Low-key tycoon, the richest man in Fujian, has made more than ten brands the top names in the industry after being founded for 31 years

It owns more than ten brands of pastries, beverages, and snacks, and almost every one of them has become a leading brand occupying one of the top positions in the market.

Some people say that it is the P&G of China's food industry.

This is a very low-key company that has been established for 31 years. What is amazing is that there are very few people who are very popular in the market and the brands that are familiar to the public. Knowing that they are from the same company, those brands are actually from the same family.

The founder is even less well-known. He is worth more than 40 billion and has become the richest man in Fujian Province. His name is Xu Shihui, and his company is called Dali Garden.

When it comes to Dali Garden, many people know that it sells buns. But in fact, there are many well-known brands under Dali Garden, but you may not know that they belong to Dali Garden Group.

In March 2020, Dali Group released its 2019 performance report. The financial report shows that for the whole year of 2019, Dali Group achieved revenue of 21.38 billion yuan, an increase of 2.5% compared with 2018 (20.86 billion yuan). Among them, net profit was 3.84 billion yuan, a steady increase compared with last year. The group's overall gross profit margin was 39.7%, 1.1 percentage points higher than the same period last year

In the report, Dali Group pointed out that 2019 is a key year for the implementation of the group's industrial transformation and upgrading strategy. Year. After two years of development and layout, three major industrial structures have been formed: household consumption, leisure food, and ready-to-drink beverages.

In recent years, Daliyuan has made rapid progress in the household consumption industry sector and has become an important engine for the performance growth of the group company. In the financial report just released this year, Dali Park proposed that it will continue to "cultivate star brands with tens of billions of revenue in each industry and create a first-class brand portfolio in China's consumer industry."

Fujian is a southeastern province with a prosperous commercial culture and rich merchants. In the 1980s, poverty inspired many Fujian people to embark on the road of business. Among them, some failed, and some have become powerful businessmen today. From clothing to sports shoes, from glass to foreign trade, from food to beverages, these industrial fields that seem to have no high-level concepts are full of Fujian people.

The money earned by Fujian people is all hard-earned money, and they will expand the scale little by little, without any opportunism.

Among the Fujian businessmen, there are many rich people we are familiar with, such as Cao Dewang, Chen Fashu, Ding Shizhong and so on. However, it is estimated that many people have never heard of Xu Shihui's name.

Born in 1958, there were many small food workshops in Quanzhou at that time. At the age of 22, Xu Shihui began to enter the food industry. It was not until 1989 that Xu Shihui started his own entrepreneurial journey. Starting from a small workshop, Dali Food's predecessor, Hui'an Meili Food Factory, was established. In fact, this small factory at that time was still a collectively owned enterprise. Xu Shihui became the representative of this small factory three years later. Later, Xu Shihui led the transformation of the factory into a private enterprise, which attracted investment from Garda Company. From then on, the development of Dali Group began.

After the establishment of Dali, it launched the first Dali brand biscuit product. Through the active development of Xu Shihui’s team, the biscuit business was going smoothly. In 1996, Dali biscuits had grown from a regional brand on the southeast coast to a national famous brand product.

But the good times did not last long. After entering the 21st century, the canned fruits and vegetables, fish skin peanuts, and spiced melon seeds that everyone loved in the 1990s have reached the stage of aesthetic fatigue, and food hygiene problems have also There is great concern because these cans are produced by small, family-run companies, so the market is in urgent need of a new product to open up the situation.

Xu Shihui realized that the food industry should follow the trend of consumption and seek solutions in product structure processing. Among urban people, many people will have some snacks on their desks, private cars or computers, either to satisfy their hunger or to entertain themselves. This phenomenon has become commonplace, and the "leisureization" of food has become a major trend.

Since 2001, he has proposed a brand new concept product: Dali egg yolk pie. In the hands of Xu Shihui, pies were expanded to an unprecedented scale. In addition to square cakes, egg yolk pie, chocolate pie, and fruit pie were launched one after another, setting off a "pie" craze in the food industry and becoming a veritable king of Chinese pie foods.

On November 16, 2004, Meili Food, a wholly-owned company of the Xu family, acquired the 42% stake in Fujian Dali held by Jiada for 8.4 million yuan.

At this point, Fujian Dali’s food business is 100% controlled by the Xu family.

On November 20, 2015, Dali Food Group was listed in Hong Kong. The Xu Shihui family controlled 85% of the shares of Dali Food after the IPO, with a net worth of 50.6 billion, and aspired to be the top company in 2016. The richest man in Fujian, and then retained the title of richest man in 2017 and 2018.

Between 2003 and 2004, when the egg yolk pie was a big success, Daliyuan quickly launched Copico potato chips and Haoyidian biscuits entered the market at a price lower than one-third of Pringles' similar products. Both products became popular across the country.

After owning the three leading food brands of Daliyuan, Copico and Haochidian, Daliyuan entered the beverage industry in 2006, investing 800 million yuan and introducing 12 It has an international standard beverage production line and comprehensively launches eight categories and more than 20 varieties of beverage products: "Heqizheng" herbal tea, "Priority Milk" protein beverage, and "Green Plum Green Tea".

In 2013, Dali Garden launched the functional drink "Lehu". Xu Shihui believes that China's functional beverage market is still in a stage of rapid development and is still a very attractive category in the beverage industry. With its focus on segmented consumption scenarios and its sponsorship of the 2019 FIBA ??Basketball World Cup, Lehu has continued to increase its market share and brand awareness in the domestic functional beverage category.

In 2017, Daliyuan once again innovated its product system, launched Doubendou soy milk, and entered the soy milk industry.

Dali Garden’s brands

Each sub-category of Dali Garden is basically a “channel + advertising” approach in product operator routines , first use the powerful network and advertising channels to occupy the market, and then carry out omni-channel rollout.

Daliyuan has relatively good control over product profit margins. Daliyuan Company also requires that the profit of products should not be less than 10%, and the profit of better products should be kept above 30%.

The financial report shows that the efficiency of Daliyuan Food’s operation is higher than that of Master Kong Food Company. According to Master Kong Food Company’s 2018 financial report: the company’s operating income was 60.686 billion yuan, the same as in 2017 It increased by 2.94% year-on-year, and the company’s shareholders accounted for 2.463 billion yuan in net profit, an increase of 35.42% over 2017. Although the sales volume of Dali Garden is not as good as that of Master Kong from the data, the net profit of Dali Garden is much higher than that of Master Kong.

The "Dali Model" means following the strategy - in many categories, it is not the pioneer or the leader, but it is the leader in following the strategy. This category ranks in the first camp, second only to the leading brands.

Generally speaking, if you can do well in a category and lead the industry, you are already very good!

However, there are almost very few top companies that can be involved in multiple categories and can achieve leadership in multiple categories. Big companies in the industry can do this. There are very few guys!

In China, companies that can do this are basically industry giants! The Dali Group is undoubtedly one of such high-level companies. Dali's net profit margin has always remained above 17%, which is much higher than Tingyi's and Uni-President's 3.8% and 4.06%.

Although the creation of products is a follow-up strategy, Dali Group has achieved the best position in each product category in its category.

Daliyuan Egg Yolk Pie ranks first in the pastry category, Copico ranks third in the potato category, delicious food ranks second to third in the biscuit category, and its herbal tea category It ranks third in the category, peanut milk ranks second in the complex protein drink category, and Lehu ranks second to third in the functional drink category. Most of these brand products are not number one, but their combined profits can exceed those of most competitors.

Domestically, Daliyuan’s product line is very broad and involves many competitors. In the beverage field, major competitors include Wahaha, Wanglaoji, Uni-President, etc. Competition in the field of pastries and biscuits will include Panpan, Xu Fuji, etc.

There are many things worth studying about the success of Daliyuan’s multiple brands. However, there is one thing that Dali Garden has done very well compared to Wahaha:

For Dali Garden, different brands are chosen for different categories, and they are consistent with the main brand. (Dali Garden) It has nothing to do with it. We use different spokespersons for new brands, and we have a very good grasp of the rhythm between each brand. We build one brand before investing in another category, focus on it, and do it steadily.

However, compared to Wahaha, it also follows the strategy and continuously develops new products, but Wahaha's new brand strategy is obviously not as successful as Dali Garden.

Except for a few products such as Nutrition Express, many of Wahaha’s products cannot even compete in the top five or top ten market positions. In addition, Wahaha pursues a strategy of low prices and surrounding urban areas from rural areas. Under such product positioning, the brand quality is not high and it is difficult to gain recognition from the mainstream consumer public.

Therefore, if we compare the multi-brand strategies of Dali Garden and Wahaha, we can find that after Dali Garden launches new products, it radiates from the central city to the surrounding areas and concentrates its superior forces to promote the brand. . However, Wahaha is exactly the opposite. The brand is launched too quickly and involves too many categories. Each category does not form a very advantageous psychological positioning and mental cognition.

A simple comparative analysis can be done on the PK strategies of various products of Daliyuan:

Heqizheng Herbal Tea PK Wanglaoji herbal tea. And it is locking in the role of supplementing the market, highlighting the selling point of large bottles, and filling the consumer demand in third- and fourth-tier cities with the appeal of large bottles.

Dali Garden Egg Yolk Pie PK Panpan French Bread, Xu Fuji, etc. As a market-leading pioneer, Dali Garden has always occupied the first position in this category.

It tastes better than other biscuits. In fact, Haochidian is not a normal biscuit in terms of category. It is more similar to an original snack food, a composite combination of biscuits + dried fruits, which attracts the diversified tastes of young people.

Copico potato chips PK Lay's. Copico has created another branch in the field of potato chips. Compared with Lay's, Copico's potato chips are thicker, and the original flavor of the potato chips is stronger, which firmly attracts taste lovers who pursue the original taste.

In the beverage field, the peanut milk, Lehu, Doubendou, etc. launched by Dali Garden are basically obviously different from other products. Difference. For example, compared with the original soy milk king Weiwei, Doubendou has obvious originality in its canned form versus brewing form.

In terms of marketing communication strategy, Daliyuan more actively leverages the power of dealers across the country to place advertisements.

Dali Foods gives dealers a lower ex-factory price, which is only about 50% of the retail price. In comparison, Jiaduobao>55% and Wangwang>60%.

Lower ex-factory prices mean that Dali Foods offers more profits to dealers. Correspondingly, distributors of Dali Foods are more willing to invest in advertising and promotion. However, Daliyuan Group's own marketing and promotion expenses are lower.

For dealers, this is a multiple-choice question: let the manufacturer offer higher gross profits and bear more marketing expenses; or let the manufacturer advertise more and Your own gross profit is lower.

Obviously, dealers choose the former because of higher gross profit margin. On the other hand, advertising by every dealer in the country can benefit more dealers (increased brand awareness). This is a marketing idea where everyone is for me and I am for everyone.

Although Xu Shihui has a business acumen, he is also very charitable. However, the balance of fate was not fair to him.

In 2012, Xu Liangliang, the only son of Xu Shihui, the richest man in Fujian and the owner of Daliyuan, died in a car accident in Jiangxi. At that time, on the highway, a large truck failed to brake and crushed Xu Liangliang's car. All three people traveling with him were killed.

At that time, it was only 3 months before Xu Liangliang got married, and his father Xu Shihui specially built him a five-star hotel in Hui'an as a wedding gift. However, after the hotel was built, the son was no longer there.

The 2019 Hurun Rich List was released, and Xu Shihui’s family wealth was worth 60 billion yuan. Xu Shihui’s daughter Xu Yangyang holds 34% of the shares. The daughter and his wife Chen Liling have become the richest women in Fujian with a wealth of 32.5 billion yuan. Now, Xu Shihui has gradually handed over the company's duties to his daughter Xu Yangyang.

Xu Yangyang was born in 1983, graduated from Xiamen University in 2005, and then studied in the UK for several years. After returning to China, he joined Dali, starting from the grassroots level, and successively served as workshop director, deputy factory director, and labor union chairman. In November 2014, Xu Yangyang was promoted to a director of Dali Group and served as the group's vice president and executive director. After Xu Yangyang became vice president, the output value and efficiency of Dali Group have been significantly improved, and the scale has become larger and larger.

Nowadays, Xu Yangyang is in charge of the daily affairs related to Dali Group.

Xu Yangyang's ability is obvious to all, so she has already been regarded as the successor of the Dali Group. But as a potential successor, she is a relatively inconspicuous presence in the public media, and reports about her are very rare. She does not often appear in the public eye, and the occasions she often attends are charity and award evening parties.

Influenced by his father Xu Shihui, Xu Yangyang is also very keen on public welfare undertakings. He has won the "Quanzhou City's First Outstanding Economic Women", "The Tenth Fujian Youth May Fourth Medal", etc. honor.

The food industry is a very traditional industry, and consumer tastes are changing with the times. Therefore, for any food company To always keep pace with the times, you must do at least one of the following three aspects:

First, marketing communication methods should always keep pace with changes in the times. For example, it is similar to Coca-Cola, which always conveys the values ????and lifestyle of young people;

Second, the products are constantly renovated. Similar to Dali Garden, product innovation also carries great risks, and it is impossible for every new product to be highly sought after by the market. If a product fails to sell, it will be a huge burden for the company.

Third, a high degree of control over channels. Channels are too important for fast-moving consumer goods. From dealers across the country to terminal outlets all over the country, the lack of any channel may cause a huge loss of market share.

In the 31 years since its establishment, Daliyuan has undoubtedly been successful in product innovation and marketing strategies, but its hidden worries are also obvious:

First, how to win the love of young people in the Internet era with diverse cultures and values. Many brands, including Coca-Cola, are constantly rejuvenating their brands. For example, Wangzai Milk uses various transformations of its cartoon characters on its packaging to be full of banter and humor. In this aspect, many traditional brands are very lacking.

Second, some brands with slightly lower market share may become a drag. For Dali Garden, the gap between Heqizheng Herbal Tea and Lehu Functional Drinks and the leading brands in their fields (corresponding to Wong Lo Kat and Red Bull respectively) is relatively large. If you are not careful, these categories may become a group. drag.

Third, how to always maintain product innovation capabilities is a difficult problem. At this point, we can see that Wahaha has entered a sunset era where product innovation is insufficient. Product innovation will eventually dry up unless it changes course and enters a completely new field.

Fourth, the risk to the heirs. From Wahaha’s Zong Qinghou to his successor Zong Fuli, from Dali Garden’s Xu Shihui to his successor Xu Yangyang, for family businesses, the risks of inheritance are exactly the same. Can the new generation of successors still have the incomparable abilities of their parents in terms of market sensitivity, judgment, product development, and channel control?

As mentioned before, food companies earn hard-earned money. Compared with emerging companies or high-tech companies, they need to put in more effort, and their profit levels are much lower than those of emerging companies.

However, food is related to everyone’s daily consumption and the appetite of millions of people. Under the massive attack of foreign brands, almost most domestic food companies have continued to shrink their front lines and survive in the cracks.

They need to continue to innovate, expand sales channels, and invest in advertising and marketing to keep their brands active. Although it has been thirty-one years since Dali Garden was founded, it is still full of vitality today in terms of innovation, marketing and careful setting of business models, which is very difficult to say.