Why has Laoganma, which appears less and less frequently, raised its prices? Failing to hold the price benchmark line in the chili sauce market, news of Laoganma's price increase spread from distributors. "Once we sell out the stock on the shelves, this batch of Laoganma on the floor will officially start to rise in price," said the owner of a dry goods store, pointing to a sack in the corner. Laoganma has a vast distributor network, which gives it strong distribution capabilities. Its brand power, built over more than twenty years, enjoys extremely high recognition among the public. In the chili sauce world, Laoganma has always been a strong player in market competition. Its presence is ubiquitous in offline supermarkets and convenience stores. However, whether in offline convenience stores or vegetable market dry goods stores, Laoganma seems to be selling less well. Consumers complain that Laoganma's chili sauce has a single flavor and doesn't taste as good as before. The younger consumer group, who prefer "light cooking" and takeout, has given emerging chili sauce brands like Hubang and Zuodashi an opportunity to enter the market from a different angle. In the 40 billion yuan chili sauce market, Laoganma is aging, but with the entry of new brands, can the market pie be made bigger? Increasingly Rarely Eaten Laoganma Actually Raised Prices? Without specifying the exact increase, Laoganma's distributors confirmed to the media that the price increase is approximately 1-2 yuan per bottle, with each case rising by 20-30 yuan. The affordable national brand Laoganma has moved out of the 10-yuan price range, breaking the price benchmark line in the chili sauce market. The news of Laoganma's price increase has caused a strong wave of attention in the market. However, when we walk into dry goods stores in vegetable markets, mom-and-pop convenience stores near residential areas, or even large supermarkets, it is not difficult to notice that Laoganma's presence on the shelves is gradually weakening. [Image: Qu Xiaofei] At Wuhan Guangbutun Vegetable Market, walking inward on the right-hand side, there are three dry goods stores. In each store, the crowded and narrow shelves on the left display various unknown sauces: Chuanxiangju's spicy mixed vegetable seasoning, Huheji's spicy noodle seasoning, Tantantan's fermented black bean and朝天椒 (chaotian pepper) sauce... [Image: Qu Xiaofei] Laoganma's red-headed and red-bodied packaging design does not stand out among the sea of red bottles and jars. After scanning for a while, we finally found it. The cheapest one, a 9-yuan flavor fermented black bean and chili oil, was placed by the owner in the most prominent position on the shelf. Another one, priced at 12 yuan per bottle, was placed at the very back of the shelf. If customers didn't specifically ask for it, it seemed destined to gather dust there. When asked about Laoganma's sales, the owner of this dry goods store directly told us, "Not good anymore." In such small offline vegetable market dry goods stores, Laoganma does not have a sales advantage. One dry goods store owner mentioned that if a customer doesn't eat very spicy food, she would recommend Huangmingji's spicy garlic sauce; if they can handle spicy, she usually recommends Fuyun's Spicy King. "These two sell better, both at 12 yuan a bottle." When asked about Laoganma's price increase, two dry goods store owners at this vegetable market told us, "It started rising a while ago." The batch on the shelf is still being sold at 9 yuan per bottle, but once that's gone, the price will officially rise to 10 yuan. At a street-side convenience store, the owner told us, "It started rising a long time ago. We can't even get stock. It's gone up by one or two yuan. Chicken oil is 12, regular is 10." [Image: Qu Xiaofei] The price increase of Laoganma has caused a stir in the chili sauce market, but among consumers, the well-known national brand Laoganma is losing its product appeal. From packaging to taste, users on Xiaohongshu have posted complaints. The packaging is similar, making it hard to distinguish between categories; it doesn't taste like before, not as fragrant; not spicy, not fragrant, not salty, the only thing you can taste is oil... "I lived for 19 years and only when I ate the flavor chicken oil Laoganma did I realize that Laoganma has different flavors." In this Xiaohongshu user's view, Laoganma's chili sauce has always been unremarkable; her family has been buying the fermented black bean flavor for over 20 years. Laoganma's product line, as consumers complain, has already expanded too much with just one "oil chili" category, making it dizzying and hard to distinguish. On Laoganma's official website, we saw that the "oil chili" category alone has 9 subcategories. On Taobao's Laoganma flagship store, the best-selling items are still the oil chili series, with sales over 10,000. The separate spicy sauce has only 92 buyers, tomato chili sauce has 86 buyers, and the bagged spicy vegetables are sold in bundles. Incorporating Chili Sauce into Takeout Menus, Hubang Avoids Laoganma Besides brand influence, Laoganma's price before the increase was almost the industry price benchmark. Laoganma's control over prices is seen as an industry "curse." We can see Laoganma everywhere in street convenience stores, supermarkets, and vegetable market dry goods stores. This is closely related to its strong distribution capability. In terms of channel expansion, Laoganma's home turf is clearly offline. By adopting a strategy of only selecting large regional distributors, Laoganma has formed a distribution network across major regions nationwide and quickly captured the market. The product has become a hard currency in the hands of distributors. With high distribution rates, high awareness, and strong brand power, Laoganma has successfully secured the top spot in markets across all provinces. Data from a report by Shengshi Huayan shows that Laoganma's market coverage across the country exceeds 90%. However, under the market structure of "one superpower, many weak players" in the chili sauce market, Laoganma's moat is still facing challenges. The "lazy home economy" driven by the new generation of young consumers, "light cooking," and takeout have given the chili sauce market new opportunities. This window has been seized by emerging chili sauce brands like Hubang and Zuodashi. Abandoning traditional dine-in and family meal scenarios, Hubang Chili Sauce, founded in 2016, avoided direct competition with Laoganma and targeted the takeout side-dish scenario. We opened Meituan and entered the takeout section, searched for Hubang Chili Sauce, and many merchants appeared on the page. However, these merchants do not primarily sell chili sauce; instead, they are deeply integrated with the dishes on their menus. For example, a Hunan-style wooden barrel rice restaurant directly named a dish "Edamame Chicken / Pickled Cabbage and Bamboo Shoots with Minced Pork / Fried Tofu with Oil Wooden Barrel Rice + Hubang Premium Beef Chili Sauce." This is a channel strategy completely different from Laoganma's traditional distributor approach, and it is also a chili sauce consumption scenario closer to current consumers. According to Hubang, "The company has set a principle of two 'don'ts': first, don't do anything that is the same as traditional sales models, i.e., advertising plus channel sales; second, don't do anything that is the same as competitors' models." Hubang Chili Sauce has overturned Laoganma's offline-dominated channel style and found a matching "simple meal" scenario and a younger takeout group less sensitive to price. Hubang has leveraged the internet takeout platform to explode. In specific practices, Hubang Chili Sauce chose to form a deep "strong connection" with merchants on takeout platforms. Hubang first focused on product packaging. From the 80g and 50g tinplate small packages for "one meal, one box," to the smaller 15g bagged products. The 15g bagged packaging and filling technology not only brings new imagination to the takeout market but also brings new innovation and breakthroughs to the chili sauce market. A 6-yuan pack of Hubang Chili Sauce, combined with Meituan and Ele.me's full-reduction activities, makes Hubang Chili Sauce a perfect item for takeout customers to reach the discount threshold. But it cannot just be given away as a freebie or add-on; Hubang integrates the operation of chili sauce into the menus of takeout merchants. This is undoubtedly a "small to big" marketing and channel play. Fierce Involution in Chili Sauce The spicy food world has a huge market, but when narrowed down to the chili sauce market, the market size has not reached the scale of hundreds of billions like prepared dishes. According to the "Chili Sauce Product Blue Book," from 2010 to 2019, China's chili sauce production increased by 80%. Another report from Zhiyan Consulting shows that by 2020, China's chili sauce market was about 40 billion yuan, with an annual growth rate of 7%. In a market of only 40 billion yuan, Laoganma's share in the chili sauce market is only 20.5%, and the remaining 80% of chili sauce companies each have less than 10% market share, according to data from China Industrial Research Institute. Brand concentration is low, regional characteristics are obvious, and the chili sauce market has formed a pattern of "one superpower, many weak players." But apart from special entrants like Hubang Chili Sauce, the overall chili sauce market still lacks innovation and has entered a stock period. This is reflected in the infinite segmentation of chili sauce flavors. Currently, Laoganma's one oil chili product is subdivided into 9 subcategories that confuse consumers. Since chili sauces typically have three flavors that stimulate the taste buds—"spicy, fragrant, sour"—brands are also infinitely deepening the flavor profiles, further segmenting into pure chili sauce, beef sauce, mushroom sauce, soybean paste, pickled vegetable sauce, and so on. Chili sauce brands are engaged in endless "involution" competition, and the growth rate of new chili sauce companies is slowing down. Data from Qichacha shows that there are currently 1,213 chili sauce-related enterprises in China. Over the past 7 years, the number of new registrations has fluctuated. Before 2017, the number of new chili sauce-related enterprises increased year by year, but after 2017, it showed an overall downward trend. In 2018, 228 new chili sauce-related enterprises were added, a year-on-year decrease of 9.52%. In 2019, 214 were added, a decrease of 6.14%. In 2020, 181 were added, a decrease of 15.42%. In 2021, 111 were added, a decrease of 38.67%. In the chili sauce industry, market size and brand numbers both prove that the chili sauce business may not be easy to do. But China, as a big spicy-eating country, eating spicy is almost a microcosm of urban change, class transformation, and social change. Cao Yu, a scholar at Jinan University, studied "Chinese people eating spicy" in detail in his book "The History of Eating Spicy in China." In an interview with Daily People, Cao Yu stated that eating spicy is closely related to age, with people under 35 eating significantly more spicy food. Spiciness, as a stimulating taste bud pleasure, can both stimulate saliva secretion and be quickly and conveniently paired with other ingredients. But in Cao Yu's view, the only weakness of chili is that it cannot adapt to an aging society. As the population gradually ages, class mobility decreases, and the scale of immigration declines, in the future, chili may well retreat to a traditional state. Final Thoughts: On the matter of chili, the regional characteristics of spiciness are enough for chili sauce brands to play with, and brands are infinitely segmenting flavors. Internet-famous Hubang Chili Sauce did not focus on flavor but avoided traditional distribution channels like Laoganma's, thus capturing a certain market share. To some extent, this indirectly confirms the high level of involution competition among chili sauce brands. The declining growth rate of chili sauce brands is strong evidence that the chili sauce market has entered stock competition. Whether the chili sauce market will grow or shrink may no longer be the strategic focus for brands like Laoganma. The difficulty of expanding into diversified business areas is the hard problem for leading chili sauce brands. Source: Qu Xiaofei (ID: quxiaofeiba), Author: Huanzi, References: 1. "Why Can Young People in Beijing, Shanghai, and Guangzhou Eat More Spicy?" Daily People -END-