This is an English adaptation of a FoodBud historical article originally published on December 12, 2021.
Yao Mazi Food Co., Ltd. planned to raise RMB 616 million through an A-share IPO, with proceeds earmarked for capacity expansion, marketing, IT systems, R&D and working capital.
The company, which began as a rattan peppercorn oil workshop, had disclosed its prospectus and moved closer to listing. CICC was the listing sponsor.
Yao Mazi planned to issue up to 44 million RMB-denominated ordinary shares, representing no less than 25% of total post-issue share capital.
The company planned to invest RMB 370 million in a project with annual capacity for:
The project budget covered fixed assets, including construction, hardware purchase and installation, contingency funds, and initial working capital.
The prospectus projected:
According to the prospectus, Yao Mazi was one of China’s pioneers in rattan peppercorn oil-related seasoning products and one of the country’s largest producers of rattan peppercorn oil and peppercorn-numbing compound seasonings.
Since its establishment, the company had focused on R&D, production and sales of numbing-flavor specialty seasonings. Its product matrix was led by rattan peppercorn seasoning oil, with peppercorn-numbing compound seasonings and local specialty foods as additional categories.
The company described its production process as combining proprietary methods, fresh pressing and supercritical extraction. It aimed to become one of China’s most representative producers of numbing-flavor seasonings.
Chairman Zhao Yuejun was born in rural Hongya, Sichuan, where local households traditionally made and stored rattan peppercorn oil in summer.
In 1992, Zhao opened a restaurant in his hometown called Yaoyao Restaurant, focused on local dishes using rattan peppercorn flavor. The restaurant itself did not take off, but diners responded strongly to its rattan peppercorn oil.
In 2002, Zhao opened a rattan peppercorn oil workshop and shifted the business focus to the oil. This became the predecessor of Yao Mazi.
In 2008, Zhao established Sichuan Hongya County Yao Mazi Food Co., Ltd., marking the formal development of the Yao Mazi brand.
Key development milestones included:
Yao Mazi was a typical family-controlled company. Founder Zhao Yuejun, his wife Gong Wanfen, and their two sons Zhao Qi and Zhao Lin were the actual controllers. The family directly held a combined 68.21% stake.
Zhao Yuejun served as chairman and general manager. Zhao Lin served as director and deputy general manager, while Zhao Qi also served as director. Gong Wanfen was supply department director, and Zhao Lin’s spouse Wu Hongyan was deputy director of the general department.
Juewei-backed Wangju Capital had previously invested RMB 130 million in Yao Mazi for a 13.68% stake, implying a valuation of RMB 950 million. Another Juewei-related fund, Hunan Siyiwu, held 5.26%. Together, Juewei-related entities held nearly 19% of Yao Mazi.
If Yao Mazi successfully listed, it would have been the second listed company backed by Juewei. Earlier in 2021, Qianwei Central Kitchen, another Juewei investment, had already listed. After that listing, Juewei realized RMB 100 million in post-tax net profit.
Yao Mazi focused on R&D, production and sales of numbing-flavor specialty seasonings. Its main products were divided into four series:
Vegetable products and snack foods were mainly local specialty foods.
Main business revenue was:
Seasoning oil consistently accounted for more than 90% of sales revenue. Compound seasonings were slowly increasing as a share of revenue.
According to Hejun Consulting survey data, Yao Mazi had about 35% share of China’s rattan peppercorn oil market in 2019.
The prospectus also showed that the production-sales ratio for seasoning oil stayed high, above 95%.
One of Yao Mazi’s core competitors, Sichuan Dingdian’er, had previously attempted to list but failed, mainly due to a single sales model and suspected related-party transactions.
Yao Mazi’s sales model was similar to many companies in the category: distribution was dominant. Distributor revenue accounted for more than 90% of main business revenue.
Distribution channels served restaurants, hotels and supermarkets nationwide. Direct sales mainly served online customers, food processors, chain restaurant companies and other large customers.
The share of direct sales revenue had been rising year by year.
As of the end of June 2021, Yao Mazi had built a sales network of more than 400 distributors. Starting from Sichuan and Chongqing, the network covered 34 provinces, municipalities and autonomous regions in China, plus several overseas markets.
The distribution network helped the company reach restaurants, hotels, community supermarkets, agricultural wholesale markets and other terminals.
Distributors were still concentrated mainly in Sichuan and Chongqing. From 2018 to 2020, Southwest China contributed more than 50% of distributor revenue. Outside the traditional Sichuan-Chongqing market, the company had developed stronger sales regions in Shaanxi, Beijing, Guangdong, Henan and Hubei. In the first half of 2021, distributor revenue from outside Southwest China exceeded 50% of total distributor revenue.
Yao Mazi generally used a payment-before-delivery model with distributors and typically did not collect performance deposits. In April 2017, to prevent cross-region selling and market disruption, distributors created a self-regulatory organization and paid deposits into it. Those deposits were held on behalf of the organization by Yao Mazi employee Wu Hongyan. The organization dissolved in April 2018, and by August 2018 all deposits had been converted into distributor prepayments to Yao Mazi.
The company also used rebate policies to support distributors, with policies disclosed for 2018-2019, 2020 and 2021.
Because of this channel structure, offline sales remained the main revenue source, accounting for more than 95% of sales revenue.
Representative end customers reached through distributors included chain restaurants such as Kaojiang, Shudaxia, Haidilao, Xibei Youmian Village and Laoxiangji, as well as chain retailers including Yonghui Superstores, Ito Yokado, Walmart and Carrefour.
Yao Mazi was also expanding direct sales. Online direct customers were mainly individual end consumers. Offline direct customers included retailers such as Hongqi Chain, airline catering companies such as Sichuan Airlines, restaurant and food companies such as Wangjiadu Foods, and food manufacturers including Juewei Food, Xiangnian Food and Baijia Food.
The company’s main raw materials included oils, agricultural products and packaging materials.
Oil materials included rapeseed oil and supercritical-extracted rattan peppercorn base oil. Agricultural products included rattan peppercorn, red Sichuan peppercorn and Ya bamboo shoots. Packaging materials included glass bottles, tinplate cans and label paper.
Purchasing was relatively concentrated among the top five suppliers.
In 2018, Yao Mazi’s second-largest supplier was Zhengzhou Xuemailong. Hunan Yisiwu, a Juewei-related fund, held 10% of Zhengzhou Xuemailong.
The prospectus disclosed multiple related-party transactions. For Juewei specifically, Yao Mazi sold customized rattan peppercorn oil products to Juewei Food and companies it controlled in the following amounts:
Note: IPO plans, fundraising amounts, investment returns, listing outcomes and forward-looking project figures above are historical disclosures from 2021.