Can traditional convenience foods be used as "Internet celebrity brands"? How sustainable is the "lazy economy"?

No one thought that an epidemic in 2020 refreshed people's understanding of convenience food, and also caused Chinese instant noodle companies to move from creeping on a low-growth channel to rising sales against the trend.

On March 19, Uni-President China released its 2020 financial report.
Subsequently, Master Kong also released its 2020 annual performance report on the 22nd.

The financial report shows that in 2020, the revenue of Uni-President and Master Kong both achieved year-on-year growth.

From the perspective of revenue growth, Master Kong is better than Uni-President.

After the financial report was announced, the stock prices of the two were also slightly different.

Uni-President announced its financial report after the Hong Kong stock market on March 19.
After the Hong Kong stock market opened on March 22, the overall stock price performance was relatively stable.

The different stock prices of the two instant noodle giants may have a lot to do with their revenue.

From the two financial reports this time, we can find that although both have achieved good results, some problems can still be found under closer inspection.

Especially with the upgrading of consumption concepts, instant noodles and beverages will no longer only satisfy the need for food, but will also be given more elements.
In the future, who can prove to the capital market that Uni-President and Master Kong have greater momentum for development? The Hong Kong Stock Research Institute will combine the latest financial reports to interpret the opportunities and challenges of the two.

The "lazy economy" has become the driving force for the performance growth of the twin giants.
How sustainable is it?

The "lazy economy" has become the driving force for the performance growth of the twin giants.
How sustainable is it?

Judging from the financial reports released by the two, Uni-President’s 2020 revenue was 22.

762 billion yuan, a year-on-year increase of 3.
4%.

The revenue growth of the two companies is largely due to the "home economy" spawned by the 2020 epidemic.

In 2020, the new consumption model of the epidemic has stimulated a surge in demand for instant noodles, helping it become the darling of the food industry.

According to Nielsen City’s data, the overall sales volume of the instant noodle industry in 2020 will increase by 0.
1% year-on-year, and sales will increase by 4.
7% year-on-year.

The financial report shows that in 2020, the unified food business income will be 9.

425 billion yuan, an increase of 10.
9% year-on-year.

In terms of net profit, Uni-President and Tingyi both achieved growth in net profit, while Tingyi's net profit growth rate was even more pronounced.

In 2020, the net profit attributable to shareholders of Master Kong was 4.
062 billion yuan, a year-on-year increase of 21.

Although both in the convenience food business maintained a certain year-on-year growth, in the beverage business, UPC showed a downward trend.

In 2020, the annual revenue of Uni-President’s beverage business was 12.

56 billion yuan, a year-on-year decrease of 1.
3%, and Master Kong’s beverage business revenue was 37.
28 billion yuan, a year-on-year increase of 4.

The decline in Uni-President’s beverage business was mainly due to the poor performance of tea beverages and juices.
On the one hand, the new generation of consumers are increasingly demanding the brand tonality of beverages and product innovation and upgrading, while the overall innovation and upgrading of the unified beverage is relatively slow, and the innovation speed of the entire industry cannot keep up with the upgrade speed of the consumer.

On the other hand, the siege of bottled beverages such as "Kirin" and "Vitality Forest" has taken away a portion of the market share.
At the same time, the strong entry of new Internet celebrity brands such as Heycha, Nai Xue, and Xiaodian has attracted many consumers, and they have attracted rushing to punch the card.
It must be said that the rise of current milk tea has also played a role in bottled drinks to a certain extent.
Not a small shock.

It is also worth noting that the performance growth of the two companies this time, especially the performance of convenience foods, is largely dependent on the inability of consumers to go out due to the epidemic.
At the same time, the catering industry closed and withdrew in the first half of the year.
The delivery of takeaways stopped, and the entire industry was in a downturn.

However, the special event of the epidemic is accidental.
With the gradual recovery of domestic catering and takeaway businesses, this means that the food business stimulated by the epidemic may not be able to continue to maintain substantial growth.
The latest data released by the National Bureau of Statistics shows that in October, catering revenue was 437.
2 billion yuan, an increase of 0.
8% year-on-year, and the monthly growth rate changed from negative to positive year-on-year.
At the same time, the entire beverage industry is entering the trend of online celebrity and fandom, which also lays hidden dangers for the development of the beverage business of the two companies.

Efforts to "high-end" to expand profit margins, but planted hidden costs

Efforts to "high-end" to expand profit margins, but planted hidden costs

The financial report shows that in 2020, Uni-President’s high-end Chinese cuisine brand "Kaixiaozao" will increase its revenue at multiples.
The income of "Tang Daren" has achieved double-digit growth for 12 consecutive years.
In the first half of 2020, the income of Tang Daren's series increased by 29.
7% year-on-year, and the proportion of Master Kong's high-priced bag noodles also increased from 40% in 2019 to 2020.
44% of the year.
This also reflects the results of their efforts in the high-end market.

With the popularization of high-speed rail, the content of dining trucks has become more abundant, and the instant noodles that were once a "travel companion" are no longer the first choice of consumers.
In addition, the siege pool that sells out-of-order food has also formed a cross-border blow to the instant noodle industry, and the demand for instant noodles is shrinking.

In order to seize market share in convenience, “high-end” has become the choice of Uni-President and Master Kong.
Master Kong launched the ultra-high-end noodle "Express Suida Noodle House", which is currently priced at 25 yuan per box on the JD platform, followed by the "Suda Cooked Noodle" and "Kangpin Private House" in the fast food field.
Uni-President also launched high-end convenience foods such as "Tang Da Ren Ji Wei Restaurant", "Kai Xiao Zhuang" and "Man and Han Chinese Restaurant".

However, it cannot be ignored that the reason why these high-end foods can quickly gain the favor of users is that, in addition to the good quality of their own products, they are also inseparable from marketing investment and idol effect.

Judging from the financial report, in the first half of 2020, the unified marketing expenses accounted for 22.
21%, which may be related to the invitation of the new generation of actors to endorse and increase promotion activities.
The unified "Tang Daren" and "Kai Xiao Zao" brands have cooperated with the new generation of top stars, and transformed the "Yuan Qi Music Festival" from offline to online, and "Man and Han Banquet" is in cooperation with the China Moon Exploration Project ( CLEP) cooperated to launch a joint gift box to expand the consumer group.

Not only in the food business, but also in the beverage business, the company cooperates with the up master of station B, and the ice tea and KPL King Glory have in-depth cooperation.
It can be seen that Uni-President also spares no effort to compete for market share, and higher advertising and marketing expenses will also squeeze profit margins.
Relatively speaking, although Master Kong’s marketing expense ratio is generally less than 20%, its joint cooperation with multiple Internet brands also has the hidden danger of marketing expenses swallowing profits.

In addition, in terms of channel depth, Uni-President cannot be fully visible everywhere like Master Kong.

According to Uni-President’s latest financial report, Uni-President’s sales and marketing expenses were 5.
35 billion yuan, a slight decrease of approximately 17.
2 million yuan over the same period.
Although the cost has decreased, it is mainly due to the reduction in taxes and fees and travel expenses in mainland China, while the sinking of products and the relative increase in channel costs.
It can also be seen from this that Uni-President is also increasing its investment in online channels and focusing on cooperation with new retail platforms such as Hema.
The increase in costs has also become a matter of course.

At the same time, Internet celebrity food is also rapidly penetrating with its natural flow advantage.
For Uni-President and Master Kong, who are expanding their market promotion, there is bound to be a head-on confrontation.

Compared with the "net celebrity brand", what is the chance of winning for traditional convenience food?

Compared with the "net celebrity brand", what is the chance of winning for traditional convenience food?

Affected by the epidemic, the sales of instant food products have increased significantly, especially self-heating hot pot and self-heating rice products are favored by the market.
According to data from Mintel's "China Convenience Food Industry Report", 69% of Chinese urban consumers eat self-heated rice as lunch.

Major brands have seized the opportunity to launch fast food products, and Uni-President and Master Kong are not far behind.
Although the reputation of the self-heating foods launched is not bad, it is undeniable that the rise of these "net celebrity" brands such as Mo Xiaoxian and Zihaoguo is bound to pose a big threat to its market share.

First of all, from the perspective of channels, the current “Internet celebrity brands” such as Mo Xiaoxian and Zihai Pot are mainly concentrated on e-commerce platforms, and Taobao’s flagship store ranks first in sales of its Taobao department.
In other words, the flow of online flagship stores of online celebrity self-heating brands is more concentrated.

While Master Kong and Uni-President, who have a background in convenience food, have the first-mover advantage in brands and channels offline, they have traditional genes and lack online experience.
From the perspective of sales, according to the statistics of Taobao, the sales volume of 80,000 copies of unified self-heating rice in January 2020 is less than half of self-heating rice.

Secondly, in terms of online marketing, traditional convenience food brands have relatively slow reactions and actions.
For example, the unified cuisine brand "Kai Xiao Zao" asked Xiao Zhan to endorse in January 2020.
In contrast, Mo Xiaoxian, as early as 2019, implanted the brand into popular variety shows such as "Daughters’ Love 2" and entered Live.
In contrast, the cost of marketing investment for Internet celebrity brands is higher, but the speed is also faster.

Finally, in terms of price, Master Kong’s self-heating rice "Kangpin Private House" costs about 25 yuan per box.
In contrast, "Internet celebrity brand" companies have more price advantages, especially in the price range of 10-20 yuan, which is more competitive.
At the same time, when the third- and fourth-tier cities and low-tier cities are sinking, “Internet celebrity brands” are more easily accepted by online KOLs, celebrities, and so on.

Of course, this does not mean that traditional convenience foods have no advantages.
For example, Master Kong's product line covers all categories and all price bands, and through digital layout to improve performance, traditional enterprises still have their own advantages in supply chain and other aspects.

At the same time, in the context of gradual intensification of competition in the high-end market, it is not difficult to find that the low- and medium-priced instant beverage market is also a blue ocean.

The double giants of instant noodles are also targeting opportunities in these areas.
For example, Master Kong launched a large-volume product "Jingshuang 1 and a half".
Uni-President also stated that "Uni-President Assam Milk Tea" continued to promote 1.
5L large bottles to create a large-package drinking scene.

In general, regardless of whether convenience foods and beverages are still popular among young people, in the context of consumption upgrades, market requirements are gradually increasing, and the consumer side is also forcing industrial upgrades and innovations.
In the future, with capital and many catering brands entering the game one after another, the fast-food industry is bound to usher in a period of deep reshuffle.
If Uni-President and Master Kong want to crush the "net celebrity brand", they may need to think about how to better achieve differentiated innovation.
Is the key.

Source: Hong Kong Stock Research Institute

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