The domestic casual snack market performed gratifyingly in the first half of the year.
Since August, a number of listed casual snack companies have released semi-annual reports or forecasts, ushering in profit growth. Yanjin Shop expects to achieve a net profit of 226 million to 236 million yuan after deducting non-recurring gains and losses in the first half of 2023, a year-on-year increase of 98.89% to 107.69%; Net profit ranged from 98 million yuan to 110 million yuan, a year-on-year increase of 199.06% to 235.68%.
Jinzai Food Group Co., Ltd. (hereinafter referred to as "Jinzai Food"), which has opened up its market popularity with its core single product "Jinzai Small Fish", is no exception.
Recently, Jinzai Food released its semi-annual report for 2023. Both revenue and profit have achieved substantial growth. Although the growth rate is not as high as that of larger companies such as Yanjin Shop, its three product lines with fish products, poultry products, and soybean products as the core The construction is completed and has received good response in the market, and the capital market is very optimistic about it. When the A-shares closed on the day the financial report was released, the overall increase in the food processing and manufacturing sector was -1.94%. Among them, 77 stocks fell and 5 stocks rose. Jinzai Food ranked first with a 2.47% increase.
Donghai Securities, Debon Securities, and Cinda Securities also issued research reports on the same day, giving Jinzai Food a buy rating. So, what is so special about the performance growth of Jinzai Food? Can it continue to release its growth potential in the future?
The "Troika" has driven the rapid increase in revenue and profit of Jinzai Food
Judging from the financial report of Jinzai Food, the company's growth presents two characteristics, one is steady and the other is balanced.
In the first half of 2023, Jinzai Food achieved revenue of 925 million yuan, a year-on-year increase of 49.07%; net profit attributable to the parent was 83.1291 million yuan, a year-on-year increase of 46.97%. The growth rate of revenue and profit is comparable, indicating that the company is in a stable and healthy development stage of increasing revenue and profit, and is not sacrificing profit for scale. In this regard, Jinzai Foods stated that the performance growth is mainly due to the continuous development and optimization of distributors, the implementation of terminal market construction, new product promotion, and revenue growth of new media platforms.
Specifically, from the perspective of products, Jinzai Foods has formed a product system consisting of fish products, poultry products and bean products. What is commendable is that each product line has achieved substantial growth. Fish products, poultry products and bean products achieved revenues of 603 million yuan, 171 million yuan and 101 million yuan respectively, a year-on-year increase of 35.01%, 155.05% and 29.23%.
The main reason for the increase in sales is that under the market trend of large-scale leisure snacks in the first half of the year, Jinzai Food has taken advantage of the "dongfeng" with its competitive product strategy.
On the whole, in the first half of 2023, the consumption recovery trend of the casual snack industry will continue, especially benefiting from holidays such as the Spring Festival, May Day, and Dragon Boat Festival, the industry's prosperity will continue to rise. According to the iiMedia Consulting report, since 2023, 27.3% of consumers said they would buy snack food 7-8 times a month, 22.4% said they would buy snack food 4-6 times a month, and 22.1% said they would buy snack food 7-8 times a month. Buy snack food 9-10 times a month. It can be seen that for leisure food, the consumption frequency of consumers is generally relatively frequent, which reflects that the leisure food industry is facing a large market demand.
Even so, there are many companies with pre-loss in the industry in the first half of the year. Rulai Yifen expects that the net profit attributable to the parent company in the first half of the year will drop by 44.62%-53.85% year-on-year. I really want you to have a pre-loss of 10 million to 20 million.
The east wind of the industry will not blow every entrant, and whether it can make more profits depends on the company's own market competitiveness.
Jinzai Foods, which first started as a distribution channel, mainly sold small-package products with low unit prices in the early days. The scattered channels and low product threshold made it difficult to form a brand effect. However, the large packaging strategy launched in 2021 has helped Jinzai Food complete a comprehensive upgrade from product, channel to brand.
The company's financial report also pointed out that "large packaging + bulk weighing" has boosted product matrix optimization. During the reporting period, the sales revenue of the company's large packaging products increased by nearly 70% year-on-year. At the same time, the company combined with the strategic layout of large packaging, increased the unit price of customers, and filled the gap in channels. During the reporting period, the sales revenue of bulk products increased by more than 220%.
So, what is so special about the big package strategy?
In fact, the large packaging strategy can be understood as a market launch strategy for companies trying to create super large single products. The core is to let existing products be launched in different channels to maximize their advantages. Previously, snack leaders Want Want, Qiaqia, and Weilong also used large packaging strategies to increase the popularity of their flagship products, and then changed the packaging, specifications, and tastes to extend the life cycle of large single products and provide experience for the development of subsequent products. Realize the diversification of brand matrix.
And Jinzai Food’s large-package product delivery method also allows core single products such as Jinzai Xiaoyu to increase brand exposure in multiple channels such as KA, CVS, and e-commerce channels, broadening the brand influence. In turn, it drives the rapid growth of bulk and small packaged products. With this strategy, Jinzai Xiaoyu's sales will exceed 1 billion yuan in 2022, and its sales revenue will increase by 35.01% in the first half of this year, becoming a leader in fish leisure snacks. The potential new product quail eggs has also achieved rapid growth. It is reported that the sales volume of Jinzai Foods quail eggs has surpassed that of jerky, with monthly sales exceeding 27 million yuan, becoming the company's second largest single product.
However, the structure of the leisure snack market has always been changing rapidly. Can Jinzai Food’s large-scale packaging strategy continue to provide impetus for the company’s later growth? How will Jinzai Food, driven by the "troika" maintain a good growth momentum in the future?
Under the market structure of "big industry and small enterprise", can Jinzai Food "run faster and faster"?
On the whole, the domestic casual snacks market has huge growth potential and long-term development. According to data from iiMedia Consulting, the market size of my country's snack food industry continues to grow, from 410 billion yuan in 2010 to 1,165.4 billion yuan in 2022, and is expected to reach 1,237.8 billion yuan in 2027.
However, some experts believe that the industry will maintain the market structure of "big industries and small enterprises" for a period of time in the future, and there is still a lot of room for improvement in market concentration. According to public data, in 2022, the CR5 of domestic leisure snacks will be 14.7%, and CR10 will be 23.3%. According to Bloomberg data, in 2021, the CR5 of the US/Japanese snack food industry will be 40.90% and 27.60%, respectively.
Under the market structure of large industries and small enterprises, it is undoubtedly very important for relevant enterprises to gain a size advantage and open up a larger market scale.
Judging from the financial report, Jinzai Foods has achieved certain results in channel expansion. During the reporting period, the company continued to promote traditional offline distribution channels, and made efforts to build a national distribution system for terminal dealers. The number of dealers increased from 2,267 to There are 2,559 stores, and the offline operating income is 718 million, a year-on-year increase of 44.06%, accounting for 77.76% of the company's operating income. At the same time, new media channels have grown rapidly, and the sales volume of goods has increased by 580.48% year-on-year.
However, compared with leading brands such as Baicaowei and Three Squirrels, there is still a gap in its channel expansion. For example, Baicaowei currently has more than 500,000 small stores through distribution channels such as Xintong and Retail, covering more than 20 provinces and cities .
In addition, the channel expansion of the current industry not only depends on the improvement of coverage, but also depends on whether it can achieve more prominent channel sales effects and open up greater profit margins. From this point of view, Jinzai Foods seems to have encountered some resistance.
The financial report shows that in the first half of the year, the overall gross profit rate of Jinzai Foods decreased by 0.81 percentage points compared with the same period of the previous year, and differentiation occurred. In terms of sales mode, the gross profit margin of the distribution mode decreased by 3.14 percentage points, while that of the direct sales model increased by 8.46 percentage points; in terms of channels, the gross profit margin of offline sales decreased by 2.33 percentage points, while that of online sales increased by 4.45 percentage points.
In this regard, the company said that it was mainly due to the increase in the price of raw materials for fish products and the impact of changes in the product structure of new product promotion. Considering that objective factors are unlikely to change significantly in the short term, companies may continue to improve channel laying effects from the product side. In the process of promoting the launch of new products and reducing the risk of launch, the large packaging strategy will still play an important role.
It is understood that the large packaging of Jinzai Food is mainly launched for blank channels. On the one hand, it will not touch the interests of original distributors. On the other hand, the new price system set can give distributors more sufficient profit margins. Based on this, the large packaging strategy is still an important starting point for the subsequent development of Jinzai Food, in order to achieve resonance between the product end and the channel end, and promote higher-quality channel development.
It is worth mentioning that, compared with companies such as Three Squirrels and BESTORE, Jinzai Foods has significantly fewer SKUs, but in this way, resources, marketing investment and sales expenses can be allocated more reasonably in terms of channel expansion. Relevant data It has also been verified: the sales expense ratio of Three Squirrels has been around 20% for many years, while Jinzai Food is only 11%.
In the process of developing channels, the construction of the enterprise supply chain has also been going on. According to the financial report, the wild anchovies produced by the Kenyan subsidiary of Jinzai Foods were imported to China for the first time during the reporting period and appeared at the third China-Africa Economic and Trade Expo. This is a new achievement in the company's global supply chain construction. In the future, we will continue to strengthen the layout of the supply chain construction and improve the global selection and supply assurance capabilities of anchovies, which may further expand the room for performance growth.
Generally speaking, domestic casual snacks are in the stage of industry differentiation. For enterprises, the capabilities of channels, supply chain, brand image and other aspects need to be steadily improved. There is a certain gap between the three squirrels and BESTORE, but judging from their accurate grasp of their own situation and the formulation of large-scale packaging strategies, as well as actions to strengthen the construction of supply chains and channels, they are expected to have greater advantages in the subsequent competition.
Author: Good blue is not good
Source: Songuo Finance