Food Sector: Raw Material Cost Decline Boosts Revenue Revenue leader: Master Kong, with revenue of 40.907 billion yuan. Revenue growth leader: Guifaxiang, up 138.93% year-on-year. Net profit leader: Shuanghui, with net profit of 2.837 billion yuan. Net profit growth leader: Qinqin Food, up 481.79% year-on-year. In the first half of this year, many food companies stated that their profit growth was due to lower procurement costs for raw materials such as soybean oil, palm oil, and white sugar. Although prices have declined, they remain at historically high levels. Due to rising raw material prices in recent years, many food companies have been developing new product categories and channels to mitigate the adverse effects of higher costs.
Instant food leaders Master Kong and Uni-President achieved both revenue and profit growth in the first half of 2023, setting new historical records. However, their instant noodle businesses performed modestly, with growth mainly driven by their beverage segments. Master Kong has been strengthening its mid-to-high-end product lineup, launching series such as Tang Da Shi, Gan Mian Hui, Ran Hun Ban Mian, and Yu Pin Sheng Yan to increase average transaction value and fill channel gaps. However, marketing costs for promoting these mid-to-high-end products increased significantly; the financial report shows that marketing costs in the first half reached 9.019 billion yuan, up 10% year-on-year, accounting for 22.05% of operating revenue.
In the snack food category, Yanjin Shop has achieved new growth through channel reform and innovation. In addition to traditional channels like supermarkets and distributors, it has formed strategic partnerships with popular snack bulk-selling brands such as Snack Busy and Snack Youming, enabling rapid development across multiple categories and channels, with net profit growth of 90%. In the same category, Jinzai Food's newly launched "Xiao Dan Yuanyuan" quail eggs product achieved monthly sales revenue exceeding 27 million yuan in 2022, and surpassed 100 million yuan in sales in the first half of this year. Based on a "large package + bulk" product combination, the company further optimized its product matrix and channel structure to enhance competitiveness. Other snack food companies like Ganyuan Foods, Zi Yan Food, and Youyou Food also saw net profit growth of over 30% in the first half of this year, performing well.
It is worth noting that Qinqin Food turned losses into profits, with net profit growth of 481.79%. The company attributed this to factors such as product price increases, channel expansion, and increased production capacity from new production bases. In the frozen and prepared food segment, companies like Sanquan, Delisi, and Babi Food experienced slower growth or significant declines. The prepared food sector performed mediocrely, and frozen food raw materials are susceptible to price fluctuations, which affected profit growth to some extent. Anjoy Food saw significant growth, with net profit up over 60%, benefiting from the rapid growth of its frozen prepared dishes; this segment generated revenue exceeding 2.1 billion yuan in the first half, up 58.19% year-on-year.
Beverage and Dairy Sector: Core Products Show Steady Improvement According to statistics from 8 companies, in the first half of 2023, both revenue and net profit in the beverage and dairy sector achieved positive year-on-year growth. Dongpeng Beverage ranked first in both revenue and net profit, but Royal Group had the highest year-on-year growth rates. From a product perspective, core products contributed a higher proportion of revenue for beverage and dairy companies. Dongpeng Special Drink, as Dongpeng Beverage's core product, generated sales revenue of 5.135 billion yuan in the first half of 2023, up 24.69% year-on-year, accounting for 94.13% of total revenue. The second growth curve products, "Dongpeng Big Coffee" and "Dongpeng Hydration," generated revenue of 320 million yuan in the first half, up 92.8% year-on-year, achieving rapid growth.
Xiangpiaopiao's Lanfangyuan Frozen Lemon Tea began key distribution both online and offline in February this year. During the reporting period, sales of Frozen Lemon Tea increased by 547.09% year-on-year, with online channel growth of 235%, making it a "dark horse" product in the industry. Net loss narrowed by approximately 85.2249 million yuan, but the company still reported a net loss, mainly due to the second quarter being the off-season for instant drinks, leading to losses.
Chengde Lulu's Almond Dew series achieved revenue of 1.4572 billion yuan in the first half of 2023, accounting for 97.54% of total revenue, up 1.52% year-on-year, with revenue growth stabilizing. From a channel perspective, the concentration of young consumers in the beverage market and changes in the market environment have driven brand channel innovation and reform, achieving omnichannel layout. Royal Group used short videos, live streaming, and private domain operations to boost online sales in the first half of 2023. During the reporting period, Royal Group's e-commerce channel achieved operating revenue of 86.3585 million yuan, up 32.08% compared to the same period in 2022. Huanlejia increased new outlets in the first half, expanding development of catering channels and ready-to-drink channels. As of the end of the first half of 2023, Huanlejia had 1,804 distributors, up 20.19% year-on-year.
We often say "channels are king." Channel innovation can bring significant development to brands. For the beverage and dairy industry, choosing the right sales channels and terminals is crucial. In the current youth-oriented consumer market, it is advisable to leverage e-commerce platforms for sales, use social media for brand promotion, and organize offline activities to attract more consumers, increase brand awareness, and build brand image.
Beer Sector: Full Growth in Revenue and Net Profit In terms of revenue and net profit, all five beer companies achieved positive growth in the first half of 2023. China Resources Beer led significantly, while Baijiu (Bairun) grew rapidly.
1. Mid-to-High-End Product Market Shenwan Hongyuan Securities stated in a research report that the high-end beer industry is expected to continue growing, with China's high-end beer market size projected to reach 282.9 billion yuan by 2024. China Resources Beer's sales of premium and above beers reached approximately 144.4 kiloliters in the first half of 2023, up 26.4% year-on-year, with Heineken sales growing about 60%, driving revenue growth. Chongqing Brewery's high-end product growth was 1.74%, and the slow growth of high-end products affected the company's profitability. Chongqing Brewery stated that it will continue to increase investment in high-end products, as there is still significant market potential for premiumization. Yanjing Beer's mid-to-high-end product revenue grew 13% year-on-year in the first half of 2023, accounting for 65% of main business revenue, and launched its first hyaluronic acid beer, "Lion King Bo Guang Niang Rose Grape Craft Beer," this year. Premiumization has become an inevitable trend in beer development, and future market competition will be proven over time.
2. Diversified Product Marketing China Resources Beer acquired Jinsha Distillery in 2022 to enter the baijiu industry. In the first half of this year, its baijiu business generated revenue of approximately 977 million yuan, with pre-tax profit of 71 million yuan. Yanjing Beer created offline experience stores to expand new scenarios for craft beer. Bairun focused on building the "358-degree" product matrix in 2023, ensuring minimum SKU counts for each product: 3-degree Tipsy, 5-degree Refreshing, and 8-degree Strong. The diversified product matrix can meet different consumer needs, attract more consumers, increase market share, and enhance the company's risk resistance and competitiveness. However, diversified product marketing requires careful consideration of product positioning and differentiation to avoid homogeneous competition.
Baijiu Sector: Kweichow Moutai Takes the Lead! Kweichow Moutai achieved operating revenue of 69.576 billion yuan in the first half of 2023, up 20.76% year-on-year, and net profit of 35.98 billion yuan, up 20.76% year-on-year. Both revenue and net profit growth exceeded 20%, laying a solid foundation for achieving the annual target. Meanwhile, the cumulative registered users of "i Moutai" exceeded 42 million. The company achieved alcohol sales revenue (excluding tax) of 9.329 billion yuan through "i Moutai" in the first half, up 111.25% year-on-year, compared to 4.416 billion yuan in the same period of 2022.
Among the five companies, only Swellfun saw declines in both revenue and net profit. Regarding the performance change in the first half of 2023, the company stated that due to reduced consumer spending and consumption downgrading, baijiu inventory levels were high in the first quarter, and competition in the terminal market intensified, leading to a significant year-on-year decline in first-quarter performance. Since the second quarter, distributor inventory has returned to healthy levels, and operations are in line with company expectations. In comparison, Yingjia Gongjiu also performed impressively in the first half of 2023. The company attributed the revenue growth mainly to increased sales of mid-to-high-end baijiu products, represented by the Dongzang series.
The baijiu industry has entered an era of stock competition. During the rapid growth of recent years, many problems have inevitably emerged. Liquor companies must remain consumer-centric, strengthen technological innovation, enhance channel construction, and meet market demand to survive and thrive in this fiercely competitive market.