This is an English adaptation of a FoodBud historical article originally published on January 14, 2022.
On January 14, 2022, Fresh Life completed a new business-registration change, adding Wangju Capital, an investment arm of Juewei, as a new shareholder. In early 2021, Fresh Life had completed a RMB 600 million Series A financing round, with its valuation already above RMB 5 billion.
Fresh Life was founded in 2016 by Grass Green Group, the consumer-industry investment holding platform under New Hope Group. It operates as a nationwide cold-chain food channel-service company, providing restaurant companies, fresh-food retailers, and fresh-food producers and traders with warehousing, trunk transport, and last-mile delivery from source to store.
By 2020, the platform had connected more than 45,000 cold-chain vehicles and covered major large and mid-sized cities across China. Its logistics and technology infrastructure supported nationwide distribution capability, service density, and service quality. Fresh Life entered supply-chain services through fresh-food cold-chain warehousing and delivery, then built core cold-chain logistics capabilities through a combination of self-build and acquisitions.
Fresh Life is a key project within the Grass Green Group system, and Juewei’s relationship with Grass Green Group already had history.
According to Juewei’s 2021 interim report, Wangju Capital had previously invested RMB 9 million in Jiangxi Anan Logistics, where Fresh Life also held a 1% stake. Wangju Capital also invested RMB 667,000 in Jiangxi Xianpei, where Fresh Life held 46% and was the largest shareholder.
Fresh Life president Sun Xiaoyu told Chinese Entrepreneur that in the first half of 2021, the company’s total revenue reached RMB 3 billion, roughly equivalent to its full-year 2020 level.
Behind those numbers were three major customers: New Hope, New Dairy, and Juewei. New Hope Liuhe and New Dairy contributed related-party transactions to Fresh Life’s cold-chain business equal to more than 10% of its first-half revenue. Sun said business demand from within New Hope currently accounted for less than 20% of Fresh Life’s business and revenue mix.
Reported related-party transaction figures included:
For Juewei, the investment reflected rising demand for cold-chain infrastructure as its own operating and investment footprint expanded.
Fresh Life had also developed its own integration playbook in cold chain: acquiring smaller local cold-chain companies, then adding digital systems and customer resources. That model was approaching maturity and was positioning Fresh Life as infrastructure for the fresh-ingredient sector.
Fresh Life had invested heavily in digital capabilities, with an IT team of nearly 200 people and cumulative technology investment of RMB 200 million. The article also cited a plan to invest another RMB 200 million in the second half of 2021.
Given Fresh Life’s revenue scale, the article framed a future listing as likely, making the stake a relatively visible financial investment for Juewei.
Based on Juewei’s latest disclosed transaction information at the time, the acquisition of Chaoxun Black Duck was already in progress.
Data from Narrow Door showed Chaoxun Black Duck had 426 stores, mainly concentrated in northern China.
At the time, more than 300 Chaoxun Black Duck stores were already being assessed by Juewei, roughly equivalent to being converted. Juewei expected the acquisition process to continue until after the Lunar New Year period, with fewer than 400 stores ultimately becoming locations where Juewei held supply rights. Because the stores were mainly in Jiangxi, Gansu, Inner Mongolia, and other northern-region markets, they were seen as complementary to Juewei’s existing coverage.
The article said COVID-related pressure on Chaoxun Black Duck created the opportunity for Juewei to pursue the acquisition.
Chaoxun Black Duck’s store model generated roughly RMB 2,000 to RMB 3,000 in daily sales per store nationwide, while stores in Jiangxi and Gansu generated about RMB 1,200 to RMB 1,500 per day. Compared with Juewei stores, Chaoxun Black Duck stores were at about 40% to 60% of Juewei’s revenue level.
Juewei’s view was that market expansion was closely tied to foot traffic. Growth was mainly concentrated in first- and second-tier cities or fifth- and sixth-tier cities, while third- and fourth-tier cities grew more slowly because traffic was relatively stable.
Historically, casual food brands expanded downward: first penetrating first- and second-tier cities, then moving to third- and fourth-tier cities, and finally to fifth- and sixth-tier cities.
If the pandemic continued to be severe, Juewei expected new store openings to focus on third- and fourth-tier cities, or fourth- and fifth-tier cities.
Juewei stores in first- and second-tier cities needed daily sales of RMB 2,000 to remain viable. In fourth- and fifth-tier cities, RMB 1,000 in daily sales could be enough, mainly because of differences in labor, utilities, and renovation costs. Opening one store in a first- or second-tier city required about RMB 200,000, while opening one in a fourth- or fifth-tier city required about RMB 100,000.
Margins between first- and second-tier stores and fourth- and fifth-tier stores were roughly similar. In practice, opening two stores in fourth- and fifth-tier cities was comparable to opening one store in a first- or second-tier city. Since first-, second-, and third-tier cities no longer allowed unlimited store densification, the article described fourth- and fifth-tier cities as a large blue-ocean market.
Juewei initially invested in businesses related to marinated snacks, then moved into light foodservice, and within light foodservice identified compound seasonings as another track.
This investment model relied on Juewei Foods’ supply chain and franchise system. Through industrial investment plus value-added services, Juewei aimed to drive valuation growth in its portfolio companies.
The specific model was the frequently cited “six shared resources” synergy:
Among these, shared procurement was the simplest, while shared production was the most difficult.
In Juewei’s 2021 annual report, shared procurement was the largest area, followed by joint distribution, then shared production. Shared sales mainly used the franchise model. Gross margin for shared production was 6% to 11%, while gross margin for joint distribution was 10% to 15%. Shared procurement was almost not profitable at the time, because procurement is a core-interest area for each company, so Juewei was still mainly using it as an entry point.
Note: Financing, valuation, IPO/listing expectations, acquisition progress, store-opening plans, and forward-looking figures are historical as of the article’s January 14, 2022 publication date.