Source丨China Candy Previously, I learned that Toly Bread, known as the "first bread stock," disclosed in its 2024 financial report its first simultaneous decline in revenue and net profit since listing. Recently, this "bread king" also released its Q1 2025 financial report, which was equally unsatisfactory, if not worse. Toly Bread "Can't Sell" Reviewing Toly Bread's financial report, I found that Q1 2025 total operating revenue was 1.201 billion yuan, down 14.2% year-on-year; net profit attributable to shareholders was 84.0372 million yuan, down 27.07%. Meanwhile, gross margin was 21.97%, down 4.88 percentage points year-on-year; net margin was 7.0%, down 15.0 percentage points. (Q1 2025 report) This is not the first time Toly Bread has seen both revenue and net profit decline. In 2024, its revenue was 6.087 billion yuan, down 9.93% year-on-year; net profit was 522 million yuan, down 9.05%. Reviewing Toly Bread's financial reports over recent years, I further learned:
2021 revenue was 6.335 billion yuan, up 6.24% year-on-year, net profit 763 million yuan, down 13.54%;
2022 revenue was 6.686 billion yuan, up 5.54% year-on-year, net profit 640 million yuan, down 16.16%;
2023 revenue was 6.759 billion yuan, up 1.08% year-on-year, net profit 574 million yuan, down 10.29%.
Toly Bread has gone from increasing revenue without increasing profit, to declining revenue growth, to simultaneous declines in both revenue and net profit, with a trend of continuous decline. At the same time, Toly Bread's market share is also declining. According to Euromonitor 2023 data, although Toly Bread ranked first by sales volume that year, its market share was only about 12%. A research report released by Sichuan Securities shows that Toly Bread's current market share in the bread industry is only 7%. Speaking of Toly Bread, many people have likely used it as "breakfast." According to my understanding, Toly Bread's best-selling products include Chunshu whole wheat bread, which holds a 30% share of the whole wheat bread market. There is also yeast bread made with a unique fermentation process, with even texture and rich milk flavor. Bagel bread is also quite popular, with a whole wheat formula and chewy texture, making it a top choice for fitness enthusiasts and office workers. Toly's "central factory + wholesale" model for production and sales is also worth mentioning. It has set up central factories in 24 cities across the country for unified production, with the factory as the center, centralized logistics distribution to regional distributors, and finally wholesale to stores. The entire process is efficient and ensures a certain degree of freshness. "Previously, most of the bread section in our supermarket was Toly, but now there are all kinds of brands," a supermarket staff member in Hebei lamented to me. Times have changed, and with frequent distributor departures, Toly's market position is increasingly precarious. In 2024, Toly added 118 distributors, but 144 exited, with 56 in East China alone, while only 22 new ones entered. While Toly Bread faces its "midlife crisis," the baking market has not stopped moving forward. According to iiMedia Research data, the scale of China's bakery food industry exceeded 300 billion yuan in 2024, and is expected to reach 351.8 billion yuan in 2025. Who Occupies the Hundred-Billion Market? Unlike Toly Bread's decline, emerging brands like "a1 Snack Research Institute" and "Xiaobai Xinli Ruan" are thriving. Take "a1 Snack Research Institute" (hereinafter "a1") for example: 2018 egg yolk pastry, 2019 cloud cake, 2020 watermelon toast, 2021 milk shred bread, 2022 cat paw pudding cake, 2023 banana bread, 2024 peanut bread, cat toast... It's fair to say they produce a hit product every year. a1 Cloud Cake has won the International Taste Award's three-star medal multiple times; Watermelon Toast and Banana Bread won ITI International Taste Awards and domestic ISEE Taste Medals; fruit-type bread sales rank first... Behind these honors is a1's "original aspiration" and "innovation." "a1 has always been doing two things: one is R&D investment higher than the industry average; the other is rooting innovation into every employee's bones. Thus, we have the value of 'Innovation is life, we believe in being born different, and others' standards are just our baseline,'" said Zhong Shanliang, co-founder & CPO of a1, at a1's eighth anniversary celebration and new product launch. Bakery stores like Holiland and Donggengdao have taken away the "short-shelf-life" business. Also second-generation successors, but unlike Toly, Holiland's young masters have run Holiland better and better, making the old brand "Holiland" come alive again among young people. The "2024 China Bakery Brand Comprehensive Competitiveness Research Report" jointly released by the China Bakery Industry Association and iResearch pointed out that Holiland ranks first with over 6,000 stores nationwide and a 25.3% market share. "Where there is traffic, there is market." A senior distributor from Henan, Li Suxia, lamented in an interview with me. Holiland's young master Luo Cheng is a "veteran player" in leveraging traffic. On Douyin, he created a contrasting persona of "socially anxious, forced into the family business," showing off "wealth" while attracting attention with his funny-guy traits that contradict the domineering CEO image. As of the time of writing, he has gained 3.075 million followers and 41.237 million likes. In short videos, he cleverly incorporates company elements, such as making cakes himself, and uses the opportunity to launch the Black Swan series and various co-branded cake products, greatly increasing consumer attention. These popular freshly baked stores also have their own tactics. A newly opened "Red Star Forward Bread and Milk Company" in Shijiazhuang, Hebei, has had long queues every day since opening. According to China Candy, many people came to check it out after seeing popular posts on Xiaohongshu; Donggengdao, Baoshifu, and others regularly offer discount group-buy coupons to attract customers to their stores. (Offline photo) In addition to very effective marketing, freshly baked stores have product advantages such as baking on-site, high freshness, and rich variety, which are a significant impact on short-shelf-life bread like Toly Bread. Private labels have also entered the bread circle, such as convenience store own bakery brands like Lawson and 7-Eleven, which are convenient and trustworthy. These brands rely on the dense network of convenience stores, allowing consumers to buy "short-shelf-life" bread anytime, anywhere, for breakfast or afternoon tea. In terms of product control, they have strict standards from raw material selection to production processes. Popular items like Lawson's Ice Skin Mooncake Cake have accumulated good reputation, continuously eroding the market share of traditional bread brands. In contrast, Toly Bread itself has many problems, facing both internal and external troubles. Why Not Work Harder? The first issue is insufficient innovation momentum. Consumers are increasingly concerned about healthy eating, but Toly Bread seems stingy in R&D investment. In 2024, R&D expenses were only 22.9684 million yuan, accounting for 0.38% of total revenue, leading to slow product iteration and a lack of truly explosive new products in recent years. At the same time, food safety controversies are always present. Frequent product quality issues not only raise consumer concerns but also seriously damage the brand image. In today's market environment that values reputation and quality, food safety issues are undoubtedly a fatal blow to the brand's moat. Facing consecutive declines, Toly Bread has tried to make changes, with some innovations in products, channels, and production, but these "innovations" have not kept pace with the speed of market development and consumer demand changes, so overall revenue has not improved. More seriously, despite the company's regression, Toly Bread still insists on a large dividend strategy. In 2024, the company achieved net profit attributable to shareholders of 522 million yuan, but proposed to distribute a cash dividend of 10 yuan (including tax) per 10 shares to all shareholders, totaling 457 million yuan, with a dividend ratio as high as 87.55%. While large profit distribution can satisfy shareholders' short-term interests, it compresses the funds available for R&D, market expansion, and channel upgrades, making the company increasingly constrained in responding to market competition and weakening its development momentum. In such a predicament, if Toly Bread continues to lie flat, its outcome is predictable. If it wants to stabilize its industry position, it might learn from other companies and do the following well. The "2024 China Bakery Brand Comprehensive Competitiveness Research Report" jointly released by the China Bakery Industry Association and iResearch shows that in 2024, when consumers choose products, "ingredient health" (73%) and "personalized service" (65%) became the primary considerations. It is clear that on the product side, it must increase R&D investment, innovate around health, personalization, and diversification, and create differentiated new products; On the channel side, with traditional supermarkets closing down one after another, it is better to deeply deploy emerging channels and build an omni-channel sales network integrating online and offline; In brand building, rebuild consumer trust with strict quality control, convey a new brand image through precision marketing, and successfully integrate into the circle of young consumers like Generation Z; In strategic planning, reasonably adjust dividend policies and invest more resources into the company's long-term development.