China Food

With an estimated value of 60billion, how can the number one player of spicy bar get ahead?

“ 
“brand is category” behind marketing.
 ”
In 1998, a catastrophic flood caused heavy losses to soybeans in Pingjiang County, Hunan Province, affecting the soy sauce industry with soybeans as raw materials. Local people switched to flour, combined with the dry flavor of spicy sauce, which gave birth to spicy strips. Pingjiang people liuweiping not only mastered the formula, but also found the wealth password.
Today, the valuation of Weilong spicy bar of “50 cents a bag” he founded has reached 60billion, more than the combined market value of three squirrels, liangpin store, Yanjin store and Laifen.
Under the filter of “addiction” and “nostalgia”, the sales volume of Weilong increases year by year. In 2021, Weilong sold 194000 tons of spicy sticks, which can be converted to an average of more than 530 tons per day.
According to the prospectus, hottie contributed more than 60% of Weilong’s revenue. Why can a company that mainly makes spicy noodles be worth so much money?
If people think of this company when they mention spicy bars, then the above problem is not a problem.
Brand is category
In the consumer industry, there is a simple standard to evaluate the quality of a company’s products, that is, whether it has formed brand power. The three words of brand power seem mysterious, but there is also a popular test method: whether the brand is the category.
For example, when it comes to smartphones, we immediately think of apple; When it comes to electric cars, we immediately think of Tesla. In the food and beverage track, Yuanqi forest successfully binds with bubble water. The strength of Weilong is to establish a consumer mind of “clean and safe spicy bar = Weilong”.
In 2005, CCTV exposed that some spicy strip manufacturers had serious food safety problems, the sanitary environment was extremely poor, and some spicy strips even contained illegal additives. After the exposure of the state-owned media, the number of spicy enterprises plummeted from 2000 to 500 [3].
This seems to be a disaster, but it is actually beneficial to Wei long. Because in the food industry, “leading safety events” is an iron law.
After the clenbuterol incident, Shuanghui became stronger and bigger. After the milk powder crisis, Feihe developed rapidly. The reason is that compared with small companies, industry leaders can better meet safety requirements through upgrading and integrating resources.
Similarly, compared with small workshops, Weilong has advanced fully automatic equipment, which can realize aseptic production. On the other hand, Weilong tore away the labels of “low-end” and “unsanitary” through various fancy marketing.
Weilong uses aluminum foil and aluminum mold to replace the previous transparent packaging. In order to better promote this package, Weilong bumped into apple iphone7.
Weilong has made a series of advertisements that imitate Apple’s style, using technology products to package spicy bars as cheap snacks with a high-end image. In order to cooperate with the spread of online advertisements, Weilong even imitates Apple’s product display style offline, putting spicy bars in glass display cabinets, and directly filling the “forced space”.
In order to better convey the hygiene of Weilong spicy sticks to consumers, Weilong invited Zhang quandan, a “futukang quality inspector”, to enter the factory for live broadcast. From the perspective of Zhang quanegg assembly line workers, the audience was guided to visit the processes of raw materials, production, seasoning, sub packaging, and even R & D and testing, in order to highlight a safety.
Although Wei long and La Tiao have still fallen into a safety storm recently, once the brand power of finished products is established in the hearts of consumers, it is difficult to shake the leading position. Consumers either don’t buy spicy bars at all. Once they want to buy them, they always prefer Weilong.
Hou Lang enters the game
After 2005, another time to change the spicy bar industry is December 10, 2009. On this day, the State Administration of Market Supervision issued the “national standard of spicy strips”, which clarified the production license and management standards of spicy strips.
The popular translation is that spicy strip has been officially corrected. In the past, because there was no standard constraint, spicy sticks were considered by many parents to be junk food at the top of the danger. After the national standard appeared, “eating spicy sticks is no longer afraid of mom’s scolding”.
Spicy bar’s status, like the former Internet addicted youth, has become an E-sports player.
The spicy strip Museum in Changsha and the spicy strip professional class in Pingjiang also came into being.
This makes the market scale of spicy strip bigger and bigger. According to frost Sullivan, the current market size of spicy bars is about 45.5 billion, which is expected to grow to nearly 70 billion in 2026. The growth rate of spicy bars is also faster than that of the whole leisure snack industry: 2016-2021; The growth rate of leisure snacks was 6.1%, and that of spicy bars was 9.4%. From 2021 to 2026, the growth rate of leisure snacks was about 6.8%, and that of spicy bars was 8.9%.
From the production point of view, there is no threshold for spicy strip itself. Its essence is seasoned flour products processed with wheat flour as the main raw material. The production mode of small workshops is popular.
Pingjiang County accounts for one third of the total output value of 60 billion yuan of spicy noodles in China. About this place, there is a saying: “where there is a weather forecast, there are Pingjiang people who make spicy sticks.”
The national standard of spicy food makes safe spicy food traceable. With the prospect of the market, it naturally attracts more competitors, including new snack brands that have been listed and have the advantages of resources and supply chain.
The three squirrels successfully reached the third place in the hot strip popularity list in 2020, only behind Wei long and Yufeng. Another example is Yanjin shop. Although its revenue of spicy bar products in 2019 was only 49.4136 million yuan, it has shouted the slogan of “being the second in China’s spicy bar industry”.
In addition, the new brand spicy prince, which advocates natural health and leads health, is also overweight the spicy bar track, and even the traditional candy enterprise “golden monkey” has launched corresponding products to get a share.
So, did the influx of more competitors have an impact on Weilong?

It’s hard to copy the tap operation

Let’s start with the conclusion: the influx of competitors is increasing, but this has not affected Weilong’s leading position. Weilong is still getting stronger.
From the perspective of revenue, from 2019 to 2021, Weilong’s three-year revenue was 3.38 billion, 4.12 billion and 4.8 billion respectively, and the growth rate of revenue in the three years exceeded 15%, far exceeding the compound growth rate of 9.4% in the spicy strip industry.
From the perspective of market size, frost Sullivan report shows that Weilong accounts for 14.3% of the market share of spicy strips, which is higher than the total market share of 2-5.
This leading position is also more specifically transmitted to the price of spicy bars. According to the prospectus of Weilong, the average unit price of Weilong spicy sticks has shown a steady upward trend in the past three years.
In contrast to those newcomers, Yanjin shop and three squirrels both suffered a decline in revenue and profit in the first quarter.
Wei long and “Tao brand”, represented by three squirrels, show diametrically opposite ideas when doing snack business: Wei long “strong offline, low SKU”, while most Tao brands are “strong online, high SKU”.
Offline channels account for the vast majority of China’s spicy snack food market. In terms of retail sales, the overall market share of offline channels will reach 74.9% in 2020 [6]. In other words, who can seize the initiative offline, who will have a better chance to sell to consumers.
In the past three years, the offline channel of Weilong has been more than 85%. By 2021, Weilong has about 690000 offline sales networks. What is this concept? At present, there are 2876 counties and cities in China. On average, there are 240 outlets in each county and city selling Weilong spicy sticks.
With such a high channel density, you can do one thing. As long as you want to buy spicy strips, Weilong is always around you.
“Taobao brand” is quite different from the beginning. Now the traffic is more and more expensive, making the traffic dividend weaker and weaker. Reflected in the report, it is a higher sales expense rate.
As for sku, at present, Weilong focuses more on spicy bars and vegetable products than other brands. For example, there are more than 1000 SKUs in liangpin store and more than 500 squirrels. In addition, Weilong only promotes one or two new products to the market a year, and the products are more focused.
On one side, Weilong has become a synonym for spicy food. On the other side, Taobao brand’s business is becoming more and more scattered. High SKU will not only aggravate the difficulty of supply chain integration, but also make its own product positioning more vague, making it impossible to occupy the mind.
Epilogue
In fact, there is a simpler logic to the vitality of spicy strip: it makes people feel happy.
In childhood, the more forbidden parents are, the more greedy children will be. When I grow up, I want to eat healthily, and I can’t stop because of my addiction to spicy food. In a sense, spicy strip can be said to be a “soft drug”.
In the words of Huang Hai, an investor in the new consumption field, this is a food that can cross the economic cycle: “people will give up many necessities in bad times, but they will never think of giving up their bad habits.”
Reference:
[1] Weilong prospectus
[2] From the listing of Weilong to see the investment logic of trillion level leisure snack track, Anxin securities
[3] Wei Long’s story has just begun, blue whale Finance
[4] Wei Long’s price rises, who stole your spicy strip freedom? Interface
[5] What did Wei long do right to become a “national snack”? NiuDao Finance
[6] A spicy stick has prized the 100 billion spicy food market, Everbright Securities
Original title: How did Wei long become a synonym for spicy food?
Author: Yan zhangpan; Source: there are several Datavision (id:ycsypl), and the reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);

food people are “watching”

Read the original text

Similar Posts

Leave a Reply

Your email address will not be published.