Author | Boya Editor | He Xiang
Retail Business Finance | Retail-Finance
Tao Huabi, she is a "veteran" who helped poor students settle their accounts in the early days of her business "Mom" is also a "laoganma" with a very charming personality who impresses employees with her family affection after the company develops and grows. Who would have thought that this illiterate, self-made rural woman would make Guizhou’s “Lao Gan Ma” a world-renowned hot commodity.
With the retirement of Tao Huabi in 2014, "Lao Ganma" completely entered the "Double Li" era. It is easy to start a business but difficult to keep it. The Li brothers have made big troubles one after another. "My mother" Tao Huabi had to go out to put out the fire in 2019 and stick to the front line.
Tao Huabi, now 75 years old, still guards the "Lao Ganma" and is eager to continue to be the "helmsman" of this big ship. However, the times are changing, hot sauce brands are emerging one after another, and Laoganma, who has been exposed to price increases one after another, seems to be bidding farewell to the "Tao Huabi Era" with tears.
As "Guizhou's business card", "Laoganma", which has been established for 25 years, is not only a bottle of hot sauce, but also a necessary seasoning for restaurant chefs, a food tool for workers, and a hometown that homesick travelers miss. taste.
Under the leadership of Tao Huabi, who “controls production with her left hand and controls prices with her right hand”, Laoganma once passed the food safety inspection of the US Food and Drug Administration (FDA) with “zero defects”; Whether the cost changes or not, it has always maintained a stable price band and has about one-fifth of the market share of my country's chili sauce market.
Lao Gan Ma is the leader and has become the "curse" of the hot sauce industry - Lao Gan Ma is the price benchmark. Brands that are cheaper than it will lose profit margins, and brands that are more expensive than it will have a difficult time. Become the first choice of consumers and then lose potential audiences.
Since the second half of last year, “paper has become more expensive” around the world, and retail sales have become “premium”. Since then, catering companies, new tea brands, and luxury goods companies have successively announced price increases. The most obvious thing experienced by ordinary people is the periodic price increase of 1-2 yuan for daily necessities.
A "price adjustment official letter" signed by Guiyang Nanming Laoganma Flavor Food Co., Ltd. shows that the price of 25 items of Laoganma will be adjusted by 5-15 per box starting from March 1. The price increased by about 10-20 yuan, and the price of a single bottle of chili sauce increased by about one yuan.
In response to this, netizens called out: "Can't we afford milk tea, instant noodles, and even Lao Gan Ma loses her taste?"
Retail Business Finance visited Metro Shanghai Songjiang The shopping mall store found that a 280g bottle of Tao Huabi Laoganma’s flavored black bean oil chili (the best-selling model) retails for 13.9 yuan, a 280g bottle of flavored chicken oil chili retails for 18.3 yuan, and a 280g bottle of spicy tributary oil chili. The price is 16.9 yuan.
On some e-commerce platforms, the unit price of a 280g bottle of flavored black bean oil chili in the Laoganma flagship store is still 9.9 yuan. Overall, Laoganma’s price adjustment has been reflected in some retail terminals.
In fact, Laoganma is good at doing "loss-making" business and has the confidence to ensure that "profits outpace inflation". This is due to its strong pricing power brought by its product strength and market share. .
Why is Lao Gan Ma the winner of inflation?
In Buffett's view, "it is a good thing to own a brand in times of inflation." Indeed, the impact of inflation on the profits of Laoganma and other hot sauce companies in the middle and tail is very different.
Laoganma’s success stems from its unique taste. It once encountered a crisis of confidence because Henan peppers “replaced” the Guizhou peppers in the original recipe. The irreplaceability of taste gives Laoganma strong product power and consumer stickiness.
Furthermore, the relationship with dealers also proves Laoganma’s strong control over gross profits.
It is understood that Laoganma’s dealers must pay for the goods in advance, or even pay for the second batch of goods, before they can get the first batch of goods, and Laoganma does not accept returns from any dealers.
With its strong distribution strategy, strong product power, channel power and pricing power, Laoganma can pass on rising costs to consumers without losing too much sales, ensuring increased profits. ; And the attributes of Laoganma’s “hard currency products” are also the key to it becoming an inflation winner.
Spring River Plumbing Duck Prophet. According to dealers, the prices of Laoganma chili sauce-related products have increased slightly since the end of last year, and the price adjustment in early March was larger. Many small retail shop owners also said that the price of "Laoganma" oil chili peppers has increased from 9 yuan before to 11 yuan this year.
But even if Laoganma frequently adjusts its prices, the dealers who should take the goods will still continue to take the goods. In their eyes, Laoganma is still a "hardly needed product" for many consumers.
Tao Huabi is a sentimental "old godmother". She has used "family-style" management to make employees and consumers trust her:
The only one in the company When there were 40 employees, the work of cutting peppers by hand was once regarded as a chore by the employees, but Tao Huabi took the lead in demonstrating and said with joy: "If you cut the peppers like apples, it will not irritate your eyes." Everyone was called "Old Inspired by the drive and determination of "Godmother", they all started to pick up kitchen knives to "cut apples".
When the company grew to more than 2,000 people, Tao Huabi always insisted on highlighting the family-friendly features in management. Not only did he provide food and accommodation for all employees, but he also remembered the names of 60 employees and even received them on their birthdays. Longevity noodles made by "Lao Ganma" herself.
In Tao Huabi's eyes, the company is a big family, and she hopes to use "godmother-style" management to provide employees with a lifelong relationship with a sense of belonging. Unfortunately, the traditional management model of family workshops has long been unable to adapt to the development of business operations and talent training in the Internet era.
The "family-style" employment model is suitable for companies in a stable period. As the company continues to grow, it needs to take advantage of economies of scale, improve processes, and change management methods.
"We are a team, not a family." Netflix CEO Reed's views are consistent with the transformative understanding of modern corporate management methods in the book "The Alliance". The author believes that the business world needs a new employment relationship framework that is conducive to mutual trust, mutual investment, and mutual benefit-the team alliance style.
It is better to build a team culture than to build a family culture.
Over the years, discussions about the transfer of power to Lao Ganma have never stopped. The modern enterprise reform that should have been completed by talented people may have started as early as the moment Tao Huabi chose to retire and distribute the shares to her two sons. , which has laid the foundation for the serious problem of "nepotism" for corporate inheritance issues.
In 2000, the eldest son Li Guishan took over 49% of Laoganma’s shares; in 2012, the younger son Li Miaoxing (formerly known as Li Hui) took over 50% of Laoganma’s shares. In terms of the company's business, Li Guishan is mainly engaged in sales and Li Miaoxing is mainly engaged in production.
In Tao Huabi's eyes, the eldest son Li Guishan is a "scholar" even though he only has a high school education. In order to reduce her work burden, he resolutely quit his "iron job" and taught her to write her name and read documents to her. After that, Li Guishan became the first general manager of Laoganma Company.
But the eldest son of the family did not become a role model in the family. The "scholar" Li Guishan had no intention of studying hot sauce. Instead, he shamed the "old godmother" because of the "unfinished building" incident of rashly investing in real estate.
The youngest son Li Miaoxing became Tao Huabi's family support for "the east is not bright but the west is bright", but the "recipe change" incident almost destroyed the golden brand that Lao Ganma had worked hard for more than 20 years.
Corporate change itself is a double-edged sword, and a truly outstanding company is good at mastering change. The core of enterprise change is organizational change, which supports the realization of enterprise strategic goals.
Various "cheating" operations in the "Double Li Era" not only failed to complete the smooth transformation of the company, but also changed the taste of Lao Gan Ma, and also torn apart the hot sauce market that was originally "dominated" by Lao Gan Ma. A small opening has opened, and new chili brands have sprung up like mushrooms after a rain. In recent years, there has even been a trend of "encirclement and suppression" of Lao Gan Ma. Lao Gan Ma, whose management cannot keep up with the times, has to face more "volume" market pressure.
Some people say that "Lao Ganma" is old and has no other choice but to raise prices. Compared with a century-old enterprise, the 25-year-old Lao Ganma is still in her prime and can be compared with beauty. Only Lao Ganma who adapts to the changes of the times and has the wisdom to adapt can complete the long-term development of the enterprise, and relying on Tao Lao alone is definitely not a long-term solution.
The question before Lao Ganma is, are the four principles of "no loans, no equity participation, no financing, no listing" that Tao Huabi once insisted on still applicable to the current development situation of enterprises? In other words, how does Laoganma go through the founder cycle, team cycle, product cycle and market cycle?
In a family business, it is not easy for a son to inherit his father's business. The fierce battle between father and son of Shuanghui worth hundreds of billions set off by the "deposed prince" Wan Hongjian is still vivid in our minds. "How does the second generation of the enterprise take over?" ” has also become one of the core propositions of traveling through the founder cycle.
"Through interviews, I found that the succession problem of retail enterprises is very common, and there are many contradictions." Professor Chen Liping, professor at Capital University of Economics and Business and executive director of the Consumer Big Data Research Institute, once spoke at the Fifth National Autonomous Conference At a brand conference, he put forward his views on "first-generation enterprises and second-generation enterprises".
The first generation of enterprises, as entrepreneurs, created the enterprise from scratch, and whether their second generation can serve as excellent entrepreneurs will carry forward and create new heights on the basis of the first generation. Organizational change is The perpetual motion machine of enterprise development. Only when the first generation and the second generation of enterprises successfully complete the transition between the two generations can good opportunities be created for the enterprise to achieve greater development.
Judging from the cycle of founders and teams, it is also a strong woman. In order to alleviate Gree’s “midlife crisis”, Dong Mingzhu, the “iron lady” worth 7 billion, did not force her son to take over Gree. , instead cultivated a 1999-year-old girl Meng Yutong to become the "second Dong Mingzhu"; Zong Fuli, who was also known as the "Princess of Wahaha" since she was a family business, used an entrepreneurial inheritance attitude with her father Zong Qing Post-parallel.
Compared with Gree or Wahaha, Laoganma does not handle corporate succession, nepotism or meritocracy well. Its conservative internal culture and extensive management have long been "outdated". Especially in terms of talent training, although Tao Huabi had a short period of "quenching" recruitment, after entering the "Double Li Era", he has always been in a "burnout" situation with no successors.
In 2019, when the company's performance took a turn for the worse, Mr. Tao, who was over 70 years old, had no choice but to "go overseas" to take the helm of Lao Gan Ma for the second time. However, Lao Gan Ma also faced a bigger problem: who can take over from the company in the future? She took over Lao Ganma?
In the face of product cycles and market cycles, it is difficult for Lao Ganma, who is bidding farewell to the "Tao Huabi Era", to eat "spicy" dishes everywhere.
“The current Laoganma is not worth buying. I used to buy a bottle and I couldn’t bear to eat it, but I could finish a bottle in two or three days. Now I can’t eat it. After a few bites, I just leave it there and wait to get moldy. ” The intuitive feelings of consumers reveal the plight of Lao Gan Ma.
In the era of scarcity, Lao Gan Ma fried rice and Lao Gan Ma bibimbap were popular items in small restaurants. Ordinary families would be extremely happy to have a bottle of Lao Gan Ma. In the Internet era where new consumer brands are emerging one after another, some entrepreneurs insist that "all products are worth making again", which makes them set their sights on the hot sauce track.
In 2020, China's hot sauce market has reached a scale of 40 billion yuan; in 2021, the number of people eating spicy food in China has exceeded 650 million, and it continues to expand at a growth rate of about 10 per year.
Over the years, Laoganma has responded to ever-changing changes with its strong product and channel power. However, due to the continuous expansion of the market, many eaters have entered the chili sauce track, and there are more and more competing products. , competition has become increasingly fierce, which also caused Laoganma's market share to drop from more than 20 to less than 15.
Relevant data shows that there are more than 4,500 companies involved in the chili sauce business. Among them, emerging hot sauce brands such as Hu Bang, Fan Ye, Zuoda Shi, and Li Ziqi Hot Sauce emerged from time to time. While targeting young consumer groups, they used multiple categories, multiple flavors, and multiple marketing to capture the minds of young people, and tried their best to capture the minds of young people. Capture market share in the hot sauce market.
On the one hand, "Laoganma" has long been solidified as the product symbol of Youlazi in the minds of mass consumers, while other niche products are only remembered by consumers for their flavor, and new products that cannot have brand names are still Trying to find a breakthrough in brand power.
"Brand" is regarded by Lao Gan Ma as a solid moat for the enterprise. It is no wonder that Lao Gan Ma has been crazy about registering trademarks in recent years. Godmother and others have become members of the Laoganma family.
Today's Lao Gan Ma still adheres to the "four no's" principle of no loans, no equity participation, no financing, and no listing. However, in the past, Lao Gan Ma, who only relied on word-of-mouth tradition, finally began to try new marketing Methods include launching the magical video advertisement "Unscrew Godmother", Lao Godmother's Love Words Bottle, etc.
On the other hand, the production equipment and raw materials of condiments are very easy to imitate, and the product operating procedures and raw material processing are similar, so the entry threshold for the hot sauce industry is low.
"Alternatives" that are better quality and cheaper than Laoganma are constantly emerging in the affordable market, while novel and diversified hot sauces are also rapidly emerging in the high-end market. This will inevitably make consumers more and more picky, and even feel that "Laoganma is no longer fragrant."
Zhu Danpeng, a Chinese food industry analyst, said in an interview with Beijing Business Daily that in the field of chili sauce, Laoganma’s advantages are declining at the product end, channel end and terminal end, and companies need to Layout from multiple scenarios, multiple channels, and multiple categories. "Laoganma needs to form a complete system in terms of innovative consumption scenarios and channel integration in order to usher in better market development space."
"I am Chinese and I do not make money from Chinese people." "The reason why there are "Lao Gan Ma" in this world is because of Tao Huabi.
Tao Huabi is extremely conscientious, dedicated, and down-to-earth in life and business. The "Lao Ganma" she has created is a model for national enterprises. Young consumer groups still need honest and innovative Laoganma, but where is the next "Tao Huabi"?
References:
1. Beijing Business Daily "Facing cost pressure, will Lao Gan Ma also raise prices?" "
2. Yangcheng Evening News ""Lao Ganma" suddenly increased in price! 》
3. Upstream news "Businesses raising the price of "Lao Gan Ma": from last year to this year"
4. Global business figure "Tao Huabi: The popular "Lao Gan Ma" ”》