The scale of edible oil market stagnates and diversifies to find new profit points.

Yihai Jiali, who came from a big family of grain and oil, is marching into a comprehensive food enterprise. Recently, there has been another dairy sales business in China. In addition, Yihai Kerry also accelerated its involvement in condiments at the beginning of this year, and its diversified territory expanded again.

Under the circumstances that the scale of the main grain and oil market is stagnant and profits are constantly diluted, the leader of the edible oil market begins to look for the next profit support point, but at present, including rice, flour, condiments, daily chemical products and so on, are all in their infancy. Yihai Kerry has not really benefited from it.

Diversification to speed up

After entering the rice, flour and seasoning markets, Yihai Kerry's diversified territory continues to expand. Recently, a New Zealand milk called Newmai was launched on e-commerce websites such as JD.com, No.1 Store, Tmall and so on. It is worth noting that this milk product is bundled with golden arowana and sold together. In JD.com, Tmall and other e-commerce websites, there are activities to buy arowana peanut oil and give away a Timerford milk.

In fact, if you look at the public information, you will find that the golden arowana and Newmai belong to the same company, and Yihai Kerry began to dabble in dairy products in the Chinese market under the arrangement of its parent company. Last year, Fengyi International, the parent company of Yihai Kerry, bought all shares of Goodman Fielder, Australia's largest listed company, for A $0.65 a share in cash, based on a 10.1 per cent stake. According to the data, Goodman Fielder is the largest food oil supplier in Australia and New Zealand, with a large number of food brands covering all categories from breakfast, lunch to dinner and snacks. Among them, New Zealand's largest milk brand Numaifu Milk is the first to enter the Chinese market.

"at present, China has signed free trade agreements with Australia and New Zealand, and Fengyi International will introduce other Goodman Fielder products in the future, while the mature domestic sales channel built by Yihai Kerry will pave the way for other products, which will break the inherent impression of grain and oil producers in the future." A person close to Yihai Kerry told Beijing Business Daily.

In addition to the traditional rice noodle grain and oil industry, Yihai Kerry is constantly extending its industrial chain. in January this year, Yihai Kerry formally signed a contract with Maruzhuang Food Industry Co., Ltd. to build Yihai Kerry's first soy sauce production line. The plant is expected to be completed and put into production next year, and Yihai Kerry is transforming from a raw material supplier to a soy sauce producer.

In addition, in January this year, Yihai Kerry and Kellogg's joint venture Yihai Kerry Pingle potato chip production line was officially put into operation in Jiangsu Province, Yihai Kerry snack food strategy landed. As early as 2013, Yihai Kerry's daily chemical brand Jiejin was quietly listed, including laundry soap, detergent and detergent.

The above person further said: "from the track of the development of Yihai Kerry's existing industry, diversification is first of all around the extension of the rice noodle oil industry chain, and its cross-industry exploration will be more and more in the future."

Main business encounters bottleneck

In fact, the expansion of Yihai Kerry's new business is also in line with the company's strategic transformation direction. Earlier, Mu Yankui, vice chairman of Yihai Kerry Group, said to the outside world that Yihai Kerry's development and transformation in China is diversification, seeking domestic identity and changing the mode of development.

From the point of view of the industry, Yihai Kerry's diversification is actually looking for a second profit support, especially when its grain and oil sector encounters a bottleneck in large-scale development, the exploration of new business becomes particularly urgent. According to Nielsen statistics, the market pattern of China's small packaging oil has become stable, with the market share of the top five brands approaching 80%. Among them, Yihai Kerry edible oil has exceeded 1.5 billion bottles, and its edible oil series products have a market share of 40%. The market share of the golden dragon fish alone is as high as 30%, which is higher than that of enterprises with the second market share.

Although it is firmly at the top of the market, Yihai Kerry's edible oil development has also encountered a bottleneck in China's edible oil market, which has not seen an increase in scale for many years. Last year, for example, the golden arowana cut its price twice, by more than 23%, to its lowest point since 2006. Thanks to good sales, goldfish maintained an 11.6% increase in sales last year, but its overall revenue of $3.5 billion was only the same as in 2013 due to massive price cuts.

Grain and oil industry analysts told Beijing Business Daily that the stagnant market scale and fierce competition are the true portrayal of the domestic edible oil market, especially in some regional markets. Yihai Kerry's market share has been squeezed by local brands to varying degrees.

In addition to full competition, small profits are also the consensus of the edible oil industry. Take Fu Linmen, the brand's biggest competitor, as an example. The gross profit margin of the brand's agricultural products-related business, including edible oil, was 6.96%, 6.59% and 3.89% respectively in the past three years, falling to 3.11% in the first quarter of this year. In the past few years, the golden arowana's profit margin was about 6% at its highest and only 1.3% at its lowest, and the profit was even thinner than that of Fulinmen. " The above grain and oil industry analysts said.

Prior to this, Yihai Kerry also said publicly: "in super cities, municipalities directly under the Central Government, the competition in the edible oil industry has become white-hot, it is very difficult to make a profit."

The start didn't work.

Compared with the edible oil industry, the domestic condiment industry has shown a strong growth advantage. It is reported that the average annual growth rate of the condiment industry is as high as 15%, and the market concentration of the top five in the industry is less than 10%. This has also become one of the reasons why Yihai Jiali has devoted himself to the production of soy sauce. "from cooking oil to rice and flour industries, Yihai Jiali has achieved horizontal expansion in several years, and now it is going to expand vertically, and its diversification is further." Analyst Chen Lina pointed out.

However, Yihai Kerry diversification is still in its infancy, and the project is either under construction or has just been put into production, so the market response is still unknown. However, the above-mentioned person close to Yihai Kerry told the Beijing Business Daily that the sales revenue of Yihai Kerry's earlier flour and rice business increased by more than 30% in 2013 compared with the same period last year. Its growth rate is much faster than that of the edible oil plate. "it is worth noting that the starting point of this plate is relatively low, so the growth rate will certainly be faster than that of edible oil, but it is understood that the sector has not yet made a profit."

In addition, in the view of other industry insiders, Yihai Kerry's diversification has a unique advantage. First of all, the support strength of its holding company Fengyi International should not be underestimated. Fengyi International is the world's largest supplier and trader of food, edible oil and agricultural products, and can provide rich financial support for Yihai Kerry; in addition, Yihai Kerry's sales network in the national market can also bring smooth channels for its later products. According to Yihai Kerry's official website, Yihai Kerry's production, sales and logistics network covers 2839 counties and cities, nearly 350 sales offices, 1585 dealers and more than 5000 distributors.

"the next step is to see how Yihai Kerry's non-grain and oil sector can make use of these networks and resources to shop goods across the country. In addition, it is worth noting that although Yihai Kerry entered the industry concentration is not high, but there is no lack of seniors, how to grab customers from the hands of predecessors also need Yihai Jiali focus on research. "

The above grain and oil industry analyst further said that from Yihai Kerry's diversified territory, it can be seen that its products increasingly rely on retail terminals, so brand promotion and marketing strategies also determine the success or failure of products. "in addition, if the cross-bank is larger, the recognition of its products will be limited by the inherent image of Yihai Kerry grain and oil producers, and the role of brand promotion will be more prominent."