This year’s production supply is rare in the market, and new hot sauce brands have begun to enter the market

  Text/Photo by Huang Ting, reporter of Yangcheng Evening News

  Recently, after condiment companies successively announced price increases, Lao Ganma, the leader of chili sauce, also joined the price increase.

According to industry media, a "Price Adjustment Letter" signed by Guiyang Nanming Laoganma Flavor Food Co., Ltd. shows that Laoganma decided to readjust the prices of some products from March 1.

  A dealer told a reporter from the Yangcheng Evening News that Laoganma has raised prices for two rounds since the year before, with an increase of over 20 yuan per piece;

  The second price increase in the year, the price increase is 5%-15%

  According to the price adjustment notice circulating on the Internet, the specific notice involves 25 single products, including oil-made chili, spicy sauce, spicy vegetables, fermented bean curd, hot pot base and other products. ) as an example, the price after the price adjustment has reached 198 yuan, which is close to 200 yuan.

So far, Laoganma has raised two rounds of prices since the beginning of the year.

  A reporter from the Yangcheng Evening News learned from a number of Laoganma's dealers that the news of the price adjustment is true. Laoganma had already made a small price increase a few years ago. The price adjustment in early March was larger. The increase in parcels is between 20-30 yuan, which is equivalent to an increase of about 1 yuan per bottle.

It is also reported that in early March, Laoganma raised the price by 5%-15%, which is equivalent to a price increase of 15-18 yuan per product.

  A Guangzhou distributor told reporters that at the end of last year, the wholesale price of their Laoganma bean curd chili (280g×24 bottles) per piece was more than 160 yuan, and now it has risen to more than 190 yuan. Wholesale is carried out at market prices, and only the quantity of purchases can be determined by itself.”

  Mainly due to rising raw material and labor costs

  Laoganma's price increase logic is no different from other condiment companies, and it still stems from the pressure of rising costs.

Laoganma mentioned in the "Price Adjustment Official Letter" that this price increase is due to the fact that the cost of raw materials, labor costs, and freight are rising every year, and the rising cost has had a serious impact on the production and stocking of some of the company's products .

  It is understood that the prices of fresh and dried peppers in Guizhou rose by 50% in 2019. Due to cost pressure, Laoganma gave up Guizhou peppers and switched to cheaper Henan peppers, causing many consumers to call Laoganma directly. "The taste has changed", and it has since been said to have used Guizhou peppers.

A person who operates a vegetable planting enterprise in Dafang County, Guizhou told reporters that due to the impact of the snow and ice weather last year, local peppers could not be planted or could not be harvested due to ice and snow coverage, resulting in a shortage in the market; however, he also revealed: "Now Laoganma doesn’t buy much chili in Guizhou, and the main source of purchase is Henan.”

  In 2021, the new season dried peppers in the northern pepper producing areas of my country will be affected, and since August 2021, the market for the northern peppers will be relatively strong.

Taking Henan peppers as an example, as of February 28, the shipping price of Sanying peppers in Zhecheng, Shangqiu, Henan was about 11 yuan/catties, an increase of 2.4 yuan/catties compared with the price on August 1, 2021, an increase of 27.91%.

  The price increase has not yet affected the retail side

  Regarding the impact of Laoganma's price increase, the above-mentioned Guangzhou dealers said that this time the price increase is relatively sudden, and the magnitude is relatively large, the market generally has not accepted the new price, and they have no purchase volume for the time being. It still depends on the needs of customers. For many consumers, Laoganma is a just-needed item, and those who should get it will still get it, but basically no one chooses to stock up at this time, because they are afraid that its price will not be stable." It was revealed that the current inventory of the dealer was produced in October last year.

  The price increase has not yet spread to retail terminals.

A reporter from the Yangcheng Evening News saw in an offline large supermarket in Guangzhou on the 10th that Laoganma is the brand with the most complete SKUs in the chili sauce category. The price of a single bottle ranges from 8.5 to 17.5 yuan, and the price tags of most products have not been changed recently; Most of the products were produced from October to December last year.

  On the Tmall and Jingdong platforms, the price of Laoganma’s flagship store has not risen, and the unit price of a 280g bottle of flavored soy sauce pepper is still 9.9 yuan.

On the 10th, the customer service staff replied to the reporter that they had not received a price increase notice yet.

  Distribution strategy and market share consolidate pricing power

  Since its establishment more than 20 years ago, what Laoganma has been talking about is its control over the price band.

The unit price of its chili sauce products has always been between 8 yuan and 15 yuan, and the fluctuation range is very small.

Therefore, the industry "magic" has been formed - Laoganma is the price benchmark. Brands that are cheaper than it can't make money, and brands that are more expensive than it are difficult to become the first choice of consumers.

The reporter visited offline and found that, except Laoganma, there are very few chili sauce products of other brands, and the price is basically in the price range.

  In addition, Laoganma's dealer strategy also played an important role in its market occupation.

Laoganma only selects large regional distributors and is responsible for logistics and transportation; in order to achieve sales goals, regional distributors must carry out two batches of development and layout, and gradually form a distribution network across all major regions.

This is why Laoganma products can be seen everywhere in supermarkets and convenience stores.

  According to the "2020-2025 China Chili Sauce Industry Market Prospects and Investment Opportunities Research Report" released by the China Business Industry Research Institute, Laoganma brand chili sauce occupies about one-fifth of the market share of my country's chili sauce market; Lee Kum Kee and Spice Girls Children accounted for 9.7% and 9.2% respectively, ranking second and third.

  According to Zhu Danpeng, an analyst in China's food industry, the price increase of Laoganma's products is not only passive pressure from rising raw material costs, but also an active forward-looking layout for its own development.

"Laoganma's annual sales exceed 5 billion yuan, which itself constitutes its moat. The only disadvantage is that the categories and channels are relatively monotonous, and they are not blessed by the capital market; I believe that with the profits brought by the price increase, Laoganma has more opportunities for future diversified layouts."

  Emerging brands enter the game and force Laoganma to change

  When it comes to chili sauce, Laoganma is a well-deserved benchmark brand, but General Changsheng is not restless.

In 2014, Tao Huabi, the founder, gradually resigned from the management of the company. According to data, Laoganma’s revenue began to turn downward in 2017. That year’s revenue was 4.447 billion yuan. In 2018, its revenue fell again to 4.389 billion yuan.

After replacing Guizhou peppers with Henan peppers in 2019, the change in the taste of Laoganma's products has attracted a lot of doubts about the brand.

  With the return of Tao Huabi in 2019 and the exchange of all raw materials back to the original materials, Laoganma returned to the growth channel in 2019 and 2020. In 2019, the sales revenue was 5.023 billion yuan, a year-on-year increase of 14.43% and a new record high. ; In 2020, sales increased to 5.3 billion yuan.

  However, in the context of the rise of new consumption, hot sauce brands such as Hubang, Fanye, and Zuoda Shi have emerged, creating a differentiated brand "playing style" and forming a rivalry between new and old brands.

For example, Hubang Chili Sauce aims at a new category of meat chili sauce, separates it from traditional vegetarian chili sauce. Through cooperation with Meituan and, the two takeaway platforms have successfully opened up the takeaway market and accumulated sales during the "Double 11" period in 2021. With 6.9 million cans, it became the number one selling hot sauce category on the entire online platform; Lin Yilun’s Fan Ye and Yue Yunpeng’s Jianghu Shop caused market repercussions under the blessing of star halo. Fan Ye once set a record of selling 30,000 bottles within 2 days of its launch. .

  In stark contrast to Laoganma, which has no financing, no loans, and no listing, many new brands have won the favor of capital.

According to incomplete statistics, as of February 2022, the Internet chili sauce brand has received more than 6 financings, and it is predicted that the investment in the Internet chili sauce industry will show an upward trend in the future.

In just one year last year, Jiadianzhiwei obtained two financings, and Chuanwazi raised nearly 300 million yuan.

  Laoganma, who has felt the crisis, has also been seeking innovation and changes in recent years.

The most intuitive change is reflected in marketing. In April 2018, Laoganma’s Tmall flagship store was officially registered, and the online and offline strategy was launched; in 2019, Laoganma launched the magical video “Unscrewing Godmother”; in 2020 , Laoganma's official flagship store has cooperated with Taobao to launch the "Laoganma Love Talk Bottle".

At the same time, it has also accelerated the pace of expanding its categories, from douchi chili sauce to more than 20 varieties such as hot pot base, fermented bean curd, and spicy dishes, and SKUs are becoming more and more abundant.

  According to statistics, in 2021, the number of people who eat spicy food in China will exceed 650 million, and the number of people will continue to expand at an annual growth rate of about 10%.

Zhu Danpeng said that in the field of hot sauce, there are more and more competing products from Laoganma, and the competition is getting fiercer.

In terms of products, channels and terminals, the advantages of Laoganma are declining. It is necessary to form a complete system in the aspects of innovative consumption scenarios and channel integration in order to usher in a better market development space.