In 2023, the core points of the development of China's condiment industry will be interpreted

In order to promote the correct direction and rapid and orderly development of more industry enterprises, the Information Department of the association specially edited and sorted out the core points about the development of the industry proposed by Wei Xiangyun, executive president of China Condiment Association, and Bai Yan, executive vice president and secretary general, in 2022, and shared them with the industry
.

 

Focus on the six core points

 

Benefiting from the recovery of the consumer market, the growth rate of the condiment industry is expected to return to the pre-epidemic period

 

The cost pressure of enterprises, especially the middle and downstream production enterprises, is expected to ease

 

The pressure of market competition will further increase, and the phenomenon of involution will become more serious

 

Market awareness for omnichannel is fully established

 

Differentiated competition and price competition coexist, and making up for shortcomings and strong long boards are indispensable

 

The replacement of new and old personnel has entered a critical period, bringing a series of new topics

 

Four points were made

 

It is necessary to establish a strategic awareness of differentiated positioning

 

It is necessary to abandon the traditional thinking that the bigger the better

 

It is necessary to avoid the misunderstanding that the more curious the innovation, the better, and pay attention to the brand effect

 

It is necessary to establish a sense of fulfilling social responsibility

 

First, benefiting from the recovery of the consumer market, the growth rate of the condiment industry is expected to return to before the epidemic

 

The catering market is an important scene
for condiment sales.
In particular, dine-in is essential
for the promotion of condiments.
According to data from the National Bureau of Statistics, in 2020, at the beginning of the outbreak, the total revenue of the catering industry plummeted by 15.
40%, from 4,672.
1 billion yuan in 2019 to 3,952.
7 billion yuan
in 2020.
In 2021, the total revenue of catering was 4,689.
5 billion yuan, a year-on-year increase of 18.
64%.

The spread of the epidemic in many places in 2022 has once again adversely
affected the catering industry.
From January to October 2022, the total revenue of catering was 3,534.
8 billion yuan, down 5%
year-on-year.

 

According to the data of the top 100 famous condiment brand enterprises in China in 2021, the total sales of the top 100 enterprises shortlisted was 131.
7 billion yuan, with a compound growth rate of 11.
94% in the past three years; The total output of the top 100 enterprises shortlisted is 18.
31 million tons, with a compound growth rate of 13.
19% in the past three years, and the sales and output generally maintain the robustness characteristics of the consumer industry, but the pace of capacity expansion has slowed down
.

 

In 2022, the total operating income of the 17 listed condiment companies in the first three quarters was 74.
729 billion yuan, and the total net profit was 12.
364 billion yuan
.
There were 14 companies with positive growth in operating income, accounting for 82.
4% of the 17 listed companies; There were 10 companies with positive net profit growth, accounting for 58.
8%
of the 17 listed companies.

 

At present, with the optimization and adjustment of epidemic prevention and control measures, the unfavorable factors that seriously restrict catering consumption such as lockdown and silence have been eliminated
.
The catering market is gradually returning to normal levels
.
This is undoubtedly a major benefit
for condiment companies.

 

In December 2022, the Central Committee of the Communist Party of China and the State Council issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), and promoting consumption will be the focus of
expanding domestic demand in 2023.
With the implementation of various specific policies and measures, the current situation of weak consumer market is expected to be fundamentally reversed
.
The worst is about to pass, and the production and market prospects of condiments are promising
.

 

Second, the cost pressure of enterprises, especially the middle and downstream production enterprises, is expected to ease

 

In recent years, the rising cost of raw materials has been one of the most important factors restricting the efficiency of
enterprises.
Since the second half of 2022, some turning points have begun to appear: commodity prices have recently begun to show some corrections, and commodity prices, including crude oil, have returned to the level before the outbreak of
the Russian-Ukrainian conflict.
Prices of staple foods such as wheat, corn and soybeans also collectively fell by nearly 30% from their highs, and although this may be due to short- to medium-term factors such as weak demand and speculative retracements, it is still a short
- to medium-term positive for easing rising costs and inflation.

 

In the past, the scissor difference between PPI and CPI was mainly driven by the price increase of upstream raw materials, and in the case of weak recovery of domestic demand, the ability of the middle and downstream industries to transfer costs was still weak, resulting in the rise of upstream raw materials on the squeeze of middle and downstream profits
.
In October 2022, the year-on-year growth rate of PPI turned from positive to negative, which is the first time since January 2021 that the year-on-year growth rate has fallen into negative territory
.
Some experts said that the "CPI-PPI" scissor gap continued to widen in October, pointing to the improvement of corporate profits or positive downstream transmission
.
Considering the impact of the base effect, the "CPI-PPI" scissor difference will tend to converge during the year, but the profit improvement trend of midstream and downstream enterprises is expected to continue
.
In addition, condiment enterprises have enhanced their ability to
resolve rising costs by establishing stable procurement channels, appropriately increasing raw material inventory, and carrying out capital hedging.

 

It can be expected that the negative impact of rising costs based on raw materials on the industry will gradually weaken
.

 

Third, the pressure of market competition will further increase, and the phenomenon of involution will become more serious

 

Although the development prospects of the condiment market are optimistic, the situation of oversupply in the market will be more prominent
.

 

On the one hand, the stable development of the condiment industry has attracted many new entrants
.
According to the statistics of the Big Data Information Center of the China Condiment Association, in 2022, enterprises including Yuanqi Forest, Fujian Seven Wolf Group, Panhua Group, Shanxi Jinyao Group and other enterprises will enter the field of condiment production through direct investment, mergers and acquisitions; On the other hand, new production capacity has been put into operation one after another, forming a phased high point
of production capacity launch.
According to incomplete statistics, in the first half of 2022, the planned investment scale of only 12 condiment companies has exceeded 10 billion yuan, and after completion and operation, the new condiment production capacity will exceed 2 million tons
.
At the end of 2022, Haitian Taste also announced in an investor survey that in the next few years, the company will release about 3 million tons of condiment production capacity
in an orderly manner.

 

According to the data of the Top 100 of China Condiment Association in 2022, the year-on-year growth rate of sales and output of the top 100 enterprises has maintained positive growth
for four consecutive years.
However, competition within the market is fierce, and the increase in concentration continues
.
Among them, the market concentration of edible oil, oyster sauce, monosodium glutamate and other sub-categories is high, the market concentration of soy sauce, chicken essence/powder, seasoning wine, hot pot seasoning, curd milk and other sub-categories continues to increase, the concentration of compound seasonings, vinegar, sauce is relatively low, and the space for differentiated innovation still exists
.

 

The dislocation between the gradual recovery of the consumer market and the concentrated release of production capacity in the supply market will inevitably have a huge impact on the operation of existing enterprises, and the competitive pressure faced by enterprises, especially small and medium-sized enterprises, will continue to increase
in the next few years.

 

Fourth, the market awareness of omni-channel has been fully established

 

With the changes in consumption behavior and consumption patterns, the channel system of the condiment industry is also rapidly iteratively updated, but the three major consumption terminals of condiments remain unchanged and the structure is stable, and it is still the catering end, the home retail end and the food processing end, and the proportion is 5:3:2
.
Condiment enterprises have formed a professional division of labor pattern in which three kinds of enterprises: manufacturers, brand owners and third-party flavor solution service providers coexist, including to B and to C channels, and also include a variety of online and offline methods
.

 

Starting from the Internet +, the condiment industry's awareness of the combination of traditional industries and the Internet began to cultivate
.
After several years of industry leadership and market exploration, condiment enterprises have fully established market awareness of new retail and omni-channel, and have begun to implement it in the construction of market channel system, and a number of brand enterprises
with Internet genes have also been born.
The industry's network access rate and online channel penetration rate are gradually increasing
.
In the first three quarters of 2022, Haitian Flavor's online sales revenue increased by more than 87.
47%, and Qianhe Flavor's online sales accounted for more than 15%.

A large number of cutting-edge brands use online as the main sales channel to achieve overtaking of traditional brands
.

 

The impact of the establishment of enterprise omni-channel market awareness on the business philosophy of enterprises is long-term and far-reaching
.
The adjustment and optimization of traditional distribution channels is imperative
.
Although the overall market contribution rate of traditional distribution channels is still about 90%, the company's concept of channel expansion has changed
.
According to the statistics of the Big Data Information Center of China Condiment Association on the change in the number of distributors of condiment listed companies in the first half of the year, among the 12 listed condiment companies, 5 dealers showed negative growth, accounting for 41.
7%.

 

Fifth, differentiated competition and price competition coexist, and making up for shortcomings and strong long boards are indispensable

 

Condiment companies hope to establish their own differentiated advantages in market positioning, category innovation and technological progress, so as to avoid the red ocean and open up their own blue ocean
.
But whether these differentiations are effective or not needs to be tested by the market
.
At the same time, price competition is relatively common
.
Especially in recent years, the new retail changes brought about by Internet innovation have also objectively increased price transparency, intensified competition in the condiment industry, and further lowered the price of the
condiment industry.

 

But unlike in the past, this price competition is not just the original low-price dumping
.
To a large extent, behind it is the comprehensive strength, platform effect and scale benefits
of enterprises.
Complementary short board and strong long board are indispensable
.
It is difficult to adapt to the current competitive needs, and enterprises must establish a multi-functional competitiveness
.

 

Sixth, the replacement of new and old personnel has entered a critical period, bringing a series of new topics

 

The condiment industry has achieved rapid development
after a critical period of nearly 30 years.
With the development of the industry, a group of entrepreneurs and practitioners have also been achieved
.
Although these people may have some traditional thinking and problems that are difficult to keep up with the times, relatively speaking, they know the industry, understand the profession, and know the boundaries
.
At present, the condiment industry is in a period of alternation of times and the handover of new and old personnel, and the understanding and cognition of the industry by practitioners is uneven
.
The confusion reflected in the market operation and consumer market guidance of individual enterprises has also brought new issues
to industry management and the popularization of industry knowledge.

 

In view of the above phenomena and judgments, it is urgent to establish a basic consensus of the condiment industry, and take this as an important reference
for the future development of the industry.
We recommend:

 

First, it is necessary to establish a strategic awareness of differentiated positioning

 

The condiment market space is large enough and belongs to the sunrise industry
with a long track.
There is still a lot
of unmet consumer demand for condiments.
Enterprises should start from a long-term perspective, find a market positioning suitable for themselves, and meet the high-quality needs
of consumers.

 

The changes of the times will inevitably bring about the restructuring of the industry, seize this opportunity, position yourself in the field where you have advantages, and dig deeply, turn advantages into strength, and form an irreplaceable and difficult to replicate competitive pattern, which is high-dimensional competition
.

 

Although heavy concept is an inevitable move in market competition, it lays hidden dangers
for the long-term development of enterprises.
Attack from all sides, follow the hype, you can only go with the flow
.

 

Second, we must abandon the traditional thinking that the bigger the better

 

New variables in the industry will always exist, and the qualitative improvement is greater than the quantitative expansion
.
It may be relatively easy to be big, but it's hard
to be big without failing.
How big a company can be fundamentally depends on the era
.

 

Large scale certainly has the advantages of strong anti-risk ability and significant scale effect, but small scale also has the characteristics of
high market flexibility and strong adaptability.
Condiment enterprises should start from their own reality, have a scientific estimate of market capacity, and do
what they can.
From focusing on revenue scale expansion to focusing on enterprise efficiency improvement
.
The fundamental survival of enterprises is profit, and only profitable enterprises can survive
for a long time.

 

Third, we must avoid the misunderstanding that the more curious the better, and pay attention to the brand effect

 

Innovation is not more than the better, and differentiation for the sake of
differentiation is difficult to achieve.
In the condiment market in recent years, new concepts and terms have emerged one after another, some of which are indeed innovative and obviously differentiated, but some of them give people the illusion
that they are not surprising and dead.

 

Most of the listed condiment companies are leading enterprises with significant brand effects, but there are still unlisted brand enterprises such as Lee Kum Kee, Tataile, Zhujiangqiao, Donggu, Xinhe, Shounong Weiye, Tianjin Limin, McCormick, Yongyi Food and Zilin Vinegar Industry, East Lake, Water Tower, Baoning, Tianli Duliu and other unlisted brand enterprises occupy a relatively important position in the condiment market and have a high market share
.
Qualified condiment listed enterprises can join forces or complement each other to achieve strategic restructuring
.

 

Fourth, it is necessary to establish a sense of fulfilling social responsibilities

 

The condiment industry has developed to today, and a large number of enterprises and brands
with social influence and popularity have emerged.
Their every move has a huge impact
on the industry and social and economic development.
In the course of the epidemic in the past three years, condiment companies have taken responsibility and made outstanding contributions
to protecting people's livelihood and promoting development.
More and more enterprises in the process of development, but also assume more social responsibility, some excellent condiment enterprises even set up a special department to coordinate the public welfare of enterprises, corporate public welfare activities are more systematic and standardized
.