---
title: "Before Becoming the 'First Spicy Strip Stock,' Weilong Still Has Two Questions to Answer"
description: "Since 2020, Weilong, the leading spicy strip maker, has been rumored to be preparing for an IPO, with reports suggesting it is working with CICC, Morgan Stanley, and UBS for a Hong Kong listing in the second half of 2021. Despite its success in turning a childhood snack into a national favorite with annual sales in the billions, Weilong faces two critical challenges: finding its next growth engine beyond spicy strips and maintaining the quality and reputation of its core product."
author: "胖鲸研究所"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2021-02-19"
language: "en"
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# Before Becoming the 'First Spicy Strip Stock,' Weilong Still Has Two Questions to Answer

> Since 2020, Weilong, the leading spicy strip maker, has been rumored to be preparing for an IPO, with reports suggesting it is working with CICC, Morgan Stanley, and UBS for a Hong Kong listing in the second half of 2021. Despite its success in turning a childhood snack into a national favorite with annual sales in the billions, Weilong faces two critical challenges: finding its next growth engine beyond spicy strips and maintaining the quality and reputation of its core product.

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Since 2020, Weilong, the "king of spicy strips," has been repeatedly rumored to be going public. Media reports say Weilong is in talks with CICC, Morgan Stanley, and UBS, with an expected Hong Kong IPO in the second half of 2021.
People born in the 80s and 90s probably never imagined that the spicy strips they bought for 50 cents a pack as children would be turned by Weilong into a national snack with annual sales in the tens of billions, soon to become the "first spicy strip stock."
According to Weilong's public data, its overall revenue in 2019 was 4.9 billion yuan, a growth rate of nearly 43% compared to 3.5 billion yuan in 2018. The revenue target for 2020 was 7.2 billion yuan, with projections to exceed 10 billion yuan in 2021—iFlytek's 2019 revenue just barely surpassed 10 billion yuan.
From a snack not fit for the table to nearly 10 billion yuan in annual sales, Weilong's efforts over the years are evident:
It invested millions to introduce European production lines, upgrading packaging machines from semi-automatic to fully automatic, ensuring quality through modern processes. It invited internet celebrities to livestream from its production workshops to overturn the "junk food" and "unhygienic" image. It switched to individual small packages to enhance product image. It improved the taste, reducing spiciness and shifting from mala to sweet-spicy to suit popular palates.
Weilong also turned itself into an internet sensation through a series of viral marketing campaigns. From leveraging the iPhone 7 launch with "Apple-style" copy and offline experience stores, to crossovers with mobile games and comics, and various "down-to-earth" and "self-deprecating" marketing on social media, it crafted a friendly, humorous image.
While attracting a huge wave of traffic, Weilong also successfully converted it into sales. In 2016, its "Apple-style" marketing and Zhang Quandan's factory workshop livestream drew massive attention, and that year's annual sales grew by 500% year-on-year.
With this combination of tactics, Weilong has become the undisputed "king" of the spicy strip world. But on the road from "king of spicy strips" to "first spicy strip stock," Weilong still has two questions to answer.
**-01-**
**Where is the next growth engine?**
One of Weilong's hidden dangers is its single-product focus; spicy strips are the main revenue source. Where is the next growth engine?
According to the "2020-2026 China Spicy Strip Industry Development Trends and Investment Profit Analysis Report" by Zhiyan Consulting, the spicy strip market size was 65.1 billion yuan in 2019, estimated to reach 94.9 billion yuan by 2026. Based on Weilong's 2019 sales of 5 billion yuan, the "king of spicy strips" holds less than 10% market share, not forming an absolute market advantage.
Meanwhile, many competitors have entered the arena. Around 2017, Weilong, with annual revenue of 2 billion yuan, was the world's largest spicy strip manufacturer, holding 6% of the Chinese market, looking down on rivals from an absolute advantage—the second-place Yufeng Food had annual revenue of less than 600 million yuan, and Weilong was still growing at double-digit rates.
So when Three Squirrels launched "Yue La" and Yanjin Shop launched "Xiao Xin Wangzi" in 2017, Weilong didn't pay much attention. "Yue La" differentiated itself from Weilong's strips in form, with a shape highly resembling a condom, and marketing focused on "dirty humor," full of adult style. "Xiao Xin Wangzi" focused on spiciness, distinguishing itself from Weilong's sweet-spicy taste. These two products diverted sales through form and taste, putting considerable pressure on Weilong.
Data shows that in 2018, Three Squirrels ranked among the top ten spicy strip products on e-commerce platforms, and by 2020, it had advanced to third place in the spicy strip category, behind Weilong and Yufeng. Yanjin Shop's spicy strip business also grew rapidly, with revenue of 49.4136 million yuan in 2019 and 27.51 million yuan in the first half of 2020, up 13,817.12% and 29.77% year-on-year, respectively.
As the spicy strip market gets squeezed, Weilong is also diversifying to drive new growth. Since 2014, it has launched products like crispy noodles, konjac, self-heating hotpot "Beiguoxia," "Zilaishu" spicy strip hotpot, hot and sour noodles, and charcoal-grilled mini sausages, and in 2020, it introduced a soft-boiled egg series.
However, these products haven't received the same treatment as spicy strips, with far less investment in promotion and marketing. The reason is that spicy strips have high gross margins—mature manufacturers can control profit rates at 40%—and the market is far from saturated. The lucrative nature of spicy strips gives Weilong little incentive to invest heavily in other products.
As a result, Weilong's other products haven't replicated the success of spicy strips. At Weilong's 2020 partner conference, Chairman Liu Weiping revealed that konjac, which performed well on e-commerce channels, had sales of 83.06 million yuan in 2019, accounting for only 1.7% of that year's 4.9 billion yuan revenue. Spicy strips are Weilong's revenue pillar.
For the capital market, which doesn't put all eggs in one basket, this revenue structure poses a huge hidden danger. Weilong needs a new hit product to become a new growth engine.
**-02-**
**How to maintain the stability of spicy strip quality and reputation?**
Weilong's second question actually extends from the first: under a single revenue structure, how to maintain the quality and reputation stability of a single product category to avoid "all eggs in one basket" risks?
Liu Weiping once said that spicy strips could become luxury goods, and judging from Weilong's path, it is indeed taking a high-end brand route—investing in new factories, introducing automated production lines, and adopting simple, elegant packaging. In the market, it is also expanding into first- and second-tier cities; the 2016 factory livestream was mainly aimed at consumers in those cities.
But Weilong's high-end path hasn't been easy. A small episode reflects how difficult it is: in 2012, Weilong invited Yang Mi to endorse its products, but was reported by Yang Mi's fans for "unauthorized use of Yang Mi's image rights." Although it turned out to be a misunderstanding, it shows that even when Yang Mi wasn't as famous as she is now, in the eyes of her fans, Weilong was "reaching above its station."
Weilong has never shaken off labels like "low-end," "unhygienic," and "unhealthy," and has been involved in negative news multiple times. In 2018, two Weilong products were named by the Hubei Provincial Food and Drug Administration for additive non-compliance, triggering a wave of questioning. Although this was due to differing regulations between Hubei and Henan, it ultimately caused Weilong to postpone its IPO plans that year. In 2019, Weilong was exposed by CCTV's 315 Gala for dirty and messy production workshops.
For Weilong, whose revenue is highly dependent on the spicy strip category, its fate is tied to the quality and reputation of spicy strips. Once spicy strips are exposed for quality issues, it would be extremely fatal to the company. After going public, the quality and reputation of spicy strips are like a "time bomb" determining its performance in the capital market. This is also a question Weilong needs to consider before listing.
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