Source: Beijing Business Today, Author: Li Zhenxing Consumers' awareness of instant eight-treasure porridge is mainly concentrated on the two brands Wahaha and Yinlu, making it difficult for Shuanghui to compete with them. Shuanghui continues to make efforts in non-meat product areas. On June 14, a Beijing Business Today reporter found that Shuanghui launched an eight-treasure sausage instant porridge product on its Tmall flagship store. This is another layout by Shuanghui in the non-meat product field. Industry insiders believe that in 2019, the sales volume of Shuanghui's main meat products did not increase, and fresh meat sales even decreased. Shuanghui is actively seeking new growth points. However, consumers' awareness of Shuanghui is still mainly meat products. At the same time, the fields Shuanghui is expanding into have low barriers to entry and are easily imitated. -01- Entering the Instant Porridge Market Shuanghui's entry into the instant food field is still based on its expertise in making sausages. It is understood that the ingredients of Shuanghui's eight-treasure sausage instant porridge include cowpeas, red dates, coix seeds, wolfberries, tangerine peel, lilies, yellow peaches, sweet corn, and water chestnuts. Through cooking, the ingredients are made into the shape of a sausage, which can be eaten directly or brewed with boiling water. The new product comes in convenient cup packaging and economical bag packaging. The new product has been put on sale in the Tmall flagship store, but the current monthly transaction volume is 0. Industry insiders believe that Shuanghui's production lines are mostly for making sausages. Producing instant food products in the shape of sausages is conducive to Shuanghui utilizing existing production lines and greatly reducing one-time investment. The production enterprise of Shuanghui's eight-treasure sausage instant porridge is Huamao Shuanghui Industrial (Group) Co., Ltd., a subsidiary of Shuanghui. The company is a relatively large meat product production enterprise under Shuanghui. In 2019, its revenue was 2.844 billion yuan, and net profit was 293 million yuan. Regarding Shuanghui's expansion into the instant food field, marketing strategy management expert Shen Boyuan believes that Shuanghui's deep exploration of products, from the original simple meat slaughtering and processing to the current convenience food, is aimed at cooperating with Shuanghui's development in the entire retail channel. At present, Shuanghui has more than 1 million sales outlets across the country, mainly distributed in supermarkets and communities. It is understood that Shuanghui's predecessor was a dying meat processing plant in Luohe City, Henan Province, established in 1958. In July 1984, Wan Long was elected as the factory director, turning a small meat processing plant with a loss of 5.8 million yuan into an "aircraft carrier" with revenue exceeding 60 billion yuan. Shuanghui has built more than 30 meat processing bases and supporting industries in 18 provinces (cities) across the country, forming an industrial chain including breeding, feed, slaughtering, meat product processing, new material packaging, cold chain logistics, and chain commerce, with an annual production and sales of more than 3 million tons of meat products. -02- Shuanghui's New Moves In the view of Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting Company, Shuanghui's consolidation of its position in the meat product field while continuously expanding into non-meat product areas is based on Shuanghui's product strategy of "stabilizing high-temperature products, developing low-temperature products, and industrializing Chinese-style products." It is understood that in the field of high-temperature meat products, Shuanghui has formulated a strategy to strengthen the development of high-temperature ingredients and products combining "meat, eggs, milk, vegetables, and grains," and transform to a product structure of "entering families and dining tables." At the same time, it strengthens the cultivation of high-end products, enriches leisure products and frozen products, and caters to new consumer demands. In the development of Chinese-style cooked food products, it leverages deep processing advantages and raw material resource advantages to cultivate signature products and enrich product categories. Under this strategy, in addition to the eight-treasure sausage instant porridge, at the beginning of 2020, in order to find new growth points, Shuanghui announced its entry into the catering industry and established a wholly-owned subsidiary, Shuanghui Catering Investment Management Co., Ltd. Not only that, Shuanghui also entered the hot plant protein field. In April, Shuanghui launched a plant-based meat product called "Eat Pea" online and acquired several enterprises with plant protein production capabilities. On the brand side, at the beginning of 2020, Shuanghui cooperated with Douyin to launch a popular product for students and young white-collar workers - the "Huoxuanfeng Kede Flower Sausage," marking the beginning of Shuanghui's brand rejuvenation. On the upstream slaughtering business side, pig segmentation has become more refined, and each segmented part has become raw material for downstream enterprise production, further reducing meat product costs. Data shows that sales from the slaughtering division to the meat products division increased, with the internal transaction ratio rising from 14% in 2017 to 16.6% in the first nine months of 2019. -03- Difficult to Form a Moat In Shen Boyuan's view, Shuanghui's expansion into new fields requires improving its differentiation level and maintaining its own moat. In the meat product field, Shuanghui's biggest advantage lies in its scale, which in turn forms an industrial chain advantage. It is understood that in the second half of 2018, the African swine fever epidemic spread. Due to epidemic prevention and control needs, cross-province pig transportation was tightened, forming a pattern where pig prices in production areas were relatively low and pig prices in sales areas were high. Shuanghui has a national slaughterhouse layout and a national fresh meat sales channel, and the value of its ability to handle production and sales imbalances has increased. Data shows that Shuanghui's main production and operation areas include Henan, Shanghai, Shandong, Hebei, Guangdong, Heilongjiang, Zhejiang, Yunnan, Shaanxi, and other places. These areas are important regions for China's slaughtering and meat processing industry, with abundant pig resources and great potential for meat consumption. In 2019, Shuanghui's scale advantage was reflected. Slaughtering revenue reached 39.1 billion yuan, a year-on-year increase of 59.33%, accounting for 64.83% of revenue, a year-on-year increase of 35.22 percentage points. However, Shuanghui's hidden dangers also lie here. Although Shuanghui's slaughtering revenue increased, due to the pig cycle and the epidemic, Shuanghui's slaughtering business volume did not increase. The 2019 annual report shows that Shuanghui slaughtered 13.2 million pigs, a year-on-year decrease of 19.04%, and external sales of fresh frozen meat and meat products were 3.09 million tons, a year-on-year decrease of 1.47% compared with 2018. In the first quarter of 2020, Shuanghui slaughtered 1.665 million pigs, a year-on-year decrease of 64.78%. Fresh product sales volume was 1.4849 million tons, a year-on-year decrease of 3.06%. The sales volume of meat products only increased by 0.05%. Industry insiders believe that once pork prices fall, with sales volume difficult to increase, Shuanghui's performance growth will face great pressure. "In addition, from the perspective of Shuanghui's newly launched products, the barriers to entry for these products are very low and they are easily imitated. There are many similar products on the market, and competition is very fierce," Shen Boyuan said. Xu Xiongjun believes that Shuanghui's meat product brand is deeply rooted in people's hearts, and it is difficult for consumers to associate it with convenience instant food, which may restrict the promotion of its convenience instant food. On the other hand, consumers' awareness of instant eight-treasure porridge is mainly concentrated on the two brands Wahaha and Yinlu, making it difficult for Shuanghui to compete with them.