Wei long is on the hot search again. This time it’s because of the price rise. According to the news of many spicy strip head enterprises such as spicy Prince and Weilong, due to the rising cost of raw materials, the company decided to adjust the prices of some products accordingly, which made many people sigh that they can’t afford to eat spicy strips.

Wei long was criticized by the market public opinion for printing the words “about” on the package last time. He was suspected of vulgar marketing and playing pornographic sideball. The matter faded with Wei Long’s apology and said to stop the production of controversial copywriting packaging.

Weilong has always paid attention to advertising and publicity. He once made circles by marketing for several times. In that year, when the food crisis, he established a fully automated plant to broadcast the production process of spicy strips, and there were countless circles of powder; Guard Long of Apple 7 press conference took the opportunity of marketing to get rid of the “unfashionable” hard rubbing high-end; He also sent dozens of boxes of spicy strips to Quan hongchan, the Olympic champion who likes to eat spicy strips, making enough heat.

This can be described as “success marketing and failure marketing”, especially in the early stage of trying to prepare for listing.

It is reported that in May 2021, Weilong completed the pre IPO round of financing, and then Weilong officially submitted the listing application to the Hong Kong stock exchange. However, six months later, the prospectus entered an invalid state. On November 12, 2021, Wei long submitted his statement to the Hong Kong stock exchange again, successfully passed the hearing of the Hong Kong stock exchange, and made a sprint towards the “first share of spicy article”.

How much money can a spicy stick make? How can Wei long sit firmly in the first place in the “spicy strip world”? What are the secrets behind Weilong’s listing?

How much money does spicy food make?

Earned 358 million yuan in the first half of the year

With the development of productivity and the continuous improvement of people’s consumption level, the snack industry began to develop rapidly. In recent years, snacks meeting different needs were born, and the industry differentiation is becoming more and more obvious. From 2015 to 2020, the scale of China’s snack food industry has increased by 38%, and it is expected to reach 1.1 trillion yuan in 2025.

A number of snack brands such as Cha Cha, Panpan, baicaowei, three squirrels and Weilong have grown up through the east wind.

In the trillion market, the share of spicy food expanded from 18.3% in 2015 to 20.3% in 2020. It is expected that the retail sales of spicy food will reach 257 billion yuan in 2025, and the proportion will further increase to 23.3%.

From the perspective of Weilong’s prospectus, Weilong achieved revenue of 2.752 billion yuan, 3.385 billion yuan and 4.120 billion yuan respectively from 2018 to 2020. The three-year compound annual growth rate reached 22.4%, far exceeding the 4.1% compound annual growth rate of China’s leisure food industry in the same period.

In terms of net profit, Weilong’s net profit in 2018, 2019 and 2020 reached 476 million yuan, 658 million yuan and 819 million yuan respectively, with net profit margins of 17.3%, 19.4% and 19.9% respectively, far exceeding the net profit margin of less than 5% of three squirrels and liangpin store in the same period.

In the first half of 2021 alone, the net profit reached 358 million yuan, and the profitability of spicy strips can be imagined.

Why do spicy bars make so much money?

Spicy strip was not born for a long time. At the beginning, the target group was not the sea of stars, but mainly students. Weilong spicy bar was born in Luohe, Henan Province. In the early stage of the product, students were even allowed to taste spicy bars for free, and the marketing effect was immediate. Weilong spicy bar firmly grasped the stomach of young groups and primary and secondary school students.

In 2005, CCTV exposed the scandal that the black workshop producing spicy strips had poor production environment, unsanitary materials and the addition of illegal additive mycostar. The label of “junk food” was deeply bound with spicy strips, which deepened the negative impression of consumers on spicy strips.

In order to reverse its image, Weilong has a large-scale layout, spending millions of dollars to build factories and adopt fully automatic packaging machines. With the rise of social platforms, Weilong has also followed the trend to broadcast a hot manufacturing line, sucking countless powders at one time.

In recent years, with the help of the east wind of the Internet, Weilong, who is good at marketing, is like a duck to water. He imitates Apple’s press conference to pack high-end spicy strips, launches classic expression packs with cartoon brands, and jointly produces fashion items with sports brands… Cross-border marketing has become a piece of contact with young people who have a good sense of the Internet.

Image source: screenshot of Weilong official website

Image source: Weilong official wechat image source: Weilong official wechat

Weilong marketing team has conducted research on the main user groups and found that the hot strips are mainly purchased by junior high school students, senior high school students and other people. These people are easy to accept new things, highly new media and diversified interests and preferences.

According to the prospectus submitted by Weilong to the Hong Kong Stock Exchange last year, 95% of Weilong’s consumers are under the age of 35, of which 55% are under the age of 25.

The consumer market determines the consumer population. Spicy snack food is generally affordable and addictive. From its birth to expanding the market, Weilong has been focusing on sinking the market through close cooperation with dealers.

From the data, in 2018, 2019 and 2020, Weilong’s offline channel revenue reached 91.6%, 92.6% and 90.7% respectively. Among them, dealers in low-level cities contributed the vast majority of sales.

As of December 31, 2020, Weilong has signed more than 1900 dealers, covering more than 570000 retail terminal outlets, of which about 70% are located in low-level cities.

However, although Weilong has a large number of offline dealers, the intensive changes of its dealers also pose a great challenge to Weilong’s sales system. For example, in 2018, Weilong terminated the cooperation of 430 dealers, 554 in 2019 and 2132 in 2020. Although there is the impact of the epidemic, these changes also affect Weilong’s control over dealers.

Food safety issues

Affecting the dream chasing path of unfashionable spicy food

Although Weilong’s revenue and profits are growing, the problems hidden behind its development are also eroding Weilong’s enterprising ambition.

On the one hand, Weilong’s product line is too single. According to its prospectus, at least 65% of Weilong’s revenue comes from “spicy food” from 2018 to 2020.

Although Weilong has been expanding its product boundaries in recent years, and the sales proportion of vegetable products such as konjac Shuang and spicy kelp has been increasing, it is still dominated by seasoned flour products, and the business is unbalanced. This is not conducive to the long-term development of the enterprise.

Because of this