Key investment points
The condiment industry has a large space, and the concentration still has room to improve
The revenue of China's condiment industry increased from 259.5 billion yuan in 2014 to 395 billion yuan in 2020, with a six-year CAGR of 7.25%. It is expected that the sales will reach 550 billion yuan in 2025. Among them, soy sauce, as the largest category, the retail sales increased from 41.1 billion yuan in 2012 to 87.4 billion yuan in 2020, and the CAGR in 8 years was 9.9%; In 2020, the market scale of vinegar is about 18 billion yuan, the sales volume of compound condiments is about 144 billion yuan, and the market scale of packaged pickled mustard is about 7.2 billion yuan; In 2019, the retail sales of oyster sauce reached 6.5 billion yuan. The concentration of condiment industry is relatively low, with CR3 accounting for 14% and CR10 accounting for 25%, which is far lower than that of South Korea, Japan and the United States (CR3 accounting for 32%, 18% and 15% respectively, and CR10 accounting for 60%, 30% and 28% respectively). There is still room to improve the industry concentration. The proportion of the top 100 seasoning enterprises' income in the industry's total income has increased from 18% in 2014 to 28% in 2020, of which the leading Foshan Haitian Flavouring And Food Company Ltd(603288) city accounts for only 7%. It is expected that the market share of the leading enterprises in the industry is expected to further increase.
Soy sauce is at the end of its growth stage and its production capacity continues to expand
The condiment industry has many categories, and the main categories such as soy sauce, vinegar and oyster sauce are in the growth stage, but soy sauce has gradually moved towards maturity at the end of the growth stage. The output of soy sauce increased from 10.12 million tons in 2015 to 13.44 million tons in 2020, and the average price increased from 5758 yuan / ton in 2015 to 6505 yuan / ton in 2020. The five-year CAGR was 5.8% and 2.5% respectively. From the perspective of production capacity pattern, Haitian has a production capacity of 4 million tons and a long-term plan of 4.5 million tons Qianhe Condiment And Food Co.Ltd(603027) , Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) , Jiajia Food Group Co.Ltd(002650) , Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) total capacity is about 558000 tons, 703000 tons, 305000 tons and 252000 tons respectively, of which Qianhe, Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) planned capacity exceeds 1 million tons, and the capacity advantage will form a scale advantage in the competition.
Functional diversification is the trend, and the C-end channel is expected to continue to develop
With the continuous recovery of catering, the C-end has made steady efforts, and the proportion of family channels has increased from 25% to 30%. With the implementation of price increases in the superimposed industry, the condiment industry is expected to achieve both volume and price increases in 2022. From the perspective of channel layout, Foshan Haitian Flavouring And Food Company Ltd(603288) catering channel has great advantages and takes the lead in realizing nationalization Qianhe Condiment And Food Co.Ltd(603027) , Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) , Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) force C end, family channel accounts for more than 80%, which is dominant in some regions. In terms of emerging channels, some enterprises actively embrace community group buying, which is expected to become one of the important channels in the industry in the future. From the perspective of future trend, structural upgrading will be the main line of the industry. The CAGR of high-end soy sauce from 2014 to 2020 will reach 11%, higher than the average growth rate of the industry; Functional diversification is the general trend; Accelerating the development of compound condiments is the direction. From 2011 to 2020, CAGR was 14.31%, higher than the growth rate of the industry; Condiment enterprises should actively focus on the above trends to seek breakthroughs.
Investment strategy
Based on the rigid demand of condiments in catering and family, the industry has a long life cycle, the market scale and market concentration are expected to continue to improve, and the volume and price of each subdivided field are expected to rise. Product scale, differentiation, health, compound and high-end will be the future development trend.
It's recommended to focus on industry leading enterprises or the strong category in a subdivision category, as well as to focus on specific subdivision areas and bind categories, so as to achieve regional brands for overtaking at corners, with a view to achieving regional brands, such as Foshan Haitian Flavouring And Food Company Ltd(603288) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ and Yihai Kerry Arawana Holdings Co.Ltd(300999) etc.
Risk tips
Macroeconomic downside risk, consumption dragged down by the epidemic, price fluctuation of raw materials, impact of community group purchase, risk reduction of business and super passenger flow, further intensification of competition, performance of recommended companies not meeting expectations, etc.
