China Business Daily (reporter Zhou Ziyi / photo)Bread’s first peach and plum bread is facing the dilemma of increasing revenue but not profit. A few days ago, the financial report released by Taoli Bread showed that the company experienced a decline in net profit in the first quarter of 2021 and 2022. Among the reasons, Taoli Bread talked about the increase in promotion. Industry insiders believe that the increased promotion of Taoli Bread may reflect that its sales level is hindered. In fact, Taoli Bread, which mainly relies on the supermarket channel, is in an embarrassing situation under the background of declining passenger traffic. The rise of the bakery market makes it more difficult to face strong opponents. In the future, it will be very difficult for Taoli Bread to break through the sales dilemma.
Bread showcase in a supermarket in Beijing
Net profit falls for first time in a decade
On the evening of April 18, the financial report released by Taoli Bread, the “first share of bread”, showed that in the first quarter of 2022, Taoli Bread achieved revenue of 1.452 billion yuan, a year-on-year increase of 9.43%; net profit attributable to the parent was 158 million yuan, a year-on-year decrease of 2.8%. , there is a situation of “increasing income without increasing profits”.
This situation has already appeared in the 2021 annual report released a few days ago. The data shows that in 2021, Taoli Bread will achieve a revenue of 6.335 billion yuan, a year-on-year increase of 6.24%; a net profit of 763 million yuan, a year-on-year decrease of 13.54%.
It should be noted that from 2012 to 2020, the revenue of peach and plum bread has maintained double-digit growth in the rest of the years except for the single-digit growth in 2020. Except for the single-digit growth in 2014 and 2019, the net profit has also increased in other years. It has maintained double-digit growth. In other words, Taoli Bread’s net profit in 2021 fell for the first time in a decade. In 2021, the net cash flow from Taoli Bread’s operating activities will be 1.014 billion yuan, a year-on-year decrease of 7.95%, which is also the first decline in ten years.
In terms of geographical distribution of revenue, Taoli Bread has a situation of “strong north and weak south”. The revenue from the Northeast, North and East China markets contributes more to its revenue, accounting for 47.7%, 22.94%, and 23.16% of its revenue in 2021, respectively. Since 2016, it has vigorously expanded its revenue from the Central and South China markets. The proportion of revenue is only 2.92% and 8.03%.
In addition, the 2021 financial report shows that 13 of the 39 subsidiaries of Taoli Bread are in a loss state, most of which are Southern companies. Shanghai Taoli, Hainan Taoli, Jiangsu Taoli, Fuzhou Taoli, and Xiamen Taoli all lost more than 10 million yuan. On the day of the annual report, Taoli Bread also stated that it planned to cancel the company’s wholly-owned subsidiaries Fuzhou Taoli and Xiamen Taoli.
It is understood that Taoli Bread was listed on the Shanghai Stock Exchange in 2015 and became the “first bread stock”. It adopts the business model of “central factory + wholesale”. Marketing strategy expert Shen Boyuan told a reporter from China Business Daily that the advantages of this model are that it does not require a huge sales team, and the operating costs are low. The disadvantage is that the distribution chain is long and the company’s control over terminal retail is relatively weak. In addition, the short-term warranty bread sold by Taoli Bread has high consumption, and the service capability of the dealers to control the terminal is relatively high.
Obstacles at the sales level
What is the reason for Taoli Bread’s first net profit decline in ten years? It explained in the annual report that the company’s gross profit margin in 2021 will decrease by 3.69% year-on-year, mainly due to the impact of the national phased social security reduction and exemption policy in the same period in 2020. the same period last year; and higher production costs due to higher raw material prices.
Western Securities analyzed that in 2021, the promotion of peach and plum bread will increase, and the return rate and discount rate will increase, which will cause the company’s operating costs to increase and profitability to be under pressure to a certain extent.
Not long ago, a reporter from China Business Daily visited many supermarkets in Fengtai District, Beijing and found that peach and plum bread often had discounts and promotions. According to a supermarket staff member, for a long time, peach and plum bread has been increasing its promotion efforts. A bread practitioner in Guangzhou told a reporter from China Business Daily that in Guangzhou, peach and plum bread in supermarkets are discounted almost every day, while Bimbo, which is also a short-term bread, has a much smaller discount, because peach and plum bread has entered the South China market more quickly. Late, and the main focus is cost performance, local consumers have low recognition of its brand.
Wang Yao (pseudonym), an investor in the consumer goods industry, told a reporter from China Business Daily that peach and plum bread mainly relies on the supermarket channel, and the passenger flow of the supermarket has declined significantly in the past two years, and the products of peach and plum bread are low value-added products, please The cost of shopping guides is too high, and they are generally sold on their own in showcases, which hinders the sales of peach and plum bread.
A baker in Shanghai also revealed to a reporter from China Business Daily that from the perspective of Shanghai and the entire East China market, Taoli bread products are mainly sold in supermarket channels, and convenience stores such as FamilyMart and Lawson mostly sell short-term products of their own brands. Baobao bread, peach and plum bread is rarely on the shelves. In the community group buying and other channels, it is rare to see Taoli Bread participating in the group.
Liu Kai, a researcher at Shenzhen Zhongwei Zhiyan Consulting Co., Ltd., told a reporter from China Business Daily that the increased promotion of Taoli Bread in 2021 may indeed encounter resistance at the sales level; on the other hand, it is also to increase brand exposure and combat competition at the same time opponent.
In addition, financial data and analysis tool service provider Wande data shows that the asset turnover rate of Taoli Bread is declining year by year, from 1.92 times in 2012 to 1.08 times in 2021. Wang Yao said that this may, to a certain extent, reflect the difficulties faced by its sales.
It is very difficult to break the game in the future
In recent years, with Dali and other bread industry leaders accelerating the deployment of the short-term bread market and the hot baking track, Taoli Bread is facing strong competitors.
It is understood that in 2018, Dali launched the “Meibechen” brand to enter the short-term bread market, and its revenue in 2021 will exceed 1 billion yuan. In the baking track, brands such as Momo Dim Sum Bureau, Hutou Bureau, Luxihe, and Dad Candy have risen. iiMedia Research data shows that there are as many as 22 investment events in the bakery food industry from January to September 2021.
A bakery owner in Zhejiang revealed to a reporter from China Business Daily that the bakery market in southern China developed earlier and faster, and the current market structure is stable. Recently, some boutiques have been opened. Compared with peach and plum bread, the bakery has a rich product line, diverse marketing methods, and convenient layout, which has caused a lot of impact on peach and plum bread.
Shen Boyuan said that there are many bakery channels and brands in East China and other regions, and the product quality of peach and plum bread is not as good as the bread baked directly by the back kitchen of the bakery. The latter products are fresher and more convenient for consumers. demand, these products will inevitably seize the market share of peach and plum bread.
How difficult will it be for Taoli Bread to break the game in the future? Zhu Danpeng, an analyst in the fast-moving consumer goods industry, believes that it will be very difficult for Taoli Bread to expand southward in the future, because the bakery market in East China and South China has developed earlier and innovation iterations are faster, which has seized many young consumer groups. The peach and plum bread is mainly aimed at middle-aged and elderly people, and its brand image in the minds of consumers is difficult to change. In the future, if Taoli Bread makes great efforts to deploy markets in South China and other markets, once there is a problem of moving sales, it will have to invest a lot of money, and it will continue to increase revenue without increasing profits.
Liu Kai also believes that at present, peach and plum bread has little opportunity to enter the South China and Central China markets. First, there are many existing competitors in the local market. Second, the brand recognition of peach and plum bread in these regions is not high. Pay more marketing costs for market expansion. In addition, its advantageous markets such as Northeast China, North China, and East China are currently close to saturation, and it is also very difficult to continue to cultivate.
Wang Yao added that if Taoli Bread wants to enter developed regions such as South China in the future, it will face sniping from rivals such as Hollyland and Weiduomei, and if it wants to enter Henan and other regions, it will face head-to-head conflicts with local Changbao Bread brands. In his view, although short-term bread is a general trend compared to long-term bread, in many offline markets, consumers still recognize long-term bread, and this consumption concept is expected to be difficult to change within five years. This makes the peach and plum bread attacked.
Regarding the reasons for the increased promotion of peach and plum bread and how to break the situation in the future, a reporter from China Business Daily called the relevant person in charge of the other party, but as of press time, the reporter did not receive a reply from the other party.Return to Sohu, see more
Editor:
Disclaimer: The opinions of this article only represent the author himself, Sohu is an information publishing platform, and Sohu only provides information storage space services.