Author | Pluto

Data support | big data (www.gogudata.com)

Recently, Dali Foods Group (03799.HK) released the 2021 interim report, with revenue of 11.287 billion, the highest in history, with an increase of 11.14% over the same period last year, with a net profit of 2.013 billion, an increase of 7.29% over the same period last year.

Dali Foods Group's product line is rich, at the same time, the scale of the single product is large, the basic market of some mature products is stable, and the growth rate of the base is relatively slow, but the China News still achieved double-digit growth, mainly because Dali Foods Group's new growth point is poised to start.

If these new growth points are realized logically, it is entirely possible to recreate a Dali Foods Group. For Dali Foods Group, whose valuation is only 12 times, these are bright spots that can not be ignored.

1、​Household consumption sector increased by 31%

The Dali household consumption sector achieved revenue of 1.679 billion in the first half of 2021, an increase of 31.2% over the same period last year. The growth rate of this sector was 7.7% in the first half of 2020, returned to 14.7% in the second half of the year, and rose to 31.2% in the first half of this year. From the growth trend, this plate has a tendency to accelerate volume.

There are two main products in this section, one is the short-term protection of the Meibachen brand launched at the end of 2018, and the other is bean milk launched in 2017.

In the first half of 2021, Meibachen achieved revenue of 614 million, an increase of 52.4% over the same period last year. Less than three years after its launch, revenue has reached 600 million in half a year, which shows the growth potential of this product.

Another product, bean milk, achieved revenue of 1.064 billion in the first half of 2021, an increase of 21.5% over the same period last year.Similarly, it has only been launched for four years, and its revenue has reached 1 billion in half a year, which shows that it is explosive.

There are two reasons why these two products are so explosive, one is objective and the other is subjective.

Objectively, there is a lot of room for these two markets.

Let's start with beans. Beans belong to plant protein drinks. TMIC trend release shows that the popularity of the concept of "dietary fiber" and "low calorie" is growing rapidly from the hot words searched in the market in 2020. This shows that with the further improvement of consumers' attention to food health, the consumption upgrading of the beverage industry will move towards the direction of nutrition and health.

This consumption trend is consistent with plant protein drinks, which are more and more favored by domestic consumers because of their high-quality nutrition supply characteristics and health labels. The data also support this. According to Tmall, plant protein drinks are the fastest-growing beverage category in China, with a compound growth rate of 24.5% over a decade.

Besides, Mei Bachen. According to the shelf life, the bread industry can be subdivided into long-term insurance, medium insurance and short-term insurance. From the shelf life, we can see that the short-guaranteed bread is healthier, more fresh, and meets the needs of consumption upgrading. The main consumption scene of short bread is breakfast, which is growing rapidly under the background of the accelerated pace of life and the infiltration of Western-style eating habits. According to Euromonitor data cited in the Huaxi Securities Research report, the income of the short-term bread market is about 17 billion in 2012, with a compound growth rate of 18.96% from 2019 to 2019, significantly higher than the overall growth rate of the bread industry.

It can be seen that the space of these two markets is very large, and the growth rate is fast, which gives Dali the objective conditions to become bigger. However, it is not enough to have a huge market space. Dali can still rely on its own strength if it can increase its volume in a short period of time.

In terms of subjective reasons, generally speaking, there are three, the first is Dali's innovation ability, the second is Dali's supply chain advantage, and the third is Dali's channel network resources.

The ability to innovate is proved by a series of explosions created by Dali in the past. To cite the current example, this year, Dali Foods Group launched the country's first plant room temperature yogurt "Flogurt planting Youjia", a product full of "technical models", which makes Doubamoto continue to maintain its posture as an innovator and leader in the plant-based industry.

With the advantage of supply chain, Dali has a total of 38 food and beverage production bases throughout the country, which is in line with the international level from equipment to management. Advanced production technology and nationalized production facilities are the backup guarantee for the continuous development of Dali. In particular, such as short-term insurance, on the surface, the technical content is not high, but in fact it is not. It needs the effective cooperation of the layout of production capacity, the density of sales outlets and the planning of distribution routes. Without a nationalized production capacity layout, it is almost impossible to make a nationalized short-term insurance brand.

Innovation and supply chain advantages ensure the output of the company's high-quality products, while Dali's sales network ensures that products reach consumers efficiently. Dali's sales team can be divided into traditional channels and modern channels. In traditional channels, Dali has more than 5000 dealers and 3 million sales points with strong brand strength, R & D capabilities and production bases throughout the country. In modern channels, Dali has established a cooperative relationship with large merchants and convenience stores, and the e-commerce business is also constantly advancing.

It is these objective conditions that let Dali ride smoothly on the two tuyere cars of plant protein drinks and short protection. It can be predicted that the brand potential energy and channel potential energy accumulated by Dali in these two areas will continue to open the gap between Dali and its competitors, and it is a high probability event to continue to increase the volume. Considering the potential size of these two pieces, it is entirely possible to create another Dali.

The growth rate of the household consumption sector continues to rise, which is proof of the gradual realization of this logic.

2. Lehu increased by 15%.

Another highlight of the report in 2021 is Lehu.

Lehu belongs to the ready-to-drink sector in the company's report, which achieved revenue of 3.683 billion in the first half of 2021, an increase of 11.2% over the same period last year, with the main contribution coming from Lehu. Lehu achieved revenue of 1.9 billion in the first half of 2021, up 15.1 per cent from a year earlier.

Lehu is currently the third largest brand in China in terms of functional beverage sales. from a regional point of view, Lehu's sales are on a par with the second place in North China and Northeast China, and surpass the second place in Southwest and Northwest China.

Functional drinks are different from other leisure drinks, the core demand of other leisure drinks lies in the changeable taste, generally have the habit of decision-making after entering the store, while consumers' core demands for functional drinks are clear and stable, that is, anti-fatigue and replenishing energy. this leads to functional drinks with certain functionality, and their consumer groups tend to have higher consumption frequency and stronger brand stickiness. These characteristics make the brand value of functional drinks very high, the life cycle of products is very long, and it is easier to produce large items.

At present, the competition pattern of domestic functional drinks has been basically stable, and the market share of the top three has reached 70-80%. In the long run, the competition is relatively healthy. In the future, due to functional demands, the industry is expected to continue to maintain high growth.

Lehu has won the tickets of the first three brands, has formed excellent brand awareness nationwide, has a stable consumer group with a certain scale, is the leading brand of domestic functional drinks, and will benefit from the development dividend of the industry.

The author learned from the interim performance meeting that Lehu is making strenuous efforts to promote new products, channel layout, strengthen advantages, but also show the determination to expand market share.

The brand dispute of Red Bull has not only led to more variables in the domestic functional beverage market, but also left more market opportunities for national brands such as Lehu, and domestic brands obviously have a better understanding of the demands of domestic consumers and are more accurate in playing. more approachable.

Specifically, first, Lehu will match different specifications of products according to the characteristics of different channels, and attract consumers through higher performance-to-price ratio. Lehu currently firmly occupies 380 milliliters 5 yuan price belt, the price plate is stable, the inventory is healthy. It is understood that next, Lehu will cover more consumer scenes and consumers through 500ml and 250ml differential products and price bands.

Second, the incentive mechanism is flexible. Lehu gives terminals and dealers more flexible and reasonable incentive system by optimizing channel profit distribution. At the same time, terminal control is strong, channel thrust is sufficient, and market share is increasing. Lehu's gross profit margin is higher than that of its peers, which also gives it more room for mobility in the market competition.

Since 2016, Red Bull has been locked in a trademark dispute, with growth stagnant and inflexible. The market share of Red Bull has fallen from 89.6% in 2011 to 54.9% in 2020, and the industry pattern has gradually changed from "one big" to "one super and many strong".

In a more flexible and refined style of play, Lehu can better hit the core aspirations of Chinese consumers, and it is highly probable that they will gain more market share in the future. Referring to the United States, we can also see that the local brand monster beverage has grabbed the market share of Red Bull.

In addition, the future market competition will be carried out in China's low-line cities, Lehu has formed a good brand potential energy, at the same time, with the help of Dali's in-depth sales network in the country, it is easier to infiltrate from the high line to the low line market.

This will be another important point for Dali's future.

3. New products, new channels, new marketing

Another highlight of this newspaper is Dali's innovation, which is reflected in new products, new channels and new marketing.

We are in an era of great change, which has subverted many practices of the past.

For example, in marketing, in the past, the traffic of the marketing side was mainly in CCTV and satellite TV, and the fast consumer giants generally chose to put a large number of advertisements on CCTV and satellite TV to occupy the minds of consumers. For example, in the past, the control of the terminal was mainly achieved through the traditional distribution network, reaching consumers, realizing a complete closed loop from the occupation of consumer mind to the occurrence of consumer behavior. Under this kind of marketing flow and channel flow, large items with economies of scale are the best choice.

And now, first, the traffic on the marketing side has been fragmented, and CCTV has been unable to occupy the minds of consumers. Second, the traffic at the channel end is also fragmented, and there seem to be traffic entrances everywhere. This kind of marketing end and channel end traffic fragmentation, a variety of new brands, new products continue to emerge, that is, we often call the online celebrity brand. On the contrary, it is the former food and beverage giants that seem to have no grasp, their traditional basic plates are under impact, and they are at a loss in new channels and new marketing methods.

However, from this newspaper, we can see that Dali has been actively embracing change, and even leading it.

In the new products, we mentioned earlier that Dali achieved a technological breakthrough by launching China's first plant room temperature yogurt, sparkling herbal tea for the preferences of young people, and sugar-free herbal tea to comply with the trend of non-saccharification. Taste and packaging are also more diverse, such as Coke, the integration of plant and fruit elements, the introduction of fresh colors.

On the channel, on the one hand, Dali consolidates the basic disk, combs dealers, and improves the quality and enthusiasm of dealers, on the other hand, it expands the coverage of modern channels, increases the live sales of Douyin Kuaishou Technology content e-commerce platform, and increases the team building of community group buying.

In marketing, the first has become more three-dimensional, fully covering popular TV dramas and variety shows, such as Sato, Shangheling, Baozao singers, etc., while expanding the fan base across the border, such as launching a joint gift box with star food brands and live streaming in cooperation with e-commerce platforms. Second, communication becomes deeper. The company actively embraces the current new media and deepens its interaction with young consumers through the content platform.

This year is not a friendly year for traditional food and beverage, and the stock price can also be seen. One of the reasons is that the flow entrances such as online supermarkets and community group purchases cultivated by the epidemic have launched a more severe impact on the traditional flow entrances, such as Shangchao, which are the basic plates of traditional food and beverages.

In fact, think about it carefully, the impact of various flow terminals on traditional food and beverages is very similar to the impact on shopping malls and clothing enterprises that began in 2010. But we can see that today, after the deep integration of online and offline, the clothing brands that used to be offline have finally come out, such as Li Ning Co. Ltd. and Anta.

Food and beverage is similar, although now in the flow fragmentation, a variety of new products and new brands emerge in endlessly, but behind these tricks, still need the support of hard power. This includes the long-term insight into the demand of Chinese consumer groups, the advantages of supply chain, the ability of R & D and quality control, the ability of channel sinking and so on.

Dali Foods Group is a leader in these hard power, and now with a new way of playing, I believe there will be a brand-new Dali.

4. Conclusion

Generally speaking, there are many bright spots in Dali Foods Group's medium report. The logic of new growth points, such as Doubamoto, Meibachen and Lehu, is being realized. it is not too much to say that it is not too much to reinvent a Dali in the future. The new way of playing is embracing, I believe there will be a brand new Dali.

At the same time, as a platform food and beverage giant with a very good financial position (10 billion in cash on its books, low asset-liability ratio, and stable dividends), it is more resistant to risk (and therefore its performance is more certain). This is particularly important in the post-epidemic era of growing uncertainty.

There is a potential outbreak of growth, there is a high degree of certainty, at the same time, Dali Foods Group's valuation is not high, only 12 times, which, whether compared with peers, or compared with the company's average in the past, is on the low side.

It can be said that Dali Foods Group not only has potential flexibility, but also has a high margin of safety.