The main business of Jiahe Food is the production and sales of non-dairy creamer. Other businesses involve products such as coffee and other solid beverages. As of 2021Q3, the company's non-dairy creamer business accounted for 77.1% of revenue. , coffee business revenue accounted for 3.4%, other solid beverage and other product business revenue accounted for 13.5%, and other businesses accounted for 6.1%.

Non-dairy creamer is similar to milk in use and function, and is similar to milk. Compared with milk, vegetable milk has the advantages of lower cost, easy storage and transportation, and can be seasoned. For mid-to-low-end milk tea shops in the 10-15 yuan price range and below, it is difficult to ensure competitive efficiency using fresh milk, and non-dairy creamer can solve the cost pain point.

Non-dairy creamer is located in the middle reaches of the food and beverage industry chain. Jiahe Food is one of the main players. Domestic competitors are mainly local unlisted companies. Overseas competitors mainly ensure the integrity of the company's internal food production chain and supply chain and do not directly compete with domestic non-dairy creamer companies.

In the future, Zhongyi’s current tea drinks will still have good growth potential. As the preferred supplier for downstream customers, the company is limited by production capacity in the short term, and its market share has declined. The company’s main focus is to go public to raise funds. Used for production capacity expansion, coupled with the gradual return of raw material prices to normal, it is expected that the industry will be protected in the future.

At the same time, the company is also looking for new performance growth points. At present, coffee OEM has a high probability of success, while the construction of its own brand needs to be observed.

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The main business of Jiahe Food is the production and sales of non-dairy creamer. Other businesses involve products such as coffee and other solid beverages. As of 2021Q3, the company’s non-dairy creamer business Revenue accounted for 77.1%, coffee business accounted for 3.4%, other solid beverages and other products accounted for 13.5%, and other businesses accounted for 6.1%.

Benefiting from the company's continued business advancement and structural optimization as well as the continued development of downstream ready-made tea application scenarios, the company's operating income increased from 1.32 billion yuan in 2016 to 1.87 billion yuan in 2020. Due to the impact of the COVID-19 epidemic in 2020, the company's net profit fell by 20.5% to 220 million yuan, but its revenue increased by 2.1% to 1.87 billion yuan. As of 2021Q3, the company's revenue and net profit were 38.9% and -22.2% higher than the previous year respectively. , the revenue scale continues to expand, but profitability has declined due to the increase in raw material prices.

01

Non-dairy creamer is a powdered food ingredient. The raw materials are glucose syrup, edible Mainly vegetable oil and Fuben. Non-dairy creamer can improve the internal structure of food, enhance the smoothness, body and fullness of the taste of food and beverages, suppress the bitterness of coffee and tea, and play a role in increasing aroma and taste. It is widely used in the production and processing of milk tea, coffee, and baking. Non-dairy creamer is similar to milk in terms of use and function. Compared with milk, non-dairy creamer has the advantages of low cost, easy storage and transportation, and new flavoring capabilities.

The wide application of non-dairy creamer originated from the habit of drinking coffee in Europe and America. In the 1980s-1990s, non-dairy creamer entered the Chinese market. After going through the import consumption stage, independent production stage and R&D innovation stage, currently domestic The market has gradually changed from import-dominated to domestic-dominated, and a certain scale of exports has been formed. According to Statista data, the global and Chinese non-dairy creamer market sizes were US$5.35 billion and US$883 million respectively in 2017, and are expected to reach US$6.373 billion and US$114.4 billion respectively in 2022, with CAGRs of 3.56% and 5.31% respectively. According to China Food News, China's non-dairy creamer product consumption reached 576,500 tons in 2018 and is expected to reach 768,200 tons in 2023, with a CAGR of 5.91%.

Currently, both solid milk tea and liquid milk tea are in slow growth Growing, freshly made tea has become the fastest growing category in the milk tea industry and will gradually replace traditional packaged milk tea with the trend of consumption upgrading.

my country's ready-to-drink tea market size will grow from 42.2 billion yuan to 113.6 billion yuan from 2.15 to 2020, approaching the 120 billion yuan market size of ready-to-drink tea, with a CAGR of SU21.9%; it is expected that 2025 The annual ready-made tea market size will reach 340 billion yuan, and the CAGR is expected to reach 24.5% in the next five years, surpassing tea leaves, tea bags and tea powder to become the largest category in the domestic tea industry.

For mid-to-low-end milk tea shops in the 10-15 yuan price range and below, it is difficult to ensure a competitive gross profit margin using fresh milk, and non-dairy creamer can solve the cost pain point. Taking a 500ml milk tea of ??10 yuan/cup as an example to break down the cost: if non-dairy creamer is used, the corresponding gross profit margin is 82.6%; if fresh milk is used, light cream flavoring needs to be added, corresponding to a gross profit margin of 35.3%. The gross profit margins of Yidiandian and Coco Duoke franchise stores are 75% and 80% respectively. It is difficult for mid- to low-end milk teas using fresh milk to compete with mainstream milk tea shops. Non-dairy creamer is still a rigid demand for mid- to low-end milk tea shops.< /p>

The retail sales of high-, medium- and low-end ready-made tea shops in 2020 are 129IZ yuan, 32.4 billion yuan and 21.2 billion yuan respectively. It is estimated that the retail sales of high-, medium- and low-end ready-made tea shops in 2025 will reach 52.2 billion yuan, 106 billion yuan, and 52.8 billion yuan respectively, and the CAGR in the next five years will be 32.2%, 26.7%, and 20% respectively.

02

Non-dairy creamer is located in the food In the middle reaches of the beverage industry chain, Jiahe Food is one of the main players, and domestic competitors are mainly local unlisted companies. Overseas competitors are mainly non-dairy creamer processing plants invested and constructed in China by foreign-funded listed food giants. Foreign-funded non-dairy creamer production lines are mainly established to ensure the integrity of the company's internal food production chain and supply chain, and do not compete with domestically funded non-dairy creamer. Finally, enterprises compete directly.

The company’s competitive position is solid, domestic sales and export sales are developing collaboratively, and there is still broad room for improvement in industry concentration. The company's current market share is 15%. Due to production capacity constraints, it has not improved in the past two years, but has declined. The main investment direction of the company's listing financing is to expand production capacity and strive to increase market share.

The company’s top five customers in 2016-2020Q3 include domestic food industry customers (Xiangpiaopiao, Tongyi), domestic fresh tea chain brands (Mixue Bingcheng, Guming, etc.), Southeast Asian coffee companies ( TORABIKA) and trading companies, etc. In recent years, ready-made tea chain brands have gradually replaced food industry companies and Southeast Asian companies as the company's top five customers. In 2020Q3, the company's top five customers were Mixue Bingcheng, Gu Ming, and Coc. Doko, Land Z Pte Ltd (Southeast Asia Trading Company), Shanghai Auntie, among which the freshly made tea drink chain brand Jiahe are all the first suppliers.

In addition, the company has also cooperated with well-known chain catering customers such as Heytea, Naixue's Tea, Seesaw, and Haidilao. As of 2020H1, the number of stores has reached 100. The number of chain customers has exceeded 9.

03

On the whole, the company has benefited from the rapid growth of ready-made tea drinks in recent years. It is expected that mid- to low-end tea drinks will still maintain an unstoppable growth rate in the next few years. At the same time, as the industry leader, the company is still the preferred downstream manufacturer. After the production capacity bottleneck is resolved, Youli will further increase its market share; in the short term, it will also benefit from the recovery of raw material prices and has a certain degree of flexibility?

At the same time, the company is also actively looking for other growth points. Since 2015, the company has begun to lay out the coffee industry. It now has a complete instant coffee production line covering roasting, grinding, extraction, concentration, and spray drying, covering the entire instant coffee production chain, including Roasted coffee beans, ground coffee powder, cold brew coffee liquid, coffee concentrate instant coffee and three-in-one coffee drinks combined with the solid beverage production line can provide customers with one-stop product services.

In 2019, the company established the Golden Cat Coffee subsidiary to operate the coffee business independently, focusing on building its own brand "Golden Cat Coffee". The product structure has shifted from mainly instant coffee powder to cold brew coffee and freeze-dried coffee. We develop manufacturing to enhance brand tone; we also carry out OEM business for downstream catering and industrial customers.

Judging from the company’s position in the traditional business and its customer connections, the OEM business still has great hope of occupying part of the market and becoming the next growth point after the milk tea market matures. As for its own brands, It is a certain degree of difficulty and requires continued observation.