Over the past few years, FoodPlus has consistently focused on building the ecosystem for China's food and consumer products entrepreneurship and investment, providing value and solving key problems for entrepreneurs, investors, and those in large companies focused on innovation and venture capital. In previous years, we recorded and observed the annual development of China's food and consumer products entrepreneurship and investment through annual rankings. From 2018 to 2021, we produced 5 annual rankings for startups and 4 annual rankings for investment institutions. Although we believe that the production and release of annual rankings have important recording significance for the industry, objectively speaking, this kind of recording is a partial record and cannot systematically, completely, and with deep insight present the development of China's food and consumer products entrepreneurship and investment each year. Combined with the fact that the current environment for food and consumer products entrepreneurship and investment in China is in a very difficult and challenging era, the overall environment has been affected by: a. the repeated impact of the pandemic; b. the cooling or even downturn of consumer investment; c. the slowdown of consumption upgrading due to various macro environments. Based on such a market environment, the industry actually needs an annual report that shows China's food and consumer products entrepreneurship and investment from various dimensions. In FoodPlus's observation, previous reports have rarely been able to combine research on the food industry, food entrepreneurship, and food investment; they mostly provide simple analysis based on investment and financing data, without revealing the core of food and consumer products entrepreneurship and investment. Therefore, we decided to produce and launch an annual entrepreneurship and investment report, named "China Food & Beverage Consumer Products Annual Entrepreneurship and Investment Report". 2021 is the first edition. As long as FoodPlus exists, we will release a new annual report each year, fully summarizing and deeply analyzing the development of China's food and consumer products entrepreneurship and investment. Report Highlights

  1. Industry first: The first annual report in the field of China's food and consumer products entrepreneurship and investment that provides a complete overview and in-depth analysis.
  2. Detailed data and comprehensive analysis: Based on FoodPlus's internal China food and consumer products investment and financing database (2019-2021), we analyze the situation in detail from dimensions such as number of investments, investment amount, monthly, quarterly, stage, and sub-category.
  3. Comprehensive coverage: The report surveyed and interviewed more than 100 food brand entrepreneurs and consumer investment institution investors in China's food and consumer products industry, covering food and consumer brands and institutions from early to growth stages.
  4. First-hand experience and materials: The report includes in-depth thoughts and outlooks from more than 20 food brand founders and consumer investors on entrepreneurship, business operations, and consumer investment.
  5. Deep insights: The FoodPlus team provides deep insights into dimensions such as entrepreneurship, investment, trends, and industry based on past research and accumulation.
  6. Guiding the future: From the dimensions of entrepreneurship, investment, and the venture capital ecosystem, we provide thoughts and guidance on market sentiment, future confidence, industry status, venture capital cycles, and value growth.
  7. Unique perspective: One of the few reports in the field of China's food and consumer products entrepreneurship and investment that comprehensively conducts in-depth research and analysis combining industry, entrepreneurship, and investment. Core Data and Views from the Report Overview: 2021 China Food and Consumer Products Investment and Financing Overview ◼︎ 2021 was a relatively active year for food and consumer products investment, with approximately 311 investment events and a total investment and financing amount of approximately 58.6 billion RMB. ◼︎ The number of investment events was mainly in the early stage from seed to Series A, accounting for about 75% of the annual investment events; the round with the highest investment amount was Series A, with an amount of approximately 11.5 billion RMB, accounting for 21% of the total annual investment and financing amount. ◼︎ In 2021, there were 311 financing events in the food and beverage industry. From a track perspective, CR3 accounted for nearly 30% (the top three tracks by financing volume contributed nearly 30% of financing events), and CR6 was nearly 50%. In terms of financing volume, functional foods/nutritional supplements ranked first with 30 financing events; the second to sixth were leisure snacks, convenience foods, low-alcohol beverages, children's foods, and condiments. ◼︎ The top 6 tracks accounted for nearly half of the total financing events, but they were not prominent in scale, with the amount accounting for only 23% of the total investment. Except for the leisure snacks track, the average financing amount for the other 5 tracks was relatively small, and the stages were mainly concentrated in early and growth stages. ◼︎ From the number of financing events and financing amounts by month in 2021, market heat gradually cooled from August in the second half of the year. The significant rebound in financing amount in September was also due to a large M&A event (FountainVest Partners acquired the veteran pet food brand Ziwi Peak for approximately 6.8 billion RMB). Therefore, it can be seen that the pace of the entire primary market suddenly slowed down in the second half of the year. ◼︎ From the top five categories by investment frequency each month, functional foods and nutritional supplements, condiments, leisure snacks, low-alcohol beverages, and pet foods occurred frequently throughout the year. In particular, functional foods and nutritional supplements had 5 related financing events in April, May, July, September, and December, including Chinese-style nourishing products, subscription-based customized supplement products, and functional candies and other forms. ◼︎ There were approximately 17 M&A transactions in 2021, mostly aimed at building industry chains, expanding business breadth, channel depth, and supply chain capabilities. Analysis: Comparative Analysis of China's Food and Consumer Products Investment and Financing from 2019 to 2021 ◼︎ Since 2019, the financing heat in the food and beverage industry has continued to rise. The CAGR of financing volume and total financing amount are both around 60%; if IPO and M&A events are excluded, and only primary market early, mid, and late-stage financing is considered, these two figures are higher: the CAGR of financing volume reaches 77%, and the CAGR of financing amount is as high as 188%. The comparison of these two sets of data indirectly reflects that capital investment has gradually moved forward over the past three years, with significantly increased interest in startups. ◼︎ Further breaking down into semi-annual data, it can be seen that the second half of 2020 is a dividing point for both financing volume and financing amount. Between the first and second halves of 2020, financing events increased by nearly 100%, and financing amounts increased by over 200%. Capital quickly increased its bets on the food and beverage track, and market heat began to rise during this period. ◼︎ From the frequency of IPOs, food ingredients and supply chain, leisure snacks, dairy products, and condiments are high-frequency tracks for IPOs, with at least one company going public each year in the past three years. ◼︎ 2020 was the peak year for IPOs in the food and beverage industry, with a total financing amount of 28.8 billion RMB, 2.6 times that of 2019 and 2.3 times that of 2021. Such a high financing amount was mainly due to two ultra-large-scale IPO events that year: Nongfu Spring's IPO and Yihai Kerry's IPO, contributing over 70% of the financing amount. ◼︎ Dairy products and baijiu (white liquor) were high-frequency tracks for M&A in the past three years, with 9 and 8 M&A cases respectively, followed by leisure snacks and meat products, each with 5 M&A cases. ◼︎ Quarterly financing data over the past three years shows a pattern of "high in the middle, low on both sides", meaning that the number and amount of financing in Q2 and Q3 are significantly higher than in Q1 and Q4; if we lay out the quarterly data from 2019 to 2021 in sequence, we can see that the number of financing events gradually climbed from Q1 2020 until it fell back in Q4 2021. The total financing amount also followed a similar trend. The decline in Q4 data reflects that the market's investment heat for the food and beverage industry began to become more rational after nearly two years of frenzy. ◼︎ Over the past three years, excluding M&A and IPO, there were approximately 100 financing events exceeding 100 million RMB in the primary market. By number, the pet food track, baijiu track, and convenience food track tied for first place, each with 10 financing events exceeding 100 million RMB; the leisure snacks track followed closely with 9 financing events exceeding 100 million RMB. ◼︎ Over time, not only did the number of financing events exceeding 100 million RMB grow rapidly (from 12 in 2019 to 63 in 2021), but the highest single financing amount also varied greatly. In 2019, the highest single financing amount was only about 500 million RMB, while in 2021 it reached several billion RMB. ◼︎ From the distribution of categories by stage in primary market investment and financing events over the past three years, it can be found that in the early stage (Angel to Pre-A round) there were 252 events, with a financing amount of approximately 54.6 billion RMB. ◼︎ In the growth stage (Series A to C), there were 225 events, with a financing amount of approximately 259.6 billion RMB. ◼︎ In the mid-to-late stage (Series D and beyond, excluding M&A and IPO), there were 16 events, with a financing amount of approximately 116.4 billion RMB. ◼︎ Looking back at investment events from 2019 to 2021, it can be found that functional foods and nutritional supplements, convenience foods, and leisure snacks received more rounds of investment. In particular, functional foods and nutritional supplements saw many new brands in 2021 and continuously received multiple rounds of financing. ◼︎ From the perspective of investment amount, the baijiu category received approximately 8 billion RMB in financing, followed by beverages, leisure snacks, and dairy products. The high financing amount in the baijiu category is partly due to frequent investment events, and partly because the baijiu category itself mostly has its own production lines and supply chains, with larger scale, so valuations are correspondingly higher. Entrepreneurship: A New Cycle Is Coming, Founders Generally Begin to Adjust Expectations and Focus on Company Fundamentals ◼︎ If we consider around 2016 as the beginning of this round of food and consumer products venture capital cycle, it has now reached the end of this cycle. Perhaps after experiencing 2022 and 2023, we will enter a new cycle. ◼︎ In the next cycle, the ecosystem for food and consumer products entrepreneurship and investment will be more mature, requirements for company fundamentals and investment standards will be higher, and market entry barriers will increase (at least more entrepreneurs and investors will have more respect for the food and consumer products industry). The entire industry, startups, and investment institutions need higher-quality development. ◼︎ In the founder survey, we also found some interesting data. Among them, the answers to two questions were concentrated on the pandemic. One question was which external environmental changes in 2021 had an impact on company operations, and the highest average score for the repeated impact of the pandemic was 61.21% (out of 100%). Another question was to rank the factors affecting company growth and development in the next 12 months. The average comprehensive score for the impact of the pandemic was 6.38 points (out of 10 points). Specifically, 49.06% of respondents ranked the pandemic impact first, and 19.23% ranked it second. ◼︎ Regarding confidence in the future, most founders have adjusted to varying degrees. Specifically, regarding consumer investment heat, 35.85% of founders chose to become more stable and conservative in company operations and strictly control cash flow expenditures; 16.98% chose that the pace has slowed down and they pay more attention to company fundamentals and internal capacity building; another 16.98% chose to adjust their financing expectations and make more long-term plans and preparations for successful financing and receipt of funds. The conservative expectation options together exceed two-thirds. ◼︎ This is also reflected in growth targets for 2022: 50.94% of founders chose conservative growth, while 49.06% chose aggressive growth, with conservative growth accounting for just over half. Regarding confidence in revenue growth over the next 12 months, the average was 72.58%, with a full score of 100%. Based on the scores and data from the above survey, confidence cannot be said to be a very good confidence index. ◼︎ New demand and micro-innovation have led to the rise of sub-categories. Companies represented by Genki Forest, Jane Ho, and Jiangxiaobai have become challengers in red ocean tracks through product innovation. Sub-tracks such as alternative proteins, children's foods, and prepared dishes have also seen a large number of emerging brands and startups. ◼︎ The venture capital market has turned from hot to cold, and the tide of time tests true skills. Structured product innovation capabilities are increasingly important in the new era. Supply chains have become the key for startups to gradually scale and develop with high quality. Many startups have begun heavy asset investment in supply chains. ◼︎ Entrepreneurship, brands, and products that traverse investment and cycles: food entrepreneurship should not be limited to investment and financing and IPO listing. With products and brands as the core, and product power as the core driving force, lead the company through cycles. ◼︎ Annual interviews with 13 founders of food and consumer products startups at different stages and in different sub-categories, including: Jane Ho, Lihe Taste, Guangliang Liquor, Wangbaobao, Daily Dark Chocolate, Qinian Wuji, Kongke, Dianjia Ziwei, Haowangshui, Zhouzi Future, CellX, Woxiaoya, and Blue Chimney. Investment: Return to Industry Value, Company Value, Product Value, and Consumer Value ◼︎ If the food and consumer products venture capital boom that began in 2020 has already created some bubbles, now the bubbles have burst. The food and beverage industry should return to its original value. Whether it is entrepreneurship or investment, we should focus on these values for investment and input. ◼︎ Capital has two sides. It can be a good support for entrepreneurship and the ecosystem, but it can also make the desires of entrepreneurship and the market greater, leading to imbalance in the ecosystem, industry development, and investment. The best way to balance is to let value return. This requires not only deep participation from investors, but also deep participation from entrepreneurs, large companies, platform parties, upstream and downstream industry chains, media, and consumers. ◼︎ Returning the industry to creating value for consumers is a very important and core matter. What can bring value to consumers is excellent products. Entrepreneurs and founders should focus on creating excellent products, while investors should focus on investing in people who can create excellent products and provide funds to allow excellent products to grow. ◼︎ Caution and high certainty will be the norm for food and consumer products investment. Periodic adjustments are good and necessary for the industry. ◼︎ We see that 80.65% of surveyed investors have dedicated teams/groups in their institutions focusing on consumption. Investment stages are mainly concentrated in early and growth stages, with early and growth stages accounting for 77.42% and 58.06% respectively. ◼︎ From the investor survey, almost all surveyed investors are bullish on the food and consumer products industry in the long term, but from short-term and medium-term perspectives, there will be adjustments to varying degrees. ◼︎ For example, one survey question was what impact the reduction in consumer investment heat in 2021 would have on the food and beverage industry and investment (multiple choice). 87.1% of investors chose "Most investors or institutions not focused on consumption will leave, but for those who stay, there will be a better investment environment". Similarly, 87.1% chose "Founders and investors will pay more attention to company operations and development, high valuations will decrease, and the overall market will become more rational". 64.52% chose "Food and beverage is a long-lasting industry, and periodic adjustments are important". ◼︎ Regarding views on food and beverage venture capital in 2022 and the future, 51.61% of investors are bullish, 41.94% are on the sidelines, and 3.23% are bearish or uncertain. However, when asked whether they will invest in the food and beverage field in 2022 and the future, 67.74% chose yes, and the remaining 32.26% chose "waiting and seeing". These indicate that the signals are positive, but also cautious and conservative, because the industry needs to return to a rational state, which is important for both entrepreneurs and investors. ◼︎ In a cold market, invest in certainty while maintaining investment possibilities, because there may not be many transaction opportunities. At this time, opportunities to seize excellent projects cannot be missed. Although investment return expectations can be lowered, there are still opportunities to obtain good returns in a cold market. ◼︎ In a hot market, there are many possibilities. Under the premise of ensuring possibilities, try to grasp certainty as much as possible, especially high certainty. Because transaction opportunities increase during this period, the chances of making mistakes also increase. The more likely you are to make mistakes, the more cautious you need to be. ◼︎ CVC will definitely play a pivotal role in China's food and consumer products industry in the future, but when and how it will come is currently unknown and uncertain. ◼︎ The maturity of food CVC in China depends on one key factor: whether the efficiency and value of internal innovation within companies have fallen below the efficiency and value of external innovation and investment/mergers and acquisitions. Once the inflection point is reached, it will greatly promote the ecosystem of China's food and consumer products entrepreneurship and investment to enter a newer stage. ◼︎ Annual interviews with 9 partners or consumer investors from consumer investment institutions at different stages, including: Maixing Investment, Qiaqia Food & Xinxian Capital, Wumart United Capital, Jinding Capital, Zero One Venture Capital, Tiantu Investment, Cowin Capital, Zesheng Venture Capital, and Huachuang Capital. Trends: Don't Be Overly Pessimistic About the Future, Nor Overly Optimistic ◼︎ The industry adjustment is temporary. Behind this is confidence in China's economy and the development of China's consumer market. As long as there are no major surprises in geopolitics and great power competition, we can always be long China in the foreseeable decades to come. ◼︎ At present, the overall domestic consumption environment presents a relatively complex situation, specifically manifested as repeated pandemic, cooling venture capital, and slow consumption growth due to various factors. In the foreseeable 1-2 years, fluctuations in the food and consumer products industry, adjustments in food and consumer products entrepreneurship and investment, and conservative expectations for company operations and development will become the norm. ◼︎ In the next 1-2 years, or even 3 years, the number of newly established companies will decrease, and the number of investment events will also decrease. In the past 1-2 years, although there has been a boom in domestic food and consumer products entrepreneurship with unprecedented heat, some bubbles will follow. ◼︎ For companies already in this market, the external environment places higher demands and challenges on the company internally. If they do not improve themselves and overcome these challenges, they may be eliminated by the market. In such an environment, it is a tempering for companies and core teams. The companies and teams that ultimately remain will be excellent. ◼︎ In the next few years, a batch of startups may be eliminated. The development of the remaining companies will enter another stage. When a certain proportion of these companies begin to IPO and become major companies in the industry, the talent pool in the entire industry will become stronger and larger. ◼︎ These will drive the industry to start another wave of entrepreneurship and investment. We predict this will arrive in about 3-5 years. Within 3 years is an adjustment period, after 3 years a new sprout begins, and after 5 years and beyond, a boom arrives. ◼︎ In the future, we will also see multi-brand operations and managing food and beverage companies as asset portfolios become the norm, which will bring new possibilities for the development of the food industry. Insights: Consolidate and Move Forward Quietly, Awaiting the Bloom of Spring ◼︎ In many industries and fields, there is the concept of hidden champions. At home and abroad, especially abroad, there are also many low-key family food companies that operate and develop quietly. They have cultivated the most core parts of their companies for many years, such as supply chains, product R&D, consumer demand insights, and technology accumulation. Perhaps they are not very outstanding in brand communication and marketing promotion, but because of the accumulation of time, they have become indispensable companies in the industry, known by many consumers, and silently integrated into their daily lives and eating habits. ◼︎ What are the important things? It is to make products that consumers need, build brands that consumers love, consolidate the upstream supply chain foundation, establish a complete sales system and distribution network, have a team that can operate and govern the company quite well, a team that supports the company's long-term stable development, and a complete financial management system and capital planning system, etc. ◼︎ To seek to become a food and beverage enterprise that operates for decades or even a century, there are many basic but core things to do, and many principles and philosophies to practice. In the future, we look forward to many food and beverage companies that consolidate and move forward quietly, together entering the moment when the company and the industry bloom in spring. ◼︎ For startups, the purpose of growth is to transform into a completely different company, to become a better, more excellent, and more competitive company, and to be sustainable. Therefore, scale is not the most core purpose of growth. Scale is the result achieved after combining some elements and experiencing time cycles. We believe this is the most core link in clarifying the meaning and value of growth for a food startup. ◼︎ Scale is a result. The elements behind scale and the quality of scale are the core of pursuing healthy growth and value growth. ◼︎ Seize product power, with product power as the core driving force, is the core element to grasp. Among the 7 fundamentals, use product power as the core driving force to drive the improvement of other fundamentals, thereby driving the company's growth and development. ◼︎ What constitutes product power? Market insight, consumer demand insight, product definition capability, product R&D capability, product design and implementation capability, and product expression and communication capability. ◼︎ Entering a new era background, after the industry enters high-level competition, as an investment, it is still to find founders with strong product power, which will have a greater chance of winning and higher certainty. ©️FoodPlus

About FoodPlus FoodPlus is the producer and publisher of the "2021 China Food & Beverage Consumer Products Annual Entrepreneurship and Investment Report". The FoodPlus team is a startup team. We are together with food entrepreneurs and food consumer investors in the ecosystem of China's food and consumer products entrepreneurship and investment. From the first day of FoodPlus's establishment, we have been promoting the development of the ecosystem through various things, including but not limited to food venture capital news, in-depth content, in-depth activities, membership services, industry forums, FA services, consulting services, etc. Currently, the core businesses are membership, FA, media, and consulting. FoodPlus is a research-driven company. We focus not only on food and consumer products entrepreneurship and investment, but also on the food industry and food innovation, and explore the logic and laws of food entrepreneurship. Our core focus is on food startups from zero to 1 billion RMB in revenue. In the short to medium term, we hope to promote the development and maturity of China's food and consumer products entrepreneurship and investment ecosystem. In the long term, we hope to promote innovation and development in China's food and consumer products industry, starting from making FoodPlus an indispensable part of the ecosystem, becoming a leading incubator, accelerator, and service provider in the field, and ultimately becoming a world-class investment and holding company focused on the food and consumer products industry. Source: FoodPlusHub Are you "watching" me?