Haitian flavor industry, Zhongju hi tech, Angel yeast, Fuling mustard, Tianwei food, Zhu Laoliu, Zhongjing food and other condiment head enterprises have recently disclosed the annual report or performance express of 2021. It is found that in 2021, the seven enterprises achieved a total revenue of 46.427 billion yuan and a net profit attributable to the parent of 9.82 billion yuan. Among them, the profit growth rate of five enterprises was negative.

The impact of the epidemic has been further deepened. Whether for small and medium-sized condiment enterprises or listed condiment enterprises, the decline in performance has become a common phenomenon, and those who can achieve no loss are the leaders in the industry. Since 2020, enterprises have been able to find a new way to increase the price of condiments, but they have not found another way to increase their performance for many times.

Performance decline "difficult" word head

"Difficult" is the key word that haunts condiment enterprises in 2021. Condiment head enterprises have reaped new lows in performance in recent years. According to the financial report of 2021, the revenue and profit growth of Haitian flavor industry hit a new low in the past 10 years, which is also the first single digit increase in its revenue and net profit since its listing in 2014; Tianwei food handed over the report card of both operating income and net profit, and the net profit decreased by more than 50%.

It is found that "the rise of commodity raw material prices" and "the rise of procurement costs" are high-frequency reasons. Angel yeast said that the decline in performance was mainly due to the rise in the prices of bulk commodity raw materials and molasses and the rise in the cost of its main business. Haitian flavor industry also mentioned the rise in procurement costs in its financial report. Fuling pickled mustard said that the company faced the impact of rising bulk raw material costs in 2021, resulting in rising operating costs of its main business, of which the operating costs of pickled mustard business rose 152.25% year-on-year.

The increase of cost is also reflected in the decline of gross profit margin. The gross profit margin of Haitian flavor industry decreased by 3.73 percentage points year-on-year, and the gross profit margin of soy sauce, oyster sauce and sauce decreased by 4.47, 0.75 and 4.68 percentage points year-on-year respectively. The gross profit margin of the main products of Fuling mustard also declined. Among them, the gross profit margin of mustard business decreased by 5.02%, the gross profit margin of radish products decreased by 5.73, and the gross profit margin of kimchi business decreased significantly by 14.49% year-on-year.

The increase of sales expenses has also become the reason for "dragging down" performance. In 2021, the sales cost of Fuling pickled mustard was 475 million yuan, with a year-on-year increase of nearly 30%. In the face of the multiple impacts of repeated epidemic, weak consumer market and rising cost of bulk raw materials, the company invested 255 million yuan in brand value building, and the brand publicity cost reached 240 million yuan, with a year-on-year increase of 11324.05%, accounting for 50.57% of the total sales cost. In 2020, The cost is only 2.1 million yuan for brand promotion. The advertising expenses of Zhongjing food increased by 11.1627 million yuan over the previous year, a year-on-year increase of 67.46%; The market promotion fee increased by 13.6163 million yuan over the previous year, with a year-on-year increase of 68.64%, both exceeding the overall increase of performance.

Insiders said that due to the intensification of competition, leading enterprises have increased investment in brand and channel construction, but it also brings the trend of increasing customer acquisition costs, which further increases the sales expense rate and puts pressure on the profit side. In addition, affected by the epidemic, the demand for condiments in the catering industry declined, which also led to the reduction of terminal sales of condiment enterprises to a certain extent.

Price rise is difficult to solve the cost pressure

According to the analysis of Dongxing securities, the condiment company will face greater pressure on the cost of agricultural raw materials from the fourth quarter of 2021 to the first half of 2022. This shows that the cost pressure of enterprises will continue.

In October 2021, Haitian flavor industry, which has not raised the price for five years, announced to raise the price of its products, which is regarded by the industry as the prelude to the price increase of condiment industry. In fact, the price increase of condiment has already begun. "In the second half of 2020, the price of pickled mustard and seasoning sauce will rise. Fuling pickled mustard has long shrunk its packaging, and Zhongju high tech has also raised the price of catering products." A condiment dealer in Beijing issued several price adjustment notices of different brands and said that the price increase was to ensure profits.

Industry insiders said that the price increase can alleviate but can not completely solve the cost pressure of condiment enterprises. At present, it seems that most condiment enterprises have limited performance growth after the price increase, and have to face the fact of declining sales. Take Fuling mustard as an example. According to the financial report, the price of mustard business, which accounts for nearly 80% of the company's revenue, increased by 13.4%, and the sales volume decreased by 0.6% year-on-year.

Bai Wenxi, vice president of China enterprise capital alliance, said that under the pressure of raw material costs, condiment enterprises have announced price increases, but price increases are not a long-term plan to drive performance growth. Condiment enterprises also need to start with product innovation, market innovation and management innovation in terms of performance breakthrough.

The relevant person in charge of Zhongju high tech said that the company has no plan to raise the price for the time being. Haitian flavor industry also said that the costs of various raw materials and energy rose sharply in 2021. At present, the market is still at a high level, and the price increase is difficult to fully cover the pressure of existing costs. The company will digest it through various measures, and has not considered raising the price again for the time being.

Enterprises have found another way

At present, condiment enterprises are also actively looking for new growth points of performance.

For a long time, food enterprises suffer losses in research and development. The new products developed are easy to be copied after they are listed. A large number of similar products will appear in a short time. The high research and development cost and low rate of return lead to the lack of motivation in research and development. However, it is found that the R & D expenses of the above seven condiment enterprises have increased. From the data, the growth rate of some R & D expenses has even exceeded the growth rate of operating revenue. In 2021, the R & D expenses of Haitian flavor industry reached 772 million yuan, continuing to maintain a significant growth. Zhongjing food invested 32.4232 million yuan in R & D, an increase of 25.77% over the same period.

Insiders said that this reflects the increasingly positive attitude of relevant enterprises towards R & D investment and technological innovation, which is conducive to the construction of competitive barriers and may even become the "engine" for the rapid development of enterprises. At the same time, continuous improvement in production equipment level, production process standards, process technology level and other aspects is also conducive to condiment enterprises to improve product power and cost control.

"The strengthening of R & D by condiment enterprises also shows that the enterprise has great pressure on market growth. It is hoped to achieve growth breakthrough through strengthening R & D, which is also an important strategic intention of the enterprise." Bai Wenxi expressed this.

At the same time, condiment enterprises are also expanding their production capacity. Recently, Hengshun vinegar industry plans to raise no more than 2 billion yuan to expand the production of brewing vinegar, rice wine and cooking wine, compound seasoning and other projects; Haitian flavor industry also said that it is expected that new production capacity of soy sauce and oyster sauce will be put into operation in 2022; Qianhe flavor industry said that it plans to raise no more than 800 million yuan for the construction of intelligent seasoning manufacturing project with an annual output of 600000 tons. Fuling pickled mustard, Zhongju hi tech and Xuetian salt also have production expansion plans.

Will the expansion of production bring potential overcapacity to enterprises? The relevant person in charge of Fuling mustard said that the current production capacity of the company can match the end consumer demand, but once the market expands, the current production capacity can not meet the sales demand. The relevant person in charge of Zhongju high tech also said that the expansion of production is based on the future market demand.

"The industry demand is relatively stable, which is also the basic reason for enterprises to increase and expand production capacity. However, according to the current production expansion speed of enterprises, the hidden danger of overcapacity in the future cannot be ruled out." Bai Wenxi believes that the operating revenue and net profit of condiment enterprises are expanding while declining, indicating that the market share and profitability of enterprises are in a downward trend. On the one hand, it is because of the aging of products and the decline of competitiveness, on the other hand, it is because the industry is facing overall pressure and changes.

In addition, condiment enterprises are still laying out new tracks. Hengshun vinegar industry said on the interactive platform that the company has actively developed and laid out a series of prefabricated vegetable products. Haitian flavor industry has also actively expanded in the rice flour grain and oil track, and has launched edible oil products "oil commander" and "geographical imprint" series rice. Zhongjing food said that the company's products have partially served the customers of prefabricated dishes. The current prefabricated dishes mainly focus on "mushroom + family banquet dishes" relying on the local high-quality mushroom resources in Xixia County, Henan Province.

Insiders said that the positive response of condiment enterprises shows their pragmatic attitude of embracing change and continuous innovation in the face of the unpredictable market, which will also continue to deepen and broaden competition barriers and win a larger market for enterprises in the future market competition. In 2021, although the performance of the condiment industry is under pressure, with the weakening of adverse factors, the development trend in 2022 is expected to be generally good under the support of positive policy guidance, economic trend and solid development foundation of the industry.