China Consumer

Food offering

Bird’s nest maker to test IPO market’s appetite

Li-Ziqi-red-w

Akuan makes Li’s foods

Bytedance’s investment in Weinian Brand Management looked doomed from the start. Not long after the two announced a deal – which saw the parent company of TikTok acquiring a 1.5% stake in the influencer incubator last July – Weinian was taken to court by its most popular ‘asset’, the food and lifestyle influencer Li Ziqi (see WiC558).

While the details of the legal dispute were not made public, many speculated that Li was unhappy that Weinian had hijacked her brand and the majority share of the influencer’s wildly successful instant food company. In protest, the 32 year-old KOL has since stopped updating her widely followed YouTube and Douyin video-streaming accounts.

While Weinian also manages a stable of other influencers, Li is, by far, its biggest moneymaker. In light of the ongoing legal saga, Bytedance announced that it was unwinding the deal that reportedly valued the KOL management firm at Rmb5 billion ($783 million).

Dubbed by her fans as “the queen of DIY”, Li’s online tutorials often promote ‘slow living’ rather then fast food. She dyes her clothing with fruit skins and grows her own produce. One video shows her growing soy beans to brew her own soy sauce, for instance.

The Sichuan-based influencer does not produce any of the ready-to-eat food she sells under her eponymous food brand. Weinian taps other contract manufacturers to mass produce the products, which include everything from the popular luosifen (see WiC488) to chili sauce. One of her contract manufacturers is Akuan Food. The Chengdu-based instant food maker, which is backed by private equity giant Hillhouse Capital, recently filed for an initial public offering on the Shenzhen Stock Exchange.

Formerly known as Baijia Food, Akuan mainly engages in the production and sales of convenience foods. In addition to making its own branded product, it is also the contract manufacturer for famous brands such as Three Squirrels.

Its biggest sellers are hot and sour rice noodles and other chili oil noodles, which are tastier alternatives to instant noodles because the flat noodles come dehydrated instead of deep fried. Consumers say that Akuan noodles are also chewier in texture than a lot of ready-made noodles in the market.

Akuan Food has benefited from the pandemic. Its prospectus shows that the company’s operating income went from Rmb422 million in 2018 to Rmb1.1 billion in 2020 and Rmb593 million in the first half of 2021. Net profit also rose from Rmb6.1 million to Rmb76.3 million and Rmb21.9 during the same periods.

In addition to Akuan Food, Yan Palace (known to local consumers as Yan Zhi Wu), a ready-to-eat bird’s nest maker, has also filed for an IPO in Shanghai to raise Rmb1 billion, which it claims will be used for expanding its manufacturing facilities, as well as marketing and research. If successful, the company will be the first bird’s nest company to go public. Made from the saliva of cave-dwelling birds called swiftlets, bird’s nests – usually eaten with syrup as they are more or less tasteless – are an expensive delicacy purportedly with a long list of health benefits (these include everything from anti-aging and anti-cancer properties to the ability to improve concentration).

According to its prospectus, Yan Palace’s revenue in 2020 was nearly Rmb1.3 billion, while its gross margin has consistently exceeded 50% for the last few years. Through a franchise model, the company mainly distributes its products via 605 retail outlets, located mainly in first- and second-tier cities. To raise the brand’s profile, the company has hired starlet Zhao Liying to endorse its goods.

Its biggest rival Xiaoxian Dun is planning to go public too. Xiaoxian Dun relies more for sales on e-commerce platforms such as Tmall and JD.com. It has also introduced a subscription model – those who subscribe to buy three items a week for a month save almost 30% on the price of the bird’s nests – appealing to a lot of younger consumers.

Those investing in either IPO will know this is a very ‘China play’ – bird’s nest is big business in the country but far less popular elsewhere…


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