After maintaining high growth for many years, Tao Li Bread began to show fatigue.
According to its 2020 annual report, Tao Li Bread ended the previous 8 consecutive years of double-digit growth in terms of revenue last year, and the growth rate fell back to single digits for the first time. After departing from the market growth and social security reductions and other policies brought about by the epidemic in the same period last year, the net profit of Tao Li Bread in the first quarter of 2021 fell by 16.27%. "Short-term performance is under pressure" and has become a "diagnosis certificate" issued by many institutions to Tao Li Bread.
In the eyes of the baking industry, the short-term bread track of Tao Li Bread is facing the squeeze of new and old opponents, and it is not easy to win the southern market smoothly. Among the old rivals, After the acquisition of Mancoton, Binbo formed a north-south encirclement trend for peach and plum bread; in the new opponents, Dali Food bet on the short-term insurance product "Mei Baking Chen", and the leisure food products such as Good Product Shop, Three Squirrels, Yanjin Shop, and Ma Dajie made efforts to bake; in recent years, the fast-growing convenience stores and tea channels have also launched their own baking brands. In the future, Tao Li Bread will expand into new markets and develop some products that meet local needs.
Core business growth slowed
On April 11, TaoLi Bread released the first quarter of 2021 performance express report, showing that its operating income was 1.327 billion yuan, an increase of 0.31% year-on-year; net profit was 163 million yuan, down 16.27% year-on-year.
Tao Li Bread explained that due to the impact of the epidemic in the same period of 2020, most peers and the catering industry did not resume business in time, and bread became the first choice of more people. In addition, due to the epidemic, the company enjoyed the national phased social security reduction policy in 2020, the promotion activities were reduced, and the return rate, discount rate and various costs and expenses were lower than in the current period.
It is worth noting that there is a certain discrepancy between the above statement of Taoli Bread and its performance in 2020. Although it has enjoyed the market and policy benefits brought about by the epidemic, taoli bread has only increased its revenue by 5.66% in the case of net profit growth of 29.19%, breaking the double-digit growth momentum maintained from 2012 to 2019.
According to the financial report, the bread and pastry business, which accounts for more than 90% of the revenue of Taoli bread, has a revenue of 5.837 billion yuan in 2020, an increase of only 5.6%. From 2017 to 2019, the revenue of the business increased by 23.49%, 18.08% and 16.89% respectively. While the growth rate slowed down, the business's operating costs increased by 22.65% in 2020, and the gross profit margin decreased by 9.75 percentage points; the inventory volume was 949969.8 kg, an increase of 102.62% year-on-year, reaching the highest value since 2017.
Huaxi Securities Research Report believes that the revenue of Taoli Bread in 2020 increased by 5.66%, which was greatly affected by the epidemic, on the one hand, the recovery of core traffic places such as schools was slower, and the repeated epidemic in the northeast of the base camp also inhibited consumer demand to a certain extent. With the commissioning of new production capacity and the improvement of the epidemic situation, it is expected that the revenue of peach and plum bread will maintain steady growth. From the perspective of profits, the phased social security reduction policy in the same period last year will no longer exist this year. On the other hand, the company still needs a period of resource investment to continue to develop strategic markets such as central and southern China, and short-term profits are under pressure.
A person close to the baking market of Tao Li Bread Company revealed to the Beijing News reporter that the reason why the revenue growth rate of Tao Li Bread slowed down in 2020 was mainly due to the impact of the epidemic, and the market did not basically recover until June last year, losing a better growth period, "Last year, the entire baking industry also declined, the more large chain stores or brands, the more weak the growth." In addition, private bakeries have appeared in some areas, pursuing the quality of on-site production, which has a certain impact on traditional baking brands. ”
According to the 2020 work summary report released by the China Baked Food Sugar Products Industry Association, due to the impact of the new crown pneumonia epidemic, the revenue of the baked food sugar products industry in the first quarter of last year fell by more than 40% year-on-year. Since the second half of 2020, the industry has gradually returned to normal, but it is still facing problems such as declining export orders, tight human resources, insufficient supply of raw materials, and rising operating costs.
The "expansion of Xinjiang" to the south was blocked
According to public information, Tao Li Bread, formerly known as Shenyang Tao Li Food Co., Ltd., was established in 1997, mainly engaged in bread and pastries, moon cakes, rice dumplings and so on. It adopts the "central factory + wholesale" model for production and sales, and is a national bread brand operating across regions.
According to the data of Zhiyan Consulting, the market size of China's bread industry in 2019 was 40.4 billion yuan, an increase of 6.6% year-on-year. Due to the acceleration of the pace of life, consumers' consumption of bread is also getting faster and faster, and the shortening of the overall consumption cycle and the improvement of taste requirements have prompted the development of bread to short-shelf life products.
Zhong Tao, general manager of Zhejiang Zixi Bread Co., Ltd., believes that in the fastest growing years after the listing of Taoli Bread, the shelf life of the product is getting shorter and shorter, and most of the products have a shelf life of 5 days and 7 days, which can compete with some bread products in chain baking stores. In addition, the service and ordering channels of Tao Li Bread are relatively perfect, and many dealers will choose to cooperate with Tao Li Bread for convenience.
Under the brand influence created by the "cost performance" strategy and the high added value brought by the "central factory + wholesale" business model, Taoli Bread has continued to grow since its listing in 2015, and at the same time increased the development of the national market. By the end of 2020, Taoli Bread has established more than 290,000 retail terminals in the national market, but the northeast base camp still occupies nearly half of the company's revenue share.
In 2018, Tao Li Bread began to "go south" to increase the development of new markets in East China, South China, Northwest China, etc., but the operating costs also rose in the same period, of which the operating costs in South China rose by 70.72%. In 2019, the net profit of Taoli Bread increased by 6.42%, the lowest increase in nearly 9 years. For the company's net profit growth rate in 2019 is lower than the growth rate of operating income, Taoli Bread has explained in the performance express report that the main reason is to increase the cost investment in the newly developed market.
According to the financial report, Tao li bread will continue to increase efforts to expand new markets such as East China and South China in 2020, increase investment in key customers, improve the quality of single stores, and accelerate the refinement and sinking of sales networks in mature markets such as Northeast China and North China. However, the operating cost of peach and plum bread in all regions of the country has increased, of which the costs of East China, South China and Central China have increased by 28.13%, 37.31% and 643.49% respectively. Among the 37 subsidiaries of Tao Li Bread nationwide, 17 of them have lost money, and the 7 subsidiaries with losses of more than 5 million yuan are Shenzhen Tao Li, Jiangsu Tao Li, Shanghai Tao Li, Nanchang Tao Li, Xiamen Tao Li, Hainan Tao Li and Fuzhou Tao Li.
In November 2020, the board of directors of Taoli Bread passed the cancellation of its wholly-owned subsidiaries Nanchang Taoli and Jinan Taoli on the grounds of "optimizing resource allocation and asset structure, reducing management costs, and improving operational management efficiency". As of the end of 2020, Nanchang Taoli lost 6.2708 million yuan, and Jinan Taoli lost 1.116 million yuan.
Zhang Ji, chief consultant of Shanghai Zhihui Marketing Consulting Co., Ltd., believes that the product attributes of short-term bread determine that Taoli Bread adopts the asset-heavy model of "base + market", which also means that the initial investment is large, and it is difficult to make a profit in emerging markets for a short time.
Competition in the bread market has intensified
In the view of Ms. Wang, the head of a chain of baking enterprises, with the intensification of competition in baking brands and channels, it is still difficult for Tao li bread to successfully win the national market.
"The main customer group of Taoli bread is in the supermarket channel, and the supermarket consumers pay more attention to the cost performance, and the bread is mostly used for the family breakfast." But now many young people buy bread in convenience stores, bakeries and even tea shops, and order takeout to eat bread and rarely place orders from supermarkets. Ms. Wang believes that in addition to the impact of lifestyle changes on the supermarket channel, private brands or exclusive brands similar to Hema and convenience stores are also increasing, and the speed of product updates is also getting faster, and Taoli bread is not the only choice for these channels.
According to the "2019 China Convenience Store Development Report" released by the China Chain Store and Franchise Association, the proportion of domestic convenience store enterprises with their own brands in 2018 was 90%, and baking and fresh food have become the direction of many convenience store own brands. According to Zhong Tao's observation, in recent years, many convenience stores are making short-term bread, and put products in more conspicuous areas of the store, convenience stores with certain channel control and bargaining power are more inclined to other high-margin brands or private brands.
The Beijing News reporter recently visited the Beijing market and found that in addition to peach and plum, Le Jin Ji and Bruno, the bread brands that facilitate the sale of bees have also launched their own baking brands. Lawson Convenience Store has also launched its own brand "Lawson Baking", which covers sliced bread, shortening bread, puff bread, pineapple buns and other types. In chain supermarkets such as Yonghui Supermarket, self-baking areas and products are not uncommon.
Convenient Bee launched its own brand bread products / Convenience Bee WeChat Mini Program screenshot
Wen Zhihong, a chain management expert at Hejun Consulting, believes that bread is a high-frequency consumer product, with relatively high gross profit and strong "convenience" attributes, so many large-scale convenience store chain systems incorporate bread categories into their own brands and commodity strategy systems. The rise of convenience store channels and the launch of private brands will form a certain competitive pressure on similar products in traditional supermarket channels.
The supermarket has its own baking area
In the traditional supermarket channel, Tao Li Bread also faces direct competition from similar products such as Bimbo, Manhattan, and Mei Baking. In 2018, the Bimbo Group completed the acquisition of Mancoton, forming a siege of peach and plum bread in the north and south markets. In the same year, Dali Foods also launched the short-term bread brand "Mei Baking Chen", hoping to get a share of the more than 40 billion bread market.
In addition to traditional baking brands, snack foods such as Three Squirrels, Good Shop, Ma Dajie, and Yanjin Shop have also launched their own baking products, which have also squeezed out market share to a certain extent. According to the financial report, leisure baking dim sum (including potato chips) products have become the largest source of income for Yanjin Shop, and the proportion of revenue has increased from 19.46% in 2018 to 34.75% in 2020.
Ma Dajie baking products
The above-mentioned bakery market participants close to peach and plum bread believe that in the future, peach and plum bread will develop some products that meet local needs to expand new markets. Southern consumers prefer internet red products, and heytea, Naixue and other internet red tea shops have launched their own baking products, coupled with the happiness cake, Maxim's group and other baking chain brands are more recognized by local consumers, "peach and plum bread may not be able to compete." In addition, from the perspective of channels, the product update speed of many convenience stores is faster, and the factory model similar to Taoli Bread may take a relatively long time from project establishment, production to listing, "a bit of a tail can not be dropped" .
In response to the above problems, the Beijing News reporter contacted Tao Li Bread by phone on April 14, and its marketing department staff suggested contacting the secretary office of the board of directors, and the secretary office of the board of directors requested that the outline of the interview be sent to the designated mailbox, but as of press time, there was no response.
Beijing News reporter Guo Tie photography Guo Tie
Edited by Zhu Fenglan Proofreader Liu Jun
Source: Beijing News