single product category under Tiandi No. 1, but he ended up with nothing.

Today, only “Tiandi No. 1” and “Bama No. 1” products are left on the company’s official website. In the 2021 annual report, “Bama No. 1” was classified as other options, accounting for only about 4.4% of the total revenue. “Chongfeng 1” and “Baicao 1” were announced to be discontinued in 2018. Go around, it is apple vinegar that makes money.

(annual report of Tiandi No. 1 in 2021)

Since its establishment, Tiandi No. 1 has gathered a number of investment institutions behind it, such as Shenzhen Venture Capital, Haifu industrial fund, Lianchuang capital, Jiangsu high tech industrial investment, etc. In February, 2021, Tiandi No. 1 won the targeted additional issuance of RMB 300million from the central enterprise poverty alleviation and the state-owned investment corporation.

In order to deal with the brand aging crisis, Chen Sheng often has a masterstroke in marketing. On the 520 day of this year, Tiandi No. 1 launched the “jealous Festival” and proposed a paid holiday to let employees go home to have children. As soon as the news came out, it immediately appeared on the microblog and attracted a lot of praise.

Quietly, Tiandi No. 1 is 25 years old, and this old brand is trying to squeeze into the young vision.

Here the rich are born in batches:

“Drinking” is an unimaginable business

Any “drinking” business in China should not be underestimated.

In May, 2021, Dongpeng special drink was listed in a shares, becoming the first share of functional drinks. This is a company that almost faced bankruptcy, but rose in the small to inconspicuous segment of energy drinks. After listing, Dongpeng special drink rose sharply in a month, and more than ten trading boards were closed. Its market value exceeded 100 billion, creating a miracle in the beverage industry.

China’s “drinking” business is attractive. An indisputable fact is in front of us: those who sell chips can’t compare with those who sell water. In September, 2020, Nongfu mountain spring knocked on the door of the Hong Kong stock exchange. On the day of listing, it soared by 85.12%. Its P / E ratio was higher than that of Moutai, Guizhou. Previously, its market value had exceeded 500billion. Zhong Fuxing, the actual controller of Nongfu mountain spring, once topped the Hurun rich list with a net worth of 100 billion yuan. With a bottle of mineral water, Zhong Fuxing grabbed the throne of China’s richest man.

Let’s talk about Maotai, the king of Baijiu. In August, 2001, Guizhou Moutai landed on the Shanghai Stock Exchange at the issue price of 31.39 yuan. Over the past 20 years, the share price has risen more than 100 times, once standing at a market value of 3trillion yuan. Even at the moment of the downturn, the total market value of Moutai has exceeded 2trillion yuan, making it the “king of shares”.

In the primary market, Yuanqi forest was exposed at the end of last year that it was about to complete a new round of financing of nearly US $200million. Since then, the latest “global Unicorn list 2021” released by Hurun shows that the valuation of Yuanqi forest is as high as 95billion yuan, which is only one step away from the market value of 100 billion yuan. In addition, Xi tea won a financing of 500million yuan last year, with a valuation of more than 60billion yuan, setting the highest domestic new tea drinking record, and is also moving towards a market value of 100 billion yuan.

“There will certainly be another 100 billion level company on this track.” Even at a time when no one is avoiding consumption, there are VC’s rushing to new tea. In February this year, the tea brand book also got an investment of more than 600million yuan with a valuation of 10billion yuan, becoming a new unicorn in the consumption field in 2022.

A VC investor in Shenzhen who focuses on the consumption track frankly said that they have been looking for new targets on the drink track – new tea, coffee and wine. His logic is simple and crude: “eat” can only eat three meals a day, but “drink” can drink several cups a day. In contrast, the drinks track is much broader.

However, the emergence of new drinks has also pushed a number of “aging” old brands such as Tiandi No. 1 to the edge. New tea, sparkling water, coffee, low alcohol liquor, etc. have captured young people’s wallets with their unique taste and rapid SKU iteration, and old brand drinks are struggling.

Not long ago, the old brand “Bingfeng” of soda water queued up in the Shenzhen stock exchange for 11 months, but withdrew the prospectus the day before the expected IPO meeting, and the dream of “the first share of domestic soda water” was dashed. It is not difficult to find from the data in the prospectus that Bingfeng’s revenue growth is slow and faces the challenges of innovation and channels.

Every generation of young people will have their own tastes. For this reason, old brand drinks need to embrace young people warmly. Zongfuli, the female successor of Wahaha, started a drastic reform and brought this old brand to consumers again through a series of operations such as changing endorsements, promoting new products and focusing on marketing; Even Coca Cola has sold herbal tea “Prunella vulgaris” across the border; Coincidentally, Maotai also made a sensation by selling ice cream not long ago.

China has a population of 1.4 billion. What to drink is always an unimaginable business. As you can see, a bottle of mineral water, a can of drink, a cup of coffee and a cup of milk tea easily support the market value of tens of billions or even hundreds of billions. You will never know what the next new species of drink will look like.




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