Nationalization War of Peach and Plum Bread

From 65438 to 0992, Deng Xiaoping visited Wuchang, Shenzhen, Zhuhai, Shanghai and other places in the south, which was followed by a vigorous wave of entrepreneurship in the history of China.

Three years later, Wu Zhigang, a 60-year-old man from northeast China, stepped off the three-foot platform. Although he is so old, the old man who is inspired by his heart also wants to do something. At that time, bread was just emerging in China. Seeing that the students loved it, the old man opened a bread workshop named "Li Tao", focusing on fresh and healthy short-term products.

Over the years, the elderly have slowly, steadily and gradually explored a set of "central factory+wholesale" business model. After gaining a firm foothold in Dandong, a small border town on the Yalu River, it hit the provincial capital Shenyang and occupied the whole northeast market step by step.

20 15, Li Tao bread a was listed. At the age of 80, Wu Zhigang not only became a veritable bread king in Northeast China, but also became the oldest chairman in A-share history.

The rise of peach and plum bread is inseparable from the growth of the industry. From 2004 to 20 19, the compound annual growth rate of bread industry in China was as high as 1 1%. The logic behind it is not difficult to understand. Bread, as the staple food of westerners, has a low edible base in China. In 20 19, the per capita consumption is only 1.9 kg, which is less than110 in America. Optimistically, this will be a potential market of hundreds of billions.

However, under the background that the industry is still growing, peach and plum bread has been in trouble in recent years. From 20 16 to 20 19, the income growth rate of Li Tao has slowed down for four consecutive years.

The reason is that, on the one hand, the short-term bread in which Li Tao bread is located is a typical bitter business. In recent years, the ex-factory price has hardly increased, and the performance has been completely pulled out by truck.

On the other hand, it is blocked in the south. It is impossible to raise prices, only sales can make up for it. After Li Tao Bread went on the market to replenish ammunition, it began to deploy troops south. But this bread king, who is all-powerful in the north, is not acclimatized in the south. In 20 19, Li Tao's subsidiaries in East China, South China and Central China almost suffered losses across the board.

Like most consumer goods, nationalization has become a hurdle that peach and plum bread must cross. But it is obviously not easy to make a successful breakthrough.

/? 0 1? /Bread King "Soft Landing"

The rapid growth of the industry is undoubtedly the key to the early staking of peach and plum bread.

In 1980s, with the reform and opening up, bread was introduced to the mainland from China, Hongkong and Taiwan Province Province. After entering the 1990s, with the economic growth, the improvement of residents' living standards and the entry of western technology, the bread industry began to develop rapidly.

According to the data of Western Securities Research Report, the compound growth rate of bread industry in China was 1 1% in 2004-20/9, which was faster than traditional fast-moving consumer goods such as liquor, beer, dairy products and condiments.

The per capita bread consumption in China is also increasing, from less than 1kg in 2008 to 1.9kg in 20 19, almost doubling in 12.

According to the length of shelf life, bread is divided into three categories: long-term shelf life, shelf life of more than 6 months; The warranty period of the mediator is 3-6 months; The warranty is short, and the shelf life is 1-7 days. The positioning of Changbao and Bao Zhong bread is mainly leisure snacks, while the positioning of short-term bread is mainly staple food, and it is more eaten as breakfast.

In 20 19, the market size of China bread industry was about 40 billion, of which Changbao and Bao Zhong bread accounted for 35%, short-term bread accounted for 65%, and the market size was about 26 billion.

The driving force for the rapid development of the short-term bread industry in China comes from three points:

First, since 2000, the urbanization rate of China has increased from 37.66% to 60.6%. The increasing urbanization rate has accelerated the pace of life, reduced the time for making breakfast, and gradually replaced eating out at home.

According to the data of the Western Securities Research Report, in 20 16, the proportion of urban residents eating breakfast at home 2-3 times a week was 66%, which was 1 1 percentage point lower than 77% in 20 13.

Secondly, with the rise of generations of young people, China's acceptance of western food has also greatly improved.

According to the data of Western Securities Research Report, in 20 16, 50% of urban consumers in China preferred western breakfast, which exceeded the proportion of people who preferred Chinese breakfast (42%). In 20 19, bread was the second favorite breakfast food for China residents, second only to steamed buns.

Thirdly, under the background that consumers are increasingly pursuing quality consumption such as health and taste, short-term bread with less preservatives will increasingly replace long-term bread and medium-term bread.

At present, the consumption base of bread in China is still at a low level. In the same year of 20 19, the average bread consumption in the United States was 22.2kg, that in Japan 10kg and that in Hong Kong was 7.6kg.

In the future, there will be the above three substitutions (eating breakfast outside instead of eating breakfast at home; Bread replaces breakfast categories such as steamed stuffed buns and fried dough sticks; With the popularization of short-term bread replacing long-term bread and medium-term bread, the market scale of short-term bread will undoubtedly continue to grow.

If optimistically estimated, this is likely to be a potential market of hundreds of billions.

However, although the industry is still growing, peach and plum bread has been in trouble in recent years. From 20 16 to 20 19, Li Tao's bread revenue was 3.305 billion, 4.08 billion, 4.833 billion and 5.644 billion respectively, with year-on-year growth rates of 28.95%, 23.42%, 18.47% and/kloc respectively.

/? 02? /"porters" who have no right to raise prices

Although there is a big market, it is not easy to make money from peach and plum bread.

Actually, short-term bread is a typical bitter business. Although more and more consumers like to eat short-term bread, the conditions for consumers to buy short-term bread are extremely harsh.

The first is convenience. An important reason why consumers eat short-term bread is for convenience. I believe that no one will beat around the bush on the way to work in order to eat a loaf of bread.

The second is freshness. Short-term bread itself has a shelf life of only a few days. If the time interval between production and shelves exceeds 2 days, it will definitely not work.

Again, cheap. Breakfast itself is not expensive. Even in the first-and second-tier markets, a traditional Chinese breakfast consisting of steamed stuffed buns, fried dough sticks, eggs and soybean milk is basically 7-8 yuan. If you eat bread, you must match it with milk, and then subtract the cost of milk. The space left for short-term bread is actually 5 yuan.

Accordingly, this also puts forward three requirements for enterprises:

First of all, in order to make it convenient for consumers to buy, we must take down all the big supermarkets and small shops around consumers, and the channel construction of enterprises must be armed with capillaries.

Li Tao's practice is direct selling and distribution. KA customers and small and medium-sized supermarkets and shops in central cities do it themselves, and small and medium-sized supermarkets and shops in non-central cities are handed over to dealers. By the end of 20 19, there were more than 240,000 sales terminals in China.

Secondly, in order to be put on the shelves as soon as possible after leaving the factory, enterprises must set up factories nearby, where there is a market, there is a factory. It can be seen that by the end of 20 19, Li Tao bread had established a production base in China 18. The coverage radius of each production base is 200-300 kilometers.

In addition to building a factory nearby, we must do our best to deliver the goods. The distribution of short-guaranteed bread has three characteristics: due to the short shelf life, it needs to be prepared every day; Because it is mostly eaten for breakfast, you need to drive in the middle of the night; Because of the low density, each car doesn't pull much. Generally speaking, Dai Yue should stick to his work.

For enterprises, this is not a small expense. Among the sales expenses of peach and plum bread, the delivery fee is the biggest one. From 20 15 to 20 19, it was 654.38+74 million, 306 million, 43 10 million, 582 million and 709 million respectively, accounting for 48.33%, 55.74% and 56.94% of the sales expenses respectively.

The increasing distribution fee has obviously eroded the profits of peaches and plums. In 20 19, its net profit was 683 million, which was exceeded by the initial issuance fee. In other words, for every net profit of 1 yuan, the delivery fee of 1.04 yuan will be spent. This is not a brand, this is obviously a porter.

Thirdly, consumers are price-sensitive, which means that product pricing cannot be too high, and there is not much room for price increase. Enterprises can only "do Dojo in snail shells".

In fact, Li Tao is concerned with the cost-effective strategy. In 20 19, the sales volume of bread products was 3 19 thousand tons, and the sales volume was 5.527 billion yuan, that is, 8.65 yuan/kg, which can be said to be very cheap. Of course, this is the ex-factory price and the retail price will be higher.

In the past few years, the growth of peach and plum bread also depends on the growth of sales.

From 20 15 to 20 19, the sales growth rates of peach and plum bread products were 25.02%, 29.47%, 23.49%, 18.08% and 16.89% respectively, and the sales growth rates were 23.08% and 23.08% respectively. The increase of average selling price is very small, and 20 19 even drops.

/? 03? /National expansion is hindered.

Since the price is difficult to increase, whether the sales volume can continue to expand has become the key to the continuous growth of peach and plum bread.

Therefore, after the listing of 20 15, Li Tao began to deploy troops to the south, trying to copy the experience of Northeast China's national expansion, but the process was not smooth.

In 20 19, Li Tao's subsidiaries in East China, South China and Central China suffered losses almost across the board, most of which were further enlarged than those in 20 18.

Established on 20 15, Shenzhen Li Tao lost 5.377 million yuan (loss reduction), and Dongguan Li Tao lost 3.9544 million yuan (profit turned losses).

Established on 20 16, Wuhan Li Tao lost1297,444,400 yuan (enlarged loss), Jiangsu Li Tao lost 8102,200 yuan (enlarged loss), Hefu Li Tao lost 4,958,700 yuan (enlarged loss) and Guangxi Li Tao lost 4,049,000 yuan (reduced loss).

Shanghai Li Tao, established as early as 2000, also turned from a profit of 65,438+0,465,520 in 2065,438+07 to a loss of 65,438+0,268,820.

Why is this all-powerful bread king in the north unaccustomed in the south? There are two reasons.

The first is timing. More than 20 years ago, when Li Tao expanded in the north, it faced a relatively blank market. But today's short-term bread market is full of powerful people.

As the growth rate of performance continues to slow down, Dali Food, which urgently needs to develop new growth points, is also eyeing the track of short-term bread that continues to grow. In the second half of 20 18, Dali launched Maybeichen, a short-term bread brand, and meaningfully chose Fujian and Northeast China to launch it, officially declaring war on Li Tao.

In just over a year, Maybechen has launched 52 SKUs, covering nearly 80,000 sales terminals. In 20 19, when the growth rate of Li Tao's net profit dropped to single digits, the revenue of Dali household consumption sector where Mei Beichen was located increased by 4 1.6% to 2.657 billion. In Dali's blueprint, Maybechen's future positioning is a brand with a scale of 10 billion.

As a leading snack food and beverage enterprise in China, Dalisu is famous for following the strategy. Before Meibeichen, six famous brands, Dali Garden, Haochidian, Kebike, Le Hu and Zhenghe Doudou, had been launched successively, and they all made good achievements in their respective fields. Such a strong opponent is obviously difficult to deal with.

Also on 20 18, the international baking giant Bimbo Group of Mexico also completed the acquisition of Manhattan. As a direct competitor of peaches and plums in the short-term bread field, Binbao mainly focuses on the North China market in China, while Mankerton cultivates East China. After the joint efforts of the north and the south, the threat has obviously increased.

In addition, well-known baking chain brands such as Yamazaki Bread and Paris Bate have emerged in succession, and well-known convenience stores such as the whole family and 7- 1 1 have also launched their own short-term bread products.

The second is economic differences. Compared with the north, the economy in the south is more developed, and southerners pay more attention to diet. In the north, peaches and plums that pay attention to cost performance are like a duck to water, but in the south, chain baking shops that are now sold and positioned at a higher end are more popular.

In fact, not only peach and plum bread, but also many catering enterprises in the north, such as Chengde Lulu and Xiabu Xiabu, have encountered considerable resistance from the south.

Zhu, a food industry analyst in China, believes that the South opened earlier, its economy is better, and the service standards it has accepted for a long time are higher. Southern enterprises do better in quality, brand, service system and customer stickiness, which makes it easier for southern enterprises to go north and harder for northern enterprises to go south. In fact, there is a difference between north and south.

Under the background that sales volume determines growth, the success or failure of national expansion undoubtedly determines the future pattern of peaches and plums. But it is obviously not that easy to cross this hurdle.