Until recently, the mention of Huang Fei Hong to many Chinese would conjure up the image of the invincible action hero played by Jet Li inOnce Upon A Time in China.
But these days Huang Fei Hong is also becoming a popular snack food. The brand, which sells packaged peanuts, recently announced that sales hit Rmb100 million from Rmb40 million the year before. What is more surprising is that most of Huang Fei Hong’s business comes from the web.
The story of Huang Fei Hong started in 1998, when Shin Ho, the manufacturer behind the brand, figured that Sichuan-style food might prove a good snack. So Shin Ho, which makes chilli paste in Shangdong province, created a recipe that combines roasted peanuts with spices such as Sichuan chilli pepper and peppercorn. The result is a tongue-numbing (and as WiC can attest) addictive treat.
Next up, how do you market the product? Faced with a limited budget, Huang Fei Hong could not afford to advertise on TV or in the print media. So the Yantai-based company had to rely on word of mouth.
Huang Fei Hong decided to put its product on Taobao, the country’s largest consumer website (see WiC94). It soon found that most consumers who bought the packaged peanuts were white-collar workers. So it tailored its marketing strategy to target office workers in big cities like Beijing, Shanghai and Shenzhen: by giving out free samples during lunch hour to gain attention. The strategy attracted a steady stream of new clients, many of whom were already shopping on Taobao.
The company then took advantage of the growth of social-networking sites like weibo and online discussion groups to help create buzz. This supported its efforts to reach its target audience at little additional cost. It says deal-sharing sites like Groupon have also proved a great marketing tool, with almost all the new customers lured by discounts later buying more at full price.
Carrefour then caught wind of the product’s popularity. The supermarket recently listed Huang Fei Hong peanuts as “price sensitive,” which means that the retailer keeps a close eye on stock levels. That’s a big deal, says Jiang Wenbo, a sales director at Shin Ho, because it means Huang Fei Hong is one of the bestselling products in the snack category at Carrefour.
Huang Fei Hong says sales from Shanghai now hit Rmb1 million a month. Beijingers buy even more: spending Rmb3 million each month.
As it turns out, China’s love for nuts is not peanut-specific. Last week, the Wall Street Journal reported that prices for US-grown pecans have been going up too, thanks to Chinese demand. Five years ago, China bought hardly any pecans, but by 2009 it was importing a quarter of the US crop. A pound of pecans in their shells fetched $2.14 on average last year, nearly double what they brought three years earlier.
Liu Wei, a 61 year-old retired chemistry teacher, said she’s not deterred by the increase in price (a 260-gramme bag of Orchard Farmer pecans are sold for Rmb38, nearly six times Beijing’s official minimum hourly wage).
“Pecans are very good for the brain. We older people should eat more of them so that we don’t get Alzheimer’s,” says Liu. “My husband has cardiovascular disease, and Beijing TV said eating pecans can help.” Her pregnant daughter-in-law has also been told to eat two a day because “pecans are very good for the baby’s brain development”, Liu told the Journal.
Whether spicy Sichuan-style peanuts are likewise conducive to infants’ cerebral growth remains a greyer area…
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.