A scaling back in spending by China’s big online commerce corporations has allowed a leading Chinese seafood snack-maker to reboot its sales.
China Shenghai Group has reported substantial sales recovery “attributable to the slowed industry consolidation” of China’s fast-growing snack market.
A major buyer of shrimp and squid for its dried seafood snacks business, Shenghai’s revenue from its food business surged in the first half of 2022 to approximately CNY 121.1 million (USD 16.8 million, EUR 17.1 million), up from from CNY 53 million (USD 7.3 million, EUR 7.5 million) in the first half of 2021. However, its gross margin decreased from 9.9 percent in the H1 2021 to 2.6 percent margin in H1 2022.
China’s online commerce sector has been shaken by the recent collapse of online grocer Missfresh, which overcommitted itself by spending massively to acquire customers, with many of them selling own brand products and products sourced from farms directly to consumers.
“Cash-burning strategies adopted by leading enterprises in selling and distribution have hurt the sales of the group,” China Shenghai Group said said in its quarterly earnings report. “As these leading enterprises have slowed down investment … the sales of the group’s food products have seen a major recovery.”
Amidst a pullback from Missfresh and other Chinese e-tailers, Shenghai has ramped up its advertising. Shenghai’s marketing spend increased 63.2 percent year-on-year to CNY 34.9 million (USD 4.8 million, EUR 4.9 million) in the first half of 2022 as the firm sought to raise brand awareness. A reliance on sales at transport hubs and grocery stores hurt Shenghai during China’s various COVID-19-related lockdowns, but the company also retails premium gift-packaged (dried) cuttlefish, oysters, scallops, and shrimp BOTH offline and online.
Shenghai’s statement references a ResearchandMarket.com report predicting average annual growth of 6.7 percent through 2027 for China’s snack food market.
Photo courtesy of China Shenghai Group
