interface news reporter | Ma Yue
interface news editor | Ya Hanxiang
Fuling mustard is trying to find ways to win back consumers and investors with plans to develop new products.
Zhao Ping, director and general manager of Fuling mustard tuber, introduced at the 2023 annual performance briefing on April 17 that the company plans to focus on mustard tuber and expand to "pickle tuber+", mustard tuber related categories, Sichuan-style compound seasonings, and Sichuan and Chongqing prepared dishes. direction development. "Currently, the Sichuan and Chongqing prefabricated dishes are in the stage of R&D, debugging and market research. New products such as mustard instant soup have been developed. In the future, we will closely follow the market conditions and strategic layout progress." Zhao Ping said.
The company’s 2023 financial report issued on April 2 showed that Fuling mustard achieved operating income of 2.45 billion yuan, a year-on-year decrease of 3.86%; the net profit attributable to shareholders of the listed company was 827 million yuan, a year-on-year decrease of 8.04%.
In yesterday's performance exchange meeting, Fuling Zhacai attributed the decline in performance to the impact of macro-consumer demand that was lower than expected, as well as factors such as intensified industry competition and rising costs.
Looking at the long term, there are actually worries about the weak growth of Fuling mustard in recent years.
Picture source: Jiemian News Huang Jiao
From the perspective of profitability, Fuling mustard’s net profit has declined in three of the past five years. That is to say, in 2019, there was a situation of "increasing revenue without increasing profits". Revenue increased by 4% year-on-year to 1.990 billion yuan, but net profit fell by 8.55% year-on-year to 605 million yuan. This is also the first year-on-year decline in net profit since its listing.
In 2021, this company's revenue increased by 10.82% year-on-year to 2.519 billion yuan, and its net profit fell by 4.52% year-on-year to 742 million yuan. By 2023, there will be further decline in both revenue and net profit.
As a company mainly engaged in the development of pickled mustard, table dishes, appetizers and other products, Fuling pickled mustard's "Wujiang" brand series of products have been at the forefront of the industry for many years. However, the main reason why it has encountered bottlenecks in growth today is that it is difficult to sell mustard.
According to the 2023 annual report, mustard products accounted for 84.73% of revenue, but revenue fell by 4.56% compared with 2022.
In response to the decline in the main mustard business, people from the Fuling Mustard Securities Department have previously said that the reason is that on the one hand, the company has been expanding its categories in the past two years and its focus is tilted towards new categories. On the other hand, it has raised prices in 2021 and in early 2022. The product has been upgraded and changed, and market acceptance requires a process.
In fact, one of the obvious perceptions of Fuling pickled mustard from the outside world is the "increased price".
From the price of less than 1 yuan per pack in 2008 to the current retail price of over 3.5 yuan/pack in offline stores, the price of Fuling mustard has skyrocketed.
Behind this is the company's deliberate price increase strategy. Fuling mustard has continuously raised the prices of its main products such as shredded vegetables, vegetable cores, and vegetable slices for several years, and adopted a more radical channel strategy. In its 2018 annual report, the company summarized its sales competitive strategy as a "market competition operating model of high cost + high price + high gross profit + selling high-quality products", effectively squeezing, harvesting and seizing the rival market. On the one hand,
's price increase strategy can improve the company's sales performance, but on the other hand, frequent price increases will also cause problems such as weakening demand, high channel inventory, and premature overdraft of performance.
To put it simply, consumers are not willing to continue to pay for "expensive" pickled mustard. For traditional categories like pickled mustard, consumers’ psychological expectations for its price are not high-value products. In addition, as a food accompaniment to food, pickled mustard is also highly replaceable. In the current fully competitive Red Sea market, consumption scenarios and frequency are decreasing.
Fuling mustard is also making efforts in multi-category layout and product innovation based on changes in market demand. But so far it has not found a strong second growth curve. In accordance with its two-wheel drive development strategy of "pickled mustard, pickled mustard +, doubanjiang, doubanjiang +", in 2023, it promoted Wujiang pickled mustard, Wujiang rice dishes, Wujiang mustard sauce, Wujiang condiments, Wujiang pickles, Wujiang kelp shreds, and Wujiang pickles. Categories such as pickled mustard soy sauce, Huitong rice noodles, Shuliu fragrant bean paste and Cuixiaocai snacks, focusing on the three major categories of pickled mustard, rice noodles and mustard sauce.
Image source: Tmall Supermarket
However, judging from the larger radish and kimchi product business including side dishes, condiments and other categories, these new categories have not yet been able to break through.
In recent years, Fuling mustard has been cultivating the market for radish and kimchi products. In 2018, the revenue of its radish products exceeded the 100 million yuan mark, but this situation has not been maintained, and the revenue of radish products has fallen below 100 million yuan for many consecutive years. In 2023, the revenue of radish products fell by 25.99% to 60.98 million yuan, accounting for only 2.49% of the revenue; during the same period, the revenue of kimchi products fell by 6.51% to 225 million yuan, accounting for 9.19% of the revenue.
According to Fuling Zhacai’s latest plan, compound seasonings and prepared dishes are also the directions it is trying.
But judging from the current market, these two tracks that have been on the forefront in recent years are both crowded with large and small players. Take the Sichuan-style compound seasoning subcategory that Fuling Zhacai is trying as an example. It is already a quite fragmented market with many mature brands and new brands, such as Haidilao, Haorenjia, Sichuan Wazi, etc.
In the field of prepared dishes in Sichuan and Chongqing, there are also companies that have taken the lead in the upstream supply chain, manufacturing R&D and branding capabilities. For Fuling pickled mustard, which is just starting to experiment, it remains to be seen whether it can rely on existing resources to produce products that win the market.
