Recently, Uni-President China Holdings (hereafter 'Uni-President China') released its H1 2022 financial results. During the reporting period, Uni-President China's revenue reached RMB 13.9 billion, up 7.2% year-on-year; the group's gross margin was 30.1%, down 4.7 percentage points year-on-year. Net profit was RMB 614 million, a decrease of RMB 232 million compared to the same period last year. Revenue growth was mainly driven by the food segment, with food revenue of RMB 5.4 billion, up 14% year-on-year, largely due to the strong growth momentum brought by innovative products in the instant noodle business during the pandemic. Among them, apart from the stable double-digit growth of 'Tang Daren', the 'Qie Huang' product achieved multiple-fold growth compared to the same period, showing considerable product potential for the future. In addition, the beverage segment maintained steady growth, with H1 revenue reaching RMB 8.2 billion, up 4.9% year-on-year. Among them, juice performed well, with Kumquat Lemon and Green Plum Green Tea showing promising momentum in both immediate consumption and foodservice channels. 'Uni-Fresh Kumquat Lemon' grew several-fold compared to the same period last year. From the overall situation shown in the H1 financial report, although profits declined due to the pandemic and rising raw material costs, with the arrival of the peak sales season in H2 and the gradual easing of pandemic impact, Uni-President is expected to offset the cost pressure in H1 and recover profits in H2. Next, let's take a closer look at the actual performance of Uni-President's various segments in H1 and the outlook for H2 from multiple dimensions. 01 The trend of premiumization in instant noodles remains unchanged; the potential of Chinese cuisine market emerges In H1, the pandemic broke out in multiple places, leading some consumers to stay at home, increasing the demand for convenience foods. At the same time, rising raw material and cost pressures reduced the profit margins of instant noodles. In this context, Uni-President resisted cost pressures and did not raise prices, which is also one reason for the decline in profits compared to the same period. In this regard, Uni-President stated that even if the macro environment is uncertain, the company will not raise prices due to temporary price fluctuations. Focusing on consumers' emotional healing and providing safe, delicious, and healthy quality products remains Uni-President's unchanged tenet. Despite cost pressures, the instant noodle business showed strong momentum in Q2, highlighting considerable product strength: Tang Daren launched the 'Big Big Cup' series to meet the needs of large-portion consumers, extending product usage scenarios; Uni-President's Laotan Sauerkraut continued to open factory visits for thousands of people, and jointly with industry Laotan sauerkraut producers, applied to the Chinese Institute of Food Science and Technology to establish a group standard for 'Technical Specification for Production Quality and Safety Control and Management of Laotan Sauerkraut'; Uni-President Qie Huang focused on key markets, using digital tools such as live streaming and mini-program game interactions to build private domain operations and enhance brand mindshare; Tengjiao strengthened the fresh and spicy flavor characteristics for Generation Z, using street dance favored by young people to interpret the rhythm and excitement; Manhan Dacan used the experience of high-end private chefs to further create the cultural texture and ritual of artisan products. In addition, in other food categories, Kaixiaozao, Najie Naxiang, Leshan Red Oil Bobo Chicken and other diversified Chinese cuisines flourished across the board. The Kaixiaozao series, including small wontons, self-heating rice, and self-heating hot pot, fully meet consumers' three meals a day; Najie Naxiang and Leshan Red Oil Bobo Chicken are only sold on e-commerce, but they made a strong debut upon launch, with positive consumer feedback. Najie Naxiang's signature product, Lanzhou Beef Noodles, achieved double-digit growth compared to last year; Leshan Red Oil Bobo Chicken has attracted much attention since its launch in March this year, becoming the only food product in the 'Tmall New Product Trend TOP 100'. From the product structure and layout of the food segment, it can be seen that under the current consumption trends, Uni-President is committed to the premiumization of instant noodles, further strengthening the concept of 'life noodles' and enhancing consumer product experience. At the same time, it is committed to promoting traditional Chinese culinary culture, bringing national flavors to thousands of households in a more convenient, healthy, and safe way through modern technology, providing consumers with quality product experiences while incorporating the value of 'emotional satisfaction' into the brand philosophy. 02 Beverages progress steadily; optimizing product matrix to match multiple channels In the beverage segment, tea beverage revenue was RMB 3.6 billion, up 4.9% year-on-year. Among them, Green Plum Green Tea performed well, with revenue nearly doubling compared to last year, becoming the growth engine for the tea business. Uni-President Green Tea and Uni-President Black Tea are positioned for new youth and Generation Z, respectively, engaging with young people, building emotional interaction and resonance, and continuously delivering brand value; Xiaoming Tongxue still closely follows the collective identity of 'classmates', deepening category awareness and brand image; Chaliwang goes deeper into the dissemination and creation of tea culture, establishing connections with consumers through the professional image of tea experts, committed to making good tea with heart and achieving the taste of freshly brewed original leaf tea. The juice segment performed outstandingly, with H1 revenue of RMB 1.4 billion, up 25.7% year-on-year. Among them, 'Uni-Fresh Kumquat Lemon' focused on the core appeal of 'sour and sweet, more distinctive', achieving revenue growth of several-fold compared to the same period last year. The sustained high growth of juice is inseparable from Uni-President's key investment and channel layout. Based on optimism and continued efforts in the juice market, Uni-President seizes opportunities, using precise marketing strategies that match different products to different scenarios, actively trying to expand its share of the juice market. This includes increased investment in foodservice, home, and gift box scenarios, matching different flavors with different specifications and scenarios to meet consumers' needs for healthy juice anytime, anywhere. The milk tea segment revenue was RMB 2.9 billion. Among them, Assam Milk Tea, as a leading brand in the milk tea category, has maintained double-digit revenue growth over the past five years. In addition, Buno Milk Tea, launched for white-collar workers and college students, has been steadily promoted in first- and second-tier cities and channels such as Douyin and Weibo/WeChat through differentiated quality and taste, with positive feedback. In addition to the above tea, juice, and milk tea categories, coffee and packaged water also had noteworthy points. Yaha Iced Coffee continues to focus on providing vitality to urban blue-collar and white-collar workers and young and middle-aged people, based on base cities, steadily expanding the core market. Aqua Spring Natural Mineral Water adjusted its product layout, launching 1.5L and 360ml 8-pack products on e-commerce, O2O platforms, community supermarkets, and other channels to meet consumption needs in different scenarios such as large packages and family purchases. It is worth mentioning that in the packaged water category, Uni-President is testing the waters in the segmented boiled water field, launching Uni-President Boiled Water in July, gearing up in this niche track. 03 H2 Outlook: Consolidate the core business and seek new opportunities For the healthy development of the market, Uni-President has done many seemingly 'unconventional' things, such as 'withdrawing from the instant noodle market' and implementing 'zero inventory', behind which is Uni-President's adherence to the belief in 'value marketing'. When Xiaoming Tongxue and Hai Zhi Yan were developing rapidly, Uni-President's management firmly carried out self-reform according to the 'value marketing' strategy, promptly preventing channel-side aggressive development driven by performance; when the company faced cost pressures and profit damage, Uni-President firmly stood on the side of consumers and employees, not raising prices, not cutting salaries, not laying off employees, putting consumer emotional experience first, and transforming employees into community group leaders to realize value. All actions are guided by 'value marketing', enabling Uni-President to maintain organizational vitality and operational stability. In the face of uncertain external environmental changes, a stable core allows Uni-President to work together, stabilize the basic market, and explore more new opportunities oriented by 'value marketing'. Looking ahead to H2 2022, opportunities and challenges coexist. Uni-President stated that it will continue to use healthy, safe, and delicious products to establish emotional connections with consumers. Product innovation in the new era requires both innovation and 'heartfelt creation', not only innovation in taste, packaging, and ingredients, but also innovation in scenarios, technology, and experience. In addition, H2 also ushers in the peak season for food and beverages. Uni-President stated that it will continue to increase channel resource investment, combine precise marketing ideas for different products and scenarios, expand the market base, and explore new market opportunities. For FMCG practitioners, H2 is about rolling up sleeves and working hard! We also look forward to Uni-President's performance in H2.