2C Prefabricated Vegetables: Where does the competitive advantage of enterprises come from? -

Chen Jiahe, Chief Investment Officer of Jiuhuan Qingquan Technology

In 20021and 2022, the direct food preparation for consumers (2C food preparation) began to become a new development direction of the consumer industry. Here, let's look at how to find the competitive advantage of such a new branch of the consumer industry.

The Origin of 2C Prefabricated Vegetables

First of all, we need to define the specific scope of 2C prefabricated vegetable industry. For cooked food, it covers a wide range. Simply put, as long as it is processed, such as beef jerky in the supermarket and fried chicken sold by McDonald's, it can be regarded as cooked food.

2C pre-cooked food, which appeared in 202 1 and 2022, is a small branch of pre-cooked food, which refers to the pretreatment of some ingredients, so that consumers can eat almost the same dishes as ordinary home cooking as long as they simply process them at home without going through various processes in the traditional family kitchen.

In fact, before 2C pre-cooking (2C comes from English, that is, To Customer, which means directly facing consumers), 2B pre-cooking (directly facing enterprises) has long been popular. Many restaurants have used a large number of prefabricated dishes for various reasons, such as saving costs, not using naked flames in office buildings, and unifying the tastes of various stores.

Because consumers often have the impression that prefabricated dishes are "stale and have too many preservatives", catering enterprises often don't publicize their use of 2B prefabricated dishes in stores. However, for smart consumers, the existence of B-end prefabricated dishes is already obvious: no one thinks that braised beef can be cooked in 10 minutes after ordering, right?

However, the blowout of 2C prefabricated vegetable industry from 202/KLOC-0 to 2022 can be regarded as an extension of 2B prefabricated vegetable industry. 202 1-2022, many consumers reduced the frequency of eating in restaurants due to the epidemic. Although going out less, people's pursuit of food has not declined, and even strengthened with economic development. Therefore, 2C prefabricated dishes have naturally become a new choice for consumers, and many sensitive capitals have poured into this new industry.

On the other hand, the small family and fine division of labor under the background of social development have also led to the increasing attraction of prefabricated dishes to C-end consumers.

On the one hand, smaller family units lead to fewer people who can cook at home, and many Chinese dishes often take a long time to prepare. Take Dongpo pork invented by Su Dongpo as an example. Su Dongpo once described the practice of Dongpo meat like this: "The net pot is short of water, and firewood can't be pumped." Don't rush him when he is ripe, he will be beautiful when the fire is full. "The key is" small fire, long time ". For more and more small families in modern times, there is no one to cook at home during the day, so cooking by yourself is a big obstacle.

On the other hand, the finer social division of labor has also led to fewer and fewer young people who can master cooking skills. For the post-60s and post-70s, cooking seems to be a very common thing, but there are differences in cooking skills, and there is no question of whether it will happen. For the post-80 s and post-90 s, cooking began to become sparse. For the post-95 s and post-00 s, many people began to think that cooking is a skill that "almost no one knows".

Under the above background, with the help of the epidemic that began in 2020, 2C prepared vegetables finally entered the stage of rapid development in 20021and 2022. Then, for enterprises, how should they find their own commercial competitive advantages?

Poor consumer stickiness

For the competitive advantage of enterprises, the best competitive advantage comes from higher consumer stickiness. For example, Apple, where Warren Buffett holds a heavy position, relies on the security and ecosystem of Apple's mobile phone to establish a high consumer stickiness: it is difficult for customers who like this function to accept other brands of mobile phones or switch to Android.

For 2C prepared dishes, consumers are very sticky. There is no condition that will restrict consumers from trying the cooked food of Company B next time after tasting the cooked food of Company A ... Some smarter consumers will learn how to make this dish after cooking several times.

To make matters worse, consumers will even have the urge to try fresh dishes after eating a certain flavor of prepared dishes several times. This is similar to the situation encountered by B&B industry. People are always willing to try a new B&B when traveling, instead of choosing the same hotel to save trouble like business travelers.

Common brand advantage and low imitation cost

Of course, companies that do well in pre-cooked dishes will still win the brand recognition of some consumers. Although this kind of consumer recognition is not easy to be converted into consumer stickiness due to the ultra-low conversion cost, when consumers trust a brand of prepared dishes, they often choose the same brand of prepared dishes because there are too many SKUs.

However, this brand advantage of 2C prefabricated dishes should not be understood as a strong brand advantage, but more like an ordinary brand advantage. There are two main reasons: there are too many SKUs, the taste is changeable and the imitation cost is low.

First of all, it is precisely because there are too many SKUs in pre-cooked dishes and the tastes of consumers are too different, so it is easy for a consumer to try the braised beef of company A again after tasting the fish head with chopped pepper of company A and feeling good, and then try the braised beef of company B. For the prefabricated vegetable industry with so many SKUs, it is difficult for 2C prefabricated vegetable enterprises to make a big single product suitable for everyone like Coca-Cola Company and Mengniu Company. And too many SKUs will inevitably leave space for competitors to insert.

Secondly, it is difficult to apply for patent protection for prefabricated dishes, and there are no barriers in the production process (for example, the advantages of origin that dairy enterprises rely on and the technological advantages that technology enterprises rely on basically do not exist here), so even if Company A makes a successful prefabricated dish, it is difficult to prevent Company B from copying it.

And when consumers find that the price of 400g curry chicken of Company A is in 39 yuan and the price of 4 10g curry chicken of Company B is in 36 yuan, what factors can prevent consumers from trying curry chicken of Company B? Anyway, even if it is not delicious, it is just a loss of a meal: the lack of consumer stickiness has played a role here.

Can't show off the use of the scene.

In the consumer industry, an important source of high return on capital for enterprises is "conspicuous usage scenarios". In other words, the purpose of consumers to buy such goods is not its use function, but its brand display function.

For example, high-end liquor, diamonds, luxury bags, these common high-priced goods, the price is often much higher than their manufacturing costs. The reason is that the consumer's main purchase intention is not its use value, but to tell others that this thing is expensive, thus winning a psychological advantage in social interaction. As for using expensive things, just ask this and you will be OUT.

For 2C pre-cooked dishes, the ostentatious use scene basically does not exist. The consumption scenes of 2C prepared dishes are mostly family daily meals. In this scenario, the use value of prefabricated dishes determines everything. Even in a few family banquets, the brand of prefabricated dishes is hard to be the protagonist on the table: high-end liquor is often a conspicuous commodity in this occasion.

Dependable regional scale effect

For 2C pre-cooked vegetable industry, one of the most easily relied competitive advantages is scale effect. And for this industry, this scale effect is a better one: regional scale effect.

Simply put, the scale effect is that the larger the enterprise, the lower the production cost and advertising cost of each commodity, and the stronger the competitiveness. In industries with economies of scale, large enterprises often get higher return on capital than small enterprises. Charles Munger once said that the scale effect is one of the most easily found effects in the analysis of enterprise's competitive advantage.

For 2C pre-cooked vegetable industry, huge central kitchen investment, massive daily purchase demand, early transportation warehouse investment, certain advertising expenditure and the ensuing brand effect, as well as massive SKU single product research and development demand are all testing the capital investment of enterprises, bringing scale advantages to enterprises that dare to invest heavily and competitive pressure to enterprises that invest too little.

At the same time, the scale effect is also divided into two categories: the scale effect of the overall market and the scale effect of regional types. The difference between the two is mainly caused by the transportation radius of the product.

For example, the chip industry is a typical market-wide scale effect. When one million chips are transported from American market to China market, the transportation cost is almost zero relative to the product value. Therefore, the scale advantage of the chip industry can be extended to the whole market, even the whole world.

For beer and cement, because the products are too heavy, the scale advantage is often regional: no matter how strong the leader in one region is, it is difficult to threaten the enterprises in another region through the production capacity in this region. Only when leading enterprises in one region acquire local enterprises can they gain a firm foothold in another region.

For 2C pre-cooked vegetables, there are two factors that are easy to show the regional scale advantage effect.

First of all, in order to give consumers a "taste comparable to home cooking", 2C prefabricated dishes are often mainly fresh vegetables or contain some fresh vegetables, so the transportation has high timeliness, and the transportation radius is often short. In many cases, cold chain transportation is needed. Therefore, it is difficult for the scale effect established by one enterprise in the local area to directly conflict with the scale effect established by another enterprise in another area.

Secondly, there are too many changes in catering in China. Generally speaking, there are eight major cuisines, including Shandong cuisine, Sichuan cuisine, Guangdong cuisine, Fujian cuisine, Jiangsu cuisine, Zhejiang cuisine, Hunan cuisine and Anhui cuisine. From a small point of view, the two cities are sometimes two or three hundred kilometers apart, and the dishes they make taste different. For example, Shanghai local food is sweet and Huaiyang food is fresh. This huge regional gap makes it difficult to bring competitive pressure to another region even if transportation costs are not considered.

To sum up, it is not easy to find a long-term competitive advantage from the following aspects: consumer stickiness, brand advantage, production barriers, high-end conspicuous use scenarios, etc. If enterprises want to get a high return on capital, for 2C pre-cooked dishes, 202 1 and a new consumer industry will rise in 2022. The only long-term competitive advantage that is easy to rely on is regional advantage.

Faced with this business pattern, 2C pre-cooked vegetable enterprises should focus on the following business strategies in their development: avoiding nationwide spread and omni-channel competition, giving up trying to take advantage of the first-Mover advantage to completely occupy the market and crowd out competitors (poor consumer stickiness makes this attempt difficult to succeed), avoiding building high-end brands through high advertising investment, focusing on key areas, gradually accumulating good reputation through high cost performance, and consolidating regional scale advantages as much as possible. Therefore, 2C pre-cooked vegetable enterprises can establish a relatively stable long-term competitiveness.