In recent years, the condiment market has been booming. According to the China National Food Industry Association, domestic condiment consumption exceeded 300 billion yuan in 2020, a 35% increase from 2019, outpacing the industry's 25% growth rate, making condiments the fastest-growing segment in the food industry. Before reform and opening-up, the condiment industry was government-controlled with a single product structure. At that time, consumers were struggling for basic needs, and a single product sufficed. After reform and opening-up, with the continuous development of the market economy, condiments gradually diversified and began to develop in segments. Nowadays, with the continuous improvement of the national economy, people's taste buds have been unprecedentedly satisfied, and health and quality have gradually been put on the agenda, achieving consumption upgrades. When it comes to "healthy" condiments, Qianhe is an unavoidable company. Qianhe is the first in China to research and launch zero-additive condiment products, and later launched organic soy sauce and functional soy sauce, striding into the mid-to-high-end market and embarking on the road to health for condiments. Image source: Qianhe Weibo "The Boy on the Tongue" On April 27, Qianhe released its 2021 results: operating revenue reached 1.925 billion yuan, a year-on-year increase of 13.7%, more than doubling since its initial listing. Looking back at Qianhe's development history, since its founding in 1996, it focused on the caramel color additive field, with downstream customers being established condiment brands like Haitian and Lee Kum Kee. Since 2001, the company expanded downstream from the caramel color business and began engaging in soy sauce, vinegar, and other condiment products. After listing in 2016, revenue has maintained rapid growth. According to iiMedia Research data, from 2012 to 2020, the number of registered condiment enterprises in China increased from 15,620 to 90,991, with a compound annual growth rate of 24.64%. Although the condiment industry has developed rapidly, the market is fragmented, and few companies truly thrive; most earn meager profits. So, what exactly did Qianhe do right to go from a behind-the-scenes soy sauce supplier to a new force in the soy sauce industry? This article will analyze Qianhe's growth path from four dimensions. Product Innovation Since entering the condiment industry in 2001, Qianhe's business was lukewarm. In 2007, it first proposed the concept of zero-additive and developed zero-additive soy sauce, thus opening a new world, and the product gained high market recognition. Why are Qianhe's innovative products loved by consumers? They captured consumer demand with great foresight! Before zero-additive products emerged, news about MSG causing cancer was widespread. The truth was yet to be verified, but it served as a wake-up call for consumers: seasonings must also be healthy! This event drove consumers' awakening to health needs. At the same time, with rising national income levels, consumers became able to pay for healthy products. At that time, the emergence of zero-additive seasonings catered to the health-conscious group. According to Nielsen data, compared to the global average, Chinese consumers pay more attention to food ingredients and are more willing to pay a premium for healthy food. But why is it considered highly forward-looking? Going back to 2007, zero-additive was a niche market, and it only truly became popular in recent years. As the market heated up, giants began to enter. In early 2021, Haitian Flavouring and Food, in an exchange with investors, stated that it would again make "zero-additive" a selling point for its future product moat. Beyond the condiment industry, the beverage industry is also seeing a trend of zero-additive. For example, Genki Forest, one of the pioneers in the zero-sugar beverage market, was founded in 2016. It can be said that Qianhe's innovation preceded the market environment by many years. Today, Qianhe and zero-additive are almost synonymous, with some consumers even thinking "Qianhe = zero-additive = health." Channel Layout – From Regional to National After gaining market recognition, Qianhe began its path to the national market. First is the number of distributors. Promoting products nationwide is not easy. As mentioned earlier, the condiment industry has been expanding in recent years, and market competition is fierce. To break through, the number of distributors is the foundation. But Qianhe did not blindly pursue growth in numbers; instead, it optimized while expanding, from 354 distributors in 2015 to 1,404 in 2020. The expansion of high-quality distributors laid a good foundation. Second is the pace of layout. Qianhe's overall strategy is to intensively cultivate the southwest market and maintain a leading advantage while expanding the national market through multiple channels. For the southwest market: continuously strengthen terminal infrastructure, improve terminal image and display share, and expand penetration and coverage. For cities outside the southwest, adopt a "high-profile" approach, focusing on breaking into first-tier cities like Shanghai, Beijing, and Shenzhen, strengthening the brand flag in first-tier cities, accelerating market layout in municipalities, provincial capitals, cities with independent planning status, and developed prefecture-level cities, forming a top-down brand expansion. Although first-tier cities have high purchasing power, brand competition is also fierce. In the early days of listing, facing these difficult-to-crack cities, Qianhe segmented the national market into seven regions: East China, South China, Central China, North China, Northwest, Southwest, and Northeast, focusing on different regions each year. In 2016, it focused on Central China, North China, and Northeast, with revenue increasing by 84.26%, 24.47%, and 81.21% year-on-year respectively; in 2017, it focused on North China, Northeast, and Northwest, with revenue increasing by 43.79%, 31.43%, and 58.77% year-on-year respectively; in 2018, it focused on Central China, North China, and Northwest, with revenue increasing by 46.52%, 32.48%, and 42.45% year-on-year respectively. (Data source: Qianhe's 2016, 2017, and 2018 financial reports) Brand Building Simply put, brand image represents a company's facade. Qianhe's positioning is mid-to-high-end healthy products, so it needs to continuously output this image to the public through resources. For example, "Fear of getting heaty? Drink Wanglaoji" and "The anti-dandruff expert, of course Head & Shoulders" are successful brand building examples. To improve consumer awareness, Qianhe implements precise online advertising and strengthens offline user experience. Online, Qianhe fully utilizes limited resources for precise media placement, with sales expenses increasing year by year. From 2016 to 2021, sales expenses grew at an average rate of 26.13%. Among them, in 2016, it sponsored the CCTV-7 food program "Fashion Turntable"; in 2021, it sponsored two seasons of Jiangsu TV's "New Dating Show", with a total agreement amount of 98 million yuan. In addition to traditional TV media, Qianhe also tried popular online short video ads. In 2020, an advertisement titled "The Boy on the Tongue" went viral on major social platforms within just 2 days of its release, attracting attention and discussion from inside and outside the industry due to its creative content. It gained a lot of traffic in a short time. Image source: Qianhe Weibo While expanding product awareness through online media, it strengthens ground promotion advantages by enhancing the image building of zero-additive products (such as shop-in-shops, zero-additive counters, image displays, etc.) and optimizing promotional scripts to further enhance user experience, allowing consumers to see, hear, smell, taste, and touch, creating the perception that Qianhe products are great. Through online awareness expansion + offline user experience enhancement, it establishes a "healthy seasoning" barrier and penetrates consumer minds. After gaining a certain number of fans, it establishes electronic member information files for opinion leaders, word-of-mouth champions, and those who consume organic and first-grade 380-day products, and maintains interaction; strengthens online and member customization of ultra-high-end products. Emphasis on E-commerce Channels Condiments are a relatively traditional industry, with revenue mainly from offline channels. As a result, many brands tend to neglect online channels. However, with the rapid development of e-commerce and changes in consumer purchasing habits, the proportion of online sales will gradually become a part that cannot be ignored. Currently, Qianhe has the highest proportion of online revenue among major condiment companies. Not only did it start laying out online channels early, but it also insists on establishing a young, professional talent management system. It can be seen that Qianhe has done a lot of work to better understand consumer needs. (Data source: Haitian, Qianhe, Hengshun Vinegar, Zhongju High-tech, Tianwei Food 2020-2021 operating data announcements; Angel Yeast Haitong 2019-2021 operating data announcements; Zhongjing Food 2020-2021 annual reports and prospectus; Securities Research Institute) Qianhe's 2018 financial report mentioned: "First, continue to strengthen e-commerce product and service advantages, with rapid growth in Tmall flagship store and JD.com supermarket sales. Second, innovate based on brand tone, integrate Tmall and JD.com brand resources, promote in off-season, and carry out online festivals (Soy Sauce Festival, Anniversary, Scene Gathering, Cross-border CP) and other activities, creatively achieving sales on the internet while increasing communication and expanding brand influence. Third, actively develop other internet marketing platforms besides giants like Tmall and JD.com, creating more targeted products (such as the 'Wulifang' series) based on different customer groups on different platforms. Fourth, actively explore new retail and new models, and proactively embrace market changes." From Tmall online transaction data, soy sauce sales in 2017 totaled 240 million yuan, with Qianhe holding a 12% share, ranking second in the industry, surpassing well-known brands like Xinhe and Chubang. Moreover, in terms of growth rate, Qianhe far exceeded the industry average. In addition to the above, Qianhe is also actively laying out in the live-streaming influencer field, having already started on Kuaishou, Douyin, and Taobao platforms. It has now cooperated with Kuaishou's top live-streaming seller, head influencer Xin Youzhi and other artists, achieving sales of 8.9 million yuan in a single session and single link. The benefits of seizing online business are not limited to immediate revenue. Over time, the post-90s and even post-00s generations are gradually becoming the main force of household consumption, and this age group is keen on online shopping. Whoever can occupy the online market first is equivalent to occupying the minds of future household consumption leaders in advance. Summary: Qianhe is not just an emerging condiment company; it has also promoted the progress of the mid-to-high-end market in the industry. In an industry, the pricing of leading companies almost leads the mid-to-low-end companies. China's largest condiment producer, Haitian, focuses on cost-effectiveness and has long occupied the mid-to-low-end market, so most condiment manufacturers choose to compete in the mid-to-low-end stock market, leading to increasingly fierce competition there. But the growth rate of high-end soy sauce is significantly faster than the industry average. Qianhe seized the business opportunity, dared to launch premium products and gain consumer recognition, successfully occupying the mid-to-high-end market. Its courage to think and act is lacking in many companies. To this day, Qianhe's road to health remains firm and confident, and it is believed that it will do even better in the future. -END-