Author | Wang Xiaojuan

In today's weather is good. Today's weather is good.

At the beginning of this year, Baiguoyuan, which has been listed for a year, ambitiously announced a ten-year GMV plan of one trillion yuan. However, in less than six months, Baiguoyuan, which is not cost-effective enough, has become the object abandoned by the middle class.

On August 22nd, Baiguoyuan Group released its mid-term performance for 2024. In this reporting period, various financial indicators including revenue and profit have declined by double digits.

In the past few years, Baiguoyuan has labeled its own fruits as "delicious" as a business objective, sticking a high price tag on itself. However, in the past two years, Baiguoyuan has been high-priced but not of good quality, and has been involved in several "rotten fruit" crises.

In addition to changes in consumer trends, consumers who are afraid of encountering "fruit assassins" have started to flee from Baiguoyuan.

Faced with the decline in customer flow and the "changing face" of performance, the management of Baiguoyuan also realized the crisis. At the financial report conference call, Baiguoyuan stated that it will continue to focus on the B-end market and pay more attention to cost-effectiveness in the C-end as well.

But it is not easy to establish new consumer awareness; Baiguoyuan's future is still full of thorns.

Escape.

298 yuan per Cat Mountain King durian, 246 yuan per kilogram of cherries, 8 Washington navel oranges for 73 yuan, 10 green grapes for 40 yuan, 3 kiwifruits for about 30 yuan, even the sugar tangerines bought by boxes outside, Baiguoyuan also charges nearly 8 yuan per kilogram.

"Too expensive" has long been a stereotype for Baiguoyuan. And in the era when people are looking for "consumption replacement", Baiguoyuan has also become an abandoned object.

In the first half of the year, Baiguoyuan achieved a revenue of 5.594 billion yuan, a year-on-year decrease of 11.1%; gross profit was 0.619 billion yuan, a decrease of 13.2% year-on-year; the largest decrease was in net profit, which decreased by about 66.1% to 88.5 million yuan.

During the financial report conference call, Baiguoyuan's management explained that the decline in performance in the first half of the year was mainly due to a decrease in customer traffic entering the stores, while the average customer spending increased due to the increase in product categories. "You can clearly feel that consumers of different social classes are becoming more rational."

The reason for the decline in net profit is that Baiguoyuan invested more in store upgrades in the first half of the year.

Baiguoyuan has always been focused on the business of premium fruits and pioneered a grading evaluation system in the industry. Baiguoyuan will classify fruits into signature level, A level, and B level, of which the signature level and A level are symbols of the company's high quality. Signature fruits have the advantage of exclusive control of goods, which was the reason why Baiguoyuan was popular among consumers in the past.

However, Baiguoyuan's labels of quality and deliciousness are also declining.

After all, when people start discussing something expensive, it's mainly about the mismatch between price and quality. Consumers know well that "expensive is not its fault, but mine", but if the price is high and the quality control is not strict, consumers will really abandon it.

During this year's March 15th period, a Baiguoyuan store in Wuhan was exposed for using rotten fruits to make expensive fruit cuts, and overnight fruits stored in the refrigerator were sold as fresh fruits the next day. In the exposed video, the store employee called it a "magical transformation of decay".

It is worth mentioning that this is not the first time. Before this, Baiguoyuan had apologized several times for rotten fruits, and its subsidiary had been fined for pesticide residue.

Positioned as high-end and pursuing quality, but repeatedly getting involved in food safety controversies, this is also an image that Baiguoyuan urgently needs to get rid of.

Despite Baiguoyuan's efforts to win consumer favor, such as launching policies like "refund for unsatisfactory taste without a receipt", to demonstrate confidence in the quality of their own fruits and highlight their value for consumer experience, returning goods is not as simple as wanting to return them. It also involves a series of conflicts with the store, making it difficult for Baiguoyuan to be a heavyweight in the fruit industry.

On the Black Cat Complaints Platform, there are nearly 2,700 complaints about Baiguoyuan. Most of the complaints are about the quality of fruits, such as selling inferior products and fruits becoming moldy and deteriorated, and these complaints are all about unsuccessful returns at physical stores.

The dual betrayal of price and quality directly makes consumers "keep their distance" from Baiguoyuan.

Self-help.

As a non-standard product, in order to do well in this business, it poses many challenges to product quality, supply chain and other aspects.

In addition to further strengthening the supervision of franchisees, Baiguoyuan is also looking for new growth points. For example, the direct sales business from the B-side. Compared to managing franchisees, direct sales are also easier to control in terms of quality.

The management of Baiguoyuan revealed that the revenue growth from the B-side has offset the declining trend of the C-side. In other words, the C-side actually declined more. In the first half of 2024, the company's sales revenue from direct sales of fruits and other foods was 0.713 billion yuan, an increase of 30% compared to the same period last year.

Among them, overseas sales have also shown good growth. Compared with the same period in 2023, direct sales of fruits in the overseas market increased by about 29.4%.

In order to further develop the B-side and expand overseas, Baiguoyuan acquired a 19.58% equity stake in the Banguo B2B platform last year, becoming its controlling shareholder. This acquisition was made to solve the pain points of large and scattered procurement and sales in the fruit industry, and jointly promote the optimization and upgrading of the supply chain.

In the second half of the year, Baiguoyuan stated that it will continue to increase the production of fruit gift boxes and other products targeting the B-side, expand more customers, and cooperate with well-known IPs such as luxury goods to open up the market.

Of course, the foundation of Baiguoyuan still comes from customers on the C-side, which is the sales brought by more than 2,000 dealers in 6,025 stores in nearly 200 cities nationwide. This is something that cannot be lost.

In the first half of the year, Baiguoyuan renewed more than 6,000 franchise stores and unified the signage in order to enhance consumer brand awareness.

In addition, Baiguoyuan is also trying some innovative store operation strategies. In the first half of the year, Baiguoyuan piloted a large-scale innovative store with an area of over 150 square meters in Yueyang, Hunan, and currently has 2 large stores in operation.

Based on changes in the consumer environment, Baiguoyuan's overall strategy has also changed. In the first half of the year, Baiguoyuan upgraded its strategy from 'delicious' to 'high-quality fruit expert and leader'.

'Delicious' means not focusing on price and only focusing on taste. However, 'high-quality fruit expert and leader' has a richer explanation. During the financial report conference call, the management explained it as 'quality cost-effectiveness'. It seems that the price reduction of high-end fruit is imminent.

Based on the new strategy, after launching the fruit evaluation system, Baiguoyuan will also establish a scientific and flexible pricing system. This was reflected in the store upgrades in the first half of the year. For example, during the upgrades, Baiguoyuan suggested franchisees to use electronic price tags.

In the second half of the year, Baiguoyuan is still committed to attracting customers to its stores. Management stated that they will improve price ranges, divide business districts for combination pricing, enrich SKU, and use online and offline integration to bring online consumers into stores.

The most direct means of attracting customers is through low-priced products.

Recently, many people have noticed that the price of seasonal fruits at Baiguoyuan has decreased compared to before. In a store in Beijing, the price of dragon fruit for attracting customers at the entrance is 2.99 yuan/500g, which is not much different from the price in nearby supermarkets.

In a huge and decentralized industry, the temptation of a vast market and the challenges of concentration have always existed. Even as the uncertainty of the consumer environment increases, fruits, as daily consumer goods, still have a large consumer base. It depends on the brand to do business with whom.

Changes in current consumption trends can also be seen from other industries. For example, in the tea drink industry, HeyTea, with product prices mainly below 10 yuan, has opened thousands of stores, while Nayuki Tea, priced above 20 yuan, continues to incur losses. Similarly, in the dining industry, the 19.9 yuan self-service concept has regained popularity, while the high-end French restaurant, Bund 18, has closed down.

Currently, Pagoda has adjusted its strategy in order to change consumers' previous stereotypes and establish new awareness, but this process still needs to be refined gradually. Of course, while emphasizing cost-effectiveness, it is also necessary to prevent falling back into the trap of drastic price reductions and losing brand character. Therefore, how Pagoda will establish a new image in the future is especially crucial.