The first batch of spicy noodles is coming.
According to IFR, a subsidiary of Reuters, Weilong Food, which is famous nationwide for its spicy strips, plans to IPO in Hong Kong next year to raise US$1 billion. The company is currently cooperating with CICC, Morgan Stanley and UBS to discuss listing matters in the second half of next year.
Previously, Weilong had made frequent equity changes, which were seen by the industry as paving the way for listing. There were also rumors of listing a few years ago.
It can be seen that Weilong’s ambitions are getting bigger and bigger. Founder Liu Weiping once proposed that a larger production base and R&D costs are needed, which may also be needed in Weilong’s plan to raise US$1 billion. part.
When it comes to Weilong, it can be said that everyone is familiar with it. However, Weilong has developed rapidly in recent years and is no longer the spicy bar brand you remember.
The birth of Weilong also started with a flood.
In 1998, Hunan suffered a severe flood, which severely damaged crops. The production capacity of soybeans, the main raw material for dried soybeans, dropped and prices rose sharply, which caused a considerable impact on the original industry.
In order to reduce costs, three master chefs in the soybean paste workshop used gluten to replace dried tofu, but by mistake, they made a substitute with similar taste but much cheaper price, which is now spicy. The prototype of the strip.
Because of the simplicity of production, the production threshold for early spicy strips was extremely low, and a large number of small workshops emerged on the market. However, Pingjiang is a mountainous area, and flour is not produced locally. Local companies have no raw material advantages. There is no sales advantage. If you want to sell your products, you still need a suitable region.
From 1997 to 1998, Liu Weiping, who graduated from high school, was still working in a Taiwan-funded enterprise in Guangdong. Seeing that he followed the advice of fellow villagers, Liu Weiping decided to try his luck in Luohe.
Luohe is an important town in the food industry in Henan. It has not only Shuanghui but also leading local food companies such as Nanjiecun, Aodili, and Beixu. It has also attracted companies such as Goldman Sachs, DuPont, Nippon Ham Co., Ltd., and Korea Domestic and foreign heavyweight food companies such as Lotte, COFCO, Want Want Group, and Charoen Pokphand Group have built factories and invested in the local area.
So in August 1999, Liu Weiping boarded train 2153 and arrived in Luohe at 3 am.
Facts have proved that his last stand was right.
In 2000, Liu Weiping had a meal with his fellow villagers and discovered a food called beef tendon noodles. Later, Liu Weiping found the production place of beef tendon noodles, which was also a small workshop with only a simple puffing machine.
Liu Weiping paid a deposit and asked the shop owner to improve the mold, and the product came out a week later. He added some caramel and chili powder and turned it into a brown product, a bit like eel, so he named it "eel strips".
Later, it was called "Spicy Tiao" and "Spicy Silk" by more and more people. With his passion for food, Liu Weiping repeatedly made spicy strips several times, and finally had a satisfactory product.
With a similar spirit of hard work, there is also Zhang Hongchao of Mixue Bingcheng, who initially figured out several recipes based on his own understanding of cold drinks. However, the first few batches of trial-produced ice cream tasted unsatisfactory, so Zhang Hongchao did not give up. If one batch failed, he adjusted the formula and made another batch. He kept trying for several days, and the testers almost vomited.
Talking back to Weilong, in order to promote spicy silk, Liu Weiping began to squat in schools near the factory. Whenever school was over, he would set up a stall at the school gate and even invite students to try the food for free.
One small detail is that in order to facilitate students to put the spicy strips directly into their pockets, Liu Weiping also changed the original 12 cm large package into a smaller size. This also shows Liu Weiping's extraordinary ability. Business acumen.
The school's initial test was very successful, and Liu Weiping's spicy silk received rave reviews. Therefore, starting in 2002, Liu Weiping's beef tendon noodle production increased sharply, from one machine to one. Dozens of units By 2003, Liu Weiping registered the trademark "Weilong" for his spicy noodles. It is said that Weilong was invented by taking one word from the names of Liu Weiping and the star Jackie Chan.
The company was registered the following year, and production bases were successively launched in Luohe, Zhumadian and Fugou, Henan.
In order to promote spicy noodles, it is said that Weilong insisted on adopting the "mass line". We promote our own spicy noodles by posting small advertisements on the street, writing soft articles, and holding health knowledge lectures.
There are rumors that in the early days, Liu Weiping hired a large number of farmers to set up land sales, with Luohe as the center, radiating 100 kilometers and 200 kilometers around, from Carrefour and Wal-Mart to schools and community shops. Posters and flags were posted everywhere.
According to Liu Weiping, "Weilong" spicy strips first took root in Luohe. The Luohe market must be opened first, and then expanded to Zhengzhou, and then to the whole province of Henan and the country.
At the beginning of market development, Weilong Spicy Tiao set an order quantity standard of "600 pieces per day" for dealers. If the order volume of 600 pieces is not reached in a day, the next customer will not be opened. For Weilong, this not only ensures that the sales volume of the products can keep up, but also has the basis of quantity, and customers will pay more and more attention to it.
Hard work pays off, and the little spicy strips capture people's hearts. Weilong's business becomes more and more prosperous.
Wei Long’s ambitions extend far beyond Luohe.
With more and more popularity in many places, Weilong is also facing a long-standing problem: that is, the brand image is too sinking.
Just like when many people mention spicy strips, they subconsciously think it is a junk product. When they mention Weilong, they also tacitly think it is a low-end product.
How to solve this long-standing pain point? Wei Long thought of a way, Apple marketing.
"250g super large capacity, chewy and kissable. On sale starting from September 13, limited to 500 copies"
"Weilong R&D laboratory has developed a new spiciness taste, 2100 spiciness The running score is closer to the taste of people across the country who value freshness and hemp, making spicy food more warm."
This copywriting is close to Apple's, simple product design, black and white and gray tones are stylish, it can be said that at the time The novelty makes consumers' eyes brighter, and they remember the advertisement and Weilong.
In this battle for consumers’ minds, Weilong has fought brilliantly.
At the same time, Weilong also spends a lot of time offline.
The month after the release of Hotstrip 7.0, Weilong’s official Weibo released a set of pictures, in which hot strips of different flavors were displayed as exhibits in a glass display cabinet. Whether it is the decoration style or product display, they are exactly the same as the iPhone offline store.
Data shows that within two days, this Weibo post had more than 35,000 retweets and more than 14,000 comments.
In the process of marketing to the Internet, in 2015, Weilong's sales also began to move online. In a short period of time, Weilong quickly entered major stores such as Tmall, JD.com, Yihaodian, and Taobao Mall. The e-commerce platform has quickly accumulated a large number of fans, and the number of fans is in the millions.
In addition to marketing, Weilong has also been exploring diversification in categories in recent years.
According to a report by Beijing Business Daily in 2019, Weilong Food currently has multiple production bases such as Luohe Pingping, Zhumadian Pingping, Qizui Dougan, and Wei Lai Food, mainly producing seasoned noodles. Production of finished products.
At present, in addition to spicy strips, Weilong Food's products also include konjac noodles, potato chips, crispy rice noodles, beef, chicken feet, braised eggs, spicy strips hot pot, etc.
Weilong’s products are no longer just spicy strips, its product line is constantly enriched and expanded. For example, in 2014, Weilong invested a lot of money to establish a third food production base, with dry noodles and konjac production lines. This was built.
When the craze for self-heating food broke out around 2017, Weilong actively followed up and launched the self-heating hot pot brand "Backpacker" for people with heavy tastes in Sichuan, Hunan and Chongqing; in 2018, Weilong launched " "Zilaisu" spicy hot pot products are deployed in the convenience food market; in 2019, Weilong sold hot and sour noodles and charcoal-grilled sausages on Tmall. In 2020, Weilong launched a new series of soft-boiled braised eggs.
According to the introduction on the official website, Weilong has currently created dozens of products in four categories: flour products, soy products, konjac products, and vegetable products. According to Liu Weiping, in 2019 alone, Weilong used nearly 200,000 tons of agricultural and sideline products such as flour, kelp, soybeans, peppers, and konjac.
In order to cope with the new changes, Weilong has also begun to invest in research and development, and has specially set up the Central Research Institute of Spicy Snack Foods. After professional R&D personnel have experienced and demonstrated the product taste, ingredients, packaging, etc., Develop new spicy strips.
At the beginning of this year, Liu Weiping also revealed to the media that he would invest in building a new factory and workshop to create a more intelligent Weilong.
From marketing to products, the reborn Weilong has grown rapidly in recent years.
At the 2020 Partner Conference, Weilong Chairman Liu Weiping revealed that Weilong’s overall revenue in 2019 was 4.909 billion yuan, of which 2.55 billion yuan was from terminal direct sales, 1.8 billion yuan was from circulation channels, and 1.8 billion yuan was from e-commerce. Revenue from commercial channels was RMB 559 million. Compared with 2018 revenue of 3.5 billion yuan, the growth rate is nearly 43%. At the same time, Liu Weiping said that Weilong's revenue target in 2020 is 7.2 billion yuan, which is expected to increase by nearly 47% based on 2019.
Weilong’s pursuit of listing this time is also related to the company’s growth potential. How big is the entire market?
Currently, according to the "Snacks Industry Development Report under the Background of Consumption Upgrading" released by the Circulation Industry Promotion Center of the Ministry of Commerce, the total output value of the snack industry in 2020 will be close to 3 trillion yuan, of which only the spicy strips category The annual output value is nearly 60 billion yuan.
Latiao is a product with high profit margin. Zhu Danpeng, a Chinese food industry analyst, said the average gross profit margin of spicy strips is close to 50%. However, this industry has yet to emerge as a national leader. Even Weilong, which has the highest market share, has a market share of less than 10% of the entire industry.
Weilong has set a sales target of 10 billion.
But behind the seemingly rapid growth, Weilong is not without hidden worries.
In fact, food safety has always been a concern for spicy strip companies seeking to go public. Even though Weilong strives to prove "clean and hygienic" with actions, it has repeatedly been on the black list of food safety inspections.
According to public information, Pingping Food, a company controlled by Luohe Weilong Trading Co., Ltd., has been involved in judicial cases so far. The number one cause of action is product liability disputes, with 39 cases.
In 2015, the Luohe Municipal Quality Inspection Bureau issued a penalty notice stating that Pingping Food’s Qisuishao and Dagluten products were passing off as substandard products as qualified products. It was ordered to stop producing and selling substandard products and fined a total of 85,700 yuan.
After the 315 spicy strips incident was exposed, Weilong has three focuses in 2019: deepening terminal development, focusing on the retail market, and focusing on display. Taking advantage of the trend, Weilong released "About Weilong Leisure Customers Prohibited from Agents of Competitive Products" The notice stipulates that dealers are not allowed to represent competing products.
Second, there are more and more competitors.
The high gross profit characteristics of Latiao naturally attracted capital to join. Internet celebrity snack brands such as Three Squirrels, Bestore, Baicaowei, and Yanjin Store have also entered the spicy strip industry. After all, people who love nuts do not conflict with those who love spicy strips.
In fact, Three Squirrels and BESTORE, which are firmly established in the high-end, have already tried the sinking route, hoping to use their previously accumulated brand awareness, consumer acceptance, and customer base accumulated by die-hard fans. Attack Wei Long.
Some of these brands have seen a significant rise. For example, according to statistics from FMCG.com, in terms of bulk snack food sales in Shanghai and surrounding areas, Weilong ranked fifth and Yanjin Store ranked 10th in 2017. One year later, in 2018, Weilong maintained its ranking, while Yanjin Shop improved to seventh place.
It can be seen that Weilong, which is about to be launched, is also in a lot of embarrassment. Whether it can withstand the attack of many competing products for a long time still needs to be tested by the market.