“Investors Network” Ye Xin

On the occasion of the Lunar New Year in the Year of the Dragon, the topic of “prepared dishes for New Year's Eve dinner” once again sparked a buzz, and topics related to “prepared dishes” were frequently trending on Weibo, causing widespread controversy.

Recently, online e-commerce platforms, fresh food platforms, and offline traditional supermarkets have all placed and sold pre-made New Year dishes, and pre-prepared New Year's dishes are trying to “seize” the Spring Festival table.

Although prepared dishes have always been debated due to food safety issues, the popularity of prepared dishes is also the current new normal of consumption. According to the “2023 China Lunar New Year Gift Box Consumer Behavior Insight Report” released by Ai Media Consulting, nearly 30% of Chinese New Year gift box consumers will choose to buy pre-prepared dishes. This is also the first time that pre-made dishes have become one of the top ten Chinese consumer choices for Lunar New Year gift boxes.

Sales of pre-made New Year's Eve dinner are booming

The most essential part of the Spring Festival is, of course, the “New Year's Eve Dinner”. The richer the menu, the more abundant it means you can spend more than one year in the coming year.

As the Spring Festival approaches, in the process of selling New Year's Eve products, prepared dishes have also become one of the main consumers in the New Year's Eve dinner market. Whether it is e-commerce platforms including Hema, Dingdong Grocery Shopping, Little Elephant Supermarket (formerly Meituan Grocery Shopping), etc., or offline shopping malls such as Hema, Da Runfa, and Carrefour, pre-made New Year's Eve dinner can be seen everywhere.

Recently, online platforms, e-commerce platforms such as Taobao, JD, Douyin, and Xiaohongshu have all launched pre-made New Year's Eve dinner promotions. On the live broadcast of anchors such as Li Jiaqi, Luo Yonghao, Baby Lie, and Chen Jie, they brought in “pre-made New Year's Eve dinner gift boxes” from various brands.

Buddha jumping over the wall, chicken with flower gum, pickled pork with plum vegetables... there are a wide variety of pre-made dishes to choose from. On an e-commerce platform, some pre-made New Year's Eve gift boxes usually include 8-12 dishes, with an average price of around 300 yuan. The main brands are established restaurants such as Zhiweiguan, Mrs. Crab, and Shen Dacheng, as well as pre-made food brands such as Mai Zi Ma and Zhenwei Xiaomeiyuan, all selling thousands of copies; in contrast, popular items such as Buddha Jumping Wall and Fish Maw Chicken are lower in price, and sales are higher, with some brands selling over 10,000.

It can be seen that the sales volume of pre-prepared dishes for the New Year is booming. In fact, sales of prepared dishes have also increased rapidly during the Spring Festival in recent years. According to some data, during the 2022 National “Online New Year Festival”, sales of prepared dishes increased by 45.9% year-on-year.

In the new year, as Gen Z gradually took the initiative, they preferred to choose more convenient and varied pre-made dishes compared to the hands-on efforts of the previous generation. According to “Tmall New Year Festival 2024: New Taste Trends”, Taobao now accounts for more than half of the post-95 users who order New Year's goods.

According to research data from Ai Media Consulting, during the Spring Festival, the main choice of venue for the New Year's Eve dinner is at home or in a restaurant. In 2023, 20.9% of households chose to buy all prepared dishes; 49.2% of households chose to buy some homemade ingredients, and some purchased prepared dishes, such as Buddha jumping over the wall, chicken with flower gum, etc., which are difficult to operate and have complicated processes. Most consumers will consider buying pre-prepared dishes.

The industry predicts that sales of pre-made dishes for the Spring Festival will peak again in 2024. According to statistics from Ai Media Consulting, the market size of China's New Year dishes industry was 129.1 billion yuan in 2023, an increase of 81% over the previous year; the market size of China's New Year dishes industry is expected to reach 170 billion yuan in 2024; the market size is expected to reach 260 billion yuan in 2026.

Industry penetration rate needs to be improved

In fact, pre-made New Year dishes not only “seize” the Spring Festival table, but are also trying to infiltrate people's daily lives.

According to public information, prepared dishes originated in the US and matured in Japan. Our country is still in the early stages of development. With the advancement of science and technology, prepared dishes are gradually becoming an emerging retail product in China.

According to data from Tianyancha, up to now, there are currently more than 64,000 enterprises related to prepared dishes; among them, from January to December 2023, more than 5,000 new enterprises were registered, an increase of 152.9% over the same period with 2022.

In terms of geographical distribution, Shandong ranked first in the region with more than 8,200 companies; Henan and Jiangsu had more than 5,900 and 5,200 companies respectively, ranking second and third; judging from the time of establishment, 33.7% of related enterprises were established within 1-5 years, and related enterprises established within 1 year accounted for 8.9%.

China's prepared food industry is growing rapidly, and there is plenty of room for development. According to Ai Media Consulting data, the size of the prepared food market reached 415.2 billion yuan in 2022, an increase of 21.31% over the previous year. The compound growth rate is expected to reach 29.25% from 2022 to 2025.

Currently, China's policy promotes the development of the prepared food industry and enhances the standardization of catering. In July 2023, the State Council issued the “Notice of the General Office of the State Council Forwarding Measures to Resume and Expand Consumption of the National Development and Reform Commission”, which mentions cultivating a “farming base+central kitchen+cold chain logistics+catering stores” model, exploring the potential of the prepared food market, accelerating the construction of prepared food bases, fully reflecting the principles of safety, nutrition and health, and improving the standardization level of food quality and distribution.

Policies are being supported, and the pre-prepared food investment and financing market is booming. According to Tianyancha's investment and financing data, there were a total of 40 investment and financing incidents in the prepared food sector, and the financing amount exceeded 4 billion yuan.

Currently, Chinese prepared dishes are in the blue ocean phase. According to data from the “China Culinary Association Five-Year (2021-2025) Work Plan”, the penetration rate of prepared dishes in China is only 10%-15%, while the penetration rate of prepared dishes in the US and Japan has reached more than 60%. Compared with that, the concentration of the prepared food industry in China needs to be increased urgently. The penetration rate is expected to increase to 15% to 20% in 2030.

Sales are mainly concentrated on the B-side

At present, national and local governments have successively introduced a series of policies to support industrial development. With policy support, the prepared food market will usher in a new period of rapid development. However, according to data from the China Chain Management Association, more than 85% of the sales channels for prepared dishes are concentrated on the B-side, and C-side sales account for a relatively small share.

The main participants in the prepared food industry chain can be broadly divided into 5 types: professional prepared food companies, upstream raw material companies, frozen food companies, catering companies, and retail companies. Among A-share listed companies, companies such as Senmio Chef (001215.SZ) and Yasui Foods (603345.SH) are important participants in the prepared food industry.

According to data, Yasui Foods is mainly engaged in R&D, production and sales of hot pot ingredients and frozen noodle rice products. In the frozen hot pot ingredients business segment, the company specializes in frozen surimi products such as “Yasui” brand fish tofu, fish seed buns, and crab-flavored steak, as well as frozen meat products such as pee meatballs, qinqin sausage, and Xiaman dumplings. In the frozen noodle and rice products sector, the company specializes in products such as “Yasui” brand yakimai, hand-held pancakes, milk-flavored steamed buns, and brown sugar cake. The frozen food products section includes the company's main “Yasui” brand shrimp paste, egg dumplings, and thousand night tofu; Yasui's “Mr. Frozen” products such as pickled cabbage, fish, lotus box, etc.; and prepared aquatic products such as “Yasui Little Chef” brand crispy meat and lotus glutinous rice chicken; and fishery prepared dishes such as crayfish tails and seasoned crayfish produced by holding subsidiaries Xinhongye and Xinliuwu.

Yasui Foods is a leading quick-frozen company. It has abundant product reserves and a strong first-mover advantage in channels and production capacity. In the first three quarters of 2023, the company's revenue was 10.271 billion yuan, up 25.93% year on year, and net profit to mother was 1,122 billion yuan, up 62.69% year on year.

Qianmiyang Chef has four major product lines: fritters, fried glutinous rice, steamed and fried dumplings, and baked goods. It has the main brand “Qianwei Chef,” “Thousand Point,” “Beilun,” “Cen Fu Zi,” and “Nabai Wei.” “Qianwei Chef” and “Thousand Points” are mainly used to produce and sell semi-finished products for B-side catering customers; “Qianwei Little Chef”, “Chen Fuzi” and “Nabai” are intended to sell products directly facing C-side consumers; “Beilun” is mainly used for bakery products.

Qianmiyang Chef's sales platforms include Douyin, JD, Kuaishou, Taobao, Tmall, Youzan, Meituan, and Hungry. The company is also a supplier to chain restaurants such as Yum Sheng China, Haidilao, Wallace, True Kung Fu, Hometown Chicken, and Lucky Coffee.

According to financial data, in the first three quarters of 2023, Qianwei Yang Chef achieved operating income of 480 million yuan, an increase of 25.0% year on year, and net profit to mother of 38 million yuan, an increase of 60.4% year on year. The company has been actively expanding new major customers, and the sales volume of core customers increased significantly in the first three quarters of 2023.

The Donghai Securities Research Report points out that demand for catering in the prepared food industry is rigid, the industry is growing rapidly, and the competitive pattern is relatively scattered, giving priority to leading companies with strong ability to create single products. With the characteristics of standardized flavors and easy preparation, prepared dishes effectively solve the pain points of high labor costs and slow meal delivery in the restaurant industry. Therefore, the increase in the catering chain rate, group meal growth, and takeout development jointly drive the growth of the prepared food industry, and the industry penetration rate is expected to increase rapidly.

It should be noted that the research institutes also indicated risks such as “the risk of fluctuating raw material prices, food safety risks, the risk of consumption recovery falling short of expectations, and the risk of sales of large single products falling short of expectations.” (Produced by Thinking Finance) ■