Enter the baking bureau, capital will never stop

Established bakery brands are encountering “Waterloo”, while new bakery brands are highly sought after by capital.

From time to time in the bakery on the street, a scent of wheat mixed with milk flavours wafted out from time to time, and the warm yellow lights poured down through the bright window, which made people feel appetite. Every time I pass by the door of a bakery after get off work, the post-90s baking enthusiast Wu Mengyuan can’t help but buy two steaming cakes, “Just the fragrance can make people forget the troubles and fatigue of the day.”

There are many young consumers who love bakery like Wu Mengyuan. A clerk in a bakery tells “The Whip Bull” that morning peak, evening peak and noon are the busiest times of the day, and more than 80% of consumers are young people.

The market environment is changing. In addition to young consumers, those who are attracted by fragrances also have capital with a keen sense of smell. In the second half of 2021, the layout of capital in the baking field has gradually become denser.

On July 16, the Weibo topic #鲍师傅访达100亿# quickly rushed to the hot search list. In response to the valuation problem, Mr. Bao officially responded, saying that he had indeed received an investment letter of intent with a valuation of 10 billion yuan, but “For a relatively long period of time in the future, financing will not be considered for the time being.”

Compared with Master Bao’s “trideful”, some bakery brands have decided to open their arms to capital.

On July 14, Standard Chartered Cake Bank of Hutou Bureau announced the completion of nearly US$50 million in Series A financing. The investment was jointly led by GGV Jiyuan Capital and Tiger Global Fund. Old shareholders Sequoia China, IDG, and angel investor Song Huanping also participated in the investment. In January of this year, Hutou Bureau had just received a Pre-A round of investment from Sequoia China, IDG and Challenger Capital; on July 6, Yuefengtang announced that it had received tens of millions of dollars from Qicheng Capital; 6 On June 25, the Momo Dim Sum Bureau announced that it had obtained hundreds of millions of yuan in Series A financing from today’s capital. It is worth mentioning that this is the fourth round of financing it has received within a year; on June 15, Dad Sugar Announced the acquisition of IDG’s 100 million yuan A round of financing; in addition, in the first half of this year, Xuan Ma and Zetian also announced that they had obtained large financing.

“Capital is leaning towards the baking track because it is believed that new giants are expected to emerge in this market of more than 200 billion yuan.” He Kaiyang, an insider in the catering industry, said to the “Bianniu Shi”, “Like Hutou Ju, Momo Dim Sum Many investment institutions can’t even grab the investment of such new Internet celebrity baking brands, and this round of financing has not yet ended, and many investment institutions are already waiting in line for the next round. Investment institutions that are not in the line have to go to Suzhou, Shanghai and other places to find local top bakery brands to invest.”

In fact, the logic of the intensive layout of capital in the baking field is not difficult to understand. With the changes in the consumption concepts and eating habits of young consumers, the main meal of baked goods is becoming the favorite of many young people. “Most of the time, there is no time to eat breakfast. If you eat too much dinner, you will get fat, low-fat and low-fat. Whole wheat bread with calories and low sugar has become the first choice.” Wu Mengyuan said.

Research data from the Prospective Industry Research Institute shows that more than 11% of Chinese people currently choose to eat bread at breakfast, which is only lower than the number of consumers who choose to eat buns. The younger generation, in particular, is more able to accept baked goods as a staple meal. This also means that the consumption space of baked goods is expected to further increase.

Enter the baking bureau, capital will never stop

Behind the 200 billion baking track: low industry concentration and increased competition

Capital grouping into the baking field, on the one hand, is to follow the preferences of young consumers, on the other hand, it is fancy to the development prospects of the baking track.

According to the data of the “Report on the Development Trend of Baking Industry in 2020”, in 2020, the market size of China’s bakery industry will be 235.8 billion yuan. It is estimated that the Chinese bakery market will maintain a growth rate of about 7% in the next five years.

According to the “Research on China’s Baking Industry Development Status and Market Prospect Trend Report 2020-2026” released by Zhiyan Consulting, the industry concentration of China’s bakery industry is CR5 (the market share of the top five companies in the industry) is 10.6%. Brands with annual sales of 100 million yuan and above have a market share of less than 10%, while the remaining bakery brands with an annual revenue of about 20 million occupy more than 90% of the market. In contrast, Japan, which is more similar to China in terms of food culture and habits, has an industry concentration of as high as 43%.

“It can be said that the bakery market is huge, but the industry concentration is low. This makes the current Chinese bakery market look like a dish of loose sand. On the bright side, whether it is an offline bakery chain store or a pre-packaged bakery product, it is temporarily There is no absolute top baking brand that occupies the mind and market share of users. There are still a lot of opportunities and room for improvement on this track.” He Kaiyang said frankly.

One data that can support this conclusion is that there is still a large gap between the per capita consumption of baked goods in mainland China and developed countries and regions. According to Euromonitor International’s statistics, in 2019, the per capita consumption of baked goods in Mainland China was only US$24.6/person, which is at the bottom 25% of the world’s level, which is far lower than the US$266.3/person in France and US$182.6/person. It is US$99.9/person in Taiwan, China and US$76.3/person in Hong Kong, China.

There are also examples that can be cited. For example, in a keynote speech on catering and baking in May this year, Qing Yong, the founder of Tomato Capital, the angel investment agency of the Momo Dim Sum Bureau, revealed that the Momo Dim Sum Bureau’s valuation is within 10 months. Increased by 500 times, the turnover can reach approximately 2 million.

If estimated according to the turnover disclosed by Qing Yong, the annual revenue of a single store of Momo Dim Sum Bureau is about 24 million. As of now, it has 16 stores. Assuming that these stores are fully open, then Momo Dim Sum Bureau has one Annual revenue will exceed 380 million yuan, and this does not include stores to be opened. In particular, it should be pointed out that the Momo Dim Sum Bureau was established in June 2020, and it has only been more than 13 months.

However, the strong demand of young consumers for baked goods and the low concentration of the industry are not all good news. The low barriers to entry in the baking industry, the large number of market participants, and the serious homogeneity of products have led to increasing competition on this track. fierce.

In April 2021, Ligao Foods, a baking brand listed on the Shenzhen Stock Exchange’s Growth Enterprise Market, disclosed in its prospectus that the company is facing increasingly fierce market competition. If the company cannot improve its R&D capabilities, expand its marketing network, strengthen management, and expand in time Increasing competitiveness by means of production capacity and other means may face the risk of declining market share and squeezing market space.

Also feeling the crisis is the Hong Kong-listed baking brand Christine . Throughout 2020, Christine closed a total of 99 stores. In its 2020 annual report, Christine pointed out that the scale of China’s bakery market is growing day by day, growing at an annual growth rate of over 10%, and competition among peers is becoming increasingly fierce. The trend of market differentiation is obvious, and fashionable, unique, and brisk products and consumption scenarios are favored by customers, especially young consumer groups with a large proportion. The development of traditional bakery enterprises has been challenged, and it is urgent to accelerate the transformation.

Enter the baking bureau, capital will never stop

The polarization is getting worse: the old bakery brands are declining, and the new bakery brands are on the top

Behind the successive risk warnings issued by Ligao Foods and Christine, it is that the baking industry is experiencing a “closed store tide”.

On July 7, Hangzhou’s veteran bakery brand Buoyancy Forest issued a notice on its official WeChat account, stating that due to business strategy adjustments, the factory will be closed on July 8 for a period of three months. In July 2020, Buoyancy Forest had closed its factory for more than two months due to the impact of the epidemic and fake recharge cards.

There is a view in the industry that Buoyant Forest frequently closes stores because of cash flow problems, especially after the epidemic. In the face of a huge funding gap, the buoyancy forest may be experiencing a life-and-death test.

In fact, Buoyant Forest is not the only veteran bakery brand that has encountered the “closed store trend”.

In June of this year, Yizhiduo was also exposed to the news that a large number of stores were suddenly closed. In the past 2020, Yizhiduo also closed more than 70 stores in Shanghai within 40 days.

Although Yizhiduo’s official response stated that a large number of store closures were caused by adjustments in business strategies, and it was working hard to find ways to resume work and production. But the deeper reasons also point to its “dying” cash flow.

On June 20, Yizhiduo founder Cai Bingrong admitted in an interview that due to arrears of more than 200 employees with three months’ wages and nearly one year of social security, the employees were eventually suspended, the production department was suspended, and more than 30 stores in Shanghai were closed. “Since 2020, Yizhiduo has been in a financial crisis. Currently, it owes more than 8 million yuan in wages to employees and the payment of suppliers, which has led to the current crisis of closing stores.”

According to the incomplete statistics of “The Whip Bull”, in recent years, Marco Polo, Xinqiao , Yuanmai Hill , Bread Talk, Uncle Tes, Grandpa Rick, Christine, Tous Les Jours, OpenOven, Established bakery brands such as Croissant and Beske have experienced partial or complete closures.

“On the surface, brand aging is the reason why these old bakery brands cannot avoid the curse of opening and closing stores, but there are two more important reasons behind the scenes, one is insufficient innovation, and the other is difficult to transform.” He Kaiyang continued Explain, “Insufficient innovation is a common problem of established bakery brands. When they face the younger generation who have become the main consumer group, they can’t understand the minds of young people. They just blindly operate according to the old way and cannot capture the hearts of young people. On the other hand, the operating costs of many offline stores remain high and the drainage is limited. This model has great hidden dangers. Compared with the current new models that emphasize light assets, flexibility, individuality, and focus on health, they also pay attention to online and marketing. To become a bakery brand, the former will not only make you cumbersome, but also not conducive to rapid response to the market and transformation.

Although the old bakery brands are encountering “Waterloo”, the new bakery brands are highly sought after by capital. In addition to Hutou Bureau and Momo Dim Sum Bureau, Luxihe is worth mentioning.

Since its establishment in 2013, Luxihe has opened more than 200 stores, which have absolute appeal in the minds of young people. In addition to product innovation and actively catering to the appetites of young people, Luxihe’s packaging and store appearance, It is also closely integrated with the young people’s favorite national trend.

Luxi River has entered the vision of capital a long time ago. For a long time, many first-line investment institutions and investors have issued letters of intent to them, but they all failed because of the lack of financing intentions by the founder of Luxi River, Huang Jin.

Touzhong.com pointed out in a report that Luxihe’s business method is very special. One is to use the OYO model to incorporate some bakery brands into the brand’s rectification and integration; the other is to develop through the “integration” of the supply chain and has Plants were opened in Nanjing, Hangzhou, Guangzhou, Beijing, and Nanning.

However, in the middle of this year, there was news in the venture capital circle that Luxi River had opened up financing. Although the specific situation is unknown, it is foreseeable that the competition between the new bakery brands will become more intense.

Enter the baking bureau, capital will never stop

“Snatch the beach” baking track: Starbucks and HiTea do their part, where is the industry heading?

The baking track is becoming more and more crowded. Whether it is a veteran bakery brand or a new bakery brand, they have to face spoilers from all directions.

An industry phenomenon that cannot be ignored is that the “baking + beverage” compound business model has swept across.

The coffee brand Starbucks was the first to put this compound business model on the table . Prior to 2017, Starbucks had always focused on coffee and tea, and sold baked goods such as bread and desserts as auxiliary products. In December 2017, Starbucks Premier Shanghai Baking Workshop opened in Xingye Taikoo Hui, Jing’an District, with coffee+ Baking’s compound business model is trying to take a share of the Chinese baking market.

At the same time, tea brands are also experimenting with this compound business model. For example, tea brands such as Naixue’s Tea , Hey Tea , Coco, etc., have begun to sell with soft European buns, cakes or muffins. This compound business model has not only changed the consumer’s habit of buying only tea or bread, but also triggered a trend of “baking + drinks” in the industry.

Not only coffee brands and tea brands, but even dairy brands have joined the baking track across borders.

At the end of 2019, the dairy brand Guangming opened a high-end bakery in Shanghai-Guangming Youbei. In addition to baked goods, the store is equipped with coffee or milk tea. However, Guangming Youbei does not pursue the speed of opening a store. So far, it has only opened stores. Out of 3 stores.

“The new bakery brand has the blessing of capital. Although this will greatly help scale development and increase market share, it cannot be ignored that it is not necessarily the bakery brand that defeats the bakery brand, whether it is a coffee brand or a tea brand. Drinking brands, these spoilers are vying for market share with their unique insights and ways they are good at.” He Kaiyang reminded, “Old bakery brands, or new bakery brands, if they want to stand out, they still need to be unique in the future. For example, the use of healthier natural raw materials to replace some high-fat and high-sugar raw materials in the formula, and the search for new potential energy in traditional culture and national tide elements.”

“If any baking brand wants to continue to expand and gain longer-term vitality, it will definitely not work to rely solely on the power of capital. Quality is the core competitive point, and it can still be used as a cool and individualized brand after getting rid of the Internet celebrity label. Baking products and even cultural symbols survive, and can capture the hearts of young consumers through continuous innovation. This is the biggest problem.” He said.

(Note: At the request of the interviewee, all names in the text are pseudonyms.)

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