Click "Read Original" for details Source: Market Value Observation (ID: shizhiguancha) Recently, Shanghai Zi Yan Food Co., Ltd., the parent company of Zi Yan Bai Wei Ji, submitted its IPO prospectus for the main board. Following Juewei, Zhou Hei Ya, and Huang Shang Huang, the braised products industry will welcome its fourth listed company. This seemingly inconspicuous industry actually has a market size exceeding 300 billion yuan, and has produced Juewei Food, which grew tenfold in four years and now has a market value exceeding 40 billion yuan. How alluring is this hundred-billion-level braised products industry? Contending for the "Braised" Crown Braised food has a history of 2,000 years in China, dating back to the Warring States period. It carries deep cultural heritage and is even called "the taste that best represents China" by many netizens. Duck necks, duck feet, Sichuan pepper chicken, and husband-and-wife lung slices... The wide variety of braised products serves both as appetizing dishes to accompany meals and as delicious snacks for leisure. In 2020, the market size of braised products in China exceeded 300 billion yuan, with a compound annual growth rate of 15% over the past five years. Among them, retail sales of leisure braised products reached 123.5 billion yuan, with a compound annual growth rate of over 20% in the past five years, making it a highly growth-oriented segment in the food and beverage industry. ▲Image source: 2021 Braised Products Industry Consumption Trend Report In the "2020 China Specialty Snack Ranking," braised food occupied half of the top ten spots, with Zhou Hei Ya, Juewei Duck Neck, and Huang Shang Huang ranking 1st, 3rd, and 4th respectively, while Xianglong Claw and Liaoji Bangbang Chicken ranked 5th and 10th. ▲2020 China Specialty Snack Ranking Source: Meituan Dianping "2020 Annual China Specialty Snack Ranking" According to iiMedia Research, compared to other leisure foods, braised products have characteristics such as impulse consumption and addictive eating, making them typical high-frequency, essential consumer goods. Moreover, technological and channel upgrades, the rise of emerging brands, and the extension of consumption scenarios provide considerable room for future industry development. The market predicts that by 2025, the market size of leisure braised products in China will reach 227.5 billion yuan, with a compound annual growth rate of over 13% in the next five years. As the industry scale expands, the production and consumption of braised products are gradually shifting from small workshops and street stalls to branded chain stores. Leading enterprises are growing stronger, and more capital is beginning to pay attention to this high-quality track that was previously overlooked. According to Qichacha data, in the first half of 2021, there were 75 financing events in the catering industry, with 7 in the braised food segment. Among them, Tencent led the investment in "Shengxiangting" (with financing amount close to 100 million yuan), Sequoia Capital China invested in "Hot Braised Time" (angel round), and Wanjia Capital led the investment in "Juhuakai." In addition, "Weiyuan Hongfang," "Jingpai Xianlu," and "Wuxiangju Holdings" also attracted capital competition. Earlier, regional braised food brands such as "Shitoupai Braised Food Research Institute" and "Wuzhi Braised Goose" also received capital support. The Four Leading Giants In China's braised products industry, the undisputed four leading giants are Juewei Food and Huang Shang Huang, listed on the A-share market, Zhou Hei Ya, listed on the Hong Kong stock exchange, and Zi Yan Bai Wei Ji, which is currently seeking an A-share listing. The first three companies originate from Changsha, Hunan; Nanchang, Jiangxi; and Wuhan, Hubei, respectively, while Zi Yan Bai Wei Ji originated in Leshan, Sichuan, established its brand in Nanjing, and later expanded nationwide with its headquarters in Shanghai. Southerners are known for their culinary skills, which is also evident in the development of the braised products industry. ▲Zi Yan Bai Wei Ji Image source: cfp In terms of performance scale, in 2020, Juewei Food's revenue was 5.2 billion yuan with a net profit of 700 million yuan, ranking first in the industry; followed by Zi Yan Bai Wei Ji with revenue of 2.613 billion yuan and net profit of 388 million yuan; Huang Shang Huang with revenue of 2.436 billion yuan and net profit of 282 million yuan; and Zhou Hei Ya with revenue of 2.182 billion yuan and net profit of 151 million yuan. In terms of store count, according to incomplete statistics, in 2020, the listed companies Juewei Duck Neck, Huang Shang Huang, Zi Yan Bai Wei Ji, and Zhou Hei Ya opened more than 1,400, 1,200, 1,000, and 400 new stores, respectively. As of the end of 2020, Juewei Duck Neck had over 12,000 stores, Zi Yan Bai Wei Ji had 4,760, Huang Shang Huang had over 4,600, and Zhou Hei Ya had over 1,700. Among the four giants, Juewei, Huang Shang Huang, and Zi Yan Bai Wei Ji primarily use a franchise model, while Zhou Hei Ya has consistently adhered to a direct-operated business model, only opening regional franchise opportunities in November 2019 and single-store franchises in June 2020. Clearly, Zhou Hei Ya's transformation is driven by performance and competitive pressures. In a rapidly growing market, compared to the franchise chain model commonly used in the industry, direct-operated chains can control quality but also bear all costs before and after store opening. This asset-heavy model is not conducive to seizing market share, expanding sales scale, and even affects profits. Since 2017, Zhou Hei Ya's revenue has dropped from 3.249 billion yuan to 2.18 billion yuan, and net profit has plummeted from 760 million yuan to 150 million yuan. ▲Zhou Hei Ya Performance Image source: Tonghuashun iFinD In contrast, companies using the franchise chain model have seen significant performance increases. Juewei Food's revenue grew from 3.85 billion yuan to 5.27 billion yuan, with profit rising from 500 million yuan to 700 million yuan. Huang Shang Huang's revenue increased from 1.47 billion yuan in 2017 to 2.43 billion yuan, with net profit growing from 140 million yuan to 280 million yuan. The divergent performance between direct-operated and franchise models forced Zhou Hei Ya to make changes. In terms of average transaction value and gross margin, Zi Yan Food has the lowest at 29.7 yuan per person and a gross margin of 30.4%; Zhou Hei Ya has the highest at 38.13 yuan per person and a gross margin of 55.4%; Juewei and Huang Shang Huang have average transaction values of 32.03 yuan and 32.63 yuan, with gross margins of 36.3% and 37.8%, respectively. The reason behind this is that Zi Yan Bai Wei Ji's product positioning differs from the leisure braised products favored by Juewei, Zhou Hei Ya, and Huang Shang Huang; it focuses on braised foods for meals. Its product range includes more low-priced vegetarian items, with a wider variety and price range. The home consumption scenario and more rational consumer base also make its pricing more affordable compared to leisure braised products. In addition to lower gross margins, the growth potential of the meal-accompaniment braised products industry is also weaker than that of leisure braised products, because in a fast-paced society, young people seem to cook less and eat at home less frequently. Of course, the meal-accompaniment braised products industry may be more favorable for leading enterprises because the market size is larger, industry concentration is lower, and the competitive landscape is relatively milder. Most participants are still small family workshops, giving leading enterprises a clear advantage. From this perspective, Zi Yan Bai Wei Ji, as the leading brand in the meal-accompaniment braised products segment, has more room to increase its market share in this niche track than the other three giants in the fiercely competitive leisure braised products track. Whether it can enhance profitability through economies of scale is a key factor for Zi Yan Bai Wei Ji to win more investor favor in the capital market in the future. Room for Growth Braised products have grown into a massive market of 300 billion yuan, but the combined market share of the four "giants"—Juewei Food, Zhou Hei Ya, Huang Shang Huang, and Zi Yan Bai Wei Ji—is only about 10% even in the leisure braised products segment, leaving enormous space for new brands. More importantly, braised products, especially leisure braised food, will continue to maintain a relatively fast industry growth rate. The market dividend is still present, and ahead lies a blue ocean. Currently, emerging brands in the market include "Wang Xiaolu," "Luweijuexing," "Haobashi," "Jiujiuyu," and "Yanlutang." Compared with traditional brands like Juewei and Zhou Hei Ya, many new brands adopt a clear differentiation strategy, with fashion, premium positioning, and online channels becoming the most important competitive labels. For example, fresh braised and ready-to-eat brands like "Shengxiangting" and "Yanlutang" offer more refined dining environments and a wider selection of dishes. They also showcase the production process, which is full of the hustle and bustle of life and a sense of safety, attracting young people through a premium brand image. ▲Shengxiangting Store Another example is "Wang Xiaolu," which has risen in recent years, focusing on chicken feet and also adopting a relatively high-price, premium route. Using a hit single product as a breakthrough, it has already covered over 2,000 convenience stores in Beijing, achieving explosive growth in brand awareness and sales. There are also new brands that enter the braised products industry mainly through innovative online strategies. The rise of live-stream e-commerce, social media, and KOL/KOC marketing, as well as online social platforms like Weibo and Xiaohongshu, allow new brands to bypass the offline channel advantages of traditional leaders and tap into entirely new consumer demands. Objectively speaking, given the huge market size and growth rate of the braised products industry, leading companies have relatively high certainty of future performance growth. Moreover, the rejuvenation and fashion transformation of braised food, along with highly personalized demands, make it difficult for any single company to dominate. New brands still have significant room for survival and counterattack. PS: From August 24 to 26, 2021, the 2021 (4th) China FMCG Conference, hosted by New Distribution, will be held in Shanghai. Focusing on industry trends + practical cases + growth-driven connections, 3,000 FMCG practitioners will gather. Ten thematic forums cover new retail O2O, community group buying, short-video live-stream e-commerce, distributor transformation, rise of new consumer brands, new alcoholic beverage interpretation, distribution B2B supply chain, omnichannel marketing, and B2B2C new technology applications, with operators from various segments bringing the latest case studies. Some of the confirmed heavyweight guests include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, general manager of e-commerce at Gold Hong Ye Paper Group... A grand gathering for FMCG professionals—you must be there! Are you "watching" me?