Click the image above for details Xiangpiaopiao is now selling both drinks and food. Xiangpiaopiao is now selling both drinks and food. Recently, Tianyancha showed that Xiangpiaopiao has added multiple "light meal" trademark registrations, including categories such as convenience foods, beer, and beverages. In fact, due to significant seasonal cyclicality, Xiangpiaopiao, which built its business on milk tea, has seen fluctuating performance. Industry insiders believe that Xiangpiaopiao's product line is singular, and long-term reliance on its existing model may make it difficult to achieve new successes. However, Xiangpiaopiao's leap from milk tea directly into the unfamiliar light meal market is unlikely to show immediate results. In the long run, the light meal market has a low ceiling and weak product differentiation, making it difficult to form a lasting moat. **-01- Registering "Light Meal" Trademarks According to Tianyancha, Xiangpiaopiao Food Co., Ltd. has added multiple trademark registrations, including "Xiangpiaopiao One Meal Light Food," with an application date of July 3, 2020, and a status of "awaiting substantive examination." In fact, in April of this year, Xiangpiaopiao revealed that "in 2020, it will further venture into light meal meal replacement and other broad brewing areas, creating new performance growth points by expanding categories." Regarding Xiangpiaopiao's future product development plans, a relevant person in charge told a Beijing Business Today reporter that in 2020, while focusing on the milk tea industry, the company will also continuously innovate product categories and attempt to explore products beyond milk tea. However, Xiangpiaopiao did not mention specific plans for light meal meal replacement products. The China Restaurant Report (White Paper) released by Meituan-Dianping Research Institute points out that the catering industry is currently facing an important node of consumption upgrade. The post-80s and post-90s population exceeds 400 million, accounting for nearly one-third of the national population, and they are the main force in catering consumption. These young groups pay more attention to health, taste, efficiency, and appearance, and light meals and simple meals are increasingly favored. "As people's requirements for health and body shape gradually increase, the accompanying 'weight loss' demand has also driven the development of the light meal market," said an industry insider. According to Tianyancha, there are currently more than 5,700 enterprises in China with "light meal" in their names, of which about 78.8% of new light meal enterprises were established after 2018. In the first half of 2020 alone, more than 900 light meal enterprises were established in China. Lai Yang, executive vice president of the Beijing Business Economics Association, said that in the past two years, light meals have received enthusiastic attention and discussion. The light meal market in China is still in its infancy with huge development prospects. Although no true giant brand has emerged, as long as enterprises operate with care and continuously improve their business models, the future development space and potential are still significant. -02- Declining Trend Becomes More Apparent Behind the hope of finding new performance growth points by entering the light meal meal replacement field is the weakening of Xiangpiaopiao's growth momentum. Data shows that in the first quarter of this year, Xiangpiaopiao's revenue was 430 million yuan, a year-on-year decrease of 48.61%; net profit after deducting non-recurring gains and losses was a loss of 88.9484 million yuan, a decline of as much as 279.13%. In response, Xiangpiaopiao explained that the early Chinese New Year timing, the sudden epidemic leading to production and shipment not meeting expectations after the holiday, and the repeated postponement of school openings resulting in fewer channel placements and sales for ready-to-drink products were the main culprits for the loss. It stated that "it has actively taken various measures, and channel sales have returned to normal levels." It is worth noting that despite being similarly affected by the epidemic, Xiangpiaopiao ranked last among six listed soft drink companies. Data shows that in the first quarter of 2020, Yangyuan Zhiyin, ranked first, had a net profit of 526 million yuan, while Xiangpiaopiao's net profit was -85.57 million yuan. In fact, Xiangpiaopiao's declining performance has long been evident. In the first half of 2017, Xiangpiaopiao lost 31 million yuan; in the first half of 2018, it lost 55 million yuan. In 2019, although Xiangpiaopiao turned losses into profits, its net profit after deducting non-recurring gains and losses was only 22,800 yuan. Since the beginning of this year, Xiangpiaopiao has experienced a series of issues, including four senior executives resigning within 35 days, the board secretary reducing holdings and cashing out before resignation, and family members pledging equity, which have attracted the attention of investors and the industry. Earlier this year, Gou Zhenhai, director, board secretary, and deputy general manager, and Cai Jianfeng, director and deputy general manager, resigned one after another. According to Wind data, Gou Zhenhai reduced his holdings and cashed out twice before resigning; Cai Jianfeng is the largest shareholder outside the Jiang Jianqi family, the actual controller of Xiangpiaopiao. In addition, the equity pledges of the actual controller's family have also drawn market attention. Data shows that Jiang Xiaoying, daughter of Jiang Jianqi and Lu Jiahua, pledged all her shares; at the same time, Jiang Jianbin, Jiang Jianqi's younger brother and the second largest shareholder, pledged a cumulative 12.64 million shares, accounting for 35.11% of his holdings. Economist Song Qinghui said that Xiangpiaopiao's overall development in recent years has not been very smooth. Although there has been some recovery, the quality of performance growth is not high. The concentrated resignation of senior executives may indicate a lack of confidence in the company's medium- and long-term development. -03- Success and Failure Both Stem from Milk Tea The "national milk tea" Xiangpiaopiao, whose cups could circle the earth N times, went public relying on a cup of milk tea, but is also "confined" by that cup of milk tea. In 2017, Xiangpiaopiao successfully listed, becoming the "first milk tea stock." However, milk tea products have obvious seasonal issues. In 2017-2018, Xiangpiaopiao suffered losses in the first half of the year, but due to hot sales of milk tea, it achieved profitability in the second half. Data shows that in the first half of 2017, Xiangpiaopiao lost 31 million yuan, and in the first half of 2018, it lost 55 million yuan. In fact, to avoid product singularity and alleviate seasonal issues, Xiangpiaopiao has also been actively launching new products. It is understood that in April 2017, Xiangpiaopiao launched two aseptically filled liquid milk tea products, "MECO" milk tea and "Lan Fong Yuen" silk stocking milk tea, entering the liquid milk tea market; in July 2018, Xiangpiaopiao launched a new-style tea drink, "MECO Migu" fruit tea. Xiangpiaopiao intended to change its declining trend through product development, and its performance improved somewhat. Data shows that in 2019, the company achieved cumulative revenue of 3.978 billion yuan, a significant increase of 727 million yuan from 2018, up 22.36%; net profit was 347 million yuan, a year-on-year increase of 10.39%. However, Xiangpiaopiao also stepped out of its familiar instant brewing track and entered the "new tea drink" circle, which has a completely different upstream and downstream industry chain and more intense competition. From the age structure of consumer groups, young people prefer new-style freshly made tea drinks. Data shows that post-90s consumers account for 50% of the new-style freshly made tea drink consumer group, and post-80s account for 37%. Public data shows that since 2018, there have been nearly 20 financing rounds for new-style tea drinks, with financing amounts often reaching hundreds of millions of yuan. Among them, Heytea received 100 million yuan in Series A financing from IDG and China Renaissance Capital, and 400 million yuan in Series B financing from Longzhu Capital and Heiyi Capital, with its valuation soaring to 9 billion yuan. Industry insiders said that domestic fruit tea consumers are mainly young people, while Xiangpiaopiao's main sales channel is traditional offline distributors, which is not advantageous in reaching young consumer groups. Song Qinghui said that for a long time, Xiangpiaopiao's main source of income has been cup-packed solid instant milk tea, but companies that rely on hit products are prone to path dependence. Therefore, Xiangpiaopiao needs to find a second growth curve while holding its main position. However, since Xiangpiaopiao has never ventured into the light meal field, it remains to be seen whether it can successfully break out of the milk tea boundary in the future. Source: Beijing Business Today, Authors: Qian Yu, Wang Xiao