After experiencing high growth in the past three years, the growth rate of the consumer market of quick-frozen noodles and rice products has slowed down. According to the 2023 annual report released not long ago, among the 8 quick-frozen food companies, 5 ushered in a double increase in revenue and net profit; Sanquan Foods, a leading enterprise of quick-frozen noodles and rice products, ushered in the first decline in revenue after listing, and the revenue growth of quick-frozen noodles and rice products of Anjing Foods was at the bottom of the company's four major quick-frozen products. The contribution of traditional supermarkets to the revenue of quick-frozen food enterprises has gradually declined, and the trend of channel fragmentation and diversion has become more and more obvious.
Despite the "prefabricated food entering the campus" incident in 2023, the enthusiasm of quick-frozen food companies to lay out the prefabricated food industry has not faded, and the prefabricated food products have also continued to grow at a high rate. Yasui Foods mentioned in its annual report that it should not be "beaten to death with a stick" for pre-made dishes. Babi Foods also said in a recent survey with investors that the State Administration for Market Regulation and other six departments issued the "Notice on Strengthening the Food Safety Supervision of Prefabricated Dishes and Promoting the High-quality Development of the Industry" and other policy changes, which strengthened the company's determination to enter the field of prefabricated dishes, and is a positive signal for listed companies that pay attention to brand quality.
The growth rate of quick-frozen noodles and rice products slowed down
In 2023, revenue will decrease by 5.09% to 7.056 billion yuan, net profit will decrease by 6.55% to 749 million yuan, and Sanquan Foods, a leader in quick-frozen noodles and rice products, will usher in the first decline in revenue since its listing in 2008. Among its main products, quick-frozen noodles and rice products, glutinous rice balls, dumplings and zongzi products achieved revenue of 3.689 billion yuan, a year-on-year decrease of 15.74%.
Sanquan Foods explained in its annual report that during the reporting period, the consumer side showed a weak recovery trend, especially in the fourth quarter of 2023, the competition of dumpling products was fierce, and the sales of stuffed products such as dumplings had a certain correlation with pork prices.
The same problem is reflected in the annual report of Yasui Foods. Affected by the market environment such as the decrease in customer flow in supermarkets and the closure of some stores, the revenue of its quick-frozen noodles and rice products will increase by 5.4% to 2.545 billion yuan in 2023, which is much lower than that of quick-frozen dish products (29.84%), quick-frozen surimi products (11.76%), and quick-frozen meat products (10.22%), ranking at the bottom of the company's four major quick-frozen products. Haixin Food's quick-frozen noodles and rice products will achieve a revenue of 17.8872 million yuan in 2023, a year-on-year decrease of 48.38%.
Mr. Pan, the sales director of a large quick-frozen noodle rice company, also confirmed to the Beijing News reporter that the sales of quick-frozen noodle rice products will rebound worse than imagined in 2023, and even in the peak season, it has not returned to the level of the same period in previous years.
According to Mr. Liu, the person in charge of a large supermarket, the overall sales of quick-frozen noodles and rice food will not be prosperous in 2023, especially in May and June. The main measures taken by the store are to organize procurement and negotiation with manufacturers to reduce the purchase price and selling price.
Qianwei Central Kitchen said frankly in the annual report that with the emergence of the chain trend of the catering industry in the mainland, more and more catering companies control quality, improve meal efficiency, and reduce costs through unified procurement of semi-finished products, so the catering B-end (enterprise end) market has become an important engine for the expansion of the market scale of quick-frozen noodles and rice products. In 2023, the catering end of the quick-frozen industry will show a slow recovery trend, and the restaurant chain will be stronger than the small restaurant; The quick-frozen C-end (consumer side) is slightly weak, and multiple channels are diverted from each other, and the trend is expected to continue.
Fragmentation of channels
One of the manifestations of the channel diversion mentioned by Qianwei Central Kitchen is that the revenue contribution of supermarket channels to quick-frozen food companies continues to decline.
In 2023, Sanquan Foods' revenue from the "retail and innovation market" fell by 9.58% to RMB5.626 billion, while the "catering market" seized the recovery opportunities of group meals, village kitchens, and banquets, with revenue increasing by 17.93% to RMB1.43 billion. The revenue of Anjing food supermarket channel decreased by 13.42% year-on-year, and the operating income of dealers, Tetong direct sales and e-commerce channels increased by 15.96%, 28.88% and 145.92% respectively. The revenue of Huifa Food's supermarket model increased by 2.62%, and the revenue of the distributor model, terminal direct sales model and supply chain model all achieved double-digit growth. Wufangzhai supermarket channel revenue decreased by 15.18%, chain stores, dealer channels, and e-commerce revenue increased by 26.68%, 10.89%, and 8.13% respectively.
Yasui Foods said in its annual report that in 2023, while the FMCG market, including quick-frozen food, will continue to recover moderately, channel differentiation and fragmentation will become more and more obvious.
Zhou Mingnan, the person in charge of Dingdong frozen pastry, said in an interview with a reporter from the Beijing News that due to changes in consumers' purchasing minds, the sales of quick-frozen noodles and rice food in 2023 will decline compared with 2022, but the demand is still at a high level, but the market structure has changed. Since 2020, the share of quick-frozen noodles and rice brand products on major platforms has declined, and the proportion of channel-owned brands has increased, which is also one of the reasons why it is difficult to do in the brand product market in 2023.
Zhou Mingnan further analyzed that major manufacturers usually hope to use the same products to meet the needs of different channels, and keep the sales scale and production line fixed. Once the rules are broken, it is easy to cause unsalable products, and price wars between brands and channels also cause low gross profit problems. In contrast, channel-owned brands can understand consumer pain points more quickly, improve ingredients, and optimize processes. At present, some brands have a close relationship with the platform and have begun to do platform customization, co-branding, and OEM products.
Since 2023, Anjing Food has started from the enterprise-end channel, selected high-end vegetable farms, fresh supermarkets and high-consumption stores, and formed a demonstration effect through breakthroughs in characteristic products, thereby driving the entire category. On the basis of consolidating the original sales channels, Huifa Food has also increased its investment in group meal channels, prefabricated food research, production and marketing, and healthy food supply chain services, and the sales scale has grown steadily. In a recent survey by investors, Sanquan Foods said that the company will follow the development trend of channel fragmentation, gradually increase the sales proportion of new business channels, and optimize the channel structure.
Continue to increase the number of pre-made dishes
In addition to opening up new channels, expanding new categories has also become the main strategy for quick-frozen food companies to maintain performance growth, and prefabricated dishes have appeared in the annual reports of quick-frozen food companies for three consecutive years.
As early as 2018, Yasui Foods began to lay out the prefabricated food category; In the second quarter of 2022, the "Anjing Kitchen" division was established, focusing on B-end conditioning dishes; Integrate upstream small and medium-sized food ingredients manufacturers with an asset-light operation model, and OEM the production of consumer-oriented dishes for the wholly-owned subsidiary "Mr. Frozen Food"; Through the acquisition of Xinhongye Food Co., Ltd. and Hubei Xinliuwu Food Group Co., Ltd., the rapid layout of upstream raw materials freshwater surimi industry and quick-frozen seasoned crayfish dish products. In 2023, the revenue of Anjing Food's quick-frozen dish products will be 3.927 billion yuan, a year-on-year increase of 29.84%. After the consolidation, Xinliuwu also contributed to the growth of the company's quick-frozen food products revenue and net profit.
Bet on the prefabricated food business, as well as Haixin Food, Huifa Food, Qianwei Central Kitchen, and Babi Food. In 2023, Haixin Food's "Aquatic Products Deep Processing and Quick-frozen Dish Products Project" will raise funds in place, acquire Dongou Food's layout of high-end aquatic prefabricated dishes, and the revenue of quick-frozen dish products will increase by 84.47% to 300 million yuan. Huifa Food has formulated a city-specific prefabricated food industry development plan, and reached a cooperation with the People's Government of Linxia Prefecture, Gansu Province, to jointly build a production and supply base for ethnic specialty foods and a gastronomy industry cluster; The establishment of Shandong Food (Prefabricated Food) Industry Sub-center, the revenue of Chinese cuisine in 2023 increased by 23.95% to 221 million yuan.
As a supply chain enterprise, Qianwei Central Kitchen will focus on the prefabricated food business in 2023, and do customized and personalized development around B-end customers, banquet scenes, and group meal needs, and the company's food product revenue increased by 38.63% to 295 million yuan. In 2023, Babi Foods plans more than 100 prefabricated food products, and has launched 11 products based on semi-finished dishes, which will be promoted through the existing food supply chain network, customized development for small restaurant chain customers, and the accumulation of consumer channels.
Judging from the above-mentioned investment layout, the "prefabricated dishes into campus" incident that will occur in 2023 and the new regulations on prefabricated dishes issued by the six departments recently have not reduced the enthusiasm of quick-frozen food companies to deploy prefabricated dishes. In 2023, the central government's "No. 1 document" mentioned for the first time the cultivation and development of the prefabricated food industry. In March 2024, the State Administration for Market Regulation and other six departments issued the "Notice on Strengthening the Food Safety Supervision of Prefabricated Dishes and Promoting the High-quality Development of the Industry", which clarified the scope of prefabricated dishes at the national level for the first time, and defined the raw and auxiliary materials and preprocessing technology of prefabricated dishes.
Anjing Foods said in its annual report that the above policies will promote new development opportunities for the prefabricated food and even quick-frozen food industry. At present, the prefabricated food industry is still a small, weak and scattered market pattern, with "categories and no brands". The chaos in the industry revealed by the "prefabricated food entering the campus" incident in 2023 is more because of the rapid development of prefabricated food-related products in the early stage, and the regulations and standards have not yet been perfected, leaving an opportunity for a small number of businesses with weak compliance awareness and lack of awe, causing adverse effects, "Therefore, it is unreasonable to expand, demonize, and kill with a stick." From the perspective of the endgame, enterprises with comprehensive advantages in product research and development, channel promotion, brand operation, etc., will better adapt to market changes and have greater development potential.
Babi Foods also said in an investor survey on March 29, 2024 that the recently introduced new regulations on prefabricated dishes are conducive to promoting the standardized development of the industry and helping branded and high-quality prefabricated food enterprises compete fairly. The policy change has strengthened the company's determination to enter the field of prefabricated dishes, and can also help the company shield the influence of some low-cost competitors, which is a positive signal for listed companies that pay attention to brand quality.
Beijing News chief reporter Guo Tie
Edited by Li Yan
Proofread by Liu Baoqing
![Promise not to reduce holdings for 5 years? First calculate how much return this quick-frozen faucet has given to the capital market[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)