Chinese instant food brand Baijia raises $28m
Chinese instant food brand Baijia Food has raised RMB200 million ($28 million) in Series B funding led by GL Ventures, the venture capital arm of Hillhouse Capital.
Other investors include Maotai Investment Fund, an investment unit of Kweichow Moutai, China’s most prestigious liquor maker, Cowin Capital, and Befor Capital. The round comes four months after a RMB110 million Series A led by Cowin.
The proceeds of the Series B will go towards technology upgrades, expanding production capabilities, marketing, and the development of new sales channels. Zhaohui Chen, chairman of Baijia, said the company plans to pursue an A-share IPO next year. It is expected to be the first instant food company to list on the A-share market.
Sichuan-based Baijia has two flagship product lines - Baijia hot and sour rice noodles and Akuan red oil noodles - which are said to represent a new kind of convenience food. The company claims to compete with restaurant takeaway options in terms of taste and nutrition. More than half of sales are through online channels.
In addition to its main business, Baijia is a contract manufacturer for fast-food brands such as Liziqi, Baicao, and Three Squirrels. Liziqi's red oil noodles and Three Squirrel's self-heating hot pots are both produced Baijia.
The company has generated average annual revenue growth of 45% over the past three years, with sales from core business activities exceeding RMB700 million in 2019. It has also benefited from the social distancing caused by the Covid-19 outbreak, with sales in the first six months of 2020 rising 120% year-on-year. Core sales are expected to surpass RMB1.2 billion this year.
Yuexiang Dai of GL Ventures said that the rise of live streaming channels has contributed to the growth of convenience foods. He added that entirely new brands have emerged on the back of technology-enabled marketing channels.
Other investment activity in this space includes a RMB100 million Series B in April for Wangbaobao, a local oatmeal brand. Wangbaobao was inspired by the appearance and marketing of cosmetics products, and it claims to have brought that "good looking" factor into the food industry.
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