---
title: "Chinese Food & Beverage Startups to Watch in 2021 | Annual List"
description: "This is the fourth annual list from FoodPlus, featuring 79 startups in the Chinese food and beverage sector. The list is based on FoodPlus's observations and research, and is not investment advice."
author: "FoodPlus团队"
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# Chinese Food & Beverage Startups to Watch in 2021 | Annual List

> This is the fourth annual list from FoodPlus, featuring 79 startups in the Chinese food and beverage sector. The list is based on FoodPlus's observations and research, and is not investment advice.

Source: FoodPlusHub (ID: FoodPlusHub)

**This is the fourth year FoodPlus has released its annual list, with 79 companies entering the startup list this year.**

> Disclaimer: This list is selected and produced based on FoodPlus's observations and research on food consumer products and food entrepreneurship, and does not constitute investment advice.

In 2022, FoodPlus membership will be fully upgraded. Focusing on the food industry and food venture capital, we will deepen our work on the two fundamentals of product and marketing, while focusing on four tracks: convenient food, children's food, alternative protein, and prepared dishes. We will provide the most in-depth and systematic content and activities in the industry, aiming to offer a platform for deep exchange, industry insight, and problem-solving for food industry practitioners.

**More than 600 people have already joined FoodPlus membership.**

**Currently, joining FoodPlus membership offers a discounted price of 1299 RMB/person/year, with an additional 3 months of membership validity. From January 25, the price will rise to 1399 RMB/person/year, with no extra membership validity. From April 2022, it will return to the original price of 1699 RMB/person/year.**

The original intention of this list is to record, not to award or rank. It is simply based on our understanding and judgment of the industry and startups to select companies that have highlights, are worth paying attention to, and can be expected to have a future. At the same time, the selection of annual companies to watch can also provide a glimpse of the year's food and beverage venture capital landscape.

If FoodPlus can continue to develop for 20 to 30 years, then when we look back at the history of China's food and beverage industry, this list may become an important perspective for understanding industry history.

From a recording perspective, the past year has undoubtedly been the hottest and most active year for venture capital in the history of China's food and beverage industry. We can see that the entire food entrepreneurship ecosystem has taken a complete shape. Although the heat has been decreasing since the second half of last year, it is far better than when we first started this list. The industry's adjustment is cyclical, and the ecosystem's maturation requires some growing pains.

We need to remember both the good and the bad in the industry. Continue the good and digest the bad. We published an article earlier last year, "Why Should We Be Cautious About High Valuations of Early and Growth-Stage Food and Beverage Companies?" At that time, the market was still hot, and we raised a question: Is market overheating a good thing or a bad thing?

If we return to today and answer this question, our answer is: As long as the market doesn't collapse, it is a good thing. The food and beverage market cannot collapse, so it is good for the medium and long term, but the short-term pain is something we must endure as part of the industry.

But no matter what, 2021 in China's food and beverage venture capital is worth remembering and deeply remembering.

Without further ado, let's take a look at the 79 companies selected this year. Although it is twice the number of companies selected in 2020, we still maintain our judgment criteria. If you are unclear about the judgment and selection criteria, you can check our previous articles.

In addition, we will release a total of three lists this year. Today, we first release the list of companies to watch. In the following days, we will also release the list of investment institutions to watch and the list of early-stage companies to look forward to, the latter being a new list this year.

If you are in the convenient food, alternative protein, children's food, or prepared dishes tracks in the food and beverage industry, or if your work in a food and beverage company involves product and marketing, you are welcome to join the newly upgraded FoodPlus membership. In 2022, we will work together to deepen exchanges and solve the core pain points in the industry.

Scan the QR code to join FoodPlus membership now.

At the same time, we have launched founding member plans for each fundamental and track. Founding members can deeply participate in our various content and activity topics, and will also discuss the core propositions of tracks and fundamentals together. Each type of founding member only recruits 35 people, and the benefits last for 3 years. Click here to learn more about founding members.

**The following is our analysis and judgment of the segmented tracks and the 79 selected startups. The content is a bit long; you can bookmark it and read it carefully, and it is worth reading repeatedly.**

In the secondary market, beverages are a favored industry, and beverages are one of the few industries in the entire large food and beverage sector, besides alcohol and dairy, that can produce large market-cap companies. This situation exists globally.

For example, evergreen beverage companies: Coca-Cola and PepsiCo, and Nestlé, the highest market-cap company among global food and beverage listed companies, also has a certain proportion of revenue from beverages.

Another example is Nongfu Spring, which went public in 2020 and has maintained a market cap of 400-500 billion HKD. Dongpeng Beverage, which went public last year, had a market cap exceeding 100 billion RMB at its peak, and although it has fallen, it still maintains a market cap of over 60 billion RMB.

Secondary market investors are also willing to give these large-cap beverage companies high PE multiples. Dongpeng Beverage and Nongfu Spring have PE multiples of around 50-60. This is not the only evidence of the secondary market's favor for the beverage industry; another major evidence is the number of listed beverage companies.

The number of listed beverage companies ranks after the liquor, dairy, snack, and seasoning industries. In 2021 alone, three beverage companies went public in China. In addition to Dongpeng Beverage, there are Liziyuan, which mainly produces dairy drinks, and Huanjia, which focuses on coconut juice in lower-tier markets. The latter two companies' market caps are currently close to 10 billion, and at their peaks exceeded 10 billion.

If the food and beverage industry is divided into food and beverages, beverages have another major characteristic compared to food: it is relatively easy to produce companies with large revenue scales. For example, Wahaha, Nongfu Spring, C'estbon, JDB, Huabin Group, Wanglaoji, Master Kong, and Uni-President are all companies with revenue in the tens of billions or even hundreds of billions. Even Coca-Cola's two major bottlers in China have annual revenue exceeding 10 billion.

It is precisely because of the good expectations for revenue scale that this may be one of the important reasons why the secondary market favors the beverage industry. Of course, this is also the biggest expectation of China's current venture capital circle for the beverage industry and beverage startups.

For a long time, the domestic beverage market has presented two types of competitors: one is national brands, including both domestic beverage giants and multinational beverage giants; the other is regional beverage brands. However, for regional beverage brands to develop, going national is the only way.

The reasons for this market structure are several:

a. The beverage distribution system and sales network are relatively stable. Every national beverage giant has its own huge channel control capability, while regional beverage brands mostly rely on years of accumulation and core distribution network relationships;

b. Beverages are low-unit-price products, and the weight of the product does not match the unit price, so beverage products have a sales radius. Almost all beverage giants build factories nationwide, while regional beverage brands rely on factories to radiate to local and surrounding markets;

c. Advertising and communication channels are single. Beverage giants have huge budgets and can occupy the most advantageous advertising positions and communication channels. For latecomers to catch up, the cost and capital challenges are very large;

d. The supply side dominates the market. The supply side includes brand owners and channel owners. Brand owners can influence the market and consumer choices, and because demand is not dispersed and supply is small, channel owners also have a certain say.

However, in recent years, a third type of competitor has emerged in the domestic beverage market, including emerging startups and giants from other fields entering the beverage industry.

Due to some changes in the market environment, the factors that caused the previous competitive landscape have changed, giving new brands some opportunities to rise. But beverages are still a market that emphasizes offline distribution systems and sales networks, is asset-heavy, and requires heavy advertising.

Therefore, beverages are not a low-threshold industry; it is still a highly competitive industry. The high threshold and strong competition in all aspects make it rare for new companies to emerge in the beverage industry, but those that do are valuable.

These factors determine that entrepreneurship in the beverage industry requires caution but is also worth looking forward to, while investment requires waiting and discovery, and if capable, proactive capture.

2021 is the year with the most beverage companies on our list since we started publishing the annual list in 2018. We were very pleased when we screened out so many beverage startups worth paying attention to, as this may indicate that opportunities in the high-threshold beverage industry are becoming more diversified.

Swipe left to see more

**1. Genki Forest**

This is the fourth consecutive year Genki Forest has been on the list. Genki Forest is a phenomenal company globally. We wrote an article analyzing Genki Forest in 2018, raising the question: "Is Genki Forest a phenomenal brand in China's beverage market in recent years?" After more than three years of development, Genki Forest can no longer be simply called a brand; it is a truly platform-based beverage company.

In terms of revenue growth alone, it is difficult to find another company with such scale growth in the history of food and beverage. From revenue of around 200 million RMB in 2018, to an estimated 700-800 million in 2019, to an estimated 2.7 billion in 2020, Genki Forest's target revenue for 2021 is over 8.5 billion, and based on data we know, it may be around 10 billion.

From the perspective of product line and brand layout, in addition to the main brand, Genki Forest has launched no fewer than 10 sub-brands, including but not limited to Ran Tea, Alien, Man Fen, Duice, Beihai Ranch, Xian Tea, Youkuang, Summer Breeze, Qingjian, and Genki Breakfast.

The sub-categories entered include sparkling water, tea drinks, energy drinks, sports drinks, dairy drinks, fruit juice, and plant protein drinks. In addition, there are some brands acquired or strategically invested, involving product types such as baijiu, beer, and ready-to-drink coffee.

On the supply chain side, Genki Forest has completed the layout of five factories nationwide, located in Chuzhou, Anhui; Zhaoqing, Guangdong; Xiqing, Tianjin; Xianning, Hubei; and Dujiangyan, Sichuan.

Previously, it was also seen that Genki Forest plans to build factories overseas. According to many media reports, Genki Forest's sparkling water products have ranked first on Amazon's entire site. In addition to factories, Genki Forest is also laying out upstream core raw materials, strategically investing in Ruifen Bio as a supplement for erythritol raw materials.

On the sales side, Genki Forest completed the construction of a national sales system as early as 2020 and established initial momentum.

But what truly brought Genki Forest to the stage of beverage giants was in 2021, when it began to more aggressively enter offline circulation channels, namely the smart freezer plan released at the end of 2020. It has now completed the layout nationwide and may further increase investment in this area.

It encountered obstacles from other beverage giants in upstream core raw materials and factories, and also encountered obstacles from giants on the sales side. But even so, it achieved a breakthrough of around 10 billion in annual revenue and completed relatively core layouts in all aspects, making Genki Forest's future development even more anticipated.

#### **2. HEYTEA (Bottled Beverages)**

If there is any heavyweight challenger among new beverage brands, HEYTEA is one. From brand power to product power, HEYTEA has shown a very strong side. Brand power not only comes from HEYTEA's accumulation in the milk tea field, but also from the gradual establishment of brand momentum in its bottled beverage business.

If the initial launch of NFC juice by HEYTEA was a test of bottled beverages, then after launching sparkling water products, HEYTEA officially began to treat the bottled beverage business as one of its core strategies. In 2021, launching the juice tea product series and upgrading the bottled beverage brand from HEYTEA Little Bottle to HEYTEA pushed HEYTEA's strategic position and industry status in bottled beverages to new heights.

HEYTEA's product power is specifically reflected in several aspects:

a. Multi-product line layout. The current product lines include sparkling water, juice tea drinks, and NFC juice, making it an important challenger in the sparkling water and juice tea categories;

b. Product iteration. From packaging forms, visuals, and product flavors, it can be seen that HEYTEA is different from traditional beverage companies. It reacts very quickly and basically has no baggage. As long as there is room for important improvement and enhancement, HEYTEA will quickly adjust and iterate;

c. Juice tea products and lemon tea products. These two series originate from HEYTEA's store drinks, but the product definition and restoration as room-temperature beverages are well done, and the lemon tea product series was launched very quickly. Shortly after the market heat rose, related products were already on the market.

Since HEYTEA's core business is in offline stores, this actually brings some uncertainty to HEYTEA's bottled beverage business. This uncertainty is more about future space. If enough attention, manpower, and resources are given to this business, the next Genki Forest phenomenon in the beverage industry may appear in HEYTEA.

#### **3. Shouquanzhai - Linlong Tea Room, Koos**

Shouquanzhai, as a solid beverage company whose main business was brown sugar ginger tea, entered the soft drink industry when the growth of its solid beverage business might face a ceiling. This transformation has been successful based on the results achieved so far. In the tea beverage field, Linlong Tea Room is showing a situation of an important industry challenger.

Shouquanzhai adopted three strategies to enter the soft drink industry. In the earliest stage, it launched corresponding Ecolean packaging products around the main brand Shouquanzhai, including sour plum soup, fruit juice, and coconut juice. After establishing awareness of this business and accumulating experience in channels and supply chain, it successively launched the tea beverage sub-brand Linlong Tea Room and the sparkling water brand Koos.

Currently, Linlong Tea Room has launched multiple popular tea beverage products, including Jasmine Light Tea and Adult Tea. As a latecomer in the sparkling water field, Koos adopts a strategy of differentiating in product packaging and flavors, trying to occupy a place.

From Koos's product flavors, you can see uncommon flavors such as durian and mint, and the product packaging focuses on co-branding strategies. The most eye-catching may be the lemon-flavored co-branded product with White Cat.

In comparison, the sparkling water field is highly competitive, and although there are many competitors in tea beverages, they focus more on the sugary tea beverage market. As a pioneer in the sugar-free tea market, Linlong Tea Room is more worthy of looking forward to its future development and growth performance.

#### **4. Guozishule**

The product series that made Guozishule gain attention and establish a foothold in the industry is the Qi Dan sparkling water series. At that time, the domestic sparkling water market was heated up by Genki Forest. Guozishule's Qi Dan series was one of the early entrants in the domestic sparkling water market. Its distinctive product packaging and visuals gave a completely different feeling from Genki Forest, and the product naming of X Qi Dan also gave consumers a relatively intuitive product impression.

After the Qi Dan product series established a foothold in the market, Guozishule began to lay out multiple product lines, entering categories such as tea drinks, dairy drinks, juice drinks, and vitamin drinks. It can be seen that Guozishule pays more attention to tea-related products, launching three corresponding products: Duoduo Lemon Tea series, Cha Hanhan series, and Shu Nai Cha series.

Unlike Genki Forest's strategy, Guozishule did not adopt a multi-brand strategy but learned from Nongfu Spring's approach, presenting Guozishule as the main brand across different product lines.

From the perspective of channel and market layout, Guozishule's layout is similar to that of Qingquan Chushan, which is also on this year's list. It focuses on first- and second-tier cities as key markets, while relying on the distributor network to lay out lower-tier markets.

For future development, continuing to show stronger capabilities in brand power, product power, and sales may bring some future imagination space and increase the possibility of entering the top tier of the beverage industry.

#### **5. Qingquan Chushan**

Initially entering the beverage market with Xiaomi Cola products, it has now laid out sparkling water, sugar-free tea, and juice tea categories, and also launched a new generation of Xiaomi Cola products.

The reason Qingquan Chushan can establish a foothold in the market is related to its market strategy: introducing hot single products from first- and second-tier cities to lower-tier markets. The successful layout of multiple products also reflects the effectiveness of this strategy. Currently, the sparkling water product line Qingting and the sugar-free tea product line Kun Cha both occupy a certain market position in their respective categories.

After starting from lower-tier markets, it is now also beginning to lay out in first- and second-tier cities. However, unlike Genki Forest's high-profile approach, Qingquan Chushan is more low-key. The current core strategy is still in lower-tier markets, ensuring product supply and distribution in first- and second-tier cities, relying on natural sell-through to occupy shelf space and market share.

Since its development, Qingquan Chushan has been relatively steady. Its product strategy is slightly lower than first-tier brands, product expansion is not aggressive, and channel and market strategies are mainly stable. If the products can ultimately be recognized by consumers and occupy market positions, the possibility of emerging from the beverage market is relatively high.

#### **6. Hope Water**

If there is one beverage company on this year's list that is the most special, it must be Hope Water. The reasons are several:

a. It is not from the traditional beverage industry, nor did it start with brand power, but from a single product in the catering channel, gradually expanding;

b. Using the catering channel as the core channel and still being able to create brand effects is very rare, especially for new brands;

c. In the beverage industry, few brands attach so much importance to brand building, especially in the early stage of entrepreneurship.

China's juice market has lacked innovation for a long time. NFC juice cannot be measured by innovation; it is more of a new product type.

In recent years, two types of rare innovation have appeared in China's juice market. One is Genki Forest's Man Fen, which is carbonated, high-concentration, and additionally enriched with nutrients. The other is represented by Hope Water, combining Chinese elements, boiling processes, and bubbles. Both have brought some new possibilities to China's juice market.

In addition to Wang Shanzha, Hope Water's Wang series also includes Wang Xingfu, Wang Taohua, and Wang Meihao. In 2021, for the canned product line, two new products were launched: Bergamot Lemon Sparkling Water and Honeysuckle Peach Sparkling Water, both focusing on medium-high or high concentration fruit juice content.

Outside the Hope Water brand line, it also laid out the wine brand Li Huanxi, which currently offers rice wine and lemon jasmine sparkling wine, also with certain Chinese elements.

To what extent Hope Water can lay out in the catering channel, what momentum it can maintain after emerging from the catering channel, and what support brand power and product power can give to Hope Water's future development are all very worthy of attention and are the possibility support for Hope Water's future development.

#### **7. Letikong**

Using dietary fiber as the core of the product and even the brand is Letikong's biggest feature. Around this feature, it has launched multiple product lines, including sparkling water, sparkling tea, and body control water. The product with relatively higher characteristics in the market is the sparkling tea product line, which is currently Letikong's main product.

Although other beverage brands have also launched corresponding products with high dietary fiber, it is still relatively rare for a company to use this as its core strategy. This shows that Letikong hopes to establish its own advantages and barriers in this area.

Currently, Letikong is also deliberately doing some things around the word "Le" (乐). The core is reflected in two aspects: on the one hand, the traditional Chinese character "樂" is used as the core logo of the brand and also the visual hammer on the front of the product packaging; on the other hand, in brand and market, it previously launched a co-branded product with the musical instrument brand Gibson.

Relying on the accumulation of its founding team in the beverage industry, Letikong has already achieved some results in the market. As for whether the core strategy of dietary fiber can build its own core competitiveness in the long term, we can only wait and see.

#### **8. Zero Degree Fruit Workshop**

NFC juice was once a very popular food and beverage category, but in recent years, the heat has decreased significantly. During these years of declining heat, market concentration has increased. The current market leader is Nongfu Spring, and Zero Degree Fruit Workshop, which brought NFC juice products to the retail and consumer market, ranks second.

We estimate that Zero Degree Fruit Workshop's revenue in 2021 can reach around 300 million RMB. The revenue composition mainly comes from several aspects:

a. Breakthrough online. According to data from third-party data platforms, Zero Degree Fruit Workshop's online GMV is in the tens of millions;

b. Deep cultivation of core channels, with deep cooperation with key channels;

c. Advantages accumulated from self-built factories and supply chain, and momentum in special channels, including many coffee and baking channels.

The online breakthrough mentioned above is very core because of Zero Degree Fruit Workshop's room-temperature NFC juice product line, which contributes the vast majority of sales online. Room-temperature NFC juice can also solve the high retail price problem that has existed for many years for this type of product.

Currently, Zero Degree Fruit Workshop has begun to try laying out offline juice stores, which is a sales method attempt. At present, two stores have been opened in Hangzhou as pilots, and this can be watched.

For Zero Degree Fruit Workshop's medium and long-term development, on the one hand, it depends on whether the NFC juice market can be further opened in China; on the other hand, it depends on Zero Degree Fruit Workshop's own product innovation and its comprehensive capabilities combining market insight and channel foundation. Overall, as a first-tier company in the NFC juice market, it largely determines how this market develops and moves forward.

#### **9. Fino**

Fino is a benchmark case of "product power defeating traffic." The taste and flavor of its products are appreciated by both professional tasters and consumers in the industry. After an early four-to-five-year accumulation period, the rapid development in the past one to two years has been explosive but also steady.

The competitive logic of coconut milk products is somewhat similar to dairy products. The most important supply chain cannot be quickly replicated compared to other beverage products.

Domestic high-quality coconut production capacity is limited, the growth cycle of coconuts is relatively long, and the quality of coconuts, such as the thickness of the coconut meat wall and the sweetness of coconut water, will affect the final product completion. This category's own characteristics make "upstream supply chain building" one of the core handles for competition in the coconut milk product category.

Fino's development logic is centered around supply chain building. In 2015, Fino began to lay out raw materials and factories. To date, Fino has 2 self-owned factories and 6 cooperative factories, managing a total of 38,000 mu of coconut forests in Vietnam, Thailand, and Hainan, China.

In terms of products, Fino's innovation logic is to optimize and upgrade traditional formulas. For example, in its star product Hou Ye Ru, Fino increased coconut meat juice to over 20% and replaced the water in the traditional formula with 5% coconut water.

In the early days, Fino's coconut milk products were mainly B2B, with clients including well-known offline tea drink brands such as Luckin Coffee and Naixue. In 2021, Fino had its "accumulated strength" moment. In April 2021, Luckin's Raw Coconut Latte was launched. It is reported that the monthly sales of Raw Coconut Latte exceeded 10 million cups and were often sold out.

Fino cleverly leveraged Luckin's trend at that time, entering from the perspective of "raw material supplier for Luckin's Raw Coconut Latte," quickly completing the leap from B-end to C-end. It also launched a 200ml specification to match C-end channels.

During the 2021 Tmall 618, Fino quickly entered the top ten of plant milk brand sales; by Tmall Double 11, Fino became the second in plant milk brand sales, second only to OATLY, and also ranked fourth in the large beverage store sales ranking. At the same time, Fino's B-end penetration continues. It is reported that Fino has reached supply cooperation with more than 30,000 offline coffee and tea drink stores.

As a research institution that has long focused on the food and beverage industry, after the "barbaric traffic" period of the past two years, phenomena such as "product power defeating traffic" and "the industry returning to business essence and common sense" are what we are happy to see. As a standout in this paradigm return, we also look forward to how Fino will go higher in the future based on product power.

Dairy, as a traditional track with hundreds of billions in scale, has long been in a state of duopoly (Yili, Mengniu) and feudal separation. The overall dairy industry's compound growth rate in the past five years is 2.7%, and industry growth has slowed significantly. But in the overall slowing dairy industry, it can be seen that innovative big single products are growing significantly.

In 2021, Yili's Jindian and Ambrosial both exceeded 20 billion, Mengniu's Telunsu announced it exceeded 30 billion, with revenue still growing over 30% year-on-year, maintaining strong growth momentum. Junlebao, which became independent from Mengniu in 2019, is expected to sell over 1.4 billion boxes of its Jianchun 0 added sugar yogurt in 2021.

These all point to an industry characteristic: the single product ceiling in the dairy track is high. We see that dairy startups are almost all entering the market with the logic of creating big single products.

Whether the milk source is stable and sufficient, safe and high-quality, determines the final quality of dairy products. The steady development of dairy enterprises highly depends on high-quality milk sources. Laying out upstream milk source pastures is a key consideration for dairy enterprises when they develop to a certain stage.

This year, Jane's, Beihai Ranch, and New Hope Dairy all invested in Aoya Dairy. Previously, Jane's had been cooperating with six pastoral enterprises including Modern Dairy, Aoya Dairy, and Fonterra, with raw milk from eight pastures of these six pastoral enterprises.

One Cow Raised by One Person is said to have built 8 pastures in Hebei, Shandong, Heilongjiang, Inner Mongolia, etc., but at the same time, Shanxi Mutong Technology, Bright Dairy (Dezhou) Co., Ltd., Shanghai Yong'an Dairy, etc., are providing raw milk and OEM processing for it.

Jane's, Classy Kiss, One Cow Raised by One Person, and Bi Ru represent three types of dairy entrepreneurship, each finding its own breakthrough. Jane's and Classy Kiss enter the mid-to-high-end low-temperature dairy market. This is not the core territory of Yili and Mengniu, and regional dairy enterprises are mainly in the mid-to-low-end dairy market.

One Cow Raised by One Person enters the room-temperature milk market, avoiding the offline terminal channel competition that traditional dairy enterprises are good at, with innovative product concepts, seizing the Internet channel dividend, and growing rapidly. Bi Ru is mainly technology R&D-oriented, with B-end cooperation as the main focus.

Swipe left to see more

**1. Jane's**

Since the creation of our annual list, Jane's has been selected every year. Founded in 2014, with revenue exceeding 1 billion by 2020, Jane's scale has surpassed most old regional dairy enterprises.

In terms of channels, it started from offline channels, with the core placed in premium supermarkets, including Hema, Ole, Aeon, and Green Label Yonghui. In 2019, it began entering convenience store channels and community fresh food, and also tried entering the company canteen channels of Fortune 500 companies. In addition, Jane's is also a top low-temperature product brand in online channel operations, accumulating nearly 1 million fans in private domain.

In 2021, Jane's announced supermodel Du Juan as the spokesperson for 0 sucrose yogurt, and due to the popularity of "Sisters Who Make Waves," announced Zhang Xinyu as the tasting officer for the 0 sucrose series, with Yuan Shanshan and Li Feier taking on the role of brand friends. But from the perspective of the fit of Jane's spokespersons and the investment in spokesperson promotional resources, these attempts cannot be considered successful.

In terms of products, in 2021, Jane's launched new products: pasteurized fresh milk, Father's Love Formula >3 years old high calcium children's yogurt, and rice pudding. Rice pudding is an attempt by Jane's in the post-meal dessert or afternoon tea scenario. At present, it does not seem to have focused key resources. Fresh milk launched 250ml and 950ml specifications, with a 10-day shelf life, emphasizing 111 tests per day, 3.6g/100ml protein, and 120mg/100ml calcium.

From low-temperature yogurt to the low-temperature liquid milk market, in the mid-to-high-end pasteurized milk market, Jane's will directly face competition with Mengniu and Bright Dairy, putting higher demands on upstream milk sources, production quality control, cold chain logistics, and sell-through management. This has important strategic significance for Jane's.

Father's Love Formula is Jane's children's yogurt line, and its product expansion thinking is similar to the segmented approach of milk powder. In 2020, it launched a pouch yogurt for infants over 8 months, with added whey protein and precise sugar control of 0%, 2%, and 4%.

In 2021, it launched Father's Love Formula >3 years old high calcium children's yogurt, specifically for children over 3 years old, increasing calcium content and adding LGG probiotics. At present, in the children's low-temperature yogurt field, Father's Love Formula is almost dominant, with a prominent big single product effect.

Looking at the long-term future, the current two major single product lines, 0 sucrose yogurt and Father's Love Formula, have high ceilings, and Jane's has a lot of room for development. As for the newly entered pasteurized fresh milk, Jane's sales are currently average. With giants ahead and pursuers behind, Jane's has a long way to go in brand, product, and core upstream supply chain.

**2. Classy Kiss**

Although both are positioned in the mid-to-high-end low-temperature dairy market, Jane's enters with the feature of no additives, while Classy Kiss is rooted in the creation of high-end quality and does not deliberately pursue sugar-free and zero additives. In the 18-year annual list where Classy Kiss was selected, we raised concerns about Classy Kiss's online channel operations. In May of that year, Classy Kiss just opened its Tmall flagship store.

In 2021, Classy Kiss's Tmall flagship store sales ranked fourth in low-temperature dairy, second only to Jane's, Bright Dairy's Sui Ding, and Beihai Ranch. At the 2022 Classy Kiss National Customer Annual Meeting, sales director Lian Xueting claimed that Classy Kiss's overall sales in 2021 increased by 25% year-on-year, with new retail and high-precision super channels achieving the first share in the industry.

In 2021, Classy Kiss focused on launching two representative new products: the "Sugar-Free Diary" cup yogurt, focusing on zero sucrose and zero sugar substitutes, and the "007" 1kg family-pack yogurt, focusing on zero additives, zero burden, and rich in seven active probiotics. At present, these two product lines have good sell-through.

After focusing on high-end yogurt for more than 20 years, in 2021 Classy Kiss entered the low-temperature fresh milk market. Unlike Jane's 75-degree pasteurization, Classy Kiss uses organic membrane filtration technology (low-temperature ceramic membrane filtration technology can filter and sterilize at 50-55°C), with native milk protein of 3.8g/100ml and calcium content of 20mg/100ml, emphasizing fresh 2 hours from pasture to factory. The milk source chose cooperation with Zhongken Huashanmu Dairy.

In terms of supply chain, in 2021, Classy Kiss signed a contract with the Suzhou Industrial Park Suxiang Cooperation Zone Management Committee to start the expansion of a 90,000-ton fermented milk project. This is another strategic cooperation after Classy Kiss yogurt landed in the Suxiang Cooperation Zone in 2015. Currently, Classy Kiss yogurt sold in the Yangtze River Delta region is produced in the Suxiang Cooperation production base.

According to reports, in 2019, Classy Kiss yogurt's operating revenue in Suzhou exceeded 680 million RMB, with tax payment exceeding 100 million RMB that year. Overall, Classy Kiss has been low-key and steady. But with the first launch of low-temperature fresh milk, Classy Kiss will face greater challenges in brand and upstream supply chain, and while competing with Jane's again, it also faces encirclement by giants.

#### **3. One Cow Raised by One Person**

Choosing to enter the market with room-temperature liquid milk, One Cow Raised by One Person signed a listing counseling agreement with CITIC Securities in October 2021, planning to list on the A-share market. From launching its first product in 2016 to reaching an annual revenue scale of 2 billion, One Cow Raised by One Person took less than five years. In 2021, six pastures of One Cow Raised by One Person passed GAP certification, marking that the pasture source is in line with international first-class standards.

On the product side, it launched Jerseys pure milk, rich in 3.8g protein and 5.0g high-quality milk fat, focusing on high-end to help increase profits.

The children's line Bangbangda series also expanded products, launching children's milk powder with no white sugar, condensed milk, cream, or flavoring clean ingredients, focusing on fresh raw milk one-time spray drying technology. Children's pure milk was upgraded, changing from dream cap to willow leaf box packaging, and protein increased from 3.3g/100ml to 3.6g.

In terms of channel sales, it caught the Internet channel dividend every wave, from early strategic cooperation with Yunji, using social networks to attract the first wave of fans, then strategic cooperation with the Tmall platform to set a small goal of 1 billion in 3 years, and strategic signing with Qianxun (ViYa's live streaming company).

According to an interview with founder Xu Xiaobo by 36Kr, 70% of One Cow Raised by One Person's sales are on online channels, and the user base has exceeded 20 million. The online channel share is too heavy. Under the trend of increasingly expensive e-commerce traffic, it will erode the gross profit of One Cow Raised by One Person and increase operating costs. One Cow Raised by One Person must consider the construction of omni-channel.

At the same time, the brand of One Cow Raised by One Person needs to be re-examined. Initially, it told the story of raising cows, using the cognitive gap of users to shape the brand story. However, with information transparency, the cooperative pastures in the process of scaling have been repeatedly questioned, and the brand needs further optimization and upgrading.

#### **4. Bi Ru**

Founded in 2014, Bi Ru initially launched BeYogurt low-temperature yogurt, focusing on additive-free Czech craftsmanship, sold in Green Leaves supermarket, which mainly deals in imported goods. In 17 years, it launched fresh milk. Bi Ru is considered one of the earliest brands in China to explore the high-end low-temperature yogurt and milk field, directly related to the founder's background.

According to public account information, founder Li Jiankang had five years of NFC juice experience before founding Bi Ru. But retail development was not smooth, and after several years of technical research, in 19 years Bi Ru launched Icebock. Currently, there are three products: Icebock, Super Milk, and Sour Milk.

Compared to other companies on the list, Bi Ru is quite special. One of the special points is that it focuses on dairy technology R&D. Icebock (Eisbock) is transliterated from a German technology used in beer, which uses the different melting points of substances for purification, making the liquid more concentrated and pure. Applied to milk, after purification, the water content is reduced, protein content can reach 6.2g/100mL, and calcium and minerals are doubled.

In 19 years, Bi Ru achieved commercial mass production of ice-purified milk. Currently, Bi Ru is still the only company that can stably supply purified milk on the market.

It is worth mentioning that due to the first-mover advantage, Icebock is registered as a brand trademark under Bi Ru. In 21 years, Bi Ru launched another product, Super Milk, to solve the problem of fresh milk instability caused by factors such as milk freshness, water content, milk fat rate, milk protein, and various trace element contents due to different seasons.

Another special point is the restraint of the brand. Icebock opened the market through B-end cooperation, which is also the team's original intention of "leaving seasoning and creativity to consumers."

Cooperating with boutique coffee shops such as Peet's and O.P.S, and tea drink shops such as HEYTEA and Lelecha, it is said to cover 25 regions and more than 200 cities nationwide, with nearly 4,000 stores using Bi Ru products, and rapidly radiating nationwide with Beijing and Shanghai as centers.

Compared to OATLY, which also opened the market through cooperation with boutique coffee shops, Bi Ru seems to have a low profile in cooperation. There is no right or wrong decision. We appreciate Bi Ru's adherence to its own development rhythm and its philosophy of striving to create product value.

Since 2018, when Saturnbird launched the industry-trendsetting "small cup" premium freeze-dried instant coffee, the overall landscape of China's retail coffee market has begun to change.

Many coffee brands have launched similar premium instant coffee products. International coffee giants Starbucks and Nestlé also joined the premium instant category in 2021. In addition, the other two types of retail coffee, drip bag coffee and coffee liquid, have also shown category leaders online.

Drip bag coffee is almost a product line that all coffee brands choose to develop, while the volume of coffee liquid products, especially refrigerated coffee liquid, is smaller than the other two types of retail coffee. Coffee beans and coffee powder products have an even smaller share in the retail coffee category than coffee liquid. The main products in retail coffee—premium instant coffee powder, drip bag coffee, and coffee liquid—have been developing in China for several years. By 2021, the product and competitive landscape had entered a preliminary stable state.

Emerging coffee brands have initially grown into scaled companies. Saturnbird, Yongpu, and隅田川 have all reached valuations of several billion, and they have each become relatively leading brands in premium instant coffee, coffee liquid, and drip bag coffee. China's retail coffee market is continuously expanding from 100 billion to several hundred billion. Market penetration will continue to increase, and the domestic coffee industry chain will become more mature. Perhaps looking at today's coffee market from the future, this is still a relatively early stage of development.

Tea****

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**1. Saturnbird**

Saturnbird has been on our list for the fourth consecutive year. Currently, Saturnbird has a dominant position in the premium instant field. We estimate that Saturnbird's overall revenue in 2021 has reached 1 billion RMB. In June 2021, Saturnbird completed a B+ round of financing of several hundred million RMB, with a post-investment valuation of 4.5 billion RMB.

In 2021, we believe Saturnbird is still worth paying attention to for the following reasons:

1. It made extended explorations in product lines. This year, Saturnbird launched oat milk and plant milk products as gifts in the Double 11 gift box as a market attempt;

2. Exploration of offline experience stores. It opened an offline store into_the force in Shanghai, selling specialty coffee drinks and some limited Saturnbird products;

3. Saturnbird innovated in brand advertising. During the Double 11 preheating period, it collaborated with director Jia Zhangke to shoot an advertisement for the main product Super Bucket, which sparked heated discussion and achieved significant results in both brand and sales.

Saturnbird is the pioneer and market cultivator of premium instant coffee. So far, its layout in all aspects is systematic and complete. In terms of product and brand, it has achieved innovation with restraint. Even if Nestlé and Starbucks jointly enter the premium instant market, it is difficult to surpass Saturnbird.

For Saturnbird now, the next step may be how to further break through from the 1 billion revenue scale, which requires Saturnbird to further challenge its own capabilities.

How Saturnbird will innovate and iterate products, whether it will develop other coffee categories, how to further expand consumer groups, how to lay out offline channels, and how to innovate marketing methods are the core elements of future growth.

**2. TASOGARE**

TASOGARE has always positioned its brand as "mass coffee." TASOGARE's drip bag coffee is priced at about 2-3 RMB, which is more affordable than brands like Saturnbird and Yongpu, which price their drip bags at around 4 RMB.

Currently, TASOGARE has developed into a full-category coffee brand, with products covering drip bag coffee, coffee liquid, instant coffee, etc. Among them, drip bag coffee and coffee liquid products are mainly produced in Japan, and some coffee powder products are processed at the origin of coffee beans. Most products are produced overseas, which has become TASOGARE's brand feature.

In 2021, TASOGARE also launched non-coffee products, including tea and curry rice, expanding products around the Japanese lifestyle. This year's sales performance was outstanding. During the 2021 Double 11 period, online sales exceeded 100 million RMB.

TASOGARE had relatively high social buzz in 2021. The brand officially announced Xiao Zhan as its brand spokesperson and also signed to become the official coffee exclusive supplier for the Hangzhou 2022 Asian Games. Now with traffic endorsement, consumers have an impression of it as a high-quality and affordable brand. These core brand traits give TASOGARE more opportunities to reach a broader consumer base.

From Qichacha, it can be seen that TASOGARE is also applying for trademarks related to convenient ready-to-eat food and catering accommodation, which does not rule out the possibility that TASOGARE will further expand Japanese-style convenient ready-to-eat products and open offline coffee shops.

China's coffee market is growing rapidly. At present, many premium coffee brands have not yet reached the lower-tier markets where coffee penetration is relatively low. This is a good market opportunity for TASOGARE.

**3. Yongpu**

Yongpu launched its flash brew coffee liquid product at the end of 2017. Today, it is the fourth year, and the product has undergone multiple iterations. Currently, it has established a place in the domestic coffee liquid market.

2021 was still a year of rapid growth for Yongpu. Throughout the year, the brand conducted a new flavor exploration of its main product, flash brew coffee liquid, launching coconut flavor and Yunnan flavor products. It also made a small iteration to its freeze-dried powder, launching the light enjoyment series, reducing the weight of a single coffee freeze-dried powder from 2.8g to 2g.

It also collaborated with Hema's popular online celebrity single product, raw milk strawberry milk, and rose lychee fruit tea flavors, combined with Yongpu's classic cold brew coffee liquid to create flavored ready-to-drink coffee. In addition, Yongpu launched a new tea brand, Xique Yuanye, with products of concentrated tea liquid, and the brand style is relatively consistent with Yongpu.

Yongpu's sales performance also achieved good growth in 2021. At the beginning of 618, sales increased 5 times year-on-year. We estimate that Yongpu's main sales channel, Tmall, had annual revenue exceeding 200 million RMB.

On the brand side, Yongpu has always maintained its own characteristic—promoting brand co-branding. Throughout the year, co-branded products were launched, such as a bracelet coffee combination with Hema and Chow Tai Fook, and a coffee ring concentrate combination with Qinqin, bringing consumers interesting experiences and brand impressions.

For brands, cross-border co-branding is also a low-cost way to expand channels, while maintaining Yongpu's brand freshness and innovation. Yongpu also further strengthened its private domain building, launching the "Yongpu Island" WeChat mini-program, continuously advocating the brand's coffee cultural and creative attributes.

Coffee liquid products, especially cold brew coffee liquid products, still account for a relatively small proportion of domestic retail coffee. However, coffee liquid products are slowly seizing the share of instant coffee. This product type is more flexible in consumption scenarios and is a sub-category with great growth potential.

Yongpu is growing together with this promising market, but it still needs to further polish its product barriers to capture more market share.

**4. Xinlu Coffee**

Saturnbird, Yongpu, and TASOGARE quickly built their core competitiveness in a short period, and some product types have already surpassed traditional coffee enterprises in sales. Emerging coffee brands mostly focus on creating a lifestyle and outputting their understanding of coffee culture.

But some brands choose to deepen their work in the coffee supply chain, relatively downplaying brand marketing. In 2021, we noticed such a brand. The company grows in the origin of coffee beans, has almost no marketing investment, has never raised funds, but the brand's overall growth rate is very fast.

Xinlu Coffee was established in March 2018 and is one of the brands under Yunnan Baoshan Zhongka Group. The current main products are drip bag coffee and roasted coffee beans. Baoshan Zhongka Food Co., Ltd., located in Baoshan City, Yunnan Province, was established in 2013 and is an enterprise integrating coffee planting, acquisition, and processing. It has its own brands "Zhongka," "Xinlu," and "Heizuan."

Currently, from Tmall sales, Xinlu's revenue is the highest among the three brands. The monthly sales of the brand's two main products, drip bag coffee and Italian blend coffee beans, both exceed 20,000.

Xinlu Coffee focuses on Yunnan blended coffee, including drip bags and coffee beans. The products classify the flavors emitted by coffee beans through different fermentation and roasting methods. The flavor types may be relatively subtle, including rum ice cream, fermented rice balls, strawberry yogurt, etc., focusing on professional coffee.

To taste such flavors, in addition to basic tools, consumers also need a certain understanding of coffee brewing techniques. The consumer group is positioned towards professional coffee enthusiasts. Xinlu's sales also made us realize that in drinking coffee, there are more and more "professional consumers."

If brands like Saturnbird are making more people develop the habit of drinking coffee, then brands like Xinlu are taking over more and more consumers who have requirements for flavor and brewing techniques.

The outbreak of the epidemic in early 2020 elevated the entire convenient food track to a new height. This is not only reflected in the overall sales volume increase of the track, but also in the intensity of competition in the track, and in the continuous upgrading and iteration of sub-categories.

In 2021, convenient ready-to-eat food is still the most popular venture capital track. In the first half of 2021, investment and financing events in the convenient food field were close to the total for the whole of 2020. The overall entrepreneurship and innovation in the track can be summarized in the following points:

1. Upgrading and segmentation of traditional convenient food. Some focus on ingredient upgrades, highly restoring taste and content; some innovate in technology, using freeze-drying technology, NFC original soup, etc.; some upgrade local flavors, integrating local specialty noodles/rice/snacks with innovation.

2. Convenience of catering & meals. Self-heating food, quick-cooking noodles, frozen food, prepared dishes & prepared meals are all representatives of catering & meal convenience. Self-heating food currently has a market scale exceeding 10 billion in China. Quick-cooking noodles are represented by river snail rice noodles. Currently, pre-packaged river snail rice noodles are also a 10-billion-level market. Products such as pasta, Japanese ramen, and local flavor noodles and rice noodles are also accelerating national popularization.

3. Segmentation of scenarios. A typical example is the rise of microwave food. Traditional frozen dumplings have become microwave dumplings, and mixed noodles/rice/fried rice that require cooking have become microwave versions. Meat, sweet potatoes, and other baked products can also be microwaved.

Compared to other tracks, our selection for convenient food this year is indeed more stringent. This stringency is reflected in the horizontal comparison of various types of convenient food companies. We still believe that the convenient food track has the possibility of new companies with revenue of several billion or even 10 billion.

Among them, we screened out Laxian Shuo and Zihaiguo, which were on the 2020 list.

As leaders in their respective categories, they did not show a leading posture in the hard battle of 2021, and their growth showed fatigue and decline. Among them, Laxian Shuo should have rethought its brand and product expansion, streamlined flavor SKUs, launched a small Laxian Shuo for children, and re-launched the instant noodle category.

On the other hand, both chose to launch new sub-brands. Laxian Shuo launched a frozen food brand (covering small steamed buns, shaomai, red bean buns, microwave dumplings) called Chunfeng Jiujia. Zihaiguo launched four brands: the quick-cooking noodle brand Huamian, the prepared dish frozen product brand Newton's Law, the compound seasoning brand Xiaoqi Kitchen, and the river snail rice noodle brand Chouchouluo. It also tried and hastily ended offline chain franchising of Zihaiguo hot pot and claypot rice.

But currently, whether in product characteristics or sales growth, the sub-brands of the two brands are still average. Especially Zihaiguo, traffic is not a one-trick. The new brand Huamian reached sales of over 14 million in August and September through a wave of traffic methods, but due to insufficient product and brand power, subsequent sales fell back to over 1 million. In 2022, more effort is needed in product and brand cultivation.

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#### **1. Hao Huan Luo**

If convenient food is a hot track in food, then river snail rice noodles have been the red-hot item in the past two years. Spicy, refreshing, fresh, sour, and hot are the unique flavors of river snail rice noodles, with strong addictive characteristics. At the same time, it smells "stinky" but tastes delicious, making consumers form a clear love-hate attitude, making river snail rice noodles naturally internet-famous. During the epidemic, river snail rice noodles repeatedly appeared on Weibo hot searches.

According to Liuzhou Commerce Bureau data, the total output value of Liuzhou river snail rice noodles has been continuously increasing, from 500 million RMB in 2015 to 10.99 billion RMB in 2020. Compared to other local specialties, the popularity and success of river snail rice noodles have inevitable factors. Local government industrial support is a core element.

Liuzhou City proposed the development concept of "Liuzhou river snail rice noodle industrialization, standardization, branding, and scaling," determined that the Liuzhou river snail rice noodle industry would take the path of bagged mechanized production, and started the construction of a river snail rice noodle industrial park. It not only provides a series of subsidies and support from production rooms, patents, talents to sales, training, and planting, but also promotes the national geographical indication trademark certification of "Liuzhou river snail rice noodles," accelerating the optimization and upgrading of the entire industry chain.

While policy dividends promote industrial development, they also make all brands in the river snail rice noodle industry face a fully competitive market. The technical and capital thresholds for entry have become lower, and brand products are seriously homogenized.

Last year, the black swan event of the epidemic caused the overall river snail rice noodle category to explode, and we were in a wait-and-see state for brands. In 2021, gradually returning to normal, the waves washed away the sand, and we saw the brand Hao Huan Luo, which still developed steadily in 2021.

In 2019, with the support of the Liuzhou government, Hao Huan Luo established the Hao Huan Luo river snail rice noodle industrial park, involving product R&D, production, warehousing and logistics, etc. It is expected to produce and process 80 million bags of pre-packaged river snail rice noodles annually, providing a stable foundation for Hao Huan Luo's development. In 2021, Hao Huan Luo firmly ranked first in the river snail rice noodle category, with an estimated revenue scale of around 900 million RMB.

Founded in 2015, before that, the founder of Hao Huan Luo had operated river snail rice noodle stores offline. The brine packet maintains a high degree of consistency with the taste of river snail rice noodles in physical stores, which is one of the core highlights of Hao Huan Luo's products.

In terms of product matrix development, Hao Huan Luo takes the classic original flavor as the core, supplemented by extra stinky and spicy and extra portion versions. The specialty versions developed crayfish flavor and clam mushroom flavor. Priced at 10-15 RMB, Hao Huan Luo is mid-to-high-end among river snail rice noodles.

Avoiding low-price competition gives Hao Huan Luo some space to focus on brand development, creating the IP comic character Huan Zai, producing short dramas, and communicating with consumers through original content. At the same time, it continuously engages in cross-border co-branding, cooperating with brands such as NetEase Cloud Music, Genki Forest, Wrigley, and Naixue Tea, attracting young consumer groups.

As a vertical industry, it requires deep cultivation, and the top priority or foundation is food safety. At the end of 2021, Hao Huan Luo was exposed to an "insect egg incident." We have been paying attention, and there is no official investigation result yet, but Hao Huan Luo's handling of this matter was unsatisfactory.

Including Hao Huan Luo in the list of companies to watch this time is more based on Hao Huan Luo's brand performance throughout 2021, and it is also our recognition of the development of the river snail rice noodle sub-category. We look forward to whether Hao Huan Luo can be solid in product quality assurance and have more highlights in channel development and brand building.

#### **2. Airmeter**

Launched in 2019, Airmeter single-handedly drove the growth of the pasta sub-category. Although partly due to the growth dividend of a wave of convenient food during the epidemic, Airmeter quickly started up in 2020, completing 250 million RMB in sales that year. In 2021, Airmeter maintained a steady growth rate, with an estimated annual GMV of around 600 million RMB.

From a product perspective, Airmeter still focuses on ready-to-cook pre-packaged pasta products. In brand output, it focuses on defining "what is restaurant-level pasta," continuously cooperating with Michelin chefs and star-rated restaurants to form brand endorsement. The controlling company behind Airmeter, Baoli, is mainly engaged in compound seasoning OEM, providing strong support for Airmeter's pasta sauce R&D and production iteration.

In offline channels, Airmeter actively expanded, laying out high-end offline channels in first- and second-tier cities, entering Hema, city'super, Ole, etc. At the end of 2021, Airmeter also effectively extended its audience, launching pasta products suitable for children. Airmeter claims to focus on refined white-collar workers, allowing them to enjoy a refined Western meal at home.

The actual audience scenario should be mainly family, with refined mothers cooking for their children. At present, apart from making the pasta shape into spiral pasta more suitable for children, Airmeter has not focused much on sauce nutrition, and the flavors are conventional tomato meat sauce. The difference between the children's line and regular products is not significant. The energy invested in the children's product line seems limited.

Although Airmeter is already the absolute leader in the instant pasta category, with a claimed market share of over 60%, it cannot rest on its laurels.

As more and more competitors flood in, newcomers each have their strengths, some targeting segmented audiences, some seizing offline channels, some entering with flavor innovation. While jointly promoting the pasta market, they will naturally erode Airmeter's market share.

In addition, Airmeter's online traffic has long relied on KOL and top streamer live streaming. How a brand that exploded in the short term can continuously build product power and brand power is still a development issue Airmeter needs to solve.

**3. Fanhu**

Among the pioneers of convenient ready-to-eat sub-categories, we were pleasantly surprised to find more possibilities. Fanhu is a brand established in the second half of 2020, focusing on the development of convenient cooking products around Chinese cuisine.

Different from takeout, self-heating rice, and frozen prepared products, Fanhu has developed a light cooking rice solution, hoping to focus on the staple food table scenario, shorten cooking time, eliminate the complexity of cooking, but retain the ritual of cooking and restore the deliciousness of the kitchen.

All products achieve standardized cooking in 15 minutes, choosing natural ingredients such as cured meat and dried goods that can be stored at room temperature, without refrigeration, easy to store and transport, better restoring local flavors and reducing user costs. In 2021, Fanhu successively launched two product lines: one is quick-cooking claypot rice (currently with four flavors: Guangdong cured meat, Hunan chopped pepper and silverfish, Xiangxi smoked bamboo shoots and bacon, and Meicai pork), and the other is Chaoshan seafood claypot porridge.

In channel operations, Fanhu focused its early efforts on Douyin. The light cooking food solution, producing high-quality content, coupled with the team's refined operations, resulted in a high conversion rate for Fanhu's grass-planting on Douyin.

From zero to nearly 20 million monthly sales, it became a benchmark brand case for Douyin food categories. Now, it has spread across online channels such as Tmall, Xiaohongshu, and Kuaishou. The monthly repurchase rate on Douyin and Tmall in the past 30 days both exceed 30%, and 2021 revenue is close to 100 million RMB.

From the consumption structure of domestic staple foods, rice is the largest category. But compared to the diversity of product forms in the flour market, the rice category has not been fully explored and valued. Fanhu provides an innovative solution.

In addition to expanding products to further meet the needs of different regional tastes for staple rice products, Fanhu's future imagination space lies in the extension of the staple food table scenario. Currently, it mainly focuses on family scenarios with open flame cooking. In the future, in office and outdoor scenarios, we look forward to Fanhu still providing solutions for "easily eating a good meal."

Prepared dishes are not a new thing; their earliest form was actually canned food. From the early 19th century, when Napoleon offered a reward for a method of preserving food to solve the problem of food supply for the army during combat, to the establishment of the world's first canned food factory in 1820, it has a history of nearly two hundred years.

This is the first year we have included prepared dishes as a separate category in the list. However, when we divided this "long history" category, we still encountered a problem: which products should be counted as prepared dishes?

In theory, the "dishes" that people eat in their three daily meals should be included. However, the current Chinese diet is particularly rich. In addition to traditional Chinese cuisines, there are Western, Japanese, Korean, and other overseas cuisines, as well as new foods included in the choice range of three meals.

So, this not only creates difficulties for our annual list selection, but more importantly, it is a real challenge for startups in this track.

Against this background, we observed that many 2C prepared dish brands enter the market in different ways.

Some start online, focus on creating big single products, and then expand other new products. Some brands work online and offline simultaneously, quickly launching new products through R&D capabilities, and then conducting market tests. Some brands first focus on the construction of offline stores, mainly with third-party brands, supplemented by the sale of their own brand products.

In terms of cuisine selection, each brand is also different, but most focus on Chinese cuisines. Including Sichuan cuisine, Jiangsu-Zhejiang cuisine, Shanghai cuisine, Cantonese cuisine, Shandong cuisine, etc.

Some brands take a different path, with local snacks, specialty braised dishes, and other side dishes as core products. Some frozen food and trading enterprises, relying on their supply chain advantages, have launched many Western-style products.

Due to the rules of the list, we cannot include all types of prepared dish brands. Especially those brands launched by retail companies, large food companies, and large catering companies. But we know they performed very well this year and played a good role in promoting industry development.

Although they may not have the sales scale of prepared dish brands under large companies, the companies on the list performed outstandingly in 2021. While sales grew rapidly, some brands also gained capital favor and completed multiple rounds of financing. They practiced their understanding of the prepared dish industry with positive actions, creating value for consumers.

This year, the topic of 2C prepared dishes is hot, but the industry is still in the early stage of a large cycle. Consumers lack awareness of prepared dish products, and even have some concerns. As a solution, prepared dishes still have a long way to go to truly integrate into the daily diet of ordinary people.

In addition to Weizhixiang, we believe more prepared dish companies will land on the capital market in the future. Compared to moving faster, we hope representative brands can go further. In addition to efforts in marketing and channels, they should also settle down to make better products and spend more effort on differentiation. Create more value for consumers and the industry.

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#### **1. Tianhaicang**

Tianhaicang's special feature is its use of traffic. It has established a strong network of streamer cooperation on Taobao, Douyin, and Kuaishou, covering from top to mid-to-tail streamers. Cooperating with Hai Qing, Lin Yilun, Hu Ke, Chen He, Luo Yonghao, Li Dan, etc., it replicates to more mid-to-tail streamers who actively bring goods.

Since its establishment, it has cooperated with up to 4,000 streamers, influencers, and celebrities. Public data shows that Tianhaicang won the first place in brand sales in the fresh food industry during the 2021 Tmall 618, and the first place in the fresh food category during the 2021 Douyin New Year Goods Festival.

Starting with frozen seafood, Tianhaicang initially entered the market with seasoned crayfish and frozen shrimp products, focusing on creating fresh food that can be eaten simply by heating. Subsequent product development is more based on Tianhaicang's trend monitoring and consumer demand analysis. This is also the basis for Tianhaicang's skilled use of traffic.

The main single products, including lobster tails, grilled sausages, chicken feet, and chicken chops, are all hot-selling products in the channel and come with their own traffic. At the same time, the products have a certain cost-performance advantage, with over 80% of products priced under 100 RMB, plus celebrity KOL endorsement, making conversion easy.

Fresh prepared products, and taking the traffic promotion path, place high demands on cold chain logistics systems and product sales forecasting and allocation capabilities. Tianhaicang has set up 9 central warehouses for warehousing and distribution nationwide and established strategic cooperation with logistics companies such as SF Express and JD Logistics.

Undoubtedly, Tianhaicang has mature capabilities in traffic operations. But in brand building, there is no sign yet. Sales completely betting on KOL/KOC are not stable. Tianhaicang needs to better establish brand momentum, attract users to actively search and repurchase, and accumulate private domain value.

**2. Royal Tiger**

Royal Tiger was established in 2020, positioned as a home frozen semi-finished product brand. The product line covers baking series such as egg tarts and pizza, meat series such as sausages and steaks, breakfast series such as hand-grabbed cakes and fried dough sticks, with extended seasonings and ready-to-eat chicken feet products. Sausages and egg tarts are Royal Tiger's best-selling single products.

The products are characterized by high cost-performance, for example, the average sausage is a bit more than one yuan each, meeting the high-frequency consumption of family scenarios that pursue cost-performance. In 2020, it was reported that egg tarts reached an average daily sales of 60,000 orders, ranking first online. The sausage product won the first place in Tmall sales in 2021.

Taking the high cost-performance route, frozen brands need supply chain management and cost control capabilities. On the product quality side, Royal Tiger cooperates with leading enterprises such as COFCO and Yihai Kerry, purchasing high-quality raw materials, and entrusts professional testing institutions to strictly control each product.

On the supply chain side, it has built twelve shipping warehouses nationwide to ensure a high-quality experience for consumers in cold chain logistics distribution.

With the family as the main scenario, Royal Tiger focuses more on mass consumption, and product selection also focuses on widely accepted products. In a relatively blank market, Royal Tiger has come to the forefront by relying on high cost-performance. In the future, as more entrants come, Royal Tiger still has a lot of room to strengthen in product differentiation R&D and brand image building.

#### **3. Zhenwei Xiaomeiyuan**

Zhenwei Xiaomeiyuan was established in 2019, committed to developing mass-market affordable prepared dishes, starting from rice and noodle products and home-style dishes, with characteristics of "good price, delicious, convenient, many categories, and easy to cook."

There are currently three product lines: pasta (such as old Shanghai scallion pancakes, Meigan Cai Guokui, mushroom and fresh meat shaomai), home-style dishes (such as golden soup sauerkraut fish, Yanduxian, mushroom meat sauce), and internet-famous dishes (such as spicy crayfish tails, crayfish mixed noodles).

As a toC startup retail brand, Zhenwei Xiaomeiyuan provides more than 100 prepared dish products. The rich SKU demonstrates its product R&D and supply chain management capabilities.

Zhenwei Xiaomeiyuan builds its brand through online live streaming, with offline channels as the focus for sales and repurchase. Starting in Shanghai, it plans to build a regional scale advantage in East China as the core market.

In 2021, in addition to distributing in major supermarkets, new retail, convenience stores, and other offline channels, Zhenwei Xiaomeiyuan also began building its own stores, currently reaching more than ten.

These stores are distributed in various areas of Shanghai, mainly street shops around residential communities, allowing consumers to conveniently purchase products. This is an important strategy for the company's scale development.

In 2021, Zhenwei Xiaomeiyuan also upgraded product packaging multiple times, adjusting visuals and materials for different sales channels, considering recognition and storage space.

In terms of funds, on the basis of financing from Zero One Venture Capital and Innovation Works in 2020, in 2021 it again received tens of millions of RMB in A and B rounds from institutions such as Guosheng Capital and Xingtuo Capital. Capital recognition not only supports Zhenwei Xiaomeiyuan's store opening but also provides ammunition for brand marketing.

The company newly launched an advertising promotional film, spreading the core brand message of "easily cook a good dish." At the same time, the company also reached cooperation with elevator media to find target consumers and continuously expand brand awareness.

Zhenwei Xiaomeiyuan's excellent performance is also inseparable from founder Pu Wenming's more than ten years of fresh food supply experience. In addition, the team's supply chain leader also has nearly 20 years of rich experience in the prepared dish industry.

#### **4. Maizima**

Starting from the B-end in 2016, Fengyi Food Factory covers a total area of 10,000 square meters, with production lines including raw product lines, frying lines, and braising lines, providing frozen prepared ingredients for catering chain enterprises and hotels. According to founder Weng Bocheng, before creating the Maizima brand, it served more than 80% of the catering chains around Hangzhou, including Green Tea Restaurant, Nongtangli, and Lao Tou Er You Bao Xia.

B-end service experience allowed the team to accumulate R&D, production, and sales capabilities. In 2019, it established the C-end home prepared dish brand Maizima and achieved rapid growth.

According to public information, in 2021, Maizima's sales achieved explosive growth of 400%, with monthly sales reaching around 20 million RMB, winning the TOP1 of Tmall Double 11 instant food dishes in 2021.

In terms of products, Maizima mainly targets mothers and white-collar workers at home, mainly providing dishes that are popular with the public but have high time costs and are difficult for "kitchen novices."

Starting from home-style dishes, it successively launched more than 30 prepared dish products such as boiled beef, sweet and sour pork tenderloin, and sauerkraut fish. Among them, boiled beef and sauerkraut fish have become core bestsellers, with monthly sales of over 10,000+ on the Tmall flagship store.

Such results were not easily achieved. For example, to provide consumers with a better consumption experience, in June and July 2021, Maizima made two significant upgrades to the boiled beef product in multiple dimensions, including beef quality, seasoning packet richness, flavor restoration, and product packaging.

In terms of supply chain, Maizima plans to build a digital factory in Jiande City. The factory will be developed in two phases and can produce four major categories of products: prepared, fried, pasta, and braised. After full production, daily output can reach 100 tons.

In 2021, Maizima accelerated offline channel distribution. In July, it entered Hema and Walmart national stores, and in the future will enter more community stores. Weng Bocheng once said that chain supermarkets are conducive to building Maizima's brand image, while community stores may become the largest channel for prepared dishes to increase volume in the future.

To reduce homogenization, Maizima tries to innovate traditional dishes, launching "chicken soup shrimp meat lion's head." At the same time, it invites food industry figures to cooperate in R&D, launching "Dongpo abalone stewed chicken feet." Through "upholding integrity and innovation," it seeks a balance between market and innovation, which is also what makes Maizima different.

#### **5. Dingding Lanren Cai**

Dingding Fresh Food was founded in 2018, focusing on catering retailization, serving as a supply chain service provider in the fresh food (3R food) field, serving new retail platforms such as Hema Fresh and Meituan Select.

In 2020, Dingding Lanren Cai was born out of Dingding Fresh Food, developing C-end prepared dish business, mainly doing e-commerce channels such as Tmall, JD, and Douyin. It has already cooperated with celebrities/influencers such as Lao Luo, Chen He, Zhang Ting, Lin Yilun, and Lie'er Baobei for live streaming; offline, it has also launched on channels such as Daily Youxian and Hema Fresh.

Following the idea of replicating mature catering dishes and creating bestsellers, Dingding Lanren Cai has developed more than ten dishes. Among them, old jar sauerkraut black fish, pepper pork belly chicken, and Xiangxi grandmother's dish are currently the core bestsellers.

Slightly different from other prepared dish brands, Dingding Lanren currently focuses more on single product creation and online traffic investment, hoping to enter the minds of some consumers through big single products and traffic, forming a certain brand awareness.

From online sales, Dingding Lanren Cai's market performance is also good. According to relevant data, during the peak season of the New Year Goods Festival, Dingding Lanren Cai's monthly GMV on Douyin reached around 20 million. At the same time, in 2021, Dingding Lanren Cai became one of the first companies selected for the "Hema X Accelerator," and is expected to receive support from the Hema team in the future and achieve faster development in channels.

However, it should be noted that Dingding Lanren Cai enters from a mature supply chain product, which has the advantage of quick start without excessive market investment, but the disadvantage is facing homogeneous competition. In addition, how the brand improves repurchase rate and moves from Hema to more offline channels is a test left for the team in the future.

**6. Leyaoju**

Founded in 2012, Xiamen Chenji Leyaoju has been deeply cultivating the B-end market for many years, building a relatively stable supply chain system, and already has three self-owned factories. Among them, the new factory in Luohe, Henan, was put into production in October 2021, and a central warehouse was established, starting a national production layout.

Focusing on frozen rice and noodle products and ice products, integrating Min, Cantonese, and Hong Kong characteristics, Leyaoju has developed core best-selling innovative products such as bursting lava buns, honey barbecue pork buns, square barbecue pork buns, and rice burgers. The B-end R&D and supply chain foundation is relatively stable.

2021 is a key transformation year for Leyaoju to move towards consumer retailization and digitalization. After receiving tens of millions of RMB in A-round financing from Xingwang Investment, Leyaoju reorganized its toC development strategy. It merged the frozen pastry brand "Qingyao" with the main brand Leyaoju, and moved the e-commerce and brand operation center to Shanghai.

It also increased online e-commerce layout and built its own Douyin team. At the same time, to let consumers get products faster and better, through cooperation with SF Express and nationwide warehousing, it achieved next-day delivery in 80% of major regions nationwide.

In product R&D, it plans to cover consumer staple food and afternoon tea scenarios through further R&D iteration. Currently, in addition to entering more than 3,000 star-rated hotels, high-end restaurants, chain catering, university and middle school canteens, chain convenience systems, and other channels nationwide, Leyaoju has also entered online platforms such as Tmall, JD, Douyin, and Pinduoduo, large supermarkets such as Walmart, RT-Mart, and Yonghui, and Hema, Daily Youxian, Shihuituan, Xingsheng Youxuan, and regional community fresh food e-commerce.

For Leyaoju, the digital brand transformation of a supply chain enterprise is bound to be full of challenges. But from a series of actions, we also see the determination of the enterprise to transform and move towards the capital market, which is worth looking forward to.

According to national food-related standards, infants and young children are mainly 0-3 years old (infants - 0-12 months, young children - 12-36 months), while children's food mainly targets children aged 3-12. Since some brands cover both infants and children, this year's list puts these two categories together. In the infant food industry, in addition to infant formula (due to the special nature of production qualifications, R&D, policies, etc., the threshold for startups is extremely high), zero-added complementary food products can be roughly divided into four categories: grain complementary foods mainly based on rice flour and noodles, complementary snacks mainly based on biscuits and teething sticks, side dish complementary foods mainly based on meat puree and fruit puree, and nutritional supplements. For a long time, the infant zero-added complementary food market has been relatively concentrated, mainly with imported brands, and channels are mainly offline maternal and child channels. 2018 is called the first year of China's complementary food industry, with the state issuing multiple policies and regulations aimed at promoting the development and upgrading of the infant complementary food industry.

In recent years, the overall market has grown steadily. In addition, with the influx of post-90s and post-95s new parents, the market has also welcomed a renewal of customer groups, and domestic brand sales have gradually increased. Compared to infant food, children's food has long lacked relevant standards. Products are not significantly different from adult food, and product definitions are vague. In 2020, the China Snack Food Circulation Association released the "General Requirements for Children's Snacks," which is also the first group standard for children's snacks in China. The overall development of children's food is still in a rough state, with great room for exploration in the nutritional needs and education of children at different development stages. In terms of brand landscape, leading brands have not yet established a foothold, the landscape is fragmented, giving startups a great opportunity to break through. In terms of products, the degree of homogenization is high, and more R&D investment is urgently needed. Outstanding product power will bring greater competitive advantages.

It is precisely the pain points in the industry and the strong demand of a new generation of young parent consumers that the industry ushered in a generational development dividend in 2020. In 2021, whether in the number of startup brands or the amount of financing, the infant food & children's food industry reached new highs. The industry has seen various types of startup brands, including comprehensive infant and children's food brands covering multiple age groups and multiple category lines, brands focusing on sub-categories, and brands focusing on solutions for certain scenarios.

Among them, some startup brands have been established for a relatively short time, but in 2021, whether in brand building, product iteration, channel distribution, or sales growth, they are worth paying attention to.

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**1. Guanghe Planet (Babycare)**

Guanghe Planet mainly operates infant zero-added complementary food and is a food brand launched by Babycare in 2020 (it is said to be a New Zealand brand acquired by Babycare, but not much information was found; Babycare is also often mistaken for an imported brand). The team introduced that in 2020, omni-channel GMV exceeded 5 billion RMB, with a compound annual growth rate of over 100%. In 2021, Babycare completed a 700 million RMB B-round financing, led by CDH Investments, with Huaxing Capital's Huaxing New Economy Fund and Sequoia Capital China Fund, a shareholder in the A round, following. Babycare initially entered the maternal and child market with an innovative waist stool design baby carrier, and gradually expanded to feeding supplies, maternal and child appliances, wet wipes, diapers, toys, etc., building a full-category maternal and child product matrix. Founder Li Kuo's designer background gives Babycare a unique style in product design and brand building. At the same time, the brand is familiar with omni-channel marketing, maintaining the dual benefit point of "function + emotion" in operations and brand, continuously attracting new young mothers.

Unlike the common practice in the maternal and child industry of expanding based on the main category's professional attributes (for example, H&H Group launched children's food GOOD GOT), and comprehensive snack companies launching maternal and child food sub-brands (for example, Three Squirrels' Xiaolu Lanlan and Bestore's Liangpin Xiaoshixian), Babycare, mainly in maternal and child products, entering the food industry is rare.

Guanghe Planet was launched at the beginning of 2021, with products covering baby noodles, teething sticks, fruit puree, yogurt drops, and a series of infant zero-added complementary foods. From Taobao GMV data, 2021 total sales can rank in the top five, which is quite considerable. Relying on Babycare's brand audience, Guanghe Planet made a good cross-category migration.

In product design, it follows Babycare's design style, using low-saturation colors to meet the aesthetics of target consumers. In product R&D, it cooperates with registered dietitians, focusing on adding nutrients needed by infants and young children, and minimizing additives such as sodium and white sugar.

As Babycare's first independent sub-brand, we have seen the initial verification of Babycare's bestseller creation methodology. But currently, there is no separate brand marketing action for Guanghe Planet, relying more on the Babycare main brand.

As the infant complementary food industry becomes increasingly competitive, and domestic other brands explore sub-category breakthroughs, Guanghe Planet mainly focuses on conventional products and lacks characteristics. In addition, whether there will be more internal resource tilt to support the brand's independent development, and whether it will make further breakthroughs in product R&D, remains to be seen.

#### **2. Dr. Cheese**

Unlike other infant and children's brands, Dr. Cheese focuses on the cheese track for babies aged 0-6. Due to the nutritional characteristics of high protein and high calcium, cheese sticks have become almost a rigid choice for parents in children's food. The development of cheese sticks by Breguet and Milkground has verified the big single product logic of the cheese track. Last year, Dr. Cheese was selected for our annual list, and this year it maintained rapid development. During Double 11, Dr. Cheese ranked first in sales in corresponding categories on e-commerce platforms such as Tmall, Douyin, and JD, as well as vertical platforms such as Wanwu Xinxuan, Dingxiang Doctor, Nian Gao Mama, and Dad Evaluation. Being able to occupy a space in the mountains occupied by dairy giants, Dr. Cheese has its special features. Founder Chen Yuhua was previously the general manager of Oldenburger China. The parent company of Oldenburger, DMK, is the largest dairy enterprise in Germany, with core business in China including room-temperature milk and cheese. Before that, he worked at Dumex for many years, responsible for maternal and child channel sales.

In terms of products, Dr. Cheese has made many differentiated innovations. The two core bestsellers are Gold Cheese Sticks and Xiao Yuan Cheese. Xiao Yuan Cheese is an original cheese imported from the Netherlands, and Gold Cheese Sticks are processed cheese made with original cheese as the core raw material.

Previously, the cheese ratio of most brands' cheese sticks was within the 15%-50% range specified by the national standard (new regulations under discussion may raise this ratio to over 50%), while Dr. Cheese's Gold Cheese Sticks achieved a cheese ratio of over 51%. In addition, Dr. Cheese launched the Platinum A2 Cheese Sticks, positioned for high-end customers. In 2021, Dr. Cheese made an overall brand upgrade. At the product level, it proposed calcium-sodium ratio, milk-calcium ratio, and cheese ratio as numerical support, and proposed the CSCS cheese stage high calcium system, providing product solutions according to the nutritional needs of babies at different growth stages.

At the same time, Dr. Cheese started building its own supply chain in Chuzhou, Anhui. In marketing, it launched campaigns such as "She Doesn't Even Look Like a Mom," "74 Cheese Festival," "Cheese Localization," "Launch Event in the Wilderness," "Hug Christmas," and "Growth Shouldn't Be So Hard," and officially announced Jia Nailiang as brand spokesperson, focusing on the insight and connection of brand and user emotions. When other brands are continuously increasing the cheese ratio, competing on product nutritional parameters, and promoting competition, Dr. Cheese, positioned as high-end, will inevitably face a hard battle. Whether it can hold its brand positioning, avoid the impact of price wars, continue product innovation, and create new bestsellers are all core considerations.

#### **3. Qiutian Manman**

Qiutian Manman, as a brand positioned in infant and children's food, covers infants and children from 6 months to 12 years old. Interestingly, the company Yichun Shijiu E-commerce was established as early as 2015 and once sold river snail rice noodles. It is said that after founder Yi Qinlang became a father for the first time, in order to make the baby's first meal well, he entered the maternal and child track in 2018. After the hot sale of infant walnut oil, the brand development path also became clear, and in 2019 it fully entered infant and children's food.

Qiutian Manman is currently positioned as "infant and children's nutritional full meal expert," planning to deeply cover Chinese-style natural complementary food, Chinese-style nutritional main meals, and Chinese-style healthy snacks. It has successively launched products from seasonings, porridge, rice and noodle staples to rice topping, snacks, and then pear paste, chrysanthemum crystals, and other medicinal and food homologous nutritional supplements.

The best-selling product, organic germ rice, takes the Chinese staple rice, which is most suitable for Chinese babies' eating habits, as the entry point. Combined with university research institutes, it proposed the "three 90" standard, namely "90% germination rate, 90% germ retention rate, short shelf life of 90 days," freshly ground and produced, retaining higher nutritional value of ingredients. This product has been the Tmall category sales champion for three consecutive years since its launch in 19 years.

Currently, Qiutian Manman's main sales focus is on online channels. According to official reports, in 2021 Double 11, it topped the Tmall "baby seasoning" category first, won the JD POP "baby noodles/porridge" category first, and on the first day of Douyin Double 11 surpassed the entire Double 11 of last year. Kuaishou continues to lead the complementary food and snack category first.

Although it claims to focus on creating a "infant and children's nutritional full meal expert brand more suitable for Chinese babies' physique and eating habits," Qiutian Manman's brand marketing currently only stays at the slogan stage. Facing competition from domestic brands, Qiutian Manman needs to carefully think about how to create identity recognition among target customers in its brand proposition.

In addition, the brand is built on a solid product foundation. In the professionalism of infant and children's products, Qiutian Manman still has a lot of room for improvement, involving compliant publicity of infant standard food, control of sodium and salt content in products, and quality control of cod sausages.

**4. Wo Xiaoya**

Compared to other brands, Wo Xiaoya has its special characteristics.

First, founder Fang Xiujuan herself has a background as an infant nutritionist. In the early days, she addressed children's nutritional problems through public account content dissemination, and later opened offline parent-child restaurants, reportedly accumulating more than 1,000 infant and children's recipes. It was not until 2020 that Wo Xiaoya brand operations began.

Second, in brand building and proposition enhancement, Wo Xiaoya has distinctive features. It proposed the 1357 balanced diet rule (1 day should eat 3 main meals plus 2 snacks, using 5 major types of ingredients (starch, meat, beans, vegetables and fruits, calories) for matching, ensuring 7 days a week without repetition), advocating weekly nutrition, scientifically achieved. At the same time, it launched a weekly series of products, which can prepare children's nutritious meals in 10-15 minutes.

Through the creation of the Wo Xiaoya IP, it invites well-known children's picture book writers and illustration artists to create animated short films, games, and picture books, advocating food education to deepen brand memory. Secondly, Wo Xiaoya developed a dedicated mini-program around food, and created refined content on official WeChat, Douyin, Kuaishou, etc., according to the baby's month age.

Colorful vegetable cartoon steamed buns are Wo Xiaoya's long-standing bestseller. It is said that Wo Xiaoya has developed 8 patented formulas for this, including the core formula of flour + cheese powder + whey protein, achieving comprehensive nutrition of high calcium + high protein for noodle staples. Because it is a frozen product, in 2021 Wo Xiaoya began building its own warehousing supply chain to ensure product quality and user experience.

In terms of channels, in addition to online channels such as Douyin, Tmall, JD, and Pinduoduo, according to public relations reports, Wo Xiaoya has entered retail channels such as KKV and Hema, and entered more than 10,000 maternal and child stores. The offline development speed is not slow. But this also brings some concerns. For startup brands, brand power building takes time. When brand power is insufficient, it is more necessary to cultivate channels meticulously. Overly pursuing the number of offline terminal distribution is debatable.

#### **5. Duo Maomao**

Duo Maomao was selected for our annual list last year. As a new Internet brand, it is also relatively prominent in offline channel operations, and even Duo Maomao's offline channel distribution speed is astonishing. According to reports, in 2021, Duo Maomao "has fully entered the five core chain institutions of Haizhiwang, Leyou, Aiyingshi, Aiyindao, and Beibeixiong, covering 100% of head maternal and child distribution channels. As of the end of November, it has entered nearly 15,000 maternal and child stores nationwide."

Products can be purchased at Henan Pangdonglai, Shaanxi China Resources, Shanxi Meitehao, Hema, Qixian, etc. The next stage will gradually expand to supermarkets such as Walmart and Carrefour, and convenience stores such as 7-11 and FamilyMart." Large-scale offline channel distribution will challenge product power, brand power, supply chain allocation, and management capabilities of distributors and channels in all aspects. We have not yet investigated Duo Maomao's channel sell-through, but we also maintain a cautious attitude.

From the brand positioning, Duo Maomao is positioned as a "new generation children's snack brand," focusing more on the development of snacks for children aged 3-6. It continuously focuses on the creation of brand IP. The three kitten IP images inspired by the founder's three children interact with consumers through comics, short videos, and other content.

In 2021, Duo Maomao launched multiple product SKUs and participated in the drafting of group standards for "Children's Jelly," "General Requirements for Children's Candy and Chocolate," and "Children's Beverages," which indirectly reflects Duo Maomao's R&D strength, supply chain capabilities, and industry connections. However, in product development, Duo Maomao's snack products follow a follow-up strategy, with little difference from competitors.

Currently, the hot-selling product is teething rice crackers. The main products intended to create big single products, such as lactic acid bacteria jelly sipper, cat paw candy, and nutritious milk chocolate, have not yet gained volume. Continuous polishing of products is a required course for Duo Maomao.

Eat Just's approval of the world's first cell-cultured meat review in Singapore in early December 2020 further ignited domestic capital's attention and enthusiasm for cell-cultured meat.

Following Eat Just's good news, in early December 2020, Avant Meats announced the completion of a $3.1 million financing from China Venture Capital, Lever VC, CPT Capital, and other well-known investment institutions. At the end of December, Zhouzi Future announced the completion of a 20 million RMB financing from Matrix Partners China. At the same time, CellX also announced the completion of a financing of several million RMB from institutions such as Lijiang China.

In 2021, many well-known domestic investment institutions and even state-owned capital further increased their bets on the cell-cultured meat track. For example, in August 2021, CellX announced the completion of a financing of tens of millions of RMB from institutions such as ZhenFund, Yunqi Capital, and K2VC; in October 2021, Zhouzi Future completed a 70 million RMB financing from Qingliu Capital, Hillhouse Ventures, Matrix Partners China, and Nanjing Innovation Investment Group.

Cell-cultured meat may be the most hopeful of the three mainstream artificial meat technology routes. This can be seen from the predictions of major research institutions on future market share—cell-cultured meat market share predictions are generally the highest.

Cell-cultured meat has many advantages that plant-based meat cannot have: real meat cells, nutritional components highly consistent with traditional meat (and can even be optimized), taste and texture closer to traditional meat, and theoretically higher production efficiency. These advantages make the market full of expectations for cell-cultured meat. Cell-cultured meat still faces the long-standing challenges: regulation, cost, and consumer acceptance.

Cost will be a core influencing factor for future consumer acceptance. At present, the cost of some cell-cultured meat products combined with plant-based hybrid technology can already reach $14-30 per kilogram, and the cost of pure cell-based can reach just over $100 per kilogram. This is already several orders of magnitude lower than the $325,000 cost of the world's first cell-cultured meat patty in 2013, but it is still much higher than traditional animal meat.

Chinese cell-cultured meat companies have also made many advances in cost optimization. CellX claims to have reduced costs by 5 times, plans to reduce costs by 10 times in 2022, and achieve price parity with animal meat by 2025. Avant Meats has optimized product costs by about 90%, and the current cost of cell-cultured fish products per kilogram still needs several hundred dollars.

The current technology trend is that the cost of cell-cultured meat can be reduced by an order of magnitude every 3 years. Perhaps around 2025, we can eat cell-cultured meat at a cost similar to high-end traditional beef.

We still clearly favor the potential of China's alternative protein/cell-cultured meat industry, and we expect this potential to be further catalyzed by active policies and enthusiastic capital in the coming years.

From a policy perspective, although there is still a distance from the establishment of a clear and specific regulatory system for cell-cultured meat at the national level, we have observed that the state has begun to invest in this field in various forms. From the capital and industry side, many leading domestic investment institutions have paid attention to this direction and continue to increase their bets.

In 2022 and 2023, several well-known alternative protein companies are expected to go public, such as Eat Just, Perfect Day, and Impossible Foods. If these alternative protein companies with solid foundations perform well after listing, it is believed that they will further stimulate the enthusiasm of domestic capital and entrepreneurs.

According to Euromonitor data in 2019, China's meat consumption accounts for 27% of the world's total, ranking first in the world, three times that of the United States. With such a large consumer market, naturally, artificial meat companies worldwide will covet the Chinese market.

From the perspective of national food safety and enterprises' understanding of local consumers, if cell-cultured meat truly takes root in China and reaches the penetration rate we expect, then among the leading companies, there will definitely be several local enterprises.

At the same time, we should also look with a neutral and objective eye. In many value links of cell-cultured meat, such as cell line culture, scaffold development, bioprocess, and terminal product formation, the progress of basic disciplines that need to be applied still has a considerable gap with the leading level abroad. For domestic cell-cultured meat enterprises, the road is still long and there are many mountains to climb.

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**1. Avant Meats**

Avant Meats is China's first cell-cultured meat enterprise, established in 2018, headquartered in Hong Kong. It currently focuses on full-stack cell-cultured seafood product R&D, including the development of technical links such as cell lines, culture media, scaffolds, and bioprocesses.

Avant's main planned products are fish fillets and fish maw, also including a series of high-value seafood products such as sea cucumber. In September 2020, Avant showcased a cultured fish maw prototype product, cultured from yellow croaker maw cells.

Avant Meats has completed nearly $4 million in financing, with investors including China Venture Capital, Lever VC, CPT Capital, and other well-known investment institutions.

In 2021, Avant Meats also made some important progress. For example, in February, Avant announced the launch of Zellulin®, the world's first cell-cultured protein for cosmeceuticals. It is reported that Avant has signed material transfer agreements with several leading raw material companies.

In addition, Avant has formed deep cooperation with Chinese biopharmaceutical company QuaCell, Merck China Accelerator, and the Bioprocessing Technology Institute under the Singapore government. According to Avant, they have optimized product costs by about 90%.

Compared to pigs, cattle, and sheep, cell-cultured fish/seafood will be easier to form, that is, relatively easier to achieve higher product completion, and many fish/seafood prices are very high. Perhaps cell-cultured fish/seafood can precede cell-cultured pigs, cattle, and sheep in market circulation and gain consumer favor.

According to incomplete statistics, there are currently more than 20 cell-based seafood companies globally. As the only cell-cultured seafood company in China, Avant's accumulated R&D momentum, geographical advantages, and government resources have helped it establish a good first-mover competitive foundation.

### **2. CellX**

CellX was established in 2020 and currently focuses on full-stack cell-cultured meat R&D. It is reported that the CellX team has expanded to more than 30 people, of which R&D personnel account for about 80%. In the early stage of a technology-driven industry, this is undoubtedly a reasonable team configuration.

Many members of the CellX team have experience in overseas enterprises. In our contact with CellX, we can also feel their diversity and openness. In addition, it is reported that CellX is also cooperating with several universities and companies on key technical links.

Currently, CellX has developed multiple cell-cultured meat product prototypes. In September 2021, CellX held the first closed-door exchange activity for cell-cultured meat product prototypes in Shanghai. During the activity, CellX provided a tasting of pork mince products and displayed three structural product prototypes: chunks of pork particles, filamentous scaffolds, and 3D bioprinted product prototypes. It is reported that CellX has reduced costs by 5 times and plans to reduce them by another 10 times in 2022.

### **3. Zhouzi Future**

Zhouzi Future was established in December 2019. The company's technical foundation is based on the research on stem cell myogenic induction and differentiation conducted by the team of its chief scientist, Professor Zhou Guanghong, since 2009. On November 18, 2019, Professor Zhou Guanghong's team developed China's first cell-cultured meat. In June 2020, Zhouzi Future held a cell-cultured meat tasting ceremony, which was the first cell-cultured meat tasting in China.

In October 2021, Zhouzi Future completed an A-round financing, with investors including well-known investment institutions such as Qingliu Capital, Hillhouse Ventures, and Matrix Partners China, as well as Nanjing Innovation Investment Group, with a total financing amount of 70 million RMB. The total financing has now reached nearly 100 million RMB.

It is reported that Zhouzi Future has currently made key breakthroughs in seed cell extraction and stemness maintenance, cell suspension scale-up production, serum-free culture medium containing 18 cofactors, and culture meat production molds with microcolumn arrays.

The stability of the baijiu industry this year should be thanked for the effective control of the epidemic in China. Data shows that from January to November, baijiu production reached 6,323,600 kiloliters, a year-on-year increase of 5.41%, stopping the continuous decline that began in 2017.

At the same time, sauce-flavored baijiu is still the hottest category in baijiu. Data shows that from January to October this year, Guizhou Province's baijiu production increased by 35.8%, far exceeding the industry average. Capital is still pouring in, and related enterprises completed multiple financings of several billion RMB in the third quarter of this year, attracting high attention from the industry.

At the same time, major liquor enterprises are busy raising prices and launching high-end new products, and the logic of leading liquor enterprises' market share continuously increasing continues. Large liquor enterprises have solid foundations in their advantageous fields and can advance and retreat appropriately. Therefore, it is very difficult for startups to break through in this mature industry.

So, some people propose that speed is essential. But for liquor enterprises, spending money on advertising and marketing is easy. The real challenge is whether they can keep up with production capacity while being fast, while stabilizing liquor quality. The baijiu industry has its own characteristics. Whether it is base liquor storage or self-built raw material planting bases, it requires time accumulation, and it cannot be fast just because you want it to be.

In this situation, mergers and acquisitions have become the only choice for liquor enterprises to quickly increase scale. This year, we saw multiple M&A events in the industry. For example, Guizhou Chun acquired Linlang Liquor, and China Resources acquired Jingzhi Liquor.

Compared to other industries, the baijiu industry may not leave many opportunities for startup brands. Therefore, relative to scale, we prefer brands that can still adhere to innovation at the moment, especially companies that can innovate from the underlying dimensions of raw materials, brewing processes, brand value communication, and categories.

But we also know that differentiation of baijiu products is difficult, and most consumers find it hard to taste subtle differences in the liquor. Consumers' preferences and taste habits for alcohol will affect their evaluation of products.

Therefore, innovation is destined not to be a smooth road, and the probability of failure is high. It requires technology and capital support, and more importantly, partners who persist together in the face of doubt. Only brands that dare to innovate can bring some different possibilities to the industry.

On the other hand, we also respect brands that can achieve rapid growth. Through keen business acumen, they can feel environmental changes and opportunities earlier than others. What is even more difficult is that in a situation surrounded by strong players, when everyone is "ALL IN," they can integrate resources from all parties, seize the dividends of the times, and turn business ideals into reality.

The trend of increasing concentration in the baijiu industry is difficult to change, but we still hope it can be more dynamic and have more startup brands emerge. At the same time, we also hope that baijiu brands do not blindly raise prices and push high-end products.

After all, the industry lacks good liquor, but good liquor is not necessarily high-end liquor. Looking back at history, baijiu was gradually developed and promoted in an era of "lack of grain and grain shortage." I hope that in the new era, baijiu can still integrate into the lives of ordinary people, allowing ordinary people to afford it and drink well.

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#### **1. Jiangxiaobai**

In 2021, the most important thing for Jiangxiaobai was the strategic review led by Tao Shiquan. The company summarized four mistakes made in the past ten years of development:

First, operational mistakes. The company realized that some products may really not taste good; second, positioning misjudgment. Not making high-alcohol liquor led to a serious loss of mainstream users; third, the publicity of product quality trust was very poor; fourth, the output of brand philosophy and brand spirit was unclear.

Therefore, Jiangxiaobai made strategic adjustments and proposed a new business model of "co-created brand," initially laying the foundation for the development direction of the next ten years.

Jiangxiaobai hopes to be closer to real consumers, recruiting a user community composed of 10,000 real consumers, and establishing a brand private board composed of users. In the new business model, they are given greater rights in product design, product pricing, brand strategy, and business strategy.

Jiangxiaobai's brand renewal actions are also wonderful, especially the "100 solemn statements of Jiangxiaobai" which once again became popular outside the circle. Behind the magical copy, consumers can feel the brand's sincerity.

In terms of products, Jiangxiaobai launched a new third-generation liquor body product, the 10th anniversary special edition "Golden Cover Jiangxiaobai." The new product retains the characteristics of the original products, improves the entry feel, and enriches the aroma. In terms of low-alcohol liquor, it launched new products such as Guolifang Peach Special Blend and Longyue. Jiangxiaobai Bistro also released its first baijiu product—Black Label 52.

In terms of channels, in 2021, Jiangji Distillery signed strategic cooperation agreements with multiple property companies, including Country Garden Services, laying the foundation for exploring community bistro and community marketing businesses.

At the same time, Tao Shiquan frequently interacted with Li Qing, founder of Ubrew. In July, he became an independent director of Ubrew, and in November, he launched the "Guolifang × Ubrew" co-brewed limited edition fruit wine—Lychee Sea Salt. In the future, the two companies may further explore cooperation in the community bistro business.

Although it has encountered challenges in operations, Jiangxiaobai is the only baijiu brand that has been on our annual list consecutively. Because we believe that Jiangxiaobai is still very representative in promoting the rejuvenation of baijiu and innovation capabilities.

In the past few years, Jiangxiaobai has continuously expanded upstream. According to public information, the company's own sorghum planting area has reached more than 6,000 mu, with 7 brewing workshops, a total of 6,553 fermentation pits, a maximum annual production capacity of 65,000 tons, and an old liquor storage capacity of more than 80,000 tons. As of the end of the third quarter, old liquor storage reached 48,000 tons. Supply chain capabilities have become the most important cornerstone for the company's future development.

Looking back, Jiangxiaobai's problem is: the product has characteristics, but it is not good enough. At the same time, it did not play a sufficient leading role in the development of the Xiaoqu Qingxiang category.

In the new strategy, Jiangxiaobai and Jiangji Distillery have made preliminary plans for future product lines, from mid-to-low-end to mid-to-high-end, covering prices from 100 to 800 RMB. It should be said that in the next ten years, Jiangxiaobai's future path is wider, but also more challenging.

#### **2. Guangliang**

In March 2019, the company's bare bottle liquor (referring to liquor without external packaging) "Guangliang Data Bottle Series" was officially launched. According to public information, once Guangliang was launched, it quickly spread across nearly 30 provinces nationwide, maintaining a growth rate of more than three times for two consecutive years, and terminal sales exceeded 1.6 billion in 2020. In the same year, it also received financing of several hundred million RMB led by Hillhouse Capital in two rounds.

Guangliang's rapid development caught many people off guard, including us, so the company was not included in the 2020 annual list. We apologize for our oversight.

According to the brand leader's interview in a certain program, in 2021, Guangliang's growth was still very impressive, with an increase possibly exceeding three times. If calculated based on this data, Guangliang's sales this year are at least 4.8 billion.

In terms of channels, in the past two years, Guangliang mainly focused on small retail channels and small catering distribution in third- and fourth-tier cities, with low exposure. This year, the company has begun to distribute in KA channels in first-tier cities, further expanding market sales scope.

According to the brand leader, in the third quarter of this year, the number of channel terminals covered by Guangliang reached 500,000+. Structurally, mom-and-pop stores, catering, and KA channels formed a ratio of about 6:3:1.

In terms of products, on the basis of the "Data Bottle," the company launched the "Guangliang 59plus" with a strong aroma and sauce aroma blend in April, claiming to use 80% of "Guangliang 59" product plus 20% of Kunsha sauce liquor (Kunsha liquor uses the "Huisha" process, is authentic sauce-flavored liquor, and has higher costs).

The new product not only upgraded the taste but also raised the product price to the 100+ RMB (bottle/500ml) price band.

In addition, we also saw online a product with a guide price of 99 RMB/500ml bottle, 42-degree strong aroma product "Super Grain" has been launched for trial sales, and the current JD promotional price is 49 RMB/bottle.

In terms of human resources, in October, Liu Qiong, a national-level liquor reviewer and senior engineer who previously worked at Wuliangye, Quanxing, and Shuijingfang, officially became the company's chief engineer. Liu Qiong's joining also provides more sufficient guarantees for Guangliang Liquor in product quality and R&D.

Guangliang focuses on the "self-pleasing" self-drinking scenario, completing the quality upgrade of the mid-to-low-end boxed liquor market with "conscience bare bottle liquor." The company is currently in the stage of breaking through from 1 billion to 10 billion, and there are several challenges in the future.

First, the current product structure determines that Guangliang is relatively sensitive to price fluctuations on the supply chain side, so it needs to invest more resources upstream to ensure the company's strategy. Second, unlike categories such as "strong aroma" and "sauce aroma," "bare bottle liquor" is an industry customary term. Whether it can form a real category in consumer minds is uncertain.

Even if "bare bottle liquor" can form a category, "bare bottle" itself does not constitute a barrier. What elements does Guangliang need to become the first in the category? Third, according to the development history of the baijiu industry, in the stage of breaking through from 1 billion to 10 billion, in addition to the main product (series), one or two auxiliary product lines are needed to support the company's development.

Currently, Guangliang has verified the growth potential of the "Data Bottle Series," but the new product "Super Grain" still needs time to verify. If combined with the uncertainty of the "bare bottle liquor" category, can Guangliang be more forward-looking in the R&D of auxiliary product lines?

#### **3. Sishijiu Fang**

Sishijiu Fang is a relatively unique existence in the baijiu industry. Starting in 2015, the company entered the sauce-flavored liquor industry at a good time. After several years of development, Sishijiu Fang's model has iterated twice.

In the 2.0 era, Sishijiu Fang established more than 100 co-creation platforms nationwide through co-creation, community, and social methods, building more than 5,000 new retail terminals, including 2,000 new retail experience stores and 3,000 non-store terminals.

Zhang Chuanzong has publicly stated that in less than 6 years, Sishijiu Fang has developed 30,000 partners and 1 million users nationwide. Among them, the more eye-catching thing is that Sishijiu Fang can make the large community highly sticky.

This may mainly benefit from the company's mechanism design. For example, in "equity," it is bound with partners, and in community operations, it implements the "537 user experience law," that is, 5 standard operating spaces for stores, 3 standard operating foundations, and 7 standard operating actions, etc.

In the 3.0 era, Sishijiu Fang will transform from a private domain brand to a public brand. In 2021, the company successively received an A round led by Cathay Capital, followed by Chuangxiang Huanju (a fund under Pernod Ricard), and a 600 million RMB B round solely invested by CMC Capital.

With capital support, Sishijiu Fang began to expand on the supply chain side. The company signed a project investment framework agreement with the Renhuai Municipal People's Government, planning to create 50,000 tons of production capacity over 3-5 years. At the same time, on the sales side, it plans to achieve the construction of 10,000 terminals on the basis of the existing 5,000 terminal new retail, and consider developing traditional channel dealers.

In terms of products, Sishijiu Fang upgraded the liquor body and packaging, and simultaneously launched the Taidou Liquor big single product strategy plan.

#### **4. Guanyun**

At the beginning of 2021, Guanyun received a strategic investment of several hundred million RMB from Genki Forest. At this point, Challenger Capital and Genki Forest together hold 51% of the shares, which may mean that Tang Binsen has officially come to the forefront.

Before this, Guanyun adjusted the liquor body through technology, weakening the distiller's grains aroma and Qu aroma in traditional baijiu, balancing sour and sweet tastes, and highlighting fruit aroma and grain aroma.

At the same time, the product packaging abandoned the traditional bright red and purple, using a minimalist transparent square bottle, highlighting youthfulness in brand expression. Based on these innovations, Guanyun achieved certain results, but the company's overall development was still lukewarm.

In October 2021, the "Guanyun Interstellar Distillery" held a groundbreaking ceremony in Sihong County. The project plans to be completed in 2-3 years, with a total investment of 10 billion RMB, a planned area of about 1,200 mu, an annual production of 100,000 tons of baijiu, and fully automated production.

The large-scale factory construction attracted the attention of many media, but the "stainless steel fermentation pit process" adopted by the new factory raised many doubts. The official response stated that the distillery's technology R&D side is to weaken the "flavor type" and highlight "process," providing consumers with better products.

This is also the point we think is worth paying attention to. The baijiu industry has been divided by "flavor type" for decades, and the representative brands of each flavor type have solid foundations. For startups, it is even more difficult to surpass the brand status of leading liquor enterprises under the logic of "flavor type."

In recent years, many liquor enterprises have also promoted innovation in flavor types, such as Yangshao Liquor's "pottery flavor," Daohuaxiang's "Xin flavor," and Kaishan's "clean flavor," but they have also encountered many challenges in development.

We should give more tolerance and support to innovation, just like the innovation of Yanghe's "emphasizing taste over aroma" back then, which led to the success of Jiangsu liquor today. Guanyun is investing real money, and ultimately the market should decide whether it is good or bad.

According to company information statistics, as of early December 2021, there were 13 investment and financing events in the beer industry, far exceeding previous years, and the invested companies were all in higher-end sub-fields such as craft beer and fresh beer.

In 2021, from the perspective of primary market investment and financing data, whether in the number of financing cases or the amount of financing, the beer industry set a new high compared to previous years. As reflected in the primary market, the trend of beer premiumization has become a consensus.

From the demand side, the new generation of consumers has more requirements for the refreshing taste, malt aroma, and rich flavors of beer. According to a 2018 report by Ipsos, in a survey of 1,000 beer drinkers, 48% of respondents preferred fruit flavors, and 43% of male beer drinkers listed fruit flavor as a preference.

Other preferences include sweet flavor accounting for 39%, sour flavor 35%, and ginger flavor 33%. At the same time, compared to baijiu, the male-to-female ratio of beer consumers is more balanced, and the continuous participation of female consumers is also driving this trend.

Looking at the top, China Resources Beer hopes to challenge Budweiser's leading position in the high-end market with its clear strategy, rapid decision-making, and geographical advantages. In 2021, under the guidance of the "Decisive Battle for High-End" strategy, China Resources Beer entered the second stage, with a series of actions in distribution system construction, advertising and marketing, channel distribution, and human resources. Especially the establishment of the "Huadinghui" represents China Resources' increased support for large distributors.

On the Budweiser side, it consolidates its leading position through supply chain, product, and channel expansion. For example, Corona and Franziskaner are trying flavor localization innovation. Reaching cooperation with JD in omni-channel & digitalization will also increase the company's coverage in non-on-trade channels.

Overall, the domestic beer industry has formed a pattern of monopoly competition among large companies, and market concentration is still increasing, leaving few opportunities for startups to build big brands.

Therefore, the real challenge for startups is to avoid becoming "sacrifices" in the competition of large companies while also being able to scale up. Of course, most brands can only be limited to a certain region and find it difficult to stand out.

However, the premiumization of domestic beer is still just beginning, and there is still a long way to go. From a micro perspective, in many regions, the market share of the first-place player is not high, and no player has formed a dominant position in brand power or channels. This gives our startups a breakthrough opportunity.

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**1. Taishan Beer**

"Baijiu is better with aging, beer is better with freshness"—this is Taishan Beer's development logic. Taishan Beer has been continuously exploring and innovating its business, which is also the reason this not-so-young beer company can be included in our list.

In 2010, Taishan Beer launched its original pulp beer "7 Days Fresh" for sale. In 2016, Taishan Beer began establishing direct sales stores in multiple provinces. In 2018, Taishan Beer built its own logistics system. After nearly twenty years of exploration, the company has moved from the survival stage to the development stage.

In terms of channels, after several years of development, Taishan Beer has more than 2,000 direct-operated stores nationwide, of which more than a thousand are in Shandong Province alone. The advantage of direct-operated model expansion is that it can better control the distribution density of stores according to company needs and leverage scale advantages. Once it establishes a foothold in a region, it will form a higher competitive barrier.

In October, the groundbreaking ceremony for Taishan Beer's 100,000-ton Foshan production base was held. After the Foshan base is put into production, it will lay a solid foundation for the company in the South China market, shortening the original cargo transportation time of more than 30 hours to 2 hours.

Relying on the establishment of the Foshan base, Taishan Beer's stores are rapidly expanding in Guangdong Province, currently approaching 150. According to Chen Chengwen's estimate, it will achieve 600 in 2022, and ultimately reach a scale of 2,000-3,000 stores. It is worth noting that to speed up the pace of store opening, Taishan Beer has also opened franchise in some regions.

In terms of funds, Taishan Beer completed a financing of several hundred million RMB led by Huawen Capital (CMC), followed by Xinjin Capital, providing strong support for the company's strategic expansion.

In marketing, in August, it signed Du Feng, the head coach of the Chinese men's basketball national team from Guangdong, as spokesperson, coordinating with the business expansion in the South China market; in December, it signed a three-year cooperation agreement with Focus Media.

Now, Taishan Beer is in the stage of breaking through to 10 billion in scale, and store expansion is in the "thousands of cities, ten thousand stores" stage. How to manage more than 10,000 stores in the future and achieve high sales per square foot is a huge challenge. To this end, Taishan Beer launched the "Taiyue Plan" this year, which is to realize the onlineization of Taipi business, user digitalization, and intelligent operation system, and achieve the next capability leap of Taipi through digital strategies such as building a digital middle platform.

#### **2. Ubrew**

Unlike other craft beer brands, Ubrew invested in building its own factory from the beginning and chose to import high-quality German equipment. This strategy made the company go through a very difficult stage in the entrepreneurial period. Fortunately, the full set of Krones equipment and the technical strength of the German team in China allowed Ubrew to receive OEM business for many domestic craft beers, establishing a foothold in the B-end business.

Now the company is making efforts towards the C-end business. To date, Ubrew has more than 2,000 stores nationwide, making it another beer company in the "thousands of cities, ten thousand stores" stage of store expansion. However, unlike Taishan Beer, Ubrew adopts a franchise model, and the store distribution is more even.

At the beginning of 2021, Ubrew comprehensively upgraded its brand style and brand spirit, adopting the Hermès orange theme color, symbolizing the new brand proposition launched by Ubrew—the spirit of the explorer. The brand incorporates elements such as motorcycles and exploration, making the brand image more unified.

Based on this, Ubrew upgraded and iterated the 3.0 model on the basis of the "Fresh Draft Flash Delivery" bistro, officially renamed "Ubrew Craft Beer Bistro." The new generation 3.0 model has two types: Master Store and Flash Delivery Store. Among them, the Flash Delivery Store is a model designed based on the concept of "small cost store opening, 1-2 people operation."

To increase the overall sales of stores, in March, Ubrew officially reached a strategic cooperation with Meituan to realize takeout hosting and agency operation services, connecting online and offline sales.

In terms of products, Ubrew developed 17 different flavors of craft beer in 2021. It also reached a strategic cooperation with JD Super, and customized two craft beers for JD Super—Lily Fruit Wine and 10 Degrees of Love—marking the official landing of cooperation between the two sides.

In 2021, Ubrew also won 13 domestic and international awards. Among them, the two products Walker Ale and First Wheat won single-item gold awards in three competitions: AIBA, IBC, and WBA.

#### **3. Taste Room**

With a successful innovation of Chinese flavor and recognizable label design, Taste Room made a craft beer called "Gui" (Osmanthus) break out of the circle.

After the success of "Gui," Taste Room continues to try to launch craft beers with Chinese elements. Including "Jiao" (Pepper) Ma Pepper Wheat Beer and "Ju" (Chrysanthemum) Cologne Ale. Among them, "Jiao" also won the "CCBA China Craft Beer Grand Prize Overall Champion" in 2020.

In recent years, the company has produced more than 100 experimental beers, including the Picture Beer series and the juice cider series. Currently, "Gui" and "Juice Cider" are the company's two most important product lines, reportedly accounting for more than half of total sales.

In terms of channels, Taste Room has fully launched on online circulation channels such as Tmall, JD, and NetEase Yanxuan. Offline, it has entered more than 300 bars, cafes, Lawson and FamilyMart convenience stores, Aldi, Hema, Olé and other premium supermarkets, as well as public spaces such as One Way Space and Eslite Bookstore, basically covering major cities in East China.

It is not easy for craft beer to break out of the circle, requiring long-term cultivation. In 2019, Taste Room established its own factory within the Qiandao Lake Brewery, with an annual output of 1,000 tons. This year, it also received a Pre-A round of financing of ten million RMB from Qinqin Food's sole investment.

Founder Pan Guanming said in a media interview that Taste Room hopes to produce beers with rich flavors that are not limited by time and scene, while achieving the "fusion" of design and taste, becoming a "designer brand in the craft beer industry." In the future, it also plans to promote core products to more mass channels.

**4. Xinling**

In recent years, due to the impact of the epidemic, consumers have increased their attention to health. According to data from IWSR's "2021 Low and No Alcohol Beverage Strategic Study," in 2020, the low and no alcohol beverage category accounted for 3% of the entire alcoholic beverage market.

Globally, the market sales of low and no alcohol are expected to grow by 34% during 2020-2024. The domestic "Non-Alcoholic Beer" group standard passed review and was implemented on November 30, 2021. The standard stipulates that non-alcoholic beer is beer with an alcohol content of less than or equal to 0.5% vol. 0.0% non-alcoholic beer is beer with an alcohol content of less than 0.05% vol.

It is precisely seeing the global consumption trend of non-alcoholic alcohol and the relative blank of domestic market brands that Xinling Non-Alcoholic Beer was established in 2020. Xinling currently has two major product lines: one is the craft series, and the other is the fruit beer series. The ingredients do not add flavorings, and dietary fiber is additionally added, while also controlling calories.

Overall, Xinling's core advantages mainly lie in supply chain management and original craftsmanship. On the one hand, in the supply chain, it directly cooperates with foreign raw material suppliers, directly sourcing raw materials from the origin. Control raw material quality and cost at the source.

On the other hand, in terms of craftsmanship, it adjusted the brewing equipment and process details, creating a set of clear brewing methods to remove alcohol and high calories, ensuring taste while also not destroying nutritional components. After launch, it performed well and gained a certain number of consumer recognition and repurchase.

In addition, the founding team has rich retail experience. Xinling mainly focuses on offline channels, entering supermarkets, convenience stores, and catering channels including Hema Fresh, Bianlifeng, FamilyMart, Wumart, and KKV. Online channels include Tmall, JD, Pinduoduo, and Douyin. Currently, it has become the number one brand in the Tmall non-alcoholic beer category. As an emerging brand in a potential sub-market, Xinling's overall performance is commendable.

According to data, from January to November 2021, domestic wine production was 230,800 kiloliters, a year-on-year decrease of 33.08%; wine imports from January to November were 388,600 kiloliters, a year-on-year decrease of 0.3%, and the import value was 9.874 billion RMB, a year-on-year decrease of 13.7%. The "double decline" of domestic and imported wine may be the true portrayal of the current domestic wine industry.

But fortunately, although difficult, we can still see some positive things happening in the industry.

On May 25, 2021, with the approval of the State Council, the Ministry of Agriculture and Rural Affairs, the Ministry of Industry and Information Technology, and the People's Government of Ningxia Hui Autonomous Region jointly issued the "Overall Plan for the Construction of the Ningxia National Grape and Wine Industry Open Development Comprehensive Experimental Zone," proposing to create a 100-billion-level wine industry development goal in 5 years.

At the same time, Xinjiang Autonomous Region, Yantai City, and other places have also introduced corresponding policies and measures to encourage the development of wine-producing areas. Relevant information shows that in July this year, the relevant departments of the Ministry of Finance have conducted research in wine-producing areas and begun to study specific topics for tax reduction of the domestic wine industry. This means that from the national to local level, the government pays more attention to the construction of wine-producing areas, giving people more expectations for industry development.

For a long time, the domestic wine industry has been troubled by high grape raw material planting costs, lack of a self-owned product evaluation system, and competition from imported wines. At the same time, there are industry characteristics of heavy assets, long investment, and slow recovery. From the data, there are only a handful of cases of financial investment entering the wine industry.

Therefore, it is very difficult for wine entrepreneurs. They need to rely more on their own abilities, resources, and feelings to support their business ideals.

Wine is a table wine in Western dining culture, but how to pair it with Chinese food has always been an industry problem for wine entering the Chinese market. The popularity of heavy-flavored dishes today is also one of the fundamental reasons why wine is difficult to integrate into consumers' daily lives.

But with the improvement of health awareness and consumption levels, the proportion of consumers who prefer moderate and balanced flavors will increase, and the trend of the wine demand environment developing in a good direction will not change. And whether it is heavy-flavored, salty, spicy, sweet, or oily, there are suitable wine pairings.

So, in the end, it still requires industry practitioners to brew good wine with heart, while also going deep into the market, approaching consumers to do market education, rather than just sending goods to distributors and being done.

China has vast land and unique geographical environments, making the climate and culture exceptionally rich and colorful. We should firmly believe in our terroir and can also grow our own wine culture.

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**1. Xige Estate**

In 2021, even in a difficult year, Xige Estate still firmly ran fast. It is commendable that annual sales exceeded 200 million RMB in 2021, and the first vintage wine after completion, more than 1.2 million bottles, was sold out this year.

The second phase of the Xige Estate's 10,000-mu vineyard project is under accelerated construction. In 2021, all grape seedling planting has been completed, with a survival rate of over 90%, and it has entered the soil-burying period. After the project is completed, Xige Estate will have 30,000 mu of high-quality vineyards.

In terms of products, in 2021, on the basis of the business-scenario-focused "N Series," Xige launched a high-end new product N.609, raising the product price band to nearly 1,000 RMB. In addition, to seize the opportunity of the "Australian anti-dumping," Xige also launched the "Yuge Guocai Series" on the "Single Vineyard Series" focusing on self-drinking scenarios, targeting the 100-300 RMB price band.

In terms of channels, in April 2020, Xige Estate proposed a "winery 4S store + traditional channels" dual-wheel linkage model and opened its first store.

During 2021, Xige added 5 new offline flagship stores, bringing the total number of stores to 6. According to winery founder Zhang Yanzhi, these stores are not broadly defined specialty stores, but extensions of the Xige Estate scene, and are the most cutting-edge propaganda positions for the Xige brand and the eastern foothills of Helan Mountain wine.

In addition, Xige Estate and JD Super Mall will carry out multi-channel cooperation: in addition to the original JD Super main site, supply and marketing platform, store help, and other businesses that have been cooperated, Xige Estate will soon enter JD Super self-operated and JD Super's Qixian Supermarket. The two sides agreed that from 2021 to 2023, Xige will achieve an online sales target of 300 million RMB through JD's channels.

In 2021, Xige Estate was approved to use the "Helan Mountain East Foothills Wine" geographical indication logo, and the winery was included in the construction plan of a "4A-level" scenic spot. With its own efforts and the government's tailwind, Xige Estate may become the first winery in the eastern foothills of Helan Mountain to break through 1 billion in sales.

**2. Aolan China**

Unlike general agency, Aolan China successfully established the "Little Red Riding Hood" brand through self-built teams and market cultivation. Using the thinking of fast-moving consumer goods, it successfully lowered the threshold for young people to consume wine. The specific strategy can be simply summarized as making young consumers able to "reach, remember, buy, and afford."

The so-called "reachable" means letting consumers reach the product through various ways. Little Red Riding Hood conducts market cultivation through tasting sessions, event sponsorship, film and television investment, exhibitions, gatherings, co-branding, and other forms. And using the content generated by these activities, it creates topics on social media channels such as WeChat, Weibo, and Xiaohongshu, and then lets influencers and KOLs spread it.

The so-called "good-looking and memorable" means letting consumers feel it looks good after reaching the product and leaving an impression in memory. During the 2019 Autumn Sugar Fair, Little Red Riding Hood upgraded its label. In the new packaging, there is no producing area, no vintage, only the red coat of Little Red Riding Hood with the word "Knock." The label is bold and eye-catching, making the public see "Little Red Riding Hood" and know it is Aolan red wine, and mention Aolan red wine and think of "Little Red Riding Hood."

In addition, in promotion, it combines Little Red Riding Hood with consumer life scenarios, such as wine-braised chicken wings and wine-braised lamb. No ritual needed, open and drink. Create real life scenarios to resonate with consumers.

Regarding "buyable and affordable," Aolan China has made efforts online and offline simultaneously. Online, it attracted a large number of fans through live streaming with goods, and also sold through fresh food e-commerce platforms and community e-commerce such as Hema, Daily Youxian, Meituan Maicai, and Chenxin Youxuan. Offline, it directly distributes in convenience stores and supermarkets in first-, second-, and third-tier cities, reducing many intermediate links in sales.

In April 2021, Aolan Little Red Riding Hood received an A-round investment of over 100 million RMB from Hillhouse Ventures and Heiyi Capital. The addition of capital increased the company's development speed. In May, it signed a 200 million RMB cooperation agreement with C&D Logistics. In marketing, it landed on CCTV's Qixi Festival slot, sponsored high-speed trains, hired brand spokespersons, and completed a brand image upgrade in September.

For the current domestic wine industry, it needs both companies that can hold their heads high, represent industry quality, and lead industry development, and companies that can bend down to increase market penetration. The rapid development of Aolan China is a reflection of the value of the latter.

Seeing the explosive growth of the Hard Seltzer category in the US market in recent years, many people in China are eager to enter the market, setting off a wave of low-alcohol beverage boom from the supply side.

According to public information statistics, as of mid-December 2021, the number of financing cases for low-alcohol beverages reached 24, far exceeding the single-digit financing cases last year. Among the capital involved, there are many top players such as Matrix Partners China, ByteDance, XVC, BAI, Tiantu Capital, and Challenger Capital.

Although brands are entering in droves, their entry points are different. There are fermentation processes, configuration processes, some use vodka, some use whiskey and baijiu; some add sugar substitutes, some add guarana; some focus on female groups, some on general groups; some focus on online channels, some on offline channels...

In 2021, many low-alcohol beverage brands faced problems such as diluted online traffic and low repurchase rates, and began to increase offline channel layout. Including various KA channels, convenience stores, new retail, community e-commerce, catering, and bars.

Looking back at the history of the US market, as early as the 1990s, various types of low-alcohol beverage products were launched successively. At the same time, before the explosion of the Hard Seltzer category, the US already had a mature cocktail and soda consumption market.

The Japanese market has a similar situation. Since the 1980s, breweries have successively launched low-alcohol beverage products. It was not until 2000 that the industry began to grow rapidly. Before that, the market maintained a state of moderate development.

Therefore, domestic low-alcohol beverage entrepreneurs should also be mentally prepared for the market to maintain moderate growth.

If from the characteristics of alcohol, low-alcohol beverages are similar to beer, relying more on the industry competitive landscape to obtain high ROE. But low-alcohol beverages are not limited by freshness, and the sales radius will be larger. Due to the many flavor combinations, product richness is also greater.

For example, when we studied the development history of low-alcohol beverages in Japan, we found that in some years, only Suntory could launch hundreds of new products. The second-ranked Kirin, at its peak, could also launch more than seventy products a year.

The above two factors may mean that competition in low-alcohol beverages will also be very fierce.

Therefore, what we can see in the Japanese and US markets is that companies with beer businesses dominate the low-alcohol beverage market. Because whether on the supply chain side or in channels, beer and low-alcohol beverages have a large overlap. Examples include Suntory and Kirin in the Japanese market, and Budweiser in the US market.

However, among the representative companies, there are also companies without beer backgrounds, such as Mark Anthony Group (parent company of White Claw) in the US, and Takara Shuzo and Godo Shusei in Japan.

In the domestic market, the entry of beer merchants is also inevitable. The giant Budweiser has already used the tried-and-true "own brand + investment" dual-wheel drive strategy. Of course, the participation of beer companies is beneficial to the development of the entire industry. But for low-alcohol beverage entrepreneurs, they should also be prepared.

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**1. Berry Sweetheart**

Tang Huimin, with keen market awareness and delicate intuition as a woman, insight into the business opportunity of "women's alcohol." After leaving RIO, she founded the female low-alcohol beverage brand Berry Sweetheart in 2019, focusing on meeting women's drinking needs in different scenarios such as solo drinking at home and gatherings.

After the establishment of Berry Sweetheart, it successively launched the small square bottle series bottled fruit wine and canned sparkling fruit wine in April 2020, and then successively launched creative wines with multiple flavors such as chocolate wine and coffee wine.

Among them, the Sweetheart Small Square Bottle series fruit wine uses fruit juice fermentation process and focuses on the selling point of "0 flavoring, 0 pigment, 0 preservative." After launch, the product was welcomed by consumers and ranked first in Tmall fruit wine category sales for three consecutive months. Currently, more than 80% of Berry Sweetheart's consumer group is young women aged 22-30.

In 2021, Berry Sweetheart moved from online to offline. Currently, channels cover traditional online e-commerce platforms such as Tmall and JD, as well as social e-commerce focused on investment and conversion such as Douyin, Kuaishou, and Xiaohongshu. In addition, it also tries WeChat private domain traffic and community group buying.

Offline, the brand has covered large supermarkets such as Metro, RT-Mart, and Tesco, convenience store chain systems such as 7-11, Lawson, and FamilyMart, and new retail channels such as Hema Fresh and 7fresh.

Shortly after the offline layout, it received good market feedback. According to public media information, near mid-2021, Tang Huimin said that Berry Sweetheart's online and offline sales ratio is about 6:4, and the offline proportion will be larger in the future.

Thanks to Berry Sweetheart's keen insight into the needs of young female consumers and its grasp of market opportunities, in 2021, the company once again gained capital recognition and completed multiple rounds of financing.

Including the A+ round completed in May, led by CPE Yuanfeng, followed by C Capital, Matrix Partners China, and Shangcheng Investment; and a new round of equity financing completed in September, led by Country Garden Venture Capital, followed by CPE Yuanfeng; and the strategic investment from AB InBev at the end of the year.

In terms of products, the "canned sparkling fruit wine" launched in May still uses fruit juice fermentation technology, focusing on "low sugar and zero fat." The first batch of products includes three flavors: lime and green plum, white peach oolong, and lychee duo. After launch, the new product received good market feedback. At the time of writing, its Tmall flagship store monthly sales reached 10,000+.

**2. Shidian Yike**

Positioned for young drinkers aged 18-30, entering with "sugar-free sparkling wine," Shidian Yike achieved relatively excellent performance in 2021. In the 2021 618, Shidian Yike won the Top1 in the emerging soda wine category and Top3 in the Tmall 618 low-alcohol beverage category. It is said that online sales have exceeded 1 million cans.

In terms of channels, in addition to completing the online layout, the company also laid out key regions offline. To improve user purchase convenience and get close to real drinking consumption scenarios, Shidian Yike densely covered entertainment venues and convenience channels in Guangzhou and Chengdu, two cities with mature entertainment scenarios.

Offline partners include China Resources Ole supermarket, Hema Fresh, BHG Life Supermarket, Tianhe Supermarket, Wantian Supermarket, 7-ELEVEN, Lawson convenience stores, etc. The number of offline outlets exceeds 10,000+.

In terms of products, focusing on selling points such as "0 sugar 0 fat, comfortable after drinking," the raw materials use vodka as the base wine, paired with fruit flavor and bubbles. The basic product line currently has 8 flavors, and also includes a surprise flavor series for marketing orientation, and launched glass bottles suitable for the ready-to-drink market.

The high-alcohol series line "Shidian Yike·Kai" first chose lemon and mint, two flavors with market foundation, with each can reaching 9% vol, meeting consumers' needs to "satisfy their alcohol craving."

In terms of brand, Shidian Yike builds brand association around the free time of young people at "10:15" in the evening, cooperating with 7 popular bars in Shanghai to launch the 22:15 Heart Ball Party special series, and on Halloween, it cooperated with Super Monkey to hold the "22:15 Villain Escape Night," which is commendable.

According to Forest Sullivan data, in 2020, the market size of China's leisure food industry was 774.9 billion RMB, with a compound annual growth rate of 6.6% from 2015 to 2020. From the category perspective, traditional sugar, chocolate, and honey (candy, chocolate, preserved fruit) account for the largest proportion in China's leisure food market, accounting for 24.2% in 2020.

Followed by baked cakes, puffed food, leisure braised products, nuts and fried goods, biscuits, and others. Among them, the leisure braised category has the fastest compound annual growth rate, with an average annual compound growth rate of 18.8% from 2015 to 2019, and still has great market potential.

One is comprehensive snack brands, whose product portfolio covers multiple snack sub-categories, such as Laiyifen and Bestore with strong offline retail genes, and Three Squirrels and Baicaowei that started on the Internet; the other is snack companies with the thinking of big single products and big channels, such as Qiaqia, Ganyuan, and Youyou, where star products occupy a relatively important position in the company's overall performance.

The overall leisure snack industry has long had low barriers, homogeneous competition, and relatively low brand concentration. And because it involves many sub-categories, new channels and new consumption trends give startup brands opportunities to enter. A new wave of emerging brands mostly enters leisure food entrepreneurship with the route of big single products. Wang Xiaolu, Sanpangdan, Daily Dark Chocolate, and Shuijun are typical examples.

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**1. a1 Snack Research Institute**

Compared to Three Squirrels, invested by Today Capital, which started with nuts and e-commerce, and Bestore, which started with offline franchise stores, from the perspective of brand development, a1 has expanded from focusing on the baking track to comprehensive snacks. Currently, a1's revenue mostly comes from offline. On the one hand, it enters national KA channels through more than 600 distributors; on the other hand, it opens direct-operated stores, currently 8.

In addition, a1 has been exploring new models with retailers such as Yonghui, Hongqi, and Century Lianhua, such as combining Yonghui's channel characteristics for product selection and entry, moving stores into Yonghui's warehouse stores and brand pavilions. From product and store location selection, a1 is a brand with a high focus on "waist consumers" and "lower-tier markets."

On the product side, a1 does not launch many new products each year, choosing to focus and concentrate resources to ensure the efficiency of new product hits. From the 2018 a1 egg yolk pastry, the 2019 a1 cloud cake, the 2020 a1 watermelon toast, to the 2021 a1 cake in the middle of pine.

In addition, to better promote product-level R&D and innovation upgrades, a1 launched the "Super R&D" plan in 2021, jointly building a global food research institute with Jiangnan University and the Guangdong Provincial Ecological Design Industrial Research Institute.

On the supply chain side, it formed the "Dezhou Super Factory" in Shandong, gathering more than 40 self-owned and strategic cooperative factories in one park, achieving all-round product management with the "new four modernizations" of automation, intelligence, digitalization, and intensification. And we see that Dezhou Kairong Investment Development Co., Ltd. has made an equity investment in a1.

According to the growth plan of 10 billion scale in 5 years, a1's development speed is not slow. And with several rounds of first-line fund and state-owned capital investment endorsements, a1 is already a very leading food startup.

But whether in the baking sub-market or moving towards the comprehensive snack track, facing competition from predecessors like Three Squirrels and Bestore, a1 still needs to continue to make efforts in product innovation, omni-channel expansion and deep cultivation, and brand building.

#### **2. Wang Xiaolu**

According to the recollection of Wang Xiaolu's founder Wang Xiong, when he transformed from braised pig trotters to the chicken feet track in 19 years, the listing of the pickled pepper chicken feet brand Youyou in April of that year greatly inspired him and strengthened his determination to go all in on the chicken feet category. In 2021, Wang Xiaolu maintained continuous growth, and it is claimed that online channel sales alone can reach 600 million.

In terms of products, the main braised chicken feet are marinated for 8 hours, then fried to form a tiger skin appearance, and then soaked in old marinade for 12 hours. The final chicken feet are visually larger than others and have a softer and stickier texture.

With product characteristics and online omni-channel traffic tactics, Wang Xiaolu made tiger skin chicken feet a bestseller, achieving a certain degree of consumer mind share.

In brand promotion, Wang Xiaolu, together with Huan Shi Interaction, launched the "Life Strikes Me" series of advertisements at the beginning of the year, and launched 5 short films in October, all with strange brain holes and reversals, ultimately highlighting the core slogan "Wang Xiaolu tiger skin chicken feet, sales exceeding 50 million/100 million bags of national trend chicken feet."

Similar to Xiangpiaopiao milk tea's "sell XX cups a year, cups connected can circle the earth X times," it conveys the popularity of the product, highlighting the brand's sales strength and memory point.

It is said that Wang Xiaolu has now entered almost all large supermarkets and convenience stores nationwide, including several major new retail platforms. In the braised snack market, offline will inevitably remain the main battlefield. Continuously improving offline channel penetration is a key consideration for Wang Xiaolu's next step.

#### **3. Daily Dark Chocolate**

Completing three financings in April, September, and December, launching the core product line DARK MILK, seizing some traffic growth channels, and online sales have also stepped up to a new level. In 2021, Daily Dark Chocolate continued to make efforts to grow, with Double 11 sales increasing by 400% year-on-year.

Chocolate has a strong random purchase attribute, and most purchase scenarios occur offline. And because of the background of imported food agents, offline channels are exactly Daily Dark Chocolate's strength. Daily Dark Chocolate has laid out nearly 100,000 terminals around first- and second-tier cities, and will distinguish product specifications for different channels.

For example, in places that solve immediate needs such as convenience stores, it sells small-scale products; in places with higher single purchase prices such as hypermarkets or modern channels, it increases the number of pieces in product packaging.

On the product side, in 2021, Daily Dark Chocolate launched the OAT MILK oat dark chocolate product line, with a pure plant-based formula, using German enzymatic hydrolysis technology to integrate oat flavor into chocolate, with three flavors: wheat aroma original, oat coconut, and oat latte. Quickly responding to current market hot demands and being able to create leading products shows Daily Dark Chocolate's excellent R&D capabilities.

On the marketing side, in addition to officially announcing Wang Yibo as the global spokesperson for Daily Dark Chocolate, using a celebrity with matching characteristics to leverage celebrity traffic to increase brand awareness, it also launched cooperation with Focus Media. Since Focus Media covers crowds that match Daily Dark Chocolate's audience, and Daily Dark Chocolate's offline channels are already dense, it can undertake the traffic brought by Focus Media's publicity.

Currently, in the dark chocolate category, Daily Dark Chocolate stands out. In an interview with Ebrun Power, Ethan proposed a 250% brand growth expectation for Daily Dark Chocolate in 2022. At this time, it is often a competition with itself. Daily Dark Chocolate still has a lot of internal skills to cultivate in continuous product innovation capabilities, channel and marketing construction, and brand building and operation capabilities that can match or even surpass well-known brands in the chocolate track.

#### **4. Sanpangdan**

Sanpangdan was established in 2010, but the founding team has been dealing with the sunflower industry since 1998. It is said that all of Sanpangdan's melon seed raw materials come from its own sunflower planting base, developing a full industry chain of melon seeds from seed industry, planting, storage, production, and sales.

In 2013, it launched Sanpangdan canned original flavor melon seeds, focusing on high quality in all aspects: good raw materials (high unit price), strict selection (high elimination rate), hand-selected grains (high labor cost), and high-end packaging (high packaging cost).

With the core selling point of "large grains, no bad seeds, ten jin selected for two liang," Sanpangdan is positioned in the high-end melon seed market. It is said that for every 3 cans of original flavor melon seeds sold nationwide, 2 are Sanpangdan, with a cumulative sales of 40 million cans for a single product.

In terms of channels, Sanpangdan initially mainly opened the situation through special channels, such as reaching strategic cooperation with brands like Haidilao, Sinopec Easy Joy, Bama Tea, and Laoshe Teahouse. At present, it has fully opened up channels, including online JD, Tmall, Douyin, and Pinduoduo, and offline Walmart, Hema Fresh, Yonghui, BHG, OLE, 7fresh, 7-11, and other chain systems, as well as cooperation with platforms such as Dingdong Maicai, Meituan Select, and JD Daojia.

In 2021, Sanpangdan established an e-commerce company in Hangzhou to increase e-commerce development, and proposed the plan to achieve "buy Sanpangdan within 1 kilometer in most cities nationwide" by the end of 2021. According to Blue Whale Finance, Sanpangdan's sales growth rate has remained at about 60% in recent years.

Compared to other nuts, melon seeds have developed more slowly, long led by Qiaqia, moving from bulk no-category to branded, quality, and diversified development. The high-end development of melon seeds has the inevitability of consumption trends. As the leader in melon seeds, Qiaqia launched the high-end premium melon seed Kuizhen as early as 14 years. From a product perspective, especially in original flavor melon seeds, Sanpangdan and Kuizhen are very similar. In the competition of high-end melon seeds, Sanpangdan needs to continue to make efforts in product, brand, and channel.

#### **5. Shuijun**

Compared to melon seeds, the category of crispy rice is smaller, and the tastes of crispy rice vary by region. East China has glutinous rice crispy rice, North China has millet crispy rice, and Northwest China mainly has handmade crispy rice. Industrialization and industrialization development are also more backward.

Shuijun Crispy Rice was established in 2014. After R&D exploration and product iteration, in 2016 Shuijun launched the first "flavored crispy rice" product, upgrading the past powdered seasoning puffed crispy rice to sauce-coated glutinous rice crispy rice, and developed different flavors such as crab-flavored egg yolk crispy rice, seafood glutinous rice crispy rice, Bixin pork floss crispy rice, and Sichuan-style hot pot crispy rice.

Focusing on product R&D, Shuijun reached a long-term strategic cooperation with Jiangnan University to achieve product matrix expansion. In 2021, it launched black gold pork floss black rice crispy rice.

Breaking the tradition of crispy rice, the change in production process brings an upgrade in the supply chain during mass production. The Shuijun team designed and developed a fully automatic crispy rice sauce-coating equipment production line and applied for a patent. In 2021, Shuijun made two major investments in the supply chain: one was to invest about 80 million RMB to build its own processing factory, and the other was to reach cooperation with Jiangsu Nongken Group, having its own stable raw material base.

According to Magic Mirror data, Shuijun's 2021 Taobao GMV is around 70 million, a year-on-year increase of more than 50%. According to one of the founders, Zhang Yulong, with an online-offline ratio of 3:7, Shuijun's overall scale in 2021 is close to 200 million. Shuijun's goal is to become China's Lay's. For it, this is not only about making crispy rice a big single product, but also how to make Shuijun a brand loved by young people, which is a long and difficult road.

#### In 2021, domestic tea sales exceeded 300 billion RMB throughout the year, a figure that has been increasing year after year since 2014. The tea industry has such a large market share in China, but it has always been in a state of "having categories, no brands."

The main reasons are: 1. In the past many years, well-known tea enterprises mostly sold offline and generally took the mid-to-high-end route, lacking consumer product characteristics; 2. Due to the lack of unified standards in the tea industry, there are few standardized products; 3. On the consumer side, there is no innovation to increase consumption frequency.

China's tea industry market is undergoing "structural changes" in recent years. With the transformation of the market environment and diversified consumer demand, the consumer group of tea has spread from middle-aged and elderly people to young people, tea products have gradually become "fast-moving," and traditional tea enterprises have faced challenges from new-style tea enterprises.

In the past few decades, the domestic tea industry has experienced changes from bulk tea to tea bags and then to the upgrade of tea bags. At the same time, the emergence of tea powder, freeze-dried tea, and tea concentrate products also shows us the possibility of further innovation in tea products. In 1992, Lipton brought convenient, cheap, and highly standardized tea bags into the Chinese market and changed the way a generation drank tea. Lipton's development in China can also be seen as a microcosm of the development of domestic tea bags.

By 2005, Lipton's sales in China reached $2.8 billion. At that time, Lipton was almost everywhere: hotels, airports, train stations, office buildings, and on TV. Because Lipton has never pursued quality in tea leaves and has not quickly grasped the needs of the new generation of consumers in product iteration, with wave after wave of consumption upgrades, consumers have also developed a pursuit of taste in tea bags.

Many domestic startups seized this point, upgraded the quality of tea bag products, replaced the traditional tea bags mainly made of broken tea with whole leaf tea, and also catered more to the taste preferences of the current main consumers in flavor, launching blended teas combined with the flavors of new-style tea drinks.

In 2021, the domestic tea industry continued to develop along the trend of tea bag upgrades. Emerging brands focused on product innovation around flavor exploration. In addition, the product expansion thinking of the tea industry is gradually developing towards the coffee industry. Tea powder, concentrated tea liquid, and freeze-dried tea products are also becoming new product expansion directions.

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**1. ChaLi**

In the tea bag field, there is a rapidly growing emerging brand, ChaLi, which was selected for our list last year.

This brand, established in 2013, is positioned as a tea bag brand and professional tea service provider. The C-end is the main revenue business. Currently, the product matrix covers fruit blended tea, classic original tea, functional tea, herbal health tea, organic tea, and lollipop milk tea. The B-end channels mainly focus on hotels, offices, and catering.

ChaLi's fundamental construction is relatively comprehensive, with upstream basic conditions integrating tea gardens, cooperatives, and tea research rooms. Core technologies such as production, processing, and R&D have also been polished for many years. It can be said that in the current tea bag field, ChaLi has a certain influence. What is worth paying attention to this year is that in 2021, ChaLi has become the second in the Tmall Double 11 tea category brand transaction ranking, second only to Dayi, which has been ranked first for consecutive years. In 2020, ChaLi ranked 4th.

In terms of product innovation, ChaLi has also launched freeze-dried tea, cold brew tea, and other products. In September 2021, the first phase of ChaLi's Nansha headquarters base was officially put into production, including a fully automated production center, R&D center, and international tea college, which further strengthened ChaLi's competitiveness in R&D and supply chain. ChaLi is gradually seizing Lipton's market share and developing into a domestic tea bag giant. For ChaLi, to further expand market share, in addition to continuous efforts in the C-end market, increasing the B-end layout is also crucial.

#### **2. TNO**

Among the products with faster growth in the tea industry in 2021, in addition to tea bags, there is another representative product type, namely freeze-dried tea powder, concentrated tea liquid, and other brewing tea products. The development logic of this type of product is somewhat similar to coffee products, giving traditional beverages a new consumption form and extending consumption scenarios and methods.

This also made us pay attention to an emerging brand TNO that applies coffee product development theory to tea drinks. The brand's founder, Wang Juntao, was the founder and CEO of Eagle Coffee. Years of coffee industry experience allowed him to form a set of coffee R&D methodology, which he also applied to TNO's product development.

The product was officially launched in December 2020. Currently, there are two product lines: water drop tea and lollipop tea. Among them, water drop tea is freeze-dried tea powder, and the product design adopts the shape of a beauty blender; lollipop tea is a unique design by the TNO team, different from traditional packaged tea bags.

TNO's current marketing mainly focuses on online live streaming, while sales adopt an omni-channel layout strategy. It has launched on Tmall flagship store and Xiaohongshu, and offline covers premium supermarkets in first- and second-tier cities, including Hema, Ole, etc.

We believe that TNO's micro-innovations in tea products, especially in product design, are relatively creative among emerging brands. In particular, the design of lollipop tea not only facilitates stirring and improves extraction speed, but also effectively avoids the embarrassment of the traditional tea bag string falling into the tea cup.

In fact, in 2021, many freeze-dried tea powder products appeared on the market, including Chayanyuese and Wanglaoji, which have high offline visibility. Among them, Chayanyuese achieved the 7th place in Tmall tea category sales within a few months of launch.

With the entry of new and old brands and the trend of following up with new products, the freeze-dried tea market seems difficult to avoid homogenization competition.

For TNO, this is a market with both opportunities and challenges. After successfully entering the tea industry market from a coffee perspective, how should it find its own product development logic? The brand needs to quickly find this answer for itself.

**3. Chaxiaokong**

In 2021, there is also a rapidly growing emerging brand in the tea bag field, Chaxiaokong. The company was established in 2020, entering the market with blended fruit and flower tea. At the same time, Chaxiaokong made technological innovations to tea bags, taking the lead in proposing the concept of "super extraction," allowing tea bags to quickly produce tea at any temperature, breaking the traditional requirement of water temperature for tea leaves. We believe the points worth paying attention to for Chaxiaokong are:

1. Rapid sales growth in the early stage of the brand. The product became the number one in the fruit and flower tea category within 3 months of launch, with monthly sales exceeding 10 million;

2. The company has established certain technological innovation. The developed super extraction technology, through the use of single-cell stretching and physical wall-breaking technology, makes the tea leaf cells appear a large number of loose and porous sponge-like structures, thereby allowing the internal substances of tea leaf cells to quickly seep out, and obtained an exclusive patent;

3. It is said to be the only emerging tea bag brand currently cooperating with the State Key Laboratory of Tea Science in China. It established a tea research institute, jointly with six experts including Liu Zhonghua, academician of the Chinese Academy of Engineering, Wang Yuefei, tea professor at Zhejiang University, and Liu Zhengquan, tea professor at Anhui Agricultural University;

4. Another point worth noting is that the brand founder Zhao Haibo has an investment banking background and participated in Alibaba Group's New York listing, giving the brand some "background halo" from its inception. In addition, the brand is the first DTC brand invested by DST in China. DST has invested in Internet giants such as JD, Alibaba, and Xiaomi.

Currently, Chaxiaokong's products mainly have two major categories: super extraction whole leaf tea and trendy health tea. At present, sales channels are mainly online. In 2021, Chaxiaokong invested in celebrities and a large number of ordinary bloggers on Douyin and Xiaohongshu, continuously strengthening the brand's health and wellness concept.

The brand's product design is also relatively novel, and the overall packaging color scheme is eye-catching. In addition, the brand also launched its own IP Xiaokong to make an "emotional connection" with consumers. Chaxiaokong launched red envelopes, stickers, emojis, and other peripherals around the Xiaokong IP.

Chaxiaokong quickly established brand awareness through novel products and traffic support, and achieved rapid growth in the early stage. This is the path many new consumer brands have taken. But in the future, whether Chaxiaokong can maintain stable growth and how to improve repurchase rates remains to be verified.

# The baking market in 2021 is generally summarized as "a song of ice and fire." On the one hand, old baking brands such as Yizhiduo, Christine, Bestcake, and Fuli Forest closed stores or went bankrupt due to the epidemic and the general environment; on the other hand, VC poured into the baking track, from offline chains to retail brands, with unprecedented attention from capital in every sub-category.

According to Euromonitor data, the baking terminal market size in 2020 was 235.8 billion RMB, with a compound growth rate of 9% from 15 to 20 years. The top two, Dali Foods and Taoli Bread, accounted for 3.7% and 3.3% respectively, with a total market share of only 7%.

One of the important reasons for the widespread attention is that the baking food track has a large scale and good growth rate but low concentration. Traditional brands face aging and reshuffling, giving industry competitors and new entrants a lot of development space.

From the consumption scenario, baking food is mainly used as a breakfast staple food consumption scenario, followed by leisure snack scenarios such as home, office, and travel. With the development of consumption and diet towards more diversified, healthy, and convenient, pre-packaged baking food has become one of the important choices for consumers' breakfast staple food. In addition, the functional demand for meal replacement is also gradually strengthening.

Compared to long-shelf-life baking food with a shelf life of 6 months to 1 year, short-shelf-life baking products with fresh taste, fewer additives, and less sugar and oil have become a growth trend. New flavors and new sub-categories are important support for the continuous growth of baking food.

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#### **1. Xuanma**

It is not easy for startup brands to truly break out of the siege. In 2021, Taobao data shows that the top three in baking food are still the three giants of comprehensive snacks: Three Squirrels, Baicaowei, and Bestore. However, under the sub-category, we saw breakthrough startup brands. Under traditional pastries, Xuanma broke through the siege of giants and won the top spot.

This year's FoodPlus annual list includes Xuanma again. According to founder interviews combined with Taobao data speculation, Xuanma's sales from 60 million RMB in 2016, over 100 million in 2017, 200 million in 2018, 500 million in 2020, and an estimated 700 million in 2021, Xuanma demonstrates strong business capabilities.

On the one hand, as a pioneering brand of egg yolk pastry, Xuanma broke the industry's long-term state of "having a category but no brand," and made the traditional Chinese pastry egg yolk pastry fast-moving and standardized, upgrading from raw materials to processes. This year, Xuanma led upstream and downstream enterprises in the industry to release the "Egg Yolk Pastry" group standard.

On the other hand, as a startup, Xuanma has shown sufficient determination and persistence in product research, focusing on the egg yolk pastry category, developing scenarios, innovating flavors, and upgrading supply chain and processes.

In 2021, Xuanma started trial production in a new factory of 10,000 square meters in Nanning Airport Science and Technology Industrial Park. The design capacity of the new factory will exceed the combined capacity of the original two factories in Nanning and Jiaxing, greatly improving automation.

This year, Xuanma completed a B-round equity financing of over 100 million RMB, with old shareholders Jinding Capital, Qinglan Investment, and new investor Maixing Investment participating. The funds will be used for full-chain digital and intelligent upgrades, factory construction, product R&D, and expanding sales channels.

It is said that Xuanma's offline channel share is currently around 20%. How to penetrate offline retail scenarios is one of the issues Xuanma needs to prioritize.

In addition, although the egg yolk pastry category still has room for further penetration, how to upgrade and iterate products in the future, whether to continue focusing or look at opportunities in the broader baking category, and how to enter and create new bestsellers are still strategic questions Xuanma needs to answer.

#### **2. Qinian Wuji**

Xuanma is a breakthrough in the traditional pastry sub-category, while Qinian Wuji has achieved its own results in the Western pastry category. Similarly, Qinian Wuji is also selected by us again after being selected last year.

Since the strategic adjustment in 19 years to focus on "whole wheat baking" as the core, Qinian Wuji has achieved doubled sales growth every year. Taking Tmall flagship store GMV as an example, it was 147 million in 20 years and 258 million in 21 years.

Although it has developed buckwheat noodles and other whole grain staple foods, chicken breast and chicken meatballs and other nutritious meat proteins, light food vinegar sauce, cold brew coffee, and other categories around light food and low calories, whole wheat bread represented by whole wheat European bread contributes more than 80% of sales.

From products to the founding team, the impression Qinian Wuji gives us can be described as "steady and solid." Whole wheat European bread focuses on 15-day short shelf life freshness, which is a great challenge for supply chain allocation.

Through operations, factory construction, and logistics optimization, Qinian Wuji achieved nearby shipping from six factories in four places nationwide, with a logistics score of 4.9 on the flagship store, even better than most long-shelf-life brands. It can be imagined how much effort the brand has put in behind the scenes.

Achieving rapid growth in just three years, it is worth noting that Qinian Wuji only received an angel round of financing from Xianfeng Qiyun in 2020. It can be speculated that Qinian Wuji has been relatively stable and continuous in gross profit control.

For Qinian Wuji, how to move towards more retail channels and whether it can grow into the next Taoli Bread under the limitation of 15-day short shelf life is what we are particularly concerned about and looking forward to.

In 2021, the trend of quality improvement in China's meat processing products continued to deepen. The big trend of quality improvement can be divided into two sub-trends: low-temperature and health. In this wave of quality improvement, in the past year, more startups have brought innovative product solutions to the market.

With the deployment and penetration of domestic cold chain facilities, low-temperature products with better nutritional value and flavor preservation are a major trend in meat products in recent years. This trend can be felt from the sales data of meat product giants.

In 2013, Shuanghui's high-temperature meat products (which can be stored at room temperature after high-temperature sterilization) had operating revenue of 15.7 billion RMB, accounting for 35% of revenue; in 2019, these two figures were 16.1 billion and 26.8%.

Domestic chicken food giant Fengxiang Co., Ltd.'s star product, the low-temperature ready-to-eat chicken breast brand "Youxing" series, had sales of 230 million RMB in 2020, a year-on-year surge of 280%; in the first half of 2021, the sales of the Youxing series were 238 million, already exceeding the full year of 2020, a year-on-year increase of 195%.

Low-temperature will continue to be a strong and irreversible trend in the future. From a macro perspective, there is still huge penetration space for low-temperature meat products. According to Huaan Securities data, the current market size of low-temperature meat products accounts for about 37% of total meat products in China, while this figure is greater than 90% in the UK, US, and Japan.

From the competitive landscape, according to Euromonitor data, the current CR3 of domestic low-temperature meat products is 23%, while the CR3 of high-temperature meat products is 86%. In contrast, the low-temperature meat product category has a better entry space.

Due to some historical problem events, consumers have concerns about the safety and health of domestic meat processing products. In recent years, many startups in this field, such as the new brands Benwei Xianwu, Rou Gandang, and Rou Banzhang that emerged in the past year, have innovated from the perspective of health, seizing the main contradiction in the market.

The current health solutions focus on no additives, no added flavors and pigments, nitrite, starch, miscellaneous meat, plant protein, etc. More leading enterprises have begun to innovate in the upstream breeding end to be free of antibiotics, hormones, and chemical drugs.

Against the background that all food and beverage categories are taking the quality route, the future quality trend of domestic meat processing products will further deepen. We believe this is self-evident. Regarding this trend, we also have another logic:

As firm believers in artificial meat, we believe that in the future, artificial meat will systematically subvert the traditional meat supply chain. Since in the long run, the price of artificial meat will be lower than traditionally raised animal meat, the living space of mid-to-low-end traditional meat products will be severely squeezed, and the traditional products that can remain are more high-end original ecological products.

Shifting the perspective from the future back to the present, the previous batch of meat processing startups such as Daxidi and Xiaoniu Kaixi have begun to deeply penetrate the upstream supply chain in the past year or so, which is quite a weather vane for the industry.

Due to the industry characteristics and product attributes of meat processing products, it is often difficult to create strong brand premiums. Therefore, traditional enterprises have more often sought integrated and scaled operational efficiency differences in the supply chain and product differentiation brought by deep tracing upstream.

For new meat processing product brands born in recent years, integrating upstream means greater R&D innovation space and production freedom, which will bring them new and exciting imagination space. This is a correct but difficult direction, and the new generation of meat processing enterprises still has a long way to go.

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**1. Daxidi**

When we first made the annual list in 2018, Daxidi was on the candidate list, but because at that time Daxidi, as a meat processing enterprise, was relatively weak on the supply chain side, we ultimately did not include it in the list.

Three years have passed, and now Daxidi is a different scene. In September 2020, Daxidi's wholly-owned factory in Baima, Nanjing was officially put into production. It is reported that the construction of this factory cost 350 million RMB, covering an area of 45 mu, with an annual processing capacity of 12,000 tons.

In October 2021, Daxidi signed a new project contract with the Nanjing National Agricultural High-tech Industry Demonstration Zone, planning to invest 2 billion RMB to build a production park covering an area of 160 mu. In addition, Daxidi has built cold chain distribution capabilities nationwide, with one warehouse per province (more than 40 warehouses in total), covering 385 prefecture-level cities. Users within the scope can receive goods within 24 hours after ordering.

In addition, in terms of product matrix, Daxidi has further transformed from a "steak brand" to a "cost-effective frozen semi-finished ingredient brand." The steak product line, in addition to the earliest synthetic cooking steak, has added SKUs such as children's steak and grain-fed/grass-fed original cuts (different parts). The non-steak product line includes seafood, chicken, baking, sausages, seasonings, etc. The overall proportion of steak products has dropped to 50% of revenue (2020 data).

Currently, Daxidi is still mainly online channels and has seized the live streaming e-commerce trend in the past two years.

It is reported that in 2020, Daxidi's revenue was about 2 billion RMB, of which Tmall accounted for about 40%, JD, Pinduoduo, and live streaming with goods accounted for 40%, and offline 20%. Daxidi attaches high importance to live streaming e-commerce. It is reported that only Douyin e-commerce is equipped with more than 30 people. Daxidi's self-broadcasting on Tmall and Douyin is also displayed by the platform as a benchmark image.

When Daxidi was first selected for the annual list in 2019, our expectation for this company was "to make depth in the upstream supply chain."

Three years have passed, and Daxidi has consolidated a lot on the supply chain and online channel sides. The rapid expansion in the past two years has also made it an enterprise with a valuation exceeding 10 billion, but our expectation for it remains unchanged. Continuously crossing and making depth in upstream supply chain value links may be the Sisyphus-like fate of meat processing and fresh food enterprises.

### **2. Xiaoniu Kaixi**

The history of the Xiaoniu Kaixi team can be traced back to 2009. It is reported that at that time, it invested 50 million RMB to build an 8,000-square-meter factory, with a daily steak production capacity of 80,000 pieces.

Later, the Xiaoniu Kaixi brand was born in 2013. Initially, it expanded offline catering business based on supply chain capabilities, successively opening more than 60 direct-operated Western restaurants and franchise stores nationwide. In 2017, to break through the limitations of time and space in the offline model, Xiaoniu Kaixi began to fully transform online, cutting off all offline stores.

Due to the foundation of years of offline Western restaurant operations, Xiaoniu Kaixi came up with a relatively rich product matrix in the early stage of transformation, positioning as a "Western-style catering retailization brand with steak as the core."

During the development process, Xiaoniu Kaixi further enriched SKUs. The current steak products include synthetic steak, grain-fed Wagyu A1/2/3 sirloin, vegetable juice children's steak, etc. The non-steak product matrix includes Western-style semi-finished products such as chicken, pizza, pasta, and egg tarts.

One highlight of Xiaoniu Kaixi's steak products among brands with the same positioning is the differentiation of raw materials. For example, its children's beef is "no growth hormone, no antibiotics, no genetically modified plastic," while ordinary positioned steak products use traceable "600-day grass-fed" beef.

After transforming online, Xiaoniu Kaixi developed rapidly. It is said that from 2018 to 2021, its sales were 80 million, 220 million, 600 million, and 1 billion respectively. It is reported that Xiaoniu Kaixi's average ROI on major platforms is currently 3-5, which is a very high figure in the food and beverage industry.

In terms of supply chain and channels, it is reported that Xiaoniu Kaixi currently has 14 self-operated warehouses nationwide, and has been launched in more than 1,000 stores in offline retail channels such as Yonghui and RT-Mart. Currently, offline sales account for about 10% of revenue.

According to Xiaoniu Kaixi's founder Rao Defei, the future offline channel deployment will be a key development direction for Xiaoniu Kaixi, hoping to increase the offline proportion to 40% of total revenue.

Xiaoniu Kaixi and Daxidi have relatively similar overall product matrices and business strategies. How the development trajectories of this pair of outstanding new brands in China's meat processing product industry will converge, interweave, entangle, and deviate is one of the most exciting highlights in this category in the coming years.

### **3. Benwei Xianwu**

Among this batch of new companies that seized the fundamental contradiction of meat product quality, Benwei Xianwu is a typical case.

Benwei Xianwu's products were launched in 2020, entering the market with mid-to-high-end positioned low-temperature meat sausages. The pork raw materials come from the hind leg meat of Nanyang black pigs. According to Benwei Xianwu, it is the first company in the industry to use antibiotic-free meat (no chemical drugs, antibiotics, or synthetic hormones used throughout the breeding process) in meat products.

In addition, Benwei Xianwu removed nitrite, which is used in traditional products for color protection and preservation but has certain health risks, from product ingredients. This currently has a certain differentiation among similar products.

It is reported that currently, in addition to online channels, Benwei Xianwu has penetrated high-end supermarkets such as BHG and Ole. In addition, it relies on the convenience store resources accumulated by its parent company Xian Shenghuo to lay out in the head convenience store systems of various provinces.

In terms of scenarios, Benwei Xianwu has made attempts such as antibiotic-free meat sausages for children, original-cut bacon for breakfast scenarios, and family banquet prepared dish sets for New Year's Eve dinner scenarios.

Benwei Xianwu says it hopes to become the "Jane's of the meat product industry." At present, the image Benwei Xianwu shows does have a bit of Jane's style—both are health-oriented innovations on traditional categories, and both show a "solid and sophisticated" style in the early operations of the company. ©FoodPlus

(End of the list of startups to watch)

Closing words: At the beginning of the 2020 list, we mentioned that for FoodPlus, there were some small regrets because our role in the list was more as observers, recorders, and witnesses, not creators, and we did not even participate in creation.

We hope that in 2022 and beyond, we will participate in creation more, and even become a part of the creators.

Making the annual list is a way for us to observe the food consumer products industry and the food consumer products entrepreneurship and investment ecosystem. We hope it can provide you with a good reference.

_**-END-**_


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## Citation metadata

- Publisher: New Distribution
- Author: FoodPlus团队
- Published: 2022-01-24
- Canonical: https://xinjignxiao.com/en/articles/chinese-food-beverage-startups-to-watch-in-2021-annual-list-75b412fa/
- Original source: https://mp.weixin.qq.com/s/diO9Ym9lgii3-KrTsX4Vgw

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