Juewei-Backed Fund Takes 9.5% Stake in Pickled-Vegetable Supplier Pengjifang

This is an English adaptation of a FoodBud historical article originally published on January 18, 2022.

FoodBud previously noted that Juewei had said its acquisition of Chaoxun Black Duck was already underway, and that it had invested in Fresh Life through its investment platform Wangju Capital.

More recently, Chengdu Xinjin Siyiwuwu, a fund jointly established by Juewei together with Qiaqia Food, Tencent-linked capital, Keming Food and others, invested in Pengjifang and took a 9.5% stake.

A Wider Supply-Chain Investment Map

Chengdu Xinjin Siyiwuwu had already invested in Lujiangnan, Guilin Sanyang and Sichuan Laotanzi.

Lujiangnan was valued at RMB 910 million. Chengdu Xinjin Siyiwuwu held 7.1% of the company, while Wangju Capital held 10%.

Guilin Sanyang’s core strength is fresh wet rice-noodle supply. Sichuan Laotanzi focuses on pickles and seasonings. Pengjifang, the latest investment target, is also in the sauce-pickled vegetable category, similar to Sichuan Laotanzi.

Pengjifang’s Product Base

According to Pengjifang’s official website, the company was founded in 1995. Founder Peng Qiangjian came from Ningxiang to Changsha to start a business selling small side dishes. When leftover vegetables remained unsold, Peng’s mother made them into jar-fermented vegetables for neighbors to taste. Demand soon exceeded supply and customers had to order in advance, which became what the company later described as a business opportunity created by surplus inventory.

Jar-fermented vegetables became the foundation of Pengjifang’s growth. The company has since developed three major product series: Bainian Laotan, Baicao Qinglu and Baiwei Jiayao, covering sauce-pickled vegetables, braised dishes and frozen foods.

Pengjifang currently has 45,000 square meters of modern deep-processing facilities and supporting infrastructure, plus about 30,000 mu of self-operated and partner vegetable planting bases.

The company also has a testing center, cooperates with professional technical teams, holds patents covering secondary biological fermentation technology and production-equipment improvements, and has an expert R&D team covering China’s eight major cuisines. It has built supply and customized-service relationships with multiple large chain hotels and military-supply channels.

Why Capital May Matter

When discussing the opportunity to acquire Chaoxun Black Duck, Juewei said the pandemic created the opening for that deal. FoodBud inferred that the Pengjifang stake may have involved a similar opportunity.

Qichacha records showed that Pengjifang pledged equity at the beginning of 2021, with pledged equity totaling RMB 120 million.

For supply-chain companies like this, cash flow and working capital are persistent pressure points. Customer payment delays and business expansion both require cash to support turnover.

According to Da Xiang Net, Pengjifang previously planned a total investment of RMB 500 million to locate its headquarters in Ningxiang Economic Development Zone. The project had a planned gross floor area of about 58,877 square meters, five times larger than the company’s former site in Muyun Industrial Park, Changsha County.

The project was planned in two phases. Phase one covered about 45,000 square meters. Considering industry influence, brand presence and supply-chain upgrading, the more than 80-mu factory area had already completed three buildings for production, warehousing and employee dormitories. An office building and jar-vegetable museum had entered the preparation stage.

The future factory area was planned as an agricultural industrial park integrating planting, processing, sales and industrial tourism. Its main products would include packaged non-ready-to-eat vegetables, meat side dishes and frozen foods, with designed annual output value of up to RMB 1 billion.

Pengjifang’s three existing series, Bainian Laotan, Baicao Qinglu and Baiwei Jiayao, had been listed in Singapore and Hong Kong. Its products continued to sell through a network of more than 300 distributors across more than 20 provinces and cities in China, with average monthly order totals of RMB 20 million to RMB 30 million.

Category Benchmark

The leading company in China’s sauce-pickled vegetable category is Fuling Zhacai, which was already listed and had a market capitalization of RMB 30.5 billion at the time of the article.

In the first three quarters of 2021, Fuling Zhacai generated RMB 1.8 billion in revenue and RMB 600 million in net profit. The secondary market assigned it a high valuation, which led to its nickname as the “Moutai of zhacai.”

Juewei’s investment footprint continued to expand from braised snacks to light foodservice, compound seasonings and sauce-pickled vegetables. It had also entered consumer-facing chain brands such as Shuyi Tealicious and Pala Hamburger. From an investment-integration perspective, FoodBud viewed the strategy as still ongoing, with a focus on helping foodservice businesses scale from 10 to 1,000, a relatively safer path within the sector.

Note: valuation, market-capitalization, listed-company, pledged-equity and forward-looking factory-output figures are historical as of the January 18, 2022 article.