Source: Guanchao New Consumption (ID: TideSight) Author: Song Bingbing From ice cream in summer to dumplings and tangyuan in winter, new brands are constantly trying to fill young people's refrigerators. Frozen products are becoming the next 'trillion-yuan catering market.' On Double 12, Xiaojia cleared out the frozen goods in her shopping cart. Besides two bags of fried dumplings, there were also semi-finished meal kits such as golden soup with pickled fish, Kung Pao chicken, and Buddha jumps over the wall. 'Christmas and New Year's Day are coming soon, so stocking up more can be used to entertain friends,' said Xiaojia, a post-95s consumer who has been hooked since discovering the 'treasure' of pre-made dishes. For kitchen novices, semi-finished pre-made dishes are not only quick and convenient but also allow them to make restaurant-quality meals at home. Doudou is another enthusiast of quick-frozen foods, with hand-pulled pancakes and dumplings as his staples. Additionally, this year he was introduced to small crispy pork and black pepper chicken nuggets. 'With just an air fryer, you can enjoy KFC-style deliciousness at home.' According to a sample survey by Guanchao New Consumption, among post-95s consumers, dumplings, hand-pulled pancakes, and fish balls have the highest proportion in their frozen food purchases, followed by mini youtiao, breakfast buns, small crispy pork, and pizza. Data shows that since this year, pre-made dish brands such as Zhenwei Xiaomeiyuan, Xunweishi, and Lixiangguo have seen significant sales growth, while semi-finished dishes from old brands like Guangzhou Restaurant and Meizhou Dongpo have also been warmly received by consumers. According to the Prospective Industry Research Institute, the sales revenue of the quick-frozen food industry is expected to reach 175.5 billion yuan in 2021. Delicious and convenient, the endless variety of frozen products has become a 'magic weapon' to win people's hearts. From ice cream in summer to dumplings and tangyuan in winter, new brands are constantly trying to fill young people's refrigerators. Frozen products are becoming the next 'trillion-yuan catering market.' ****The Frozen Food Market Heats Up As semi-finished products increasingly enter young people's kitchens, the purchase frequency has shifted from low to medium-high, bringing more vitality to the entire frozen food industry. The capital market has also brought vitality. According to incomplete statistics from public data by Guanchao New Consumption (ID: TideSight), in 2021 alone, there were more than 10 financing events in China's frozen food industry, with total financing amounts reaching hundreds of millions of yuan. Among them, there were 3 frozen food supply chain companies and 6 quick-frozen food and pre-made dish brands. New brands are developing very rapidly. Zhenwei Xiaomeiyuan received angel round financing just two months after its establishment, completing four rounds of financing within a year, with investments from Xingtuo Capital, 01VC, and Sinovation Ventures. It is also worth noting that in addition to traditional investment institutions, Genki Forest and Xiaohongshu have also made moves. Genki Forest invested in the pre-made dish brand 'Maizima', and in the same month, Xiaohongshu invested tens of millions of yuan in the low-temperature meat product brand 'Benwei Xianwu'. Sancan Youliao is a new retail project independently incubated by the 'Dongpin Zaixian' group, the first B2B platform for cold chain ingredients supply chain. It has also obtained three rounds of financing in just over a year of establishment. Unlike many brands, Sancan Youliao targets young consumer groups, aiming at the incremental market created by this demographic. By laying out community chain stores for pre-made dish ingredients, as well as 24-hour unmanned self-service smart cabinets in office buildings and apartments, it brings convenient semi-finished pre-made dishes to more C-end consumers. Xu Jiacheng, investment vice president at Zhonghai Investment, once said when investing in Sancan Youliao: 'As the pace of urban life accelerates and the trend of smaller family sizes speeds up, the semi-finished dish industry has reached an inflection point and entered a period of rapid development. Frozen food logistics and transportation have particularities, and community retail terminals have obvious advantages in customer acquisition and fulfillment efficiency compared to other channels.' In addition, in April this year, the first stock in the pre-made dish industry was born—Weizhixiang. As of the time of writing, Weizhixiang has a market value of 8.4 billion yuan. Data shows that Weizhixiang's revenue in the first three quarters of 2021 increased by 23.72% year-on-year to 570 million yuan, and net profit increased by 9.02% to 103 million yuan. Anjing Food once analyzed that the development of the catering industry and changes in consumer eating habits have brought new development opportunities for quick-frozen food. Hot pot, malatang, oden, and other snacks are gradually emerging at home and on the streets, and the food delivery market is also growing rapidly, extending the consumption of quick-frozen food to daily life and leisure areas. The frozen food industry is a trillion-yuan market, but the number of frozen food SKUs is huge and standards vary. Upstream and downstream are extremely fragmented, information is asymmetric, logistics and warehousing costs are high, and price fluctuations are large, leading to long-term lag in development. With the rapid development of food delivery and increasing attention to food safety issues, the frozen food industry is continuously becoming more standardized and normalized. Frozen food B2B platforms that improve supply chain efficiency, such as Dongpin Daojia, Dongshifu, and Feixiong Lingxian, have also risen to the occasion and grown under the support of capital. Founded in 2016, Dongpin Daojia maintains a financing frequency of one round per year, and in 2021 it received investments from Mingyu Venture Capital and Hongtai Fund. Sufficient funds have also greatly enhanced the company's digital and smart warehousing capabilities, improving sales efficiency, procurement efficiency, warehousing efficiency, logistics efficiency, and capital utilization efficiency. The rush of capital has made the cold chain industry no longer 'cold.' ****Competing for Young People's Refrigerators Seasonally, ice cream and quick-frozen products have obvious complementary peak and off-peak seasons. In China, 60%-70% of offline ice cream distributors sell ice cream in summer and dumplings in winter, sharing the cold chain. This is also why Zhong Xue Gao has crossed over to create Lixiangguo. Traditional quick-frozen foods mostly revolve around offline supermarkets in terms of channels and marketing. Lixiangguo launched its first sales through online channels, reusing Zhong Xue Gao's efficient cold chain system. Lin Sheng, founder of Zhong Xue Gao, once stated that extending from ice cream to quick-frozen food and creating Lixiangguo was based on three points: First, it is an inevitable choice; quick-frozen and ice cream are naturally complementary in seasons. Ice cream naturally sells less in winter than in summer, while quick-frozen products are in peak season in autumn and winter, creating a relative seasonal complementarity in products; Second, channel compounding; Zhong Xue Gao's mature TO C cold chain system can be reused. Frozen products and ice cream are not actually separate; Lixiangguo can directly reuse Zhong Xue Gao's offline channels in the future; Third, optimism about the frozen food market. In Lin Sheng's view, the frozen food market will expand significantly in the next 10 years, with very high growth rates. 'Lixiangguo has taken a step outward, heading for the freezer compartment at the bottom of consumers' refrigerators. Zhong Xue Gao occupies one compartment, and Lixiangguo moves one more compartment into the refrigerator.' Lixiangguo entered the frozen food track with its dumpling series. In the past year, it has successively launched dozens of SKUs including wontons, chaoshou, fried dumplings, yuntun, small crispy pork, instant douhua powder, and seasonings. According to public data, Lixiangguo's overall performance during this year's Double 11 grew by 700%. No longer just the traditional 'old three' frozen products of dumplings, buns, and tangyuan, this year's popular small crispy pork has stirred up the frozen food market. During Double 11, Lixiangguo's new small crispy pork reached TOP2 in the Tmall meat products category within one hour of launch, with a repurchase rate of over 40%; while Meihao small crispy pork achieved sales revenue of over 600 million yuan in 2020, expected to exceed 1 billion yuan this year. Although new brands are developing vigorously, the battle in the frozen food market has actually been ongoing for many years. The traditional 'old three' frozen products have long been dominated by the three brands 'Sanquan', 'Synear', and 'Wan Chai Ferry', which together hold over 50% of the market share. However, in recent years, product homogenization has become very serious, and old brands have seen sluggish growth. According to this year's third-quarter financial reports, companies such as Weizhixiang, Sanquan, Anjing, and Haixin Food have experienced significant declines or losses in performance. In addition, Sanquan and Anjing have also announced price increases, with some quick-frozen foods rising by 3%-10%. According to a report by iiMedia Research, in 2020, 46.8% of Chinese consumers purchased quick-frozen foods 1-2 times per month, and 36.45% purchased them 3-4 times per month. Consumers are becoming pickier, no longer satisfied with simple meal replacements, and hope that convenient foods like pre-made dishes become more like freshly cooked meals. This also forces frozen food products to upgrade in terms of raw materials, production technology, taste, nutrition, and health. ****30 Years: Who Dominates the Frozen Food Industry? The history of frozen food in China can be traced back to around 1980. However, it truly became a category starting in 1990, when Chen Zemin invented China's first quick-frozen tangyuan. In the 1990s, Chen Zemin gave up his position as deputy director of the Second Hospital of Zhengzhou City and chose to go into business, setting up a stall to sell ice cream. Chen Zemin was a restless innovator. He noticed that people in the Northeast loved eating dumplings and would freeze leftover dumplings outdoors, so he had a sudden idea: why not make tangyuan frozen? Frozen food is not simple; it involves freezing equipment, freezing technology, cold chain logistics, and more. After returning to Zhengzhou, Chen Zemin started developing machinery. Unexpectedly, he succeeded. He invented China's first quick-frozen tangyuan and applied for a patent. Chen Zemin took this innovative food to supermarkets to promote, gradually opening up sales channels for quick-frozen tangyuan. In 1992, Chen Zemin founded Sanquan Food Factory, and quick-frozen tangyuan officially entered the production line for batch production. Within less than a year of establishment, Sanquan successively launched quick-frozen dumplings, zongzi, and other products. At that time, refrigerators were just beginning to be popularized in China, and distribution only had 'cold' but not yet 'chain'; intercity distribution only had cold storage and refrigerated trucks. 'How to ensure food remains in a low-temperature environment at all times' was initially a problem that troubled Sanquan. Sanquan first used third-party refrigerated trucks for distribution. Although the temperature could be adjusted, long-distance transport was greatly affected by outdoor temperatures, and long transport times, coupled with cost-saving measures that led to insufficient temperature control, caused some products to thaw and spoil. During the same period, Li Wei also faced cold chain transportation issues. In 1997, 29-year-old Li Wei also planned to enter the tangyuan business. At that time, Li Wei was the general distributor for Walls in Henan, and the relatively complete system (Walls provided Li Wei with 5 refrigerated trucks and thousands of cubic meters of cold storage) laid the foundation for his later entry into the quick-frozen food industry. Gradually, he also became close friends with Chen Zemin's son, Chen Nan. Even with years of experience in the frozen food industry, Synear also faced food safety and quality issues brought by the cold chain. Previously, due to substandard cold chain transportation and sales storage, Synear Food was also found to have unqualified peroxide values. The quick-frozen industry kept up, but the logistics and distribution ends could not keep up. In the early years, the lack of cold chain held back quick-frozen products. However, with the continuous iteration of cold chain technology and the upgrading of logistics and warehousing levels, the cold chain market has entered a new era. Digitalization and IoT technology have gradually replaced traditional refrigerated trucks, and sales channels have expanded from large supermarkets and nearby community stores to online platforms. Dongpin Daojia is a typical representative. As a data-driven frozen food supply chain service platform, Dongpin Daojia specializes in providing one-stop frozen food ingredient services for catering businesses. Currently, it has nearly 10,000 active ordering users, with a repurchase rate stable above 85%. Through its self-developed IT system, Dongpin Daojia collects terminal data to form an exclusive industry label database. Through intelligent algorithm analysis, it achieves precise matching between upstream and downstream, reducing industry sales costs, replacing manual labor with systems, and changing the original product circulation path through its own warehousing and distribution system. The frozen food industry has experienced 30 years of ups and downs. It is worth noting that even the earliest Sanquan Food currently has a total market value of only 17 billion yuan. ****Pre-made Dishes: From B-end to C-end The pre-made dish market has also been blown to the forefront. According to statistics, by the end of April 2021, there were 71,900 pre-made dish-related enterprises in operation in China, with 12,500 registered in 2020 alone. Some analyses predict that the existing market for pre-made dishes in China is about 300 billion yuan, and it is expected that in the next 6-7 years, the pre-made dish market can grow to a trillion-yuan scale. If food delivery drove the demand for pre-made dishes, then the pandemic pushed pre-made dishes from the B-end to the C-end. Pre-made dishes were first used in restaurants. The demand for faster food delivery, coupled with the need for standardized dishes in chain restaurants, made pre-made dishes from central kitchens the ideal choice. However, under the pandemic, restrictions on dining out led these pre-made dishes to gradually enter consumers' homes. Xunweishi is one such example. In August 2020, Xunweishi was registered and established. Xunweishi launched spicy beef noodles, Tom Yum seafood noodles, and flower gum chicken hot pot, which can be enjoyed as a hearty 'feast' at home after just a few minutes of heating. Wang Biao, founder of Xunweishi, once publicly stated that the timing is right to enter the pre-made dish market, as people's living habits and consumption psychology have undergone significant changes compared to earlier years. Gao Yang, CMO of Xinliangji, also said that in the future pre-made food market, the boundaries between B-end and C-end businesses will become increasingly blurred. It can be said that the relationship between the two is that C-end empowers B-end, better driving the efficiency and development of the enterprise supply chain, and under the influence of brand power, increasing gross profit. Pre-made dishes are not only a focus for new brands but also provide new opportunities for time-honored brands. After many places across the country issued the call to 'avoid returning home during the Spring Festival unless necessary,' hometown delicacies became a 'homesickness' for many wanderers. To taste the flavors of memory, online shopping became the most convenient choice for consumers. Time-honored brands have also entered platforms such as Taobao, JD.com, and Pinduoduo. As of now, the 86-year-old Guangzhou Restaurant's Tmall flagship store has over 1.6 million followers. Quick-frozen dim sum such as char siu buns, custard buns, and shrimp dumplings have become bestsellers in the store. 'Delicious and cost-effective' is the most common user review for this category, with many users saying they can enjoy dishes of the same quality as those in Guangzhou Restaurant's dining halls at home. In addition, Beijing Quanjude, Shanghai Old Restaurant, and other time-honored brands have all launched pre-made dishes. Tmall data from 2020 shows that pre-made dish sales increased by 111% year-on-year. Under Generation Z, the single-person economy and lazy economy are driving the rapid growth in demand for frozen products such as pre-made dishes. ****Summary In the 1970s, the concept of cold chain had not yet emerged, and freezing and refrigeration technologies were just being popularized. During this period, China first introduced spiral quick-freezing devices, marking the beginning of the quick-frozen industry's embryonic stage; In the 1980s, China independently developed fluidized bed quick-freezing devices and plate freezers, achieving a breakthrough from 0 to 1 in quick-freezing technology; Since the 1990s, domestic local quick-frozen enterprises have been established one after another, and China's quick-frozen industry entered the introduction period. In addition to Sanquan Food and Synear Food, Kedi Food, Anjing Food, and Haixin Food also entered the market, and quick-frozen dumplings and tangyuan became common frozen foods in households. From 2010 to the present, the diversification of products, channels, and technology has pushed China's quick-frozen industry into a growth period. Hot pot, malatang, oden, and other catering categories are selling well, greatly increasing the demand for quick-frozen foods. CICC predicts that in the next 10 years, China's quick-frozen food industry will still be in a growth period, with an expected CAGR of about 10%. The target population is broad, and the quick-frozen food market is large enough. Whether it is large chain restaurants (large B-end), small restaurants (small B-end), or C-end users, all have higher demands for the development of the quick-frozen industry. Small B-end users are constrained by rent and labor costs, focusing more on cost-effectiveness and requiring cost reduction and efficiency improvement; large B-end customers require dish consistency and strict quality control, thus valuing stable quality and customization; while C-end users demand convenience, ease of operation, variety, and good taste. The battle between new and old brands continues, and behind the frozen food market, there are infinite possibilities. Are you 'watching' me?