Hotpot Seasoning Maker Caoyuan Hongtaiyang Pursues A-Share IPO

This is an English adaptation of a FoodBud historical article originally published on June 22, 2022.

Caoyuan Hongtaiyang, a compound-seasoning company, completed IPO tutoring registration on June 8, 2022, with Dongxing Securities as its tutoring institution, as it sought an A-share listing.

Market Position

According to cited industry materials, China’s hotpot base segment remained fragmented in 2019. The top four companies held only 40% market share, or 28% after excluding related-party transactions involving Yihai International.

The top five hotpot base brands were listed as Yihai International, Teway Food, Hongjiujiu, Hongtaiyang and Dezhuang.

Industry participants grouped hotpot seasoning brands by revenue into three tiers:

• First tier, above RMB 1 billion: Haidilao, Teway and Hongjiujiu.
• Second tier, RMB 500 million to RMB 1 billion: Mingyang, Dezhuang, Qiaotou and Caoyuan Hongtaiyang.
• Third tier, RMB 100 million to RMB 1 billion: more than 10 brands, including Pangzi, Qiuxia, Zhoujunji, Little Sheep, Caoyuan Ama, Yunting and Haiqiwang.

The overall market was described as pyramid-shaped.

Company Development

According to Caoyuan Hongtaiyang’s website, the company is a professional seasoning business integrating R&D, production and sales. Although it was formally established in 2003, its roots date back to 1998. Around 2000, it launched a Mongolian-style hotpot base made with vegetable oils.

As demand grew, the company moved from a small workshop to Balizhuang in Yuquan District and began forming an assembly-line production model. In April 2003, under chairman Yu Wenjun, the factory moved into the Hohhot Industrial Park, registered as Inner Mongolia Hongtaiyang Food Co., Ltd., and entered a more formal corporate stage.

Within three years, the company grew from 6 people to more than 60, with sales exceeding RMB 7 million.

By 2017, according to the company website, group sales had risen from RMB 7 million to more than RMB 360 million. In 2019, sales reached RMB 650 million. One industry source familiar with Caoyuan Hongtaiyang said its current scale was around RMB 1.5 billion.

The company began preparing for a listing in 2019, completed its joint-stock restructuring on January 10, 2022, and signed a strategic investment agreement with CPE Yuanfeng in March 2022.

Capacity and Product Range

Caoyuan Hongtaiyang’s website said the company planned to begin construction on a technical renovation and expansion project with annual capacity of 60,000 tonnes of hotpot soup-making agents. The project had total investment of RMB 450 million, was listed as a key industrial project in Hohhot, and was located in Hohhot’s Yulong Industrial Park, with total building area of 44,405.80 square meters.

Positioned as a representative northern-style hotpot base company, Caoyuan Hongtaiyang pursued a broad product strategy. It developed and launched more than 100 SKUs across six series: hotpot bases, hotpot dipping sauces, cooking seasonings, barbecue seasonings, ready-to-eat dipping sauces and powdered seasonings.

As the group expanded, it also established Bole Qianlima Asset Management Co., Ltd. and seven restaurant business divisions.

Restaurant Links and Distribution

Chairman Yu Wenjun was also the controlling shareholder of Jiutianjia, a barbecue brand with 1,078 locations.

On marketing, Caoyuan Hongtaiyang said on its website that it had a complete sales system and a nationwide network covering more than 1,400 authorized distributors, over 300,000 retail terminals and 50,000 supermarket outlets.

At the time, listed hotpot base companies included Haidilao-affiliated Yihai International and Teway Food. Yihai International had a market value of RMB 21.4 billion, while Teway Food had a market value of RMB 17.0 billion.

Note: IPO plans, investment details, market values and forward-looking project figures are historical as of the original June 22, 2022 article.