The candy king Xu Fuji: Is the "sweet life" over?

For many people, Xu Fuji once represented the taste of Chinese New Year. As a sugar king, Xu Fuji started as a "new year's candy", with an annual sales growth rate of more than 20% at its peak, ranking first in the bulk sugar and packaged sugar market for 17 years in a row.

Unexpectedly, Xu Fuji's business went from bad to worse, gradually faded out of people's sight, and he repeatedly fell out of favor with his parent company Nestle and became an outcast.

Under the crisis, Xu Fuji began to change and turned to the nut track. Will this be a good choice?

"There is Xu Fuji in the south and Master Kong in the north", which was once regarded as a typical case of Taiwanese businessmen operating in the mainland, and also confirmed the past glory of Xu Fuji.

From 65438 to 0992, many Taiwanese businessmen accelerated their investment in the mainland. Among them, the four Xu brothers who started with candied fruit are one of them. They set up factories in Dongguan, engaged in candy OEM processing, and then exported their products to other countries.

Two years later, after realizing that the rapid development of the mainland economy would significantly boost people's demand for candy, the four brothers decided to switch from export to domestic sales and start their own brands. "Xu Fuji" has since moved towards the historical stage.

At that time, the Chinese New Year was the node with the largest consumption of candy, but at that time, no candy brand thought of bundling it with the Chinese New Year. Xu Fuji keenly discovered this business opportunity and launched a series of "New Year Candies" at 1994, covering more than 40 kinds of sweets, focusing on low-price strategy. With the help of many factors, Xu Fuji was a great success, with sales exceeding 1997 1 100 million yuan.

It is worth mentioning that in this process, Hsu Fu-kee also pioneered two strategies: batch unified pricing and counter mode, which greatly simplified the process of users buying sugar, and at the same time strengthened users' understanding of Hsu Fu-kee brand, laying a further foundation for later development.

In 2000, with the entry of Wal-Mart and Carrefour into China, Hsu Fu-kee established a supply and marketing relationship with these large supermarkets and began to enter the fast lane of development: it was not only listed in Singapore in 2006, but also its sales increased by 20% every year, ranking first in the market for many years. According to the official introduction, by 2007, Xu Fuji had 88 sales branches in China, with more than 13500 direct retail outlets, making it one of the largest confectionery enterprises in China.

20 1 1, Xu Fuji ushered in a turning point.

In this year, Nestle, eager to expand its business in China, bought 60% equity of Hsu Fu Kee for10.70 billion US dollars, and the four Hsu brothers held the remaining 40%.

There are two reasons behind Nestle's acquisition of Hsu Fu Kee. The first is to expand its product line. At that time, Nestle had a gap in the category of candy and needed to make up for it in order to compete with Mars, which is also a food giant. Xu Fuji was the best choice at that time. On the other hand, Xu Fuji's bulk container resources of10.8 million, as well as the third-and fourth-tier markets, towns and rural markets that have been deeply cultivated for several years, have greatly helped Nestle's sinking.

On the other hand, Xu Fuji's "selling himself" means that he hopes to consolidate his position in the market with the help of Nestle's capital and R&D investment, and compete with candy brands such as Mars, Alps and Ziyi International.

One side has money and understands R&D, while the other side has brand influence and channels. The combination of the two was once considered by the market as a strong alliance and was highly anticipated. However, it backfired. Later, although Nestle quickly entered the second and third tier cities in China through Hsu Fu Chi's offline dealer channels, Hsu Fu Chi did not prosper because of Nestle's blessing, but went from bad to worse. There are many reasons for this.

On the one hand, after Hsu Fu Kee was acquired by Nestle, he fell into the quagmire of food safety many times. First, during the Spring Festival of 20 12, many products of Xu Fuji were found to have used TBHQ and BHT (two antioxidants, causing cancer), and then it was exposed that there were food safety problems in the internal canteen, which led to collective food poisoning of employees. Turning a blind eye to the health of consumers and employees, Xu Fuji, who had become a "foreign capital" at that time, was condemned by public opinion.

Source: Xu Fuji Guan Wei

On the other hand, it is to miss the Internet dividend period. From 20 13, China surpassed the United States to become the largest online retail market in the world. The rise of online shopping has ushered in the reshuffle of channels. Xu Fuji, who was immersed in the glory of the past offline, did not seize the opportunity. It was not until 20 18 that he began to transform online and finally fell behind.

The more important reason is that Xu Fuji's "New Year's Sugar" strategy has gradually failed. According to the data of previous financial reports, candy sales can account for 40% of Xu Fuji's annual sales during the Spring Festival, which also means that the sales performance of the Spring Festival largely determines the lifeline of Xu Fuji; But nowadays, with more and more kinds of products on the market, people no longer just take out candy, but also nuts, snacks and fruits when entertaining guests in the New Year, and candy is no longer the only good gift for festivals.

Many reasons have led to the gradual slowdown of Xu Fuji's revenue growth. According to the data of IC lab, in 20 14, Xu Fuji's market share fell to the third place in China and fell to the throne of "candy king". By 20 19, Hsu Fu Kee's revenue was only 5 billion yuan, lower than the nearly 5.2 billion yuan before being acquired by Nestle. This means that in the past 10 years, Xu Fuji just stood still.

Since then, Xu Fuji has been devastated. Not only is it classified as "other income" by Nestle in the financial report, but it is no longer listed separately. He even repeatedly rumored that he would be sold by Nestle and become an outcast.

Behind the decline of Xu Fuji, in addition to its own reasons, it also has a lot to do with the background of the sluggish domestic candy industry.

According to the data of Foodaily, from 20 16 to 2020, the average annual growth rate of the total candy market is only 2%, which is at the bottom of the track of snack food.

At the same time, the rise of milk tea, cakes, desserts and other categories has become a new form for young people to obtain "sweetness", and "old love" candy has gradually been abandoned by new substitutes.

With the whole track weak, Xu Fuji began to transform into nuts, hoping to form a new growth engine with the help of the great health attributes of the nut industry and the superposition of its own brand and scale effect. At the same time, he hopes to use the rising momentum of nuts to promote the sales of his candy.

In order to form differentiated competition with the traditional nut giants such as three squirrels, Baicaowei and Huang Shanghuang, Xu Fuji not only launched a single nut product, but also created a variety of nut mix and match gift boxes, all of which were matched with different classic candies, hoping to attract consumers with the multi-product combination model of "nut+candy".

The development space of nut track should not be underestimated. According to Frost & Sullivan's data, the retail sales of nuts, roasted seeds and nuts and snacks market will be141500 million yuan in 2020, and the compound growth rate is expected to be 9% in the next five years, with broad market prospects.

However, it is not difficult for Xu Fuji to compete with nut brands on the layout line for many years. At present, Xu Fuji's nut+candy gift package is only available in JD.COM stores, and since it was launched in 2020, the product reviews below are only 20W+. On the other hand, the product reviews of the three squirrels are all between 300W and 500W W.

It is difficult to maintain success, and it is even more difficult to transform. From laughing at the candy rivers and lakes, to the current decline in performance, the future of transformation is uncertain, and the candy king's turnaround is probably not so good.

References:

"The decline history of a generation of candy kings: once sold 6 billion a year, now it is like capital abandonment", and new business should participate.

Candy giant abandoned by the times: Xu Fuji's 30-year history of business ups and downs, IC laboratory

Xu Fuji: The suspense of fate, Lee's business review.