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Food and beverage supply chain perspective: the temperature of the future

  Since 2022, the catering supply chain enterprises, including condiments, have been under great operating pressure. Under the normalization of epidemic prevention and control, the recovery of the catering side has not been as good as expected. The price of raw materials is still high, and the profit side has been squeezed. Standing in the present, how to look forward to the future business development of catering supply chain enterprises? Can subsequent demand pick up? What kind of trend will the industry category interpretation show in the future?
Demand side: Structural changes occur

  Demand is under pressure under the epidemic, and companies generally lose one-month performance. The
  epidemic has a greater impact on first-tier cities, and the degree of damage to county towns varies in different regions, mainly because the condiment industry is more active in county towns at this stage. By the end of May, condiment companies focusing on catering generally lost about 20 days of performance, and companies with a large proportion of small and medium-sized supermarkets had an impact of about 15 days. In terms of scenarios, the demand for fast food products is relatively rigid, and is less affected by the epidemic. Social catering such as hot pot is seriously affected, and corresponding to customized meal condiments and Cantonese compound condiments, the damage is relatively greater.
  From January to July 2022, China’s catering revenue was 2,373.4 billion yuan, a year-on-year decrease of 6.8%, of which July revenue was 369.4 billion yuan, a year-on-year decrease of 1.5%. Although it is still declining, it has resumed growth month-on-month. Since late August, the epidemic has spread in many places, and the management and control are strict. The catering has been seriously affected again and continues to be under pressure. Judging from the current situation, condiment and catering supply chain companies have lost at least one month in terms of performance, and condiment and catering supply chain companies with a large proportion of catering channels may suffer more serious losses.
  The trend of
  catering . On the catering demand side, according to iiMedia Research consulting data, brand chain stores have become the most preferred type of restaurants for consumers, and the top ones are basically rigid catering needs. On the supply side, in 2022, Meituan Catering will reduce the number of stores required for chain brands from three to two, which will partly drive the chain rate of restaurants to increase from 12% in 2018 to 18% in 2022. However, in the long run, the logic of chain promotion at the catering end has not changed substantially, and it has also spawned two new trends in the demand for condiments and the catering supply chain.
  First, the demand for condiments is transmitted from the catering side to the household side, and the compound condiments are transmitted from hot pot and Sichuan cuisine, which were first used in the catering side, to household consumption. The growth rate is faster, and the customized seasoning is growing faster than the home side.
  Second, the cost-effectiveness and customization of condiments have become a trend, and pre-made dishes have exploded. Catering chains and the downgrade of condiment consumption at the catering side have jointly promoted the demand for condiments on the catering side to be customized and cost-effective. These changes will also be transmitted to families, leading to changes in the decision-making of relevant companies.
Supply side: cost pressure is still high, and corporate profits are generally under pressure

  The price of raw materials has remained high from last year to the present, and the profit side of enterprises is under pressure. The cost of condiments is running at a high level, and there is no short-term downward trend, and it is likely to continue until 2023 or longer. Among them, monosodium glutamate, salt and other essential consumer goods are highly concentrated in the industry, and it is less difficult to raise prices. From October 2021 to March 2022, the price of monosodium glutamate has dropped for a short time, but the price soon resumed upward. At the end of 2021, the competitive price increase of companies in the industry has evolved into a general price increase in the industry. All channels have accepted it, and price transmission has been completed, but the price increase is not enough to cover the cost increase. In this context, some companies have increased their market launch in order to ensure sales, which eventually led to a decline in the profits of most condiment companies since the beginning of 2022. It is not ruled out that some companies may raise prices again this year.
  The rising cost and the epidemic factor have indirectly led to an increase in industry concentration. The price increase of raw materials, superimposed on the spread of the epidemic in many places, transmitted to the consumer end of the demand, and the catering end preferred cost-effective products. The concentration of the condiment industry is generally low. Even products with a high degree of maturity, such as soy sauce and vinegar, are still low in concentration. Monosodium glutamate and chicken essence are high in concentration but have limited growth potential. Therefore, the concentration of growing categories is relatively scattered. . Looking back on the development history of the condiment industry in the past 30 years, every round of raw material price increases, economic growth slowdown, financial crisis, and pessimism are all periods of increased concentration, so the current stage is conducive to traditional basic condiment leaders Enterprises are further concentrated, while the relative blue ocean compound condiment enterprises have limited benefit.
Channel hotspots: The influence of associations is weakening, interest e-commerce is on the rise, and opportunities for pre-made dishes are emphasized

  From the perspective of consumption, food is a rigid demand of human society. If food and beverage consumption is hindered, the proportion of household consumption will increase. In the case of silence or reduced contact and gathering in some cities, economic vitality can still be seen.

  Community group buying: the overall impact is weakening, and there is still pressure in the region and county.
  Community group buying will have a great impact on the price system of the condiment industry in 2021. Basically, huge subsidies are used to stimulate user growth, resulting in many supermarkets. The performance of modern retail-based companies has suffered a serious decline. By 2022, out of various considerations such as profit-seeking, community group buying will still have low-price promotions, but the overall negative impact on the manufacturing industry will be weakened.
  Community group buying has basically weakened the diversion of offline supermarkets, and has little impact on first-tier and provincial capital cities. It is even beneficial to some big brands. It has built and strengthened the positive role of brands from catering channels to broadening household consumption channels. However, community group buying still has an impact on the county-level market, mainly affecting the offline supermarket consumers, and has limited impact on the farmers’ market, and it is more to educate consumers. At present, the policy control + epidemic outbreak in 2022 has partially reduced the negative impact of community group buying, and the effect of community group buying on the condiment industry has changed from unfavorable to favorable under the epidemic.
  At present, enterprises such as Haitian Flavor Industry actively embrace the community group purchase channel and have achieved good development.
  Interest e-commerce: The influence of new consumer brands is limited, and traditional brands are recommended to actively deploy.
  From the perspective of sales, Internet brands in the catering supply chain have limited sales, and traditional brands have more advantages in the layout of related interest e-commerce platforms. In recent years, platforms such as Douyin, Kuaishou, Xiaohongshu, etc., have emerged a large number of emerging brands of condiments and catering supply chains that were originally only deployed offline. Some new brands that claim to have Internet genes have poor sales and repurchase, and primary market financing is hot. is also decreasing. The first-line brands with a solid foundation themselves have also performed prominently on related platforms. Head brands such as Haitian and Chubang have also exerted force in recent years, and their influence on the interest e-commerce platform has continued to increase. Traditional condiment companies should pay attention to related interest e-commerce platforms. If they are actively operated, they may bring considerable increments. For example, Qianhe Flavor has always attached great importance to platform construction and has achieved good results.
  It is worth noting that since the epidemic in 2020, many small and medium-sized condiment and catering supply chain companies have successfully built brands through short video platforms such as Douyin and Kuaishou, and achieved gratifying growth against the trend. This channel is worth studying and working hard, and its growth also shows that there are still plenty of growth opportunities in the market.
  Pre-made dishes: Pre-made dishes are in the limelight, and condiment companies can pay attention to related opportunities.
  Affected by the epidemic, the traditional catering supply chain can no longer meet the requirements of catering companies for flexible and flexible services. The opening time of the store is uncertain. More importantly, as a result, pre-cooked dishes have exploded. Pre-prepared vegetable companies are growing rapidly, and there is a large demand for raw materials in the catering supply chain. If they enter the supply chain, they can increase their revenue. Pre-made dishes mainly use soy sauce, vinegar, cooking wine, monosodium glutamate, chicken essence, etc., and some use spices and compound condiments. The annual demand for condiments of medium-scale pre-prepared vegetable companies may reach tens of millions of yuan. If condiment companies enter the relevant supply chain, they can gain new growth outside of traditional channels.
  As the famous entrepreneur Wang Yongqing said, “selling popsicles should start in winter”, if the economy develops steadily, the market pattern will be difficult to break, the strong will remain strong, and the weak will remain weak; when the economic growth trend is slowing down, if our If we cannot see the future, it will be difficult for us to seize opportunities when economic growth accelerates.

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