We are a leading spicy snack food company in China with strong growth momentum. According to Frost & Sullivan, in terms of retail sales value in 2021, we ranked first among all spicy snack food enterprises in China, with a market share of 6.2%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories. Weilong is a popular snack food brand among young consumers in China. According to Frost & Sullivan, 95.0% of our consumers are at or under the age of 35, and 55.0% are at or under the age of 25, and we are the most well-recognized and favored spicy snack food brand among consumers in China and the No. 1 snack food brand in terms of brand awareness among those at or under the age of 25.
We are committed to making authentic Chinese gourmet more entertaining, casual, convenient and affordable, and to introducing more spicy snack food products that offer consumers a cheerful consumption experience.
20 years ago, inspired by traditional Chinese formulas, we started our business with seasoned flour products, also commonly known as Latiao (辣條). In the early years, we produced some popular seasoned flour products with enticing spicy flavor using our self-developed formulas and raw materials procured from reputable suppliers, and offered them through a broad distribution channel at affordable prices to young consumers, which helped our brand cultivate a broad customer base. Our products accompanied the youthhood of the millennials in China, who became our first loyal customers. Over the years, we continued to enhance our formulas and improve our production process and techniques to maintain our leading position in the seasoned flour product category.
We are dedicated to using household food materials, such as soybean, flour and kelp, as our main ingredients and adhere to our product development philosophy of “maximizing the intrinsic value of nature with an industrialized approach”. With our product development capabilities, we have in recent years diversified into vegetable and bean-based product categories, and launched multiple brands such as our “Fengchi” and “Kiss Burn” series. In 2021, two of our product categories, namely our seasoned flour products and our vegetable products, each generated over RMB1.0 billion in annual retail sales value; among them, four products, namely Big Latiao, Konjac Shuang, Kiss Burn and Mini Latiao, each generated over RMB500.0 million in annual retail sales value.
We focus on the research and development, manufacturing, sales and distribution of spicy snack food. We are committed to continuously upgrading existing products and introducing new products. We have a well- diversified and strategically-constructed product portfolio, covering the following categories:
‧ Seasoned flour products, primarily comprising Big Latiao (大麵筋), Mini Latiao (小麵筋), Spicy Hot Stick (麻辣棒), Mini Hot Stick (小辣棒) and Kiss Burn (親嘴燒).
‧ Vegetable products, primarily comprising Konjac Shuang (魔芋爽) and Fengchi Kelp (風吃海帶).
‧ Bean-based and other products, primarily comprising Soft Tofu Skin (軟豆皮), 78° Braised Egg (78°滷蛋) and meat products.
We constantly adapt to changing purchasing behavior of consumers and have quickly expanded to supermarkets, chained convenience stores and e-commerce channels, which have wide exposure to young consumers. As of December 31, 2021, we cooperated with more than [1,900] offline distributors and our distributors’ sales network covered approximately [690,000] retail points of sale in China, with significant potential for future expansion. Meanwhile, we have strengthened our presence on major e-commerce platforms. Our revenue from online channels increased by 52.2% from RMB250.8 million in 2019 to RMB381.8 million in 2020. Our revenue generated from online channels increased by 45.1% from RMB381.8 million in 2020 to RMB553.8 million in 2021, primarily due to growth in both online direct sales and online distribution resulting from our increasing online advertising activities and cooperation with new e-commerce platforms during 2021. In addition, we use e-commerce and social media channels to build a trendy and engaging brand image through interactive marketing activities, turning young consumers into our natural brand promoters.
Over the years, we have been dedicated to meet the changing needs of consumers through launching new products, upgrading existing products, introducing new product categories, as well as improving consumer experience. We actively explore new packaging size and style and consumer-friendly pricing policies to keep our products appealing to young consumers and to address a wide range of consumption scenarios. We have adopted brand building strategy that targets young consumers through content-based marketing, branding activities and the involvement of key opinion leaders. In addition, we continuously improve and upgrade both our online and offline distribution channels to provide consumers with more convenient purchase experience. As a result, during the Track Record Period, we achieved strong growth and outstanding profitability. In 2019, 2020 and 2021, our total revenue reached RMB3,384.8 million, RMB4,120.4 million and RMB4,800.2 million, respectively. From 2019 to 2021, the CAGR of our total revenue reached 19.1%, far exceeding the 4.2% CAGR of the snack food industry in China for the same period, according to Frost & Sullivan. Our net profit margin reached 17.2% in 2021, higher than the average net profit margin of approximately 10% in the snack food industry in China in 2021, according to Frost & Sullivan.
According to Frost & Sullivan, the spicy snack food market in China is relatively fragmented, with the top five players accounting for an aggregate market share of 11.5% in 2021 in terms of retail sales value. In 2021, we were the largest spicy snack food player in China with 6.2% market share, 3.9 times of the second largest player in terms of retail sales value. According to the same source, the spicy snack food market accounted for 21.0% of the total market size of the snack food industry in China in 2021, which is also fragmented. In 2021, we ranked 10th among approximately 3,000 snack food companies with annual revenue of over RMB20.0 million and a presence in China and we ranked sixth among all domestic snack food companies, accounting for 1.3% of the overall market share in terms of retail sales value.
Leveraging our strong brand recognition, product competitiveness and channel distribution capability, we believe that we will continue to increase our market share and capitalize on future growth opportunities in the spicy snack food industry, which, according to Frost & Sullivan, is expected to reach a total addressable market of RMB273.7 billion by 2026.
Source: Weilong (09985) Prospectus (IPO Date : 2022/12/05) |