"The price of bulk raw materials was rising last year. Everyone has been squatting for a year and can’t hold back this year." Over the past month, leading quick-frozen enterprises such as Anjing Food, Haixin Food, Sanquan Food and Qianweiyang Kitchen have intensively adjusted their distribution prices. Fang Qizhi, the head of a quick-frozen food enterprise in Southwest China, said one of the reasons. Several companies have reduced their promotion policies or raised their distribution prices, and the reasons also include the continuous increase in labor, transportation and energy costs.
According to quick-frozen industry insiders, the Beijing News reporter revealed that despite the pressure, the terminal price of quick-frozen food is hard to shake in a short time. On the one hand, the gross profit space of quick-frozen food is limited, and dealers and consumers are more sensitive to the price; On the other hand, in recent years, the quick-frozen food market has been "involuted" seriously, and the product price has gone down. It has entered an "infinite cycle" of declining purchasing power, low-price competition of brands, cost reduction by raw material substitution, product quality decline and customer loss, and the industry reshuffle is imminent.
Compared with the surge in demand for quick-frozen food brought by home epidemic prevention last year, the growth rate of quick-frozen food enterprises has dropped significantly this year. In order to cope with the industry dilemma, leading enterprises have diversified their investment layout, and some regional brands are also developing new snacks and new channels such as e-commerce, convenience stores and catering.
Some brands of quick-frozen products are selling at promotional prices.
Intensive price adjustment of quick-frozen enterprises
On December 1st, Qianweiyang Chef, the "first stock in the quick-frozen supply chain", issued a price adjustment announcement, saying that in view of the rising costs of raw materials, labor, transportation and energy, it was decided to reduce the product promotion policy of some quick-frozen rice and flour products or raise the distribution price, with the price adjustment range ranging from 2% to 10%. The new price will be implemented according to the price adjustment notice of each product from December 25th, 2021.
Also due to the rising cost, Anjing Food announced the price adjustment as early as November 1, reducing the promotion policies of some quick-frozen surimi products, quick-frozen dishes and quick-frozen rice and flour products or raising the distribution price, with the price adjustment ranging from 3% to 10%. Since then, Haixin Food and Sanquan Food have followed suit, and the reasons, scope and range of price adjustment are almost the same.
In addition to these listed companies, Miss Food BP Division recently issued a "Notice of Price Adjustment of Product Policy" to customers, claiming that the cost of enterprises has increased, and the promotion policies of some products have been appropriately reduced by about 5% since December 16. According to the Beijing News reporter’s verification, Missing Food has not adjusted the product distribution price yet.
The price adjustment range is difficult to offset the cost pressure.
In Fang Qizhi’s view, even if the distribution price is raised by 3%-10%, it is difficult to cover the cost pressure. According to his understanding, since the beginning of this year, the prices of raw materials such as edible oil, condiments, rice, meat, vegetables and food additives used in the production of quick-frozen foods have been rising. "The price of palm oil has doubled compared with previous years, sugar has increased by 50%, soy sauce has increased by 8%-10%, and flavors and fragrances have also increased. The price of pork has decreased compared with last year, but it is also at a relatively high level compared with previous years. "
At the same time, the labor cost of Fang Qizhi’s quick-frozen enterprise is also rising at a rate of 5%-8% per year. "Take the meal fee as an example. In the past, a meal cost 10 yuan. Now, if you want to maintain the same standard, the cost will increase by 20%-30%."
The increase in cost is reflected in the financial reports of several listed companies of frozen food. In the first half of 2021, raw materials, direct labor and manufacturing expenses in Sanquan Food increased by 6.71%, 15.79% and 18.86% respectively. Among them, the cost of raw materials accounts for the highest proportion of its operating costs, reaching 79.21%. Haixin Food lost 24,021,500 yuan in the first half of the year. Apart from the influence of channels and competition, its capacity utilization rate was insufficient, and the increase in unit manufacturing cost, material cost and labor cost further lowered its gross profit margin.
Anjing Food once mentioned in the semi-annual report in 2021 that in recent years, the cost of meat, minced fish, flour and cartons has increased, the freight per unit product has increased, and the wages of employees have risen rigidly, which has led to the increasing operating costs of enterprises. Although the company has controlled the cost increase through a series of efficiency measures, it can’t completely offset the pressure brought by inflation on the efficiency of enterprises.
The terminal price is still difficult to shake.
Based on comprehensive accounting, the overall cost of Fang Qizhi’s quick-frozen enterprise has increased by 20%-30% this year, but he bluntly dares not adjust the price, mainly because the market is "involuted", product prices are lower and business is not good.
In southwest China, Fang Qizhi’s frozen food enterprise has a certain scale, which can compete with national industry giants. "Although the brand value of the giants is greater than ours, there was no market conflict between us before, but now there is a conflict, because their prices are cheaper than ours when raw materials are rising."
Fang Qizhi said frankly that quick-frozen foods are "mass goods", and the gross profit space is relatively small. Dealers and consumers are more sensitive to prices, so it is not easy to adjust the price at the terminal. "Every brand has a price anchor, that is, the price range recognized by consumers. For example, consumers recognize that the price of your dumplings is 10 yuan. Once you sell one or two yuan more, consumers will turn to other brands. "
The relevant person in charge of a quick-frozen noodle rice food enterprise in Henan also confirmed to the Beijing News reporter that from the perspective of the national market, the brands of quick-frozen dumplings are mainly Sanquan, Missing and Wanchai Wharf. Due to the concentration of brands and the serious homogenization of products, once the price adjustment of a single brand is more obvious at the terminal, consumers are likely to turn to other low-priced brands.
On December 8, the Beijing News reporter visited some supermarkets in Beijing and found that the price increase of frozen products of various brands is not obvious at present, and some products have also made promotional prices. For example, in the Souxiu City store of Yonghui Supermarket, the price of Miss 1000g family-packed quick-frozen dumplings is only 11.9 yuan/bag, and the promotional price of Sanquan champion tomato beef, beef green onion and three fresh dumplings is 12.9 yuan/bag. In Shuntianfu Supermarket, Sanquan Dumplings will play a 20% discount promotion.
The trace of price increase of quick-frozen products is not obvious.
Mr. Li, the manager of a supermarket store, told the Beijing News reporter that he has not received the price adjustment letter from the quick-frozen food company. "The brand wants to raise the price, and our purchasing department will stabilize the price, either by changing manufacturers or brands, or by holding down the price through negotiations. Therefore, it is very difficult for the terminal to raise the price, and the price increase is also a few products that sell slowly, such as abalone flavor and lobster flavor, which will increase by one or two yuan. But whenever it sells fast, the people are used to it, and the price will suddenly rise, which will be very sensitive. "
Judging from the announcements of several quick-frozen listed companies, most of them adjust the distribution price and promotion policy, without mentioning the terminal price, but some enterprises have suggested risks to the possible effects of price adjustment. Both Anjing Food and Sanquan Food reminded in the announcement of price adjustment that this price adjustment may have a certain impact on market sales, and the impact on the company’s future performance is uncertain. Haixin Food also said that adjusting the product sales price will help improve the company’s profitability, but there is uncertainty about the impact on product sales and the duration of new sales price, and there is a risk that product prices will continue to fluctuate.
Industry reshuffle accelerated
In the case that the terminal price is still difficult to shake, Fang Qizhi believes that the brand price adjustment compresses the dealer’s gross profit. "Now the dealers are generally in a bad mood and the goods are not easy to sell. They are all compressing costs and looking for increments." For brands, the main way to reduce costs is to coordinate with suppliers to reduce the price increase, and the other way is to substitute raw materials, but this will undoubtedly reduce the quality of products and ultimately affect sales.
According to him, at present, some quick-frozen food enterprises will replace pork with chicken to reduce costs and maintain low terminal prices. "Consumers who recognize quality can eat it, so some brands maintain low prices and lose some customers, and some customers simply won’t eat frozen products."
"This year is a year of concentrated price adjustment in the industry. This cost-driven price adjustment is to some extent a guarantee for industry upgrading and product quality." A person in the quick-frozen industry believes that, on the whole, quick-frozen enterprises are reluctant to adjust the terminal price, but in the case of rising costs, maintaining low prices is likely to have the problem of raw material substitution, which is not conducive to consumers buying genuine products.
For the trend of low-price competition in the past two years, Fang Qizhi believes that it is related to external factors such as the impact of the epidemic and the decline in purchasing power. "Encourage manufacturers to go to low-end products, the price will be involved, the quality will be reduced, and consumers will abandon the brand because of the reduced quality, which will become an infinite loop. In the past two years, the industry has entered a reshuffle period, depending on who can survive. "
In fact, the "involution" of the quick-frozen food industry is particularly obvious this year. Compared with the surge in demand for quick-frozen food brought by home epidemic prevention last year, the growth rate of quick-frozen food enterprises has dropped significantly this year. Among the five listed frozen food enterprises that announced the semi-annual report in 2021, Sanquan Food’s net profit decreased by 38.55%; Haixin Food and Huifa Food suffered losses, and their net profit decreased by 156.4% and 1060.09% respectively.
Combined with various financial reports, it can be found that the revenue scale of quick-frozen food in traditional supermarkets is declining, and the business growth rate in restaurants, distribution, e-commerce, special channels, community group buying, hot pot food specialty stores and other channels is accelerating, but the low-price competition in community group buying has lowered the average unit price per ton of sales, with the proportion of high-end products decreasing and the proportion of low-end products increasing.
Multi-layout seeking change
Fang Qizhi judged that it will take several years for this round of quick-frozen industry reshuffle, and brands that can survive need to embrace new channels such as e-commerce, convenience stores and catering. "Only when you have a volume can you survive, and the capital to survive is to make the products exquisite and cutting-edge, and to make the sub-categories the best." At present, Fang Qizhi’s company has developed 300 or 400 SKUs, and the snack-type quick-frozen noodle rice products have opened up the situation in the e-commerce channel. "Snacks are mainly breakfast scenes, which are not as large as jiaozi, but they are incremental products, which can help increase turnover and share expenses."
Although this year’s profit growth has declined year-on-year, the scale of the quick-frozen food industry continues to expand, and several leading enterprises have also made diversified investment layouts.
In the first half of this year, Anjing Food formulated the product strategy of "main food comes into the market", which increased the promotion of dishes and products, and the category of "Mr. Frozen Products" and shrimp slippery increased greatly. At the same time, Anjing Food continued to promote the layout of "selling real estate", acquired 70% equity of British quick-frozen food enterprises and 90% equity of Xinhongye Food, and laid out the upstream raw material freshwater fish paste industry and quick-frozen seasoning crayfish dishes.
Haixin Food is also laying out the business of quick-frozen prefabricated dishes. In the first half of this year, its sales revenue of quick-frozen dishes was 4,653,800 yuan. Sanquan Food, on the other hand, has attracted investors’ attention because of its investment in the "Pot Circle", a special hot pot food store, and the right to operate 7-11 Henan convenience store chain. Some insiders have judged that hot pot Castroni is a new track for quick-frozen food enterprises, and the "pot ring" invested by Sanquan has had a certain impact on the sales of some frozen surimi and meat products enterprises.
Different from the traditional quick-frozen food enterprises, Barbie Foods, the first stock of steamed stuffed bun, mainly sells its quick-frozen food by self-supporting or joining breakfast shops. In the first half of 2021, Babi Food achieved performance growth, which not only benefited from the increase in the number of stores and the order amount of a single store, but also had a great relationship with the investment in Dongpeng Beverage, a subsidiary of Dongpeng Special Drink. In May this year, Dongpeng Beverage went on the market, and Barbie Foods indirectly held Dongpeng Beverage through Tianjin Junzheng Investment Management Partnership, resulting in a fair value change income of nearly 200 million yuan.
(Fang Qizhi is a pseudonym in the text)
Beijing News reporter Guo Tie Photography Guo Tie
Editor Li Yan proofreads Lin Zhao.