Konjac, which scientific name is Amorphophallus konjac, is an herb native to southwestern China, Japan, India, Sri Lanka, the Malay Peninsula and other regions.
Konjac has a long history of cultivation and use in China, in the “Ben Cao Tu Jing” “Ben Cao Gang Mu” and other ancient books have been recorded. Konjac has cold properties, tastes flat, as a medicinal herb that can reduce swelling and eliminate toxins, mainly for the treatment of carbuncles, swelling and poison, tropical diseases, etc.
Konjac has low calorie, low fat, high fiber, no cholesterol, every 100 grams of konjac flour contains more than 70 grams of fiber, much higher than other foods. Nutritionists recommend the daily intake of dietary fiber for adults is 25-30g, if you eat konjac, 50g konjac can meet the daily dietary fiber requirements.
Processed konjac food is lower in starch and fat and contains fewer calories. Its regulating effect on dietary fiber makes it have the effect of lowering blood lipids, lowering blood sugar and inhibiting cholesterol absorption. As a result, it has become one of the most popular snacks among young people in contemporary China – satisfying cravings and keeping fit at the same time.
Weilong, one of China’s largest casual food companies, has achieved even greater commercial success with its Latiao and konjac shuang products. On May 12, 2021, Weilong submitted its listing application to the Hong Kong Stock Exchange, and the post-IPO valuation of Weilong’s Pre-IPO financing exceeded RMB 60 billion (About $9.5 billion).
Why did Weilong get such a high valuation? And how did it get to where it is today? In this article, we will introduce the journey that Weilong has taken to grow into a leading Chinese casual food company.
The entrepreneurship of “Ping Ping”
Henan Luohe has the title of “China’s food city”, there are thousands of various food enterprises in the city, and the headquarters of Weilong is established here. In addition, there is the headquarters of Shuanghui, China’s largest meat processing base and a key national leading enterprise in agricultural industrialization. Want Want, Uni President and other well-known brands in mainland China’s largest base are also located here.
Weilong’s founders, Liu Weiping and Liu Fuping are blood brothers. They started to enter the casual food industry in 1999. But at that time, there were no signature products such as Latiao and konjac shuang that we are familiar with now.
Their hometown is Pingjiang, Hunan Province. The region is rich in Jiang Gan, a bean product that is brined and roasted. But because the price of soybeans, the raw material for production, had skyrocketed, many locals began to use the Jiang Gan process to make a gluten snack – Latiao, which led the Liu Weiping brothers to discover a business opportunity.
In 2001, they came from their hometown to Henan Luohe with the recipe of Latiao to start a business.
In 2003, because of his love for the famous movie star Jackie Chan, whose Chinese name is “Cheng Long”, Liu Weiping combined the “Wei” in his name and the “Long” in “Cheng Long” and named the brand “Weilong” and applied for a trademark. This was the birth of the first brand in the Chinese Latiao industry.
After this, the two brothers took a “Ping” word from each name, set up the Ping Ping Food Processing Factory. They moved into the Luohe Industrial Park, and committed to creating “Weilong” series of casual foods.
Liu Weiping realized at the beginning of the brand that to go longer, they must invest more in technology. He increased the capital investment and introduced a whole set of fully automatic packaging equipment from Europe, as early as 2004.
Weilong should have started into high gear at this point, but it was not to be. In 2005, because of the incident of adding non-edible preservatives to gluten in Pingjiang gluten factory, the number of Latiao enterprises in Pingjiang was greatly affected, and the number plummeted by three-fourths, leaving only 500 or so. The Weilong brand also took a hit as a result, and only gradually recovered in 2008.
From 2005 to 2010, Weilong has launched small gluten and large gluten casual snacks, and the scale of the enterprise has gradually expanded. Weilong became the famous trademark of Henan Province and the famous brand of Henan Province.
Through research on the market, Liu Weiping decided to use the star effect to promote the Weilong brand. Since 2010, Weilong has invited famous Chinese actresses such as Yang Mi to endorse the “Kiss Burn” and “Kiss Bean Tendon” series of products to expand the brand influence.
In 2014, Luohe Weilong Trading com., ltd. and Luohe Weilai Food Technology co., ltd. were established, investing a lot of capital and technology dedicated to developing a broader casual food market. The homonym “Wei Lai” in Chinese also means “Future”, which shows that Wei Long is still full of expectations for the future of the company.
In 2015, Weilong kept spreading its sales channels on the e-commerce platform and opened the curtain of online sales. Weilong’s snack products were quickly stationed on China’s leading e-commerce platforms such as “Tmall”, ”Jingdong“ and ”the Store“, and are committed to creating a comprehensive, multi-level and precise online sales circle for Weilong.
In 2015-2016, Weilong realized the power of online communication and began to take the initiative to cooperate with famous Weibo bloggers to create hotspots every now and then, and started to operate its own official account. By now, Weilong’s official Weibo account “Weilong Delicious” has 381,000 followers, and its brand image is rapidly improving in the process.
During this period, Weilong’s second production plant also initiated.
In 2017, Weilong’s capacity continued to expand and introduced the SAP information management system. In the same year, Weilong followed the trend of healthy casual snacks and launched the “konjac shuang” product, which won the “Convenience Food Innovation Award”. Weilong has since launched “wind eat seaweed”, which has seen a significant increase in sales of vegetable snacks.
In 2018, Luohe Weidao Food Technology Co., Ltd. was established, the main business is the production of konjac products.
In 2018-2020, the sales share of Weilong’s vegetable product snacks increased from 10.8% to 28.3%, while the sales share of soybean product snacks decreased from 10.6% to 6.4%.
In 2019, Weilong has integrated offline and online resources to establish a multi-channel sales and distribution network. In the same year, the second phase of Weilong Park was completed and put into operation, the level of automation and production capacity was increased again, and the annual output of casual snacks could reach 100,000 tons. Weilong’s headquarters has also moved here, and the industrial park covers an area several times larger than before.
In 2020, Shanghai Weilong Delicious Biotechnology started operation and the third phase of the park began construction. According to Weilong’s strategy, it is proposed to build a casual food industrial park for vegetable products, meat products, egg products, flour products, etc., and an e-commerce logistics park. After the project is fully completed and put into operation, Weilong will become a food enterprise with over 10 billion RMB (About $1.6 billion) business volume.
Application for IPO
Weilong’s ROE have been quite good in recent years, at 493.5% in 2018, 135.6% in 2019 and falling back to 66.9% in 2020 due to the impact of the epidemic. However, Weilong still had sales revenue of RMB 4.12 billion (About $650 million) and a net profit of RMB 818 million (About $129 million) in 2020. It is 2.37 times more than BESTORE, the head brand in the same industry in China, and 2.71 times more than Three Squirrels.
On May 12, 2021, Weilong submitted an application for listing, and the name of the company to be listed is “Weilong Delicious Global Holdings Ltd.”. Weilong’s Pre-IPO financing has a post-investment valuation of more than RMB 60 billion, equivalent to the combined market capitalization of Qiaqia Food, BESTORE and Three Squirrels, the latter three of which are all listed casual food companies in China.
In the “2021 Global Unicorn List” released by Hurun Research Institute, China’s leading rich ranking research institute, Weilong successfully made it to the list and ranked 49th.
According to the prospectus data, Weilong occupies 5.7% of China’s spicy casual food market, ranking first, and shows a continuous upward trend.
According to a Frost & Sullivan report, retail sales in China’s spicy casual food industry will reach RMB 257 billion (About $40.5 billion) by 2025, with the market size of flavored flour products reaching RMB 67.2 billion (About $10.6 billion).
If Wei Long can successfully go public this time, it will become the highest market capitalization casual food company in China. And its proposed goal of an annual output value of more than 10 billion RMB is believed to be achieved soon.
After these years of diversification, Weilong has five series of products, including flavored flour products, soy products, konjac products, vegetarian products, meat products and marinated eggs, with more than 40 kinds of products, all of which are spicy snacks.
Flavored flour products
The main raw material of this category is gluten, and the first Latiao launched by Weilong belongs to this category, which includes large gluten, small gluten, Kiss Burn, Kiss bar, large spicy bar, small spicy bar, and baked gluten, etc.
The main raw material is soybean series of products, including spicy sliced beancurd, kiss beancurd sheets, big hot beancurd sheets and other products, and recently also online small package of Changsha specialty stinky tofu snacks.
Konjac products snacks, there are piquant, sour-spicy and spicy hot three flavors, the main product is konjac shuang.
The raw materials are various vegetables and grains, including products such as wind eat seaweed, spicy potato chips, millet potpourri, hot and sour noodles, and small Mahua.
A variety of fish and meat products snacks, including fish tofu, fish balls, hand torn crab flavor stick, pickled pepper chicken feets, grilled small sausages and other products.
There is currently only one product under this category, the 78° Marinated Egg, which has a rounder surface and brighter color than other common marinated eggs. It is also the only snack with almost no spicy taste among Weilong’s products at present.