In 2020, condiments, small household appliances, and online food brands are among the three most popular tracks in the large consumer industry. Behind the 334.5 billion market, what is the condiment market pattern in 2020?
Compound condiment track, Beacon again, what are the opportunities for venture capital? As a channel-driven FMCG, what new features will its channel and supply chain present?
In this paper, we are mainly divided into two parts: Firstly, from four perspectives, the overall market pattern and changes of condiments are outlined. The focus will be on the exploration of opportunity points, digging deep into the subdivision circuit of compound condiments, and analyzing the investigation points of capital on channels and supply chains.
01
"Sour, sweet, bitter, hot and salty" under the 100 billion market。
Condiments began to be marketized in the late 1990s, and the capital heat climbed in 2016 and 2017, and this year, it joined the three popular tracks in the large consumption field with online food brands and small household appliances.
According to the data of Zhiresearch Consulting, the scale of China's condiment market in 2019 has reached 334.5 billion yuan, with a compound growth rate of 7.5% in eight years, and the Prospective Industry Research Institute predicts that it is expected to exceed 400 billion yuan in 2020.
This is already a large market of 100 billion, according to the China Condiment Association, condiments are mainly a kind of consumer goods widely used in diet, cooking and food processing, and have the role of harmonizing taste, odor, fishy, smelling, greasy, fragrant, fresh and so on. Generally can be divided into two categories: single condiment, compound condiment.
Condiments are outstanding in the capital market, and the hot secondary market is particularly obvious, mainly showing three major characteristics:
1) At present, there are A total of 27 condiment-related listed companies in A-shares, and their total market value is rising all the way. According to Wind data, as high as 919.1 billion yuan in September 2020, up 71% from the end of 2019. 2) The market value of the leading enterprises, Haitian flavor industry more than 500 billion, Torch high-tech, Angel yeast, Tianwei food and other 11 companies ranked 10 billion echelon. 3) The valuation premium rate is very high. Shanghai Securities data show that in the first half of 2020, the valuation premium rate of condiments in the food and beverage subsection has always remained above 400%, which is significantly higher than other subsections. The progress of the secondary market has also enhanced the attention of the primary market.
In the primary market, Qingtong Capital investigated 100+ investors in the field of large consumption and found that capital generally pays a lot of attention to condiments.
From the financing data of whale and enterprise business cards, from 2017 to September 2020, a total of 30 projects have completed financing, and there are 3 from January to September 2020. The financing round is mainly concentrated before the A round, which is relatively early.
In terms of category, composite condiments are favored by capital, and 25 of the 30 financing projects produce composite condiments. Companies that received financing, traditional enterprises and new brands established after 2010, "half the world", accounted for 12 and 13 respectively.
At the same time, the number of new players on the track has increased year by year, according to enterprise data, from January to September 2020, there were 68,805 newly registered enterprises in condiment, and 83,188 in 2019, which is 2.5 times that of 2015.
There is a special phenomenon, the number of condiment players is large, the capital attention is also high, but the final amount of investment is not much. This is mainly because there are limited targets in line with the logic of institutional investment, and capital will look at condiment projects, focusing on channels and supply chain capabilities.
Condiment track, the market value of 27 listed companies rose, up 71% year-on-year, and complex condiments were favored by venture capital. The synchronous force of the primary and secondary markets is a short-term outbreak catalyzed by the epidemic, or a sustained development trend of the industry?
What are the new characteristics of the condiment market in 2020?
02
Focus on the four characteristics of the condiment industry
After the rapid development period of 2004-2014, after 2015, the growth rate of the industry slowed down, the market pattern continued to optimize, the concentration of single condiment increased, and the compound condiment market continued to expand; In 2020, condiments mainly present four characteristics at the category and channel level.
1. Single condiment, the "darling" of the secondary market
The maturity of the single seasoning market is high, with a focus on top players and a concentration of listed companies. According to Wind data, among the 27 seasoning companies in the Ashare market, the majority produce a single seasoning. Haitian Flavor Industry, Hengshun Vinegar Industry, and COFCO Sugar Industry started with soy sauce, vinegar, and sugar, respectively.
In addition, the single condiment production process is complex, the entry threshold is high, and the startup company has limited opportunities to run out.
Single condiment development time is long, the market pattern is clear, mainly includes 8 categories: salt, soy sauce, vinegar, MSG, sugar, spices, cooking wine, sesame oil. Among them, soy sauce is the largest category, accounting for 21%, the head players are obvious, has formed a "super multistrong" pattern led by the Haitian flavor industry; Vinegar accounts for a relatively low proportion, only 5%, the market is more dispersed, the East China Sea securities data show that its industry concentration CR3 is only 10.1%; Consumption of MSG and salt is on the decline, down 10% in eight years, according to the Condiment Association. This is mainly influenced by consumers' healthy eating, according to Mintel's 2019 study data, which shows that 94% of urban Chinese consumers try to reduce their salt intake.
At present, the development of single condiments mainly presents two major trends:
First, single condiments that focus on functionality and health are favored.
Taking soy sauce as an example, according to Qingshan Capital, there are many functional soy sauce categories on the market, including cold sauce, braised soy sauce, iron fortified soy sauce, etc., and there are also differences in quality. Qingtong Capital statistics Taobao data found that among the top 10 sales of soy sauce, 7 are above secondary, or functional soy sauce.
Secondly, product prices continue to upgrade, according to Euromonitor data, the average retail price of China's condiment industry in 2019 was 19.4 yuan/kg, which increased year by year from 2014 to 2019, with a compound growth rate of 3.5%.
According to Everbright Securities, the main price belt for domestic residents to buy soy sauce has also risen from less than 10 yuan to 10-15 yuan,accounting for 46.6%.
2. Compound condiments: Venture capital concentration, new categories emerge in endlessly
Compound seasoning refers to the various basic seasonings, according to a certain proportion of preparation, to meet different seasoning needs. From the category point of view, chicken essence accounted for the highest proportion, according to Guosheng securities data, accounting for 29%, the market by Jiale, Mrs. Le two major enterprises oligopoly;
Chinese compound condiments and hot pot condiments are growing fastest, according to Everbright Securities data, the compound growth rate of the market size of the two from 2015 to 2020 is 16.9% and 15%, respectively, ranking the top 2 sub-categories.
Complex condiment startups are dense. According to business cards and whale data, 25 complex condiment projects have been successfully financed from 2017 to September 2020.
The track has many sub-categories, low market concentration, and large space for the development of entrepreneurial brands. Compared with the scale effect that has been formed by traditional brands, the advantages in the channel and supply chain, the new brand still has certain challenges to run into the head.
There are two types of players in the compound condiment circuit: first, unlisted traditional condiment enterprises, including national brands, such as Lao Ganma, Wang Shouyi, etc., and regional leaders, such as Dandan, Hongshanhe, etc.; Second, startups established less than 10 years ago, such as Fan Ye, Chuan Wazi and so on.
Among them, unlisted traditional condiment enterprises are also important players on the track, which mainly presents two characteristics:
1) Generally large volume, has become the head of the subdivision category. From the company's official data, hot sauce leading Lao Gan Ma, sales revenue in 2019 exceeded 5 billion yuan, an increase of 14.43%; Spices leader Wang Shouyi, 2019 revenue of more than 3 billion yuan. 2) In terms of category, SichuanGuizhou area has a majority of chili condiments, such as Laoganma, Baiwei Zhai, Dandan, Fansuoguang, stellar and so on. Due to good cash flow and traditional business philosophy, the financing needs of such enterprises are often not strong.
In addition, Qingtong Capital found an interesting phenomenon that some startups will expand to the convenient fast food track, and Yuan Jia sauce and Rice ye have developed SKUs such as instant noodles and Luosifen. At the flagship store on Tmall, Fanye's Luosifen noodles sell more than 50,000 orders per month, far higher than its sloppy Joe sauce, which sells 1,000 orders per month.
Why do these companies "cross over" into instant food? Qingtong Capital summed up two major reasons:
1) The biggest difference in the consumption of instant food is the taste of the sauce package, which is the advantage of the condiment startup;
2) The consumption scene of "one person eating" for young groups is a big market of 250 billion.
3. Channel: Catering is the "king", take-out gives birth to new categories of food
Condiment channels are king, and there are three main distribution channels: catering channels, family channels, and industrial channels. Different from other FMCG products, the B end is the largest demand end for condiments.
1) Catering channels accounted for 50%, and household channels increased instead of decreasing during the epidemic
Condiments are deeply bound to the catering industry. According to the data of the condiment Association, the catering channel has accounted for 50% of the condiment distribution channel, the household retail and industrial channels accounted for 30% and 20% respectively.
In addition, according to data from the China Journal Network, the use of condiments in catering channels is 7.19g/kg, which is 1.56 times that of home cooking.
In 2019, China's catering revenue reached 4.67 trillion yuan, an increase of 9.4%, and Frost and Sullivan predicted that it is expected to exceed 7 trillion yuan in 2024. The growth of catering scale is bound to promote the demand for condiments to rise further.
During the epidemic, the two types of channels showed different development trends: the catering channel was hit hard, while the family channel was not reduced. According to the China Condiment Association, the catering industry lost nearly 500 billion yuan during the Spring Festival, and condiment enterprises face the risk of reducing orders and recovering payments. And household consumption has increased significantly, from Shanghai securities data, 2020 Q1 condiment household channel income growth rate of more than 30%.
2) Delivery channels give birth to new categories of dishes
The development of take-out channels has spawned new use scenarios for condiments. The rise of the food category, outside the sale of food sauce, for example, has run out of Hubang, Zuo big Lion 2 head brands. According to the official data of Hubang hot sauce, its annual sales reached 200 million yuan in 2019, and the compound growth rate of nearly 3 years was as high as 300%.
At present, the penetration rate of the catering category is very low, with the rapid growth of take-out, catering will be one of the segments with great growth prospects in the future. According to data from the Prospective Industry Research Institute, China's takeout transaction volume reached 603.5 billion yuan in 2019, an increase of 30.8% over the previous year. Undoubtedly, in the takeout channel, condiments are expected to break through the traditional growth path and breed more new brands.
4. Kids' condiments are coming into their own
The demand for children's condiments has grown from scratch and has become a category that cannot be ignored, according to the data of the Machang Research Institute, the consumption amount of children's condiments accounted for 3.8% of children's food in 2019, and only 0.2% in 2016. The huge population of children and the change in the concept of childcare of consumers from 85 to 95 years ago are the reasons for the birth of its market demand. According to the data from the National Bureau of Statistics, the proportion of people aged 0-14 in the total population in 2019 was 16.78%.
From the category point of view, most of the domestic condiments, children's bibimbap, children's soy sauce is the most popular. According to Zhiresearch consulting data, domestic children's condiments accounted for nearly 70%. Qingtong Capital statistics on Tmall and Jingdong data found that among the top 20 children's condiments sold on the two major platforms, children's bibimbap accounted for 42.5% and children's soy sauce accounted for 22.5%.
It is worth noting that at present, children's condiments lack a national unified safety standard. According to the survey by the Macheng Research Institute, 95% of the domestic children's soy sauce sold by the three major e-commerce platforms follows the GB/T 18186-2000 standard, which is only the general standard for brewing soy sauce, and does not specifically involve the specification of children's soy sauce.
Looking at the condiment industry, the single condiment market pattern is clear, listed companies are concentrated, and the entry threshold of startup companies is high; In compound condiments, unlisted time-honored brands have deep roots, and startups emerge in endlessly. In addition to traditional catering and family retail channels, take-out has become a new consumption scene. So, what are the development opportunities for condiments on this long slope and thick snow track in 2020? What kind of company can successfully "out of the loop"?
03
Condiment enterprises "out of the circle" opportunity
Condiment heat is not reduced, favored by capital, which factors are mainly favored by capital? What other subdivision tracks can run out of the head? Qingtong Capital combined with the views of investment institutions and founders, to discuss this.
1. What is the category? Hot pot, Chinese compound condiments are promising
The market concentration of compound condiments is low, the growth rate is fast, and it has great growth
According to Euromonitor, China's compound condiment market in 2018 was 109.1 billion yuan, the compound growth rate of 2013-2018 was as high as 14.4%, and it is expected to reach 148.8 billion yuan in 2020. As a concentrated track for startups, hot pot condiments and Chinese compound condiments have more development potential.
1）Hot pot condiments, with large imagination space
Hot pot condiment is one of the popular tracks, including base and dip 2 kinds. According to Zhiyan Consulting data, the market size of hot pot bottom material in 2019 was 22.5 billion yuan, and the hot pot dipping material was 5 billion yuan, both of which grew by more than 15% year-on-year.
From the perspective of the player pattern, although there are some head players, such as Yihai International, Tianwei Food, Red 99, etc., according to Dongxing Securities data, market concentration CR3 is less than 20%. The hot pot condiment market is still relatively scattered, and the space for new players to run into the head is larger.
Qingtong Capital analysis believes that hot pot condiment is about to enter the fast lane, there are two driving factors:
1) The rapid development of hot pot catering, according to the prospective Industry Research Institute data, the market size of the hot pot industry in 2019 reached 529.5 billion yuan, an increase of 10%. 2) The diversification of hot pot consumption scenes, especially family scenes such as one person eating, relatives and friends gathering, is bound to drive the demand for hot pot condiments.
2）Chinese compound condiments: dish seasoning packages, hot sauce popular
Chinese compound condiments, is the fastest growing category of compound condiments, according to the China Condiment Association, 2015-2020 compound growth rate of 16.9%.
At present, there are two major categories receiving attention:
1) The popularity of classic dishes seasoning packages has increased, such as mapo tofu, Kung pao chicken, boiled meat slices seasoning packages. Among them, fish seasoning packages, crayfish seasoning packages are particularly hot, according to the official data of Tianwei Food, the revenue of its good family pickled fish seasoning has exceeded 300 million yuan. 2) Hot sauce is the most favored by venture capital, and 10 of the 13 compound condiment entrepreneurial projects successfully financed from 2017 to 2020 produce hot sauce, such as Fan Ye, Er and Marry.
The future rapid growth of Chinese compound condiments is closely related to the B-end catering industry and C-end consumer groups.
First of all, the gradual chain of B-side catering and the large scale of group meals have spawned a huge demand for standardized Chinese compound condiments. According to the National Bureau of Statistics, the revenue growth rate ofChina's restaurant chain stores in 2019 was 27.4%. According to the China Hotel Association, the group meal market reached 1.5 trillion yuan in 2019, accounting for 33.2% of the catering industry. 2) The C-end consumer group is younger, and compound condiments meet the needs of "lazy economy" to reduce cooking steps and improve efficiency.
04
What does capital look at? Channel, supply chain ability is the key to win
Throughout the operation capacity of condiment companies, channels and supply chains are the two core elements of capital consideration, which also determine whether it can stand out from many players.
1）Channel: Embrace catering and take advantage of new channels
"Small food, large circulation", the channel is crucial to the expansion efficiency of the condiment market.
First of all, to see whether the channel laying is extensive and comprehensive, it depends on the coverage and penetration of dealers, in addition to supermarkets, convenience stores, can reach grocery stores, mom and pop stores and other sinking terminals. According to Alibaba data, the number of retail stores in the country is as high as 6 million, of which more than 70% are in 3-6 tier cities, contributing to 40% of the shipments of the FMCG industry. Secondly, whether there is a stable catering customer endorsement. According to the company's prospectus, its top five customers contributed nearly 47% of its revenue in 2019. How to enhance the stickiness of large customers is also a major topic faced by condiment enterprises. Nichen shares focused on customized meal preparation business, and its revenue proportion increased from 25.2% to 42.1% in 2016-2019, and the stability of major customers was relatively stronger.
In addition, make full use of new channels such as take-out. The rise of takeout and the popularity of dishes have brought more imagination to condiments. In the takeout channel, condiments are expected to break through the traditional growth path and breed more new brands.
Fourth, online channels based on e-commerce platform flagship stores can help TOC startups quickly build volume and establish brands. Fanye started online in 2016, and its flagship store sales exceeded 30 million within a year. According to the data of the China Condiment Association, the number of new sauce brands settled online has grown rapidly, with a growth rate of 200% in 2019.
2）Supply chain, Building the "center" of condiments
In the three segments of the big consumption track in 2020, online food brands and small household appliances are good at the game of Internet celebrity, and most of them use the foundry model; Condiments are more inclined to build their own supply chain to maintain the stability of taste and quality.
Although the startup will use OEM in the early stage due to the size of the company, Fanye, Yuan Jia sauce, two and marriage have all expressed the importance of self-built supply chains to the brand.
So what makes a good supply chain for condiments? Qingtong Capital research believes that there are mainly three aspects:
1) At the raw material level, there are partners with high cost performance and stable quality. 2) At the production level, if the enterprise builds its own production line, the capacity utilization rate is higher. According to Haitian official data, the capacity utilization rate is as high as 95% in 2019; If the use of OEM enterprises, it is necessary to have a better run-in processing plant, so that the taste output is stable. 3) At the warehousing and logistics level, it can cover the whole country and has enough flexibility. Parknshop Food has flexibly served a number of international and domestic catering and food giants through self-established logistics and the development of warehouse management systems.
Brief summary
After nearly 30 years of development, it has become a completely competitive market.
Compound condiments are in the new category increment stage, the growth rate is fast, the market is still relatively scattered, the entrepreneurial opportunities are intensive, hot pot condiments, Chinese compound condiments 2 categories are relatively potential subdivision track.
Channel and supply chain are the important ability points of condiment enterprises to "circle out". How to stand out among many players, cross the brand life cycle, and ultimately return to the business development logic of condiments.
