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Three and a half years of past financing records, charting: FoodPlus Research Analysis Team

Coffee is a popular circuit in China’s consumer sector in recent years.

On the one hand, it is reflected in the actions of Starbucks, Nestle and other world coffee giants in China, including Starbucks taking back the shares of Uniform Starbucks, so that all Starbucks stores in the Chinese market are under its control. Fang flagship store, this store has become a landmark building and a popular tourist attraction in Shanghai. At the same time, it has also launched a series of digital initiatives, including app booking orders, takeaway business, etc.

Nestle has launched 2 new coffee products in the Chinese market after establishing a coffee alliance with Starbucks, including capsule coffee products and high-end instant coffee products. At the same time, it has also increased the innovation of coffee products in the Chinese market, including the introduction of cold brewing. Ready-to-drink coffee products, fruity instant coffee products, etc.

On the other hand, it is reflected in the fact that Ruixing Coffee has been listed in the United States in just a few years. It has used capital and technology to achieve overtaking in the coffee field. If it is calculated based on the number of stores, currentlyRuixing Coffee has become the largest coffee brand in China. At the same time, the coffee field has also received the attention of capital in recent years, including today ’s capital investment in Manner coffee, Seesaw’s investment by Hony Capital’s Baifu Holdings and so on.

Finally, the most core and small coffee shops are emerging in China ’s first- and second-tier cities, and gradually moved to economically developed third- and fourth-tier cities. In addition, coffee is being upgraded in first- and second-tier cities. Affected by the third wave of specialty coffee abroad, the core is reflected in the increase in the popularity of coffee in first- and second-tier cities, and the phenomenon of upgrading in coffee consumption. At the same time, it is also penetrating and popularizing in third- and fourth-tier cities.

Combining these three factors, the Chinese coffee market is booming.

From the perspective of the coffee supply side, it is also highlighting the growth of the Chinese coffee market. The coffee beans in the Chinese market are mainly dependent on imports and the cultivation of Yunnan. In recent years, the cultivation of coffee beans in Yunnan has gradually increased, and high-quality Yunnan products have also appeared on the market. Coffee beans, thanks to the Yunnan government, major coffee giants, and local coffee plantation leaders in Yunnan over the past few years have vigorously promoted coffee plantation in Yunnan. According to the USDA’s China coffee import data, the compound growth rate in the past few years has remained at about 18%.

Combining three and a half investments from Sequoia Capital, there are some notable signals and thought points:

① Three and a half is the earliest company of Sequoia Capital in the investment stage in the past five years;

② This is also the first time Sequoia Capital entered the coffee track. Why did you choose to invest three and a half times? It is worth thinking and studying.

③ From the perspective of the growth rate of Santon in the past few years, it is one of the fastest-growing brands in the coffee industry. Where does the growth behind come from? For Santon, its growth momentum and What is the foundation;

④ What is the brand entrepreneurial logic in China’s coffee field, and how should investors, as investors, measure the project objectives in the coffee field;

⑤ At present and in the future, there are also opportunities in the Chinese coffee industry, whether it is opportunities for large companies, entrepreneurship and investment opportunities, or opportunities for coffee brand holding companies.

Next, let’s do some analysis and understanding of Sequoia Capital’s investment style in the food and beverage field and investment cases in recent years.

I. Sequoia Capital Invests in the Food and Beverage Field Strategy and Logic Analysis

Let’s take a look at the investment cases of Sequoia Capital in the consumption field in the past five years. From this, we can judge whether Sequoia Capital’s investment strategy and investment logic in the food and beverage field.

Sequoia Capital China Fund’s investment in consumer products in 2015 and beyond, charting: FoodPlus research and analysis team

From the above 18 investments made by Sequoia Capital in the field of consumer goods, we can find the following characteristics:

①There are very few angel round projects. Jiayu Beverage is a typical angel round project of Sequoia Capital;

② Although the majority of round A projects, but Sequoia Capital ’s investment funds are relatively large, such as the good Series A financing, Sequoia Capital invested 200 million RMB, and Walloon was the first financing, Sequoia Capital Hundreds of millions of RMB invested;

③ In most consumer goods fields, Sequoia Capital tends to support those who can enter the first echelon of the industry, at least the first echelon of subdivided categories. For example, Junlebao’s revenue has reached 13 billion RMB in 2018. It is expected that Around 16.5 billion RMB in 2019, close to 20 billion RMB;

④ The overall emphasis is on the later stages, which is more like PE’s investment in the field of consumer goods;

⑤ Leisure food is a track that Sequoia Capital values ​​in the food and beverage industry. The above three companies already have a certain market position. Among them, Ganyuan Foods just passed the initial application last week and is expected to enter in 2020. To the capital market;

⑥ For outstanding companies that did not invest in the early stage and growth stage, Sequoia Capital will seek to invest in the transfer of old stocks. Jiang Xiaobai, who invested at the end of last year, and Junlebao, who invested recently, are typical cases.

Based on this investment style of Sequoia Capital, it is not difficult to judge that the investment of investment institutions in the field of consumer goods and investment in the field of food and beverage will pay more attention to certainty, which means the pursuit of more stable investment returns.

Investment in the field of consumer goods has been cultivated for many years by established investment institutions such as Sequoia Capital, IDG Capital, and Capital Today, and it has formed a relatively stable play. Generally, it will not easily intervene in the early stages. The investment institutions that have recently entered the field of consumer goods have concentrated their investment in this area only in the last three years or so.

From investing to getting feedback on the project, it has also gone through a small cycle. Many investment institutions have also begun to adjust their practices in the field of consumer goods. Some are similar to Sequoia Capital and focus on the later stages. Institutional investment strategies are gradually taking shape, and investment in consumer goods is becoming faster and more efficient. Jingwei Venture Capital and source capital are typical examples.

It is foreseeable that the investment of most institutions in the field of consumer goods and food and beverage will be transferred to the later stage. In fact, this brings two considerations.

First, the competition in the later stages will be fierce, and at the same timeEnterprise maturity is also relatively good. At this time, professional and experienced investors are more needed to help the rapid development of the company. It is worth thinking whether the investment institutions newly entering the food and beverage industry have this ability.

Second, due to the great uncertainty of early investment in the food and beverage industry, if most institutions move to the later stage, there will be a certain gap in early investment. For some investment institutions who are willing to deepen their cultivation in this field, It is an opportunity. After all, it is very challenging to compete with first-tier funds such as Sequoia Capital. In addition, the early projects cultivated are in the mature stage. First-line funds such as Sequoia Capital are better investors in the later stage. What is worth thinking about here is how to make early investment in the field of food and beverage, which can not only capture good projects, but also avoid the project investment failure rate caused by this uncertainty.

Going back to Sequoia Capital ’s investment strategy in the food and beverage sector, the overall shift is to the later stages, looking for companies that can enter the first echelon in a segmented industry. The reasons behind this may be as follows:

① At present, the early investment of Sequoia Capital is mainly in the field of science and technology, and the early investment in the field of science and technology is more likely to bring ultra-high returns compared to the field of consumption;

② The investment waiting time in the early consumption field is too long. For example, if the investment is three and a half, if it is entered in 2018, it means that the investment cycle will increase by two years. It is worth noting that Sequoia The two early-stage food and beverage companies invested by Capital include Jiayu Beverage and HeyJuice. Although the size of Jiayu Beverage has exceeded the bottleneck of about 100 million, in the past few years, there has been no rapid development in revenue. And HeyJuice is currently in a state of stagnation. From the WeChat public account tweets, the activity has been greatly reduced, but the old products are still being sold, and it has been a long time since new products and brand marketing activities have been launched;

③ At present, Guo Zhenwei, the managing director who is mainly responsible for Sequoia Capital ’s consumption and investment in the food and beverage sector, previously researched food and beverage in the secondary market in CICC. There is also a touch of relevance.

Two or three and a half times have been the benchmarks for brand entrepreneurship in the food and consumer goods field in recent years. What are some of the unique and worthwhile things to learn?

1. First of all, we need to think deeply and understand, what is the business of food consumer product brand?

As a company, a startup company, and a startup company in the field of food and consumer products, under the premise of ensuring survival, what should also be focused and built is the core of food and consumer product brand entrepreneurship.

To ensure survival, we need products, factories and supply chains that produce products, sales channels, and products to sell. In this case, marketing is also needed to let more people know their products. Dismantling from these links, the core issues that need to be resolvedThe problem is related to products and sales. In this process, it is necessary to ensure that the company’s cash flow is in a normal state.

In order for a food startup to survive, we have many types of solutions, such as finding quality distributors, entering well-known channels, establishing core sales channels online, and expanding publicity through digital marketing. The company puts effort into securing capital reserves through financing.

But a food and consumer product startup that seeks long-term development should not sacrifice some long-term benefits and long-term development foundations in order to survive, especially the entrepreneurship of food consumer product brands. Imagine a question. If a food and consumer product company can develop in the market for 10 or even decades, what are the assets and core capabilities that will eventually settle?

Divided into tangible assets and intangible assets. Tangible assets include fixed assets such as factory buildings, production equipment, research and development facilities, and intangible assets include brands, product patents, product formulas, technology reserves, capital reserves, financial assets, long-term equity investments The core competencies are management team, organizational capability, market insight, product innovation, sales network, etc.

A comprehensive analysis of the key elements is excellent brand equity, a strong product portfolio, a solid production and supply chain system, an extensive and solid sales network, excellent corporate culture and organizational capabilities, a management team, and strong cash. Flow capacity and capital reserves, keen market insight and product innovation capabilities.

Consumer brand business started from the first day, and even before it started, the construction and polishing of these key elements has already begun. If you ignore this and just think about how to survive or how to increase sales, you will lose sight of this and lead to the company’s long-term core competitiveness and long-term development value discounted, or even the possibility of becoming an excellent food consumer goods company.

So, as a food and consumer product brand, entrepreneurship should be based on the foundation, focus on the future, and solve the company’s survival problems while building the foundation of various long-term development, thinking about the company’s long-term development goals, and the long-term positioning of the brand.

2. Let’s first review the development of San Dun and its important points.

An important development node and system since the establishment of Santon and a half: FoodPlus research and analysis team

Santonban was founded in 2015. In addition to the ear-cooked coffee products, it also introduced a variety of products not related to coffee.Products, such as chocolate, rice dumplings, etc., may be related to the brand name of three and a half meals. According to the founder, three and a half meals mean three and a half meals other than three meals, so they are named three and a half meals.

It can be seen from the important development node map since the establishment of San Dunban that there are some important development processes and important points in time. Among them, there are two core aspects in the early period of San Dunban:

a. Through peripheral products such as hand-made coffee sets, and product sales are mainly focused on some niche online e-commerce companies that agree with boutique coffee, such as the kitchen, Xiaohongshu, etc., through several The niche e-commerce trains a group of boutique coffee enthusiasts who have a sense of santon brand, forming the most core brand audience in the early days. Santon also makes output on some coffee content, such as hand-made coffee tutorials, etc. ;

b. The development of deep plowed coffee products and the creation of affordable boutique coffee products, the core of which is the introduction of convenient cold-extracted follicle coffee products. Cold-extracted coffee is more advanced and more popular among coffee lovers in specialty coffees. A coffee brewing method. This product launched by Santon can solve the problem of convenience for fine coffee lovers to make cold brew coffee by themselves.

For the three-and-a-half-tons that have exploded until now, there are three core areas:

a. Continue to innovate in coffee products, launch boutique instant coffee products, and make cold-brewed coffee into the form of freeze-dried coffee powder. On the one hand, it reduces the consumption and drinking difficulty of boutique coffee, and on the other hand, it saves half a meal Directly entered the huge instant coffee market;

b. Opening a Tmall flagship store, relying on the Ali retail platform to make brands and boutique instant coffee products out of the circle through various brand building and marketing methods, which gives Santon a chance to make its innovative boutique instant Coffee products have contacted a wider range of consumer groups, which are a wider range of coffee consumers and pan-coffee consumers, not just lovers of specialty coffee;

c. With the power of capital, the entry of venture capital funds can provide the company with good capital on the one hand, and on the other hand, it can further expand the company’s popularity and affect more potential customer groups, and the most critical factor is capital. Entry can standardize the operation of a company and bring resources and experience to a company.

In general, the development of three and a half meals and the iteration on the product are quite smooth. In this process, the value of three and a half meals that are done right and well done is naturally indispensable.

3. Analyze the desirability of Santon in product innovation, brand building, marketing, and overall operation development

As for what Santon has done on the product, it cannot be simply understood as upgrading instant coffee to freeze-dried instant, nor can it be simply understood as the instant melting of cold-brew specialty coffee. It should be viewed from multiple aspects. This is a set of combined innovations that provide a living solution around high-quality coffee.

Three-ton semi-fine instant coffee process flow chart, picture source: Three-ton semi-cold instant coffee product introduction manual

First is the product quality, using high-quality coffee beans, coffee extraction using cold extraction process, different from the traditional instant coffee production process, and even a certain difference with the ordinary freeze-drying process, a series of combinations to improve quality determines three The quality of the semi-fine instant coffee.

Three and half product packaging, picture source: Three and half official website

Secondly, on the packaging, the product is packaged in a miniature coffee cup shape, as if a small cup of coffee is held in its own hands, and the cause of the coffee cup can also be associated with freshly ground coffee, usually A cup of coffee from 20 to 30 yuan is packed in this small jar, and the price is about 6 to 7 yuan. At the same time, the shape of the packaging is also very clever. Different flavors with different colors can bring good visual enjoyment.

The most important thing is that the three-and-a-half-half flavor combination provides a high-quality coffee life solution, which can be brewed with hot or cold water, or with milk, sparkling water and other beverages. Consumers like the flavor of coffee, developed coffee products with different flavors and strengths, and used a set of products to solve the coffee needs under various scenarios.

Combining these three aspects, Sandton has presented a convenient and high-quality coffee solution in product innovation.

In terms of brand building and marketing, the three and a half times have been excellent in many coffee brands and food consumer goods entrepreneurial brands we have observed, taking into account both the long-term value precipitation of the brand and the creativity in marketing. The presentation of the brand and product promotion.

As a typical example, the three-and-a-half joint product plan, that is, the three-and-a-half joint coffee strategy, is basically a joint name with the barista and coffee brand in the three-and-a-half joint products, such as minority Barista, Taguchi, and FRITZ, a well-known coffee brand in South Korea. Here is three and a halfThe joint product launched with FRITZ, and the story behind the launch of the joint product.

Co-branded products launched by Sandun Ban and FRITZ, a well-known coffee brand in South Korea. Image source: Sandun Ban.