---
title: "Luosifen 'Flip-Flop': Starting with Haohuanluo?"
description: "The explosive popularity of luosifen was unexpected. As a regional delicacy, it rose to the top among street foods like Lanzhou beef noodles and Wuhan hot dry noodles. The first packaged luosifen appeared in 2014, but by 2019, annual output exceeded 6 billion yuan. However, in November, leading brand Haohuanluo was exposed for insect eggs in its product, interrupting its rise. This article explores the challenges facing the luosifen industry, including quality control issues, reliance on OEM factories, and the gap between online hype and real market acceptance."
author: "鲨鱼马特"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-12-09"
language: "en"
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# Luosifen 'Flip-Flop': Starting with Haohuanluo?

> The explosive popularity of luosifen was unexpected. As a regional delicacy, it rose to the top among street foods like Lanzhou beef noodles and Wuhan hot dry noodles. The first packaged luosifen appeared in 2014, but by 2019, annual output exceeded 6 billion yuan. However, in November, leading brand Haohuanluo was exposed for insect eggs in its product, interrupting its rise. This article explores the challenges facing the luosifen industry, including quality control issues, reliance on OEM factories, and the gap between online hype and real market acceptance.

Source: Koi Finance (ID: jinlifin)

The explosive popularity of luosifen was unexpected by anyone. As a regional delicacy, with predecessors like Lanzhou beef noodles, Wuhan hot dry noodles, and Northeast grilled cold noodles, luosifen managed to become the ceiling among street foods. In fact, the first standardized packaged luosifen was born in 2014, but by 2019, the annual output value of packaged luosifen had already exceeded 6 billion yuan. In just a few years, luosifen went smoothly. Until November, when the leading brand "Haohuanluo" was exposed for insect eggs, the pace of luosifen's ascent to the mainstream was abruptly interrupted. On November 28, Haohuanluo officially responded. Although the truth is still unclear, investigations show that Haohuanluo has flipped more than once. In the comments section of Haohuanluo's Tmall flagship store, there are many comments and pictures of consumers finding foreign objects. As of now, Haohuanluo has 54 complaints on the Black Cat complaint platform. In early November, Haohuanluo's parent company "Dehua Food" was fined 70,000 yuan for violating the Work Safety Law. Similarly, in 2021, Li Ziqi's flagship store's luosifen was repeatedly exposed for foreign objects. Indeed, behind the lively luosifen track lies a side unknown to foodies, and the luosifen flip-flop in the eyes of foodies may start with Haohuanluo.

**Is going out of the circle not necessarily a good thing?**

Haohuanluo is one of the earliest brands to enter the industry. Before luosifen gained widespread popularity, this snack, which some people would avoid, was only prominent in Liuzhou. At that time, Li Ziqi was still exploring short videos, while Luobawang, Haohuanluo, and Xiluohui had already been established. Later, the consumer market had the right timing, location, and people, and the tripartite pattern gradually emerged. In 2016, the concentration of the top 10 brands in the luosifen industry was 4.93. By 2017, among the top 10 luosifen brands, Haohuanluo, Luobawang, and Xiluohui occupied 88% of the market share, with Haohuanluo leading. It is said that at its best, it could outsell the second-place Luobawang by over 2 million units. Small brands couldn't compete with them. At that time, the market acceptance of luosifen was limited. During the most severe competition, dozens of factories in Guangxi had inventory backlogs, capital couldn't be recovered, and there were no orders. More than 30 factories were on the brink of bankruptcy. However, as a distinctive regional delicacy, in the niche era of luosifen, the few leading brands clearly lived comfortably.

After 2019, this situation was eventually shattered by the market. That year, Li Ziqi made a high-profile entry with a luosifen-making video. In 2020, the number of registered luosifen enterprises reached 6,736, a year-on-year increase of 68.85%, with full-scale development. In the first quarter of 2021, the number of newly registered luosifen enterprises reached 2,422, exceeding one-third of the previous year's total. Three Squirrels, Baicaowei, Bestore, Want Want, Haidilao, and even Sinopec and Wuling Hongguang couldn't escape the "truth law" of luosifen. The defensive period for Haohuanluo, Luobawang, and Xiluohui began from this point, and the top three positions became unstable. During the 2020 "Double 11" shopping festival, Li Ziqi's luosifen surpassed many established luosifen enterprises, topping Taobao's 2020 instant food sales. Since then, Li Ziqi has long occupied the first place, Haohuanluo second, and Luobawang and Xiluohui even fell out of the top three.

There is no way around it. It is reported that Li Ziqi's OEM factory in Liuzhou can produce 600,000 to 1 million bags of luosifen per day, accounting for 1/4 to 1/3 of Liuzhou's total packaged luosifen output. Coupled with the social attributes of internet celebrities, traditional brands cannot compete. In fact, the popularity of luosifen may not be a good thing for the entire market. It should be noted that in 2014, there was only one pre-packaged luosifen enterprise in Liuzhou that met production qualifications. Local economies fear industrial proliferation the most. By the end of 2019, there were 81 registered pre-packaged Liuzhou luosifen enterprises with over 200 brands. On Pinduoduo, luosifen priced at 3 yuan per bag is everywhere.

Now, luosifen production lines are everywhere. The leading enterprises recognized by the industry have a daily production capacity of about 150,000 bags or more, the second tier about 100,000 to 150,000 bags, and the third tier 50,000 to 100,000 bags. Most brands are still in the second and third tiers.

Among the more than 1,200 enterprises related to the luosifen industry in Liuzhou, over 1,100 are individual businesses, and only 31 are engaged in food manufacturing. Among these 31 food manufacturing enterprises, only 3 have registered capital of over 10 million yuan. Quality control problems are inevitable. In 2019, the Guangxi Market Supervision Administration inspected 82 batches of convenience food, of which 18 were unqualified, with the majority produced in Liuzhou. In July this year, the affiliated company of Liujiang Renjia luosifen was penalized because a batch of luosifen did not meet food safety standards. Black Cat complaints show that there are as many as 896 complaints related to luosifen. From obscurity to overnight fame, luosifen cannot always be so lucky. The Haohuanluo incident is a true portrayal.

**Are internet-famous brands ruined by OEM factories?**

"Nine out of ten luosifen brands look to Liuzhou."

This statement is not exaggerated. Carefully observe the packaging of luosifen; regardless of the brand, the production factory is likely from Liuzhou. Not only luosifen, but also the snack brands that have suddenly risen in the past two years are almost all backed by several large OEM factories. That is to say, two products from different brands may meet on the same production line.

For example, Li Ziqi's luosifen is produced by Guangxi Zhongliu Food; Three Squirrels and Baicaowei's beef tendons come from Sichuan Pinpin; Haidilao's popular Miao Cuijiao comes from Xuyuan; Bestore's beef tendons come from Shangshangfang... The OEM factories of the top three internet snack brands have been thoroughly investigated by netizens. They compete fiercely in the consumer market, but in fact, apart from packaging, they are identical.

Brands are just movers on the production line. Although this can quickly mature the market, the hidden dangers are far more than just trending on Weibo and being complained about by consumers.

In 2017, Three Squirrels was sued by consumers due to food safety issues and had to postpone its IPO. Similarly, in 2018, Tongrentang's market value evaporated by over 1 billion yuan because its OEM factory recycled expired honey as raw material.

In comparison, being scolded online by netizens is nothing.

Undoubtedly, internet-famous brands rely too much on OEM factories because, from the moment they appear before consumers, their survival and growth cycle is compressed multiple times compared to traditional brands. New consumer brands that cannot adapt to the internet rhythm seem unqualified to survive. This strategy of "chaotic punches beating the old master" means brands have no time to carefully refine their products.

Take Genki Forest as an example. According to public reports, Genki Forest's product development cycle is only 3 to 6 months, sometimes even less than 3 months.

On the surface, this data seems fine, but it is worth noting that traditional food brands may need a year to develop a biscuit. For example, Ligao Food, established 20 years ago, took nearly 1.5 years from R&D to market for its donut. A French cheese company spent a year just finding raw materials for a new product.

Despite the pitfalls of the OEM production model, brands are reluctant to let go, especially for rapid mass production and flexible configuration. From the perspective of cost and efficiency, it is indeed tempting. Brands only need to figure out how to make packaging beautiful and names catchy. If they are lucky enough to be favored by Viya and Li Jiaqi and appear in short videos, they are not far from becoming popular.

On the other hand, from Li Ziqi's luosifen to Three Squirrels' moldy nuts, FMCG brands are rapidly expanding in the consumer market while exposing the OEM production model to public scrutiny. As brands sink deeper into OEM controversies, the latter actually gains a dividend. Due to the low pricing of OEM factories, some unknown OEM factory stores on Taobao can have over 100,000 followers.

The new consumer track is in full swing, and there are many OEM factories that have turned the tables. After all, the gross margin of OEM is only 10%-30%, or even lower. It is reported that "Zhancui Food," which licenses Frozen and Peppa Pig, is planning to go public. Sichuan Baijia Food, which stands behind multiple internet-famous brands like Li Ziqi, Baicaowei, and Three Squirrels, achieved performance of 710 million yuan in 2019, with profit growth of 100%, and successfully completed an A-round financing.

Tides come and go, and no one is willing to be just a "behind-the-scenes" forever.

**Luosifen is popular, but not completely popular**

In the eyes of foodies, the map of China is roughly a regional food atlas. From north to south, there are grilled cold noodles, malatang, crayfish, stinky tofu... Everyone can find a soulmate for their taste buds. Luosifen is a standout among regional snacks. In 2020, luosifen-related keywords were searched over 3 million times a week and appeared on over 30 hot searches.

Social buzz gave luosifen enough face, and it also solidified its status as a top trend. The term "going out of the circle" always accompanies luosifen in front of the public and capital. However, think carefully: has luosifen really gone out of the circle? There are always friends who love it to the core, and a group of onlookers who cover their noses and avoid it.

The former's recommendations repeatedly prove the "truth law" that "luosifen is either zero times or countless times," but perhaps the latter's disdain is more common in real life. Setting aside traffic, at least from the data of the catering market, this is indeed the case.

According to the "2021 China Snack Food Digital Promotion Index Report," the top five regional snacks in China are Chongqing hot and sour noodles, Shaanxi cold noodles, Shanxi knife-cut noodles, Shaanxi roujiamo, and Yangzhou fried rice. The Jiangsu-Zhejiang-Shanghai region consumes 32 million servings of Xinjiang dapanji a year. Grilled cold noodle stalls are everywhere. No matter when or where, carbohydrates are always the greatest joy. In Chinese snack food, noodles account for over 35%.

Overall, luosifen is only a minority's carnival and is still far from mainstream dining. On Douban's snack comparison group, there are over 1,000 posts complaining about luosifen. Whether fans accept it or not, tastes vary, and luosifen itself is a product of regional curiosity.

Cooking instant food at home remains the main consumption scenario for luosifen. According to iiMedia Research data, in 2020, among Chinese luosifen consumption scenarios, home surpassed restaurants and food streets, ranking first with 51.50%. The offline catering market's acceptance of luosifen is not high. In the past two years, while luosifen flooded young people's social circles, the average annual growth rate of physical store revenue in 2020 was only 12.47%.

So how many people are truly passionate about luosifen? A survey report once classified consumers who bought luosifen only once in a year as "curiosity fans," and those who bought it more than twice in the same period as "true fans." From Alibaba sales data, the conclusion was that true fans and curiosity fans are basically split 30/70.

More specifically, among consumers who purchased luosifen in the past year, 68% only placed one order, and about 17% repurchased once in the past year.

The naked data cruelly tears apart the dream of luosifen mainstreaming. Of course, luosifen's popularity is not accidental. Before becoming the top trend in the food world, Liuzhou had been quietly working for many years. However, the gap in age and region among luosifen's audience has not been completely eliminated.

On one hand, since the second half of 2016, the order share of the post-90s generation has exceeded 80% of the entire market. The order proportion of other age groups is negligible in front of this huge number.

On the other hand, according to Meituan data, the main force of luosifen consumption nationwide is still in Guangxi. Guangxi consumes more luosifen in a year than the combined total of Henan, Guangdong, Shaanxi, and Shandong.

This is an indisputable fact. Luosifen is active on the internet, but that does not mean it can firmly take root in the traditional catering market. These two contrasting scenes may be the future feedback of the industry.

Although the food industry does not change and update as fast as other industries, relying only on the noise built by young people on social networks cannot make luosifen rest easy. Especially since the business logic under the internet is uniform, who knows when the next top trend will suddenly emerge. These are the problems that luosifen must solve after going out of the circle.

**Theme: "Dialogue · New Growth" Episode 1:**
**Category Innovation, Accelerating the Building of Core Competitiveness**
**Time:** December 9, 2021 (Thursday) 14:00-15:00
**Guests:** [Lu Wenjin] - Chairman of Hubang Chili Sauce [Ji Zhongkai] - Marketing Management Director of Hubang Chili Sauce [Zhang Rui] - Vice President of Operations at Fenxiang Xiaoke [Zhao Bo] - Founder of New Distribution**
**Introduction:**
This is an era where no one can do without spice, and new consumption drives the development of various industries. Focusing on the chili sauce market, the vast market space and low entry barriers have driven various internet-famous and emerging brands to enter.
The industry is characterized by low concentration, fragmented competition, and declining brand loyalty, and competition has become fierce. What development space remains for the chili sauce track? What key factors will drive industrial iteration and upgrading?
"Dialogue · New Growth" Hubang special session, explore the essence of the industry from here...

**Are you "watching" me?******


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