This is an English adaptation of a FoodBud historical article originally published on April 19, 2022.
After investing in tea-drink chain Shuyi Tealicious after Chinese New Year, Juewei moved again in March 2022, this time into frozen bakery through Enxicun.
Enxicun was founded in 2017 and is described in the source as a leading scaled and automated frozen-bakery producer in China. It supplies frozen bakery products to membership-based retailers, retail channels, and chain restaurant operators. Its products include Swiss rolls, mille crepe cakes, mousse cakes, cream puffs, cookies, and snow-skin mooncakes.
According to Enxicun's website, sales exceeded RMB 100 million in 2018. The source says reliable information indicated its latest annual sales had exceeded RMB 1 billion.
In November 2021, Enxicun received strategic investment from snack giant Mondelez. The source says Mondelez invested RMB 105 million for a 5% stake, implying a valuation of RMB 2.1 billion.
Four months later, Enxicun raised a new round from funds and investors including Juewei-related vehicles, Mai Xing Investment, Jiayu Fund, and Shenxia Financial.
Juewei's exposure was structured through three entities:
Together, these holdings gave Juewei-related parties 4.9% of Enxicun. Since Enxicun's 2021 sales had grown sharply, the article estimated the new-round valuation would not be below the earlier RMB 2.1 billion level. On that basis, it estimated Juewei's investment scale at no less than RMB 100 million.
Juewei had previously invested in bakery through Happiness Cake, a consumer-facing bakery brand. In 2017, Juewei invested RMB 15 million for a 3.34% stake, valuing the company at RMB 440 million. Happiness Cake later raised a RMB 96 million Series A led by investors including Meituan Longzhu, a RMB 400 million Series B, and a recently announced RMB 100 million Pre-C round.
The source notes that Juewei's Happiness Cake investment had already been impaired by RMB 960,000 by the end of 2017 and by RMB 8.34 million by the end of 2018. By the time of Juewei's 2019 annual report, the holding was consolidated under Juewei Wangju and no longer disclosed separately. Juewei's remaining stake was stated as 1.6%, mainly held through Yu Yanxin, formerly chair of Juewei's supervisory board and now mainly responsible for Jue Capital.
The article frames frozen bakery as part of a supply-chain shift in baked goods. Improved processing technology narrowed the taste gap between factory-made frozen bakery and in-store production, while offering better cost economics. At the same time, cold-chain infrastructure made short-shelf-life products easier to transport and preserve.
The broader trend described was a shift from long-shelf-life products to short-shelf-life products, and from in-store production to industrialized frozen-bakery production.
The article cited frozen-bakery penetration of more than 70% in Europe and the United States, more than 50% in Japan and South Korea, and around 10% in China. It expected rapid penetration in China over the following years and projected that, within five years, the bakery end market could support a frozen-bakery supply-chain market worth several tens of billions of RMB upstream.
The sector was described as having fast-growing downstream demand, while upstream capacity was still expanding and consolidating. Capacity remained fragmented, and bottlenecks continued to limit downstream demand growth.
Major B2B frozen-bakery players named in the article included Ligao Foods, Gaobei, Enxicun, and Namchow Food Group. Ligao Foods, a listed company, was described as the sector leader.
According to Ligao Foods' annual business update cited in the article, its 2021 revenue was expected to reach RMB 2.78 billion to RMB 2.85 billion, up 53.62% to 57.49% year on year. In Ligao Foods' 2020 annual report, frozen bakery accounted for 52.8% of revenue and was its core business.
A report from Everbright Securities cited in the article put Enxicun's 2020 frozen-bakery business at RMB 300 million to RMB 400 million, still behind Ligao but not far away.
Both Ligao Foods and Enxicun served major customers including Walmart's Sam's Club. In 2020, Ligao benefited from Walmart procurement doubling, lifting the share of direct-sales revenue.
Even so, distribution remained the core sales channel for B2B frozen-bakery firms. From 2017 to 2020, Ligao Foods' distribution model contributed 83.38%, 83.51%, 83.94%, and 77.84% of main-business revenue respectively. Among the downstream customers of Ligao's top 20 distributors, 92.3% were bakery stores, including Happiness Cake and Holiland.
After Juewei's investment, the article expected supply-chain switching within Juewei's ecosystem to be likely. It specifically mentioned Happiness Cake, and said it would not be surprising to see bakery products later appear in Shuyi Tealicious stores.
The source also saw possible logistics synergies with Juewei's distribution system.
Enxicun had self-owned capacity in Shanghai, Shenzhen, Dongguan, and other locations, planned and designed to 100,000-grade clean food-processing workshop standards. Its website also showed a nationwide distribution-center footprint.
The article identified four core areas of competition for frozen-bakery manufacturers:
1. Product: downstream bakery stores increasingly wanted differentiated and customized products. Emerging tea and coffee chains were looking for suppliers able to support customization. 2. Sales team: reaching large numbers of small bakery stores required field sales, so sales volume tended to correlate with sales-team size. 3. Cost control: suppliers needed to provide low-cost, good-quality products. Downstream bakery stores remained price-sensitive, and in lower-end categories such as egg tarts, oversupply had already triggered price competition. 4. Capacity: new factories could require a three-year investment cycle and high capital expenditure. The article said Enxicun was investing RMB 300 million to build a new factory with 100,000 tons of capacity. New plants also required commissioning and a gross-margin ramp-up period, so capacity expansion was mainly led by existing large manufacturers, with concentration expected to rise.
For Enxicun, the article raised a strategic question: after taking Juewei's investment, should it move further downstream toward traffic ownership, such as launching a bakery store brand and expanding through franchising? The rationale was that franchising was a model Juewei understood well, and similar moves existed in the industry, including bakery brands within the Wallace ecosystem.
Note: investment, IPO-direction, valuation, capacity, and forward-looking market figures are historical as of the original article date, April 19, 2022.