Establishing a Research Institute to Address the Challenge of Creating Blockbuster Products: Ziyan Foods Accelerates “Self-Revolution”

Food R&D is different from other fields and requires attention to detail. In recent years, research and development in the food industry has been given increasing importance.

On the morning of November 17, the inauguration ceremony of the Ziyan Food Innovation Research Institute was held in Guanyun County, Lianyungang.

As a well-known brand in the braised food industry and a player in a relatively mature sector, why did Ziyan Food establish its own Innovation Research Institute? Zhong Huaijun, the Director of the Ziyan Food Innovation Research Institute, stated, “As people’s living standards continue to improve, consumers are increasingly demanding higher food quality and experiences. Ziyan Food’s establishment of a research institute is based on these market demands and development trends.” Zhong Huaijun added that Ziyan Food will continue to explore and develop the healthy food industry, ensuring that future research not only focuses on taste and safety but also on health.

It is reported that the Ziyan Food Innovation Research Institute will undertake three core functions: launching more new products that align with market trends and consumer demands, ensuring high product quality and food safety, and rapidly converting research results into productivity.

At the event, a reporter from Blue Whale Finance noticed that the Ziyan Food Innovation Research Institute had planned several functional areas, including a corporate exhibition area, product tasting area, flavor technology research area, sensory evaluation area, and instrument analysis area. Ziyan Food has also optimized and upgraded its existing product R&D center in terms of both software and hardware, for instance, by purchasing a series of leading domestic and international food processing and testing equipment and bringing in professional flavor researchers and high-tech talent.

According to available information, Ziyan Food is a large-scale producer of braised food in China, focusing on the R&D, production, and sales of braised products. The company’s main products include “Husband and Wife Lung Slices,” “Baiwei Chicken,” and “Tengjiao Chicken,” which are made from poultry such as chicken, duck, beef, pork, as well as vegetables, seafood, and soy products. These products are primarily used as side dishes with meals, supplemented by casual consumption, with the main brand being “Ziyan.”

Despite having a diverse product line, the flagship product “Husband and Wife Lung Slices” remains a strong sales driver. According to Ziyan Food’s 2023 semi-annual report, fresh products contributed 86.08% of the company’s main business revenue, with the “star” product “Husband and Wife Lung Slices” generating sales of 543 million yuan, accounting for 31.59%.

“We have always been trying to create more star products like ‘Husband and Wife Lung Slices’ and ‘Tengjiao Chicken.’ For example, this year we launched products such as Refreshing Beef, Refreshing Pork Feet, Bobo Chicken Slices, and Crispy Shreds. But it’s actually very challenging to surpass these two products, because our customers usually think of Tengjiao Chicken and Husband and Wife Lung Slices first, and then buy some others. We’ve racked our brains trying to outdo ourselves, and often things don’t go as planned, but we must keep launching products with vitality,” Zhong Huaijun said. “I often say it’s like how WeChat surpassed QQ; can we create another one and revolutionize ourselves?”

It is reported that Ziyan Food has established long-term, stable partnerships with large suppliers like Wens Foodstuff Group, New Hope Group, and COFCO Group for the supply of key raw materials such as whole chickens, beef, and duck by-products. This allows the company to source fresh, high-quality ingredients from the origin and, relying on its five production bases, form an all-round supply chain system with the optimal cold chain delivery distance as the radiation radius, fast supply, and maximum freshness. Orders placed the previous day are produced the same day and delivered to stores on the same or the next day, ensuring the freshness of the products.

It is noteworthy that the upgrade of Ziyan Food’s supply chain has also optimized its cost side. Ziyan Food stated in its financial report that the prices of raw materials are close to the range of previous years, and the company has strengthened supply chain optimization, improved production processes, and upgraded technology, resulting in significant improvements in net profit.

According to Ziyan Food’s 2023 third-quarter report, the company achieved operating revenue of approximately 882 million yuan in the first three quarters. The company’s gross profit margin was 24.19%, up 6.69 percentage points year-on-year; the net profit margin was 12.06%, up 3.94 percentage points year-on-year. Looking at the single-quarter indicators, in the third quarter of 2023, the company’s gross profit margin was 29.17%, up 11.07 percentage points year-on-year and 6.18 percentage points quarter-on-quarter; the net profit margin was 15.15%, up 5.38 percentage points year-on-year and 1.67 percentage points quarter-on-quarter.

Moreover, expanding its market segment is one of Ziyan Food’s revenue-increasing strategies. Following its strategic investment in Lao Han Bian Chicken in June, Ziyan Food made another move in September by strategically investing in Jing Cui Xiang. Ziyan Food Chairman Ge Wuchao stated that steadfastness and diversified exploration are two inseparable aspects of enterprise development. Steadfastness is the foundation of the company’s development; since the company’s establishment, we have been deeply engaged in the side dish braised food market, committed to consolidating our leading position in the industry. However, with changes in the market environment and the diversification of consumer needs, we also see the necessity of exploring new opportunities for development on the existing foundation. The company continues to explore diversified development paths by launching several sub-brands, such as “Feng Si Niang Qiaojiao Beef,” “Shaguo Zhuangyuan,” and “Jiaoyan Jiaoyu,” covering categories like casual dining and casual braised food, as well as strategic partnerships with food brands such as Lao Han Bian Chicken and Jing Cui Xiang. This strategy opens up broader growth opportunities for the company. Through diversified strategic layout, the company can quickly respond to market changes, enhance overall competitiveness, and further consolidate its industry-leading position to achieve long-term development.

On the other hand, with the strong momentum of the restaurant industry’s recovery, competition has also become more intense. Ge Wuchao admitted that after the pandemic, consumer demand has changed, with increased focus on food safety and health. Additionally, as consumers’ purchasing power recovers, it may attract more competitors into the market. Therefore, Ziyan Food needs to strengthen brand building and marketing efforts to enhance brand influence and market share to maintain its industry-leading position. Further strengthening product R&D and quality control to provide safer, healthier products that better meet consumer needs is essential.