During the National Day holiday, Haitian Flavor Industry was labeled as "additive" and "double standards". Although Haitian tried its best to clarify, it was still full of criticism. Someone threw Haitian to buy Qianhe , and some people swear to never buy Haitian's stock again, which reminded me of the melamine incident in 2008.
Feijing Investment Research first demonstrated its attitude that the melamine incident is a serious food safety issue and we will never tolerate it; Haitian’s additive storm caused social sentiment due to the company’s delay in answering positively and failed public relations. This is not a defense for Haitian. There is no problem with the use of food additives within the scope of compliance, but Haitian's approach is indeed inappropriate.
1. Looking back at the whole story of Yili’s “Melamine Incident”, is the impact of additives on Haitian temporary?
"Melamine" incident:
"Melamine incident" was a serious food safety accident that broke out in 2008. On September 8, 2008, 14 babies in Minxian County, Gansu Province also suffered from kidney stone disease. After examination, chemical raw material melamine was found in the milk powder eaten by these babies. Afterwards, melamine was detected in 69 batches of products from 22 manufacturers including Yili , Mengniu , Guangming, Shengyuan and Yashili. The incident deteriorated rapidly, causing huge social response and public anger. The main cause of the melamine incident was illegal milk stations. Yili, Mengniu and even Sanlu were actually victims. But their endings are very different because choices ultimately affect the outcome.
In September 2008, the State Administration for Market Regulation announced the melamine test results of infant formula milk powder nationwide:
Sanlu: All 11 batches that were randomly inspected were unqualified, and the maximum content of melamine was as high as 2563 mg/kg;
Mengniu: Only 3 batches of infant formula milk powder were randomly inspected were unqualified, and the maximum content of melamine was only 68.2 mg/kg;
Yili: Only 1 batch of 35 batches of children's formula milk powder was randomly inspected, and the maximum content of melamine was only 12 mg/kg.
melamine is a raw material used to make plastics or coatings, and it is simply unscrupulous to add it to milk powder. Therefore, when Sanlu chose bad suppliers, she was destined to embark on the road of bankruptcy; although Yili and Mengniu had a slight situation, their stock prices also plummeted in the short term.
sodium benzoate is a licensed food additive, but domestic and foreign products are different, and it is indeed a bit embarrassing to everyone when they are taken to the table. Haitian's stock price fell three times after the opening of the National Day. The comment area is still in an uproar and mixed reviews. Judging from the consumer's reaction, even began to boycott Haitian Soy Sauce and defected to other brands. Haitian's performance in the second half of the year may not be good.
After the "Melamine Incident", Yili and Mengniu did different ways, gains and losses were different:
1999, Yili's then vice president Niu Gensheng , and he resigned and started his business with nine colleagues and founded Mengniu. With superb marketing methods, his turnover reached 21.3 billion yuan in 2007, exceeding Yili's turnover of 19.4 billion yuan.
But after the "Melamine incident", Yili and Mengniu's different practices have produced different effects. Milk is a fast-moving consumer goods. For dairy companies at that time, whoever mastered the dealers would master the market. After the incident broke out, domestic dairy companies suffered heavy blows. All dairy products produced before the incident must be removed from the shelves and brought back to the dealer warehouse to destroy and dealer warehouses.
In the face of interests, human nature is the most test. Mengniu asked its own dealers to share the responsibility, and lost 50% of the funds, causing many dealers to suffer heavy losses; Yili chose to bear the losses in full, winning the reputation and hearts of dealers. When the dairy industry recovered, many of Mengniu's dealers turned against Yili. After that, Yili quickly returned to the industry first place.
Haitian Flavor Industry is the number one in the condiment industry. Its market value is the sum of the market value of many condiment companies and its size is huge. But the more the leader it is, the more attention it is. The short-term impact of additive incidents must exist. It is unknown whether Haitian can restore its image and win the trust of consumers again.
2. Can the highlight moments of Haitian have been maintained?
1, high gross profit margin, high turnover rate double high enterprise
gross profit margin is the ratio of the enterprise's gross profit (operating income-cost) to operating income, and is used to measure the profitability of the enterprise's products. The higher the gross profit margin, the stronger the profitability of the enterprise.
Inventory turnover rate usually refers to the number of inventory turnover times within a year. The higher the inventory turnover rate, the easier it is to sell the inventory to obtain cash, and the stronger the cashing capacity.
"price" and "quantity" are two key indicators for enterprises to sell products. Financially, the gross profit margin is equivalent to the "price" of the product, representing the bargaining power of the enterprise; the inventory turnover rate is equivalent to the "quantity" of the product, reflecting the best-selling degree of the product. According to the investment matrix diagram of gross profit margin and inventory turnover rate, enterprises can be divided into four types:
best-selling strong bargaining: high gross profit margin, high inventory turnover rate
best-selling weak bargaining: low gross profit margin, high inventory turnover rate
unselling strong bargaining: high gross profit margin, low inventory turnover rate
unselling strong bargaining: high gross profit margin, low inventory turnover rate
unsalable weak bargaining: low gross profit margin, low inventory turnover rate
compares the gross profit margins and inventory turnover rates of Haitian Flavor Industry, Qianhe Flavor Industry , Zhongju High-tech and Gaga Food in the past five years. It is obvious that Haitian Flavor Industry is a typical high gross profit margin, high inventory turnover rate enterprise, and the corresponding matrix is a best-selling strong bargaining. In other words, Haitian's products sell well and fast, and have relatively strong bargaining power for the upstream and downstream.
Haitian inventory turnover is about 50 days at a time, and it can be turned over 7-8 times a year; Qianhe Flavor Industry turns over for about 150 days at a time, and Zhongju High-tech turns over for about 180 days at a time. Don’t doubt Haitian soy sauce is fake. The calculation of inventory turnover rate is like this.
Inventory consists of raw materials, in product , finished products, packaging materials, low-value consumables, etc. For Haitian, which sells soy sauce, raw materials refer to soybeans, wheat, etc. In the product, the soy sauce in production, the finished products are brewed soy sauce, and the packaging refers to soy sauce bottles, cartons, etc.
inventory turnover days are the weighted sum of the turnover rates of these items. Assume (with some subjectivity):
Haitian raw materials retained for 7 days in stock;
is 120 days in the fermentation period of product soy sauce, and 40 days in other products, which is concluded that it is about 90 days in the fermentation period of product
inventory goods turnover days are 7 days (assuming that the product is best-selling and the inventory product is in short supply. Find);
packaging products and low-value consumables account for a very small proportion, negligible;
takes the proportion of inventory items in the 2021 annual report as the weight, and calculates the inventory turnover days of Haitian as:
0.26*7+0.49*90+0.22*7=47.46 days, so Haitian's inventory turnover days were reasonable. In the past, relying on brand advantages, channel advantages and management advantages, the products were sold quickly and well.
2. The industry is large, Haitian itself has strong competitiveness
iMedia Consulting Data shows that the market size of China's condiments in 2021 was 459.4 billion yuan, and the CAGR from 2016 to 2021 was 9%. It is estimated that the market size will reach 788.1 billion yuan in 2025. The growth momentum comes from catering and consumption upgrades.
There are more than 400,000 seasoning companies, there are many local brands, and the industry market competition landscape is relatively scattered. Euromonitor data shows that the CR5 of my country's condiment industry snack market in 2021 was 18.8%, and the industry concentration was very low. Haitian himself accounts for 7.1%, with a clear advantage.
3. Behind the additive storm, it reflects consumers' attention to food safety
Many people think that Haitian is wrong at home and abroad, and that they are so arrogant and unapologetic. The reason for the rapid fermentation of the incident is that Haitian is the leader in the spotlight. The soy sauce it sells is aimed at the public. Before something happened, 8 out of 10 families bought Haitian soy sauce. Therefore, consumers trust Haitian very much, but it makes many people feel disappointed.
It is undeniable that not only Haitian’s soy sauce has additives, but other ordinary soy sauces also have them. Therefore, this incident may allow the food industry to usher in stricter standard control, accelerate the clearance of small and medium-sized condiments companies, and concentrate market share on leading companies.
But can trust be recovered by issuing a clarification announcement? At present, Haitian’s leading advantage is still there. What can it be done? If Haitian can take action and let the public truly see the responsibility and responsibility of a leading enterprise, it may be able to reverse adversity.
As for whether to take action? What actions should be taken? Feijing Investment Research is looking forward to it just like everyone else.
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Source: Feijing Investment and Research
