On the evening of October 17, Qiaqia Food (002557.SZ), a leading nut company, released its third-quarter report for 2019. During the reporting period, the company achieved operating revenue of 3.219 billion yuan, a year-on-year increase of 10.64%, and net profit attributable to shareholders of 400 million yuan, a year-on-year increase of 32.27%. Notably, Qiaqia's single-quarter revenue in the third quarter was 1.232 billion yuan, a year-on-year increase of 19.01%, with a significant sequential improvement in revenue growth. Core products such as the blue bag flavored sunflower seeds and the small yellow bag nuts maintained strong growth. -01- Marketing Efforts Drive Outstanding Performance in Nut Products Data shows that in the first three quarters of this year, the company's gross margins were 30.38%, 33.40%, and 35.84%, respectively, with profitability improving quarter by quarter. Analysts say that in the third quarter, despite the gradual fading of the price increase effect, Qiaqia still achieved a steady increase in gross margin by upgrading intelligent processing equipment, and the future looks promising. In line with the peak season in the second half of the year, Qiaqia Food continued to strengthen its marketing efforts starting from the third quarter. In July this year, the company held the Qiaqia 2019 Global Strategic Partner Summit and Qiaqia Nut Brand Upgrade Conference in Shanghai with the theme "Leading Freshness, Enjoying Worldwide," and cooperated with the well-known consulting agency "Hua & Hua" to upgrade its brand strategy, redesigning product packaging and advertising slogans. The new slogan "Mastering Key Freshness Preservation Technology" highlights the product's differentiated advantages and enhances consumer brand memory. Most notably, in September, Qiaqia pioneered a transparent factory live broadcast in the industry. On that day, Qiaqia consumers around the world watched the live broadcast of the transparent factory by scanning QR codes on its flagship store e-commerce pages and terminal shelf displays. At the same time, Qiaqia also conducted a synchronized live broadcast on the Nasdaq screen in New York's Times Square, truly achieving global live streaming and world-wide simultaneous viewing. Through the live broadcast, Qiaqia showed global consumers the real-time operation of its raw material origins, automated intelligent production lines, and global three-dimensional warehousing centers, further conveying its strong manufacturing strength, key freshness preservation technology, and "freshness strategy" to the public. It is reported that within 5 minutes of the broadcast, the number of viewers exceeded 100,000, and the cumulative viewership exceeded 1 million that day. Tens of thousands of netizens at home and abroad expressed online that Qiaqia nuts speak with strength, praising Chinese manufacturing. This innovative marketing approach targeting corporate manufacturing strength is truly a model case for Chinese food companies' marketing communication. In terms of offline channels, Qiaqia has increased advertising investment in first- and second-tier cities, signing a strategic cooperation agreement with Focus Media to place advertisements and posters in buildings in 15 core cities, thereby helping the market form a perception of Qiaqia nuts as globally leading in freshness. On the other hand, it has increased its penetration into third- and fourth-tier cities and cooperated with stores that match the attributes of nuts and roasted seeds, such as mother-and-baby stores, fruit stores, and convenience stores, to deeply explore consumption scenarios. In terms of e-commerce channels, the company has reached strategic cooperation with Alibaba and JD.com, and also signed a strategic cooperation agreement with WeChat Pay, fully leveraging the advantages of "Qiaqia Manufacturing" to continuously expand product marketing channels. At the same time, the small yellow bag has launched differentiated products for e-commerce channels, with price and packaging distinct from offline, forming a positive complementarity and parallel development momentum between online and offline. -02- Full Industry Chain Fresh Manufacturing Ensures Quality Assurance Nowadays, the nut industry is highly competitive, with many nut brands on the market and varying quality. Qiaqia has been able to break through and achieve impressive results. Looking deeper into the reasons, its biggest advantage is its full industry chain layout from upstream raw material collection, warehousing, cold chain transportation, to automated production and sales channels. Currently, Qiaqia has over 1 million mu of nut raw material planting bases globally. By deeply intervening in upstream raw material planting and procurement, Qiaqia has strong quality control capabilities, and at the same time, it is more resilient when raw material prices rise or sources are limited, making its operations more stable. In addition to ensuring quality at the raw material end, Qiaqia also attaches great importance to quality management in the production process. The company is the earliest in the industry to streamline, mechanize, and intellectualize production processes. To improve nut quality, Qiaqia introduced Swiss Buhler equipment worth tens of millions, independently developed nitrogen-filled freshness preservation technology. For example, the Qiaqia small yellow bag daily nuts single product packaging uses multiple freshness preservation technologies, achieving milk powder-grade freshness preservation packaging with oxygen content below 1%, and establishing a TPM management system to improve production efficiency while ensuring stable product quality. At the same time, Qiaqia has nine production bases worldwide that meet international standards. The global production layout reduces transportation costs while ensuring product freshness. Financial reports show that in the third quarter, Qiaqia's inventory turnover days decreased to 103 days, and the operating cycle decreased to 117 days, significantly improving operational efficiency. -03- Going Global to Expand New Overseas Channels, Promising Future Qiaqia started its internationalization path as early as 2002, and in recent years, under the background of the "Belt and Road" policy, it has accelerated its globalization process. After years of overseas market development, the company's influence in the international market has been continuously enhanced, making it one of the national brands with the most export countries and the widest export regions. In the United States, Qiaqia has entered the mainstream consumer market from the Chinese community, becoming a snack for more and more local people, and can be found in supermarkets such as Costco and Walmart. In Southeast Asia, Qiaqia is very popular, having reached cooperation with distributors in most Southeast Asian countries. It is worth mentioning that in July this year, Qiaqia's Thailand factory officially started production, marking a new journey for Chinese nut brands to go global. Thailand is located in the center of Southeast Asia. In the future, the Thailand factory will effectively radiate to the Southeast Asian market. At the same time, some products exported to Europe and the United States will also be shipped from Thailand. With the company's complete export network, Qiaqia's overseas business is expected to enter a new round of growth. In addition, the company was invited to attend the Sino-French Brand Summit, where it launched three high-end gift boxes designed by LV collaborating designer Vincent Du Sartel, accelerating its internationalization, achieving brand rejuvenation, and connecting with global consumers. Market analysts say that the company's earlier category focus, mechanism reform, and internal incentives have gradually shown improvements in performance. At the same time, the blue bag and small yellow bag are still in a volume expansion cycle. Especially the small yellow bag, benefiting from the company's continuous strengthening of product advantages and active brand promotion, still has great room for improvement in gross margin and profitability. In addition, with the upcoming employee stock ownership plan, the company's operational vitality is expected to be further activated, helping Qiaqia accelerate its march towards the 10 billion revenue target. If a tip is adopted, a reward of 400-2000 yuan will be paid. China FMCG + Internet Professional New Media Committed to FMCG manufacturer and distributor transformation and upgrade and channel digital solutions Copyright Issues | Business Cooperation | Project Consulting | Reader Submissions