This is an English adaptation of a FoodBud historical article originally published on July 7, 2022.
Dexin Foods, a supplier of ingredients for freshly made coffee, tea, and other beverage chains, was preparing for an A-share listing in 2022. The company planned to issue no more than 16.823 million shares and raise RMB 900 million.
The company focuses on R&D, production, and sales of freshly made beverage ingredients. Its main products include beverage concentrates, flavored syrups, and beverage inclusions.
Its customer base included Yum China, McDonald's, Starbucks, Luckin Coffee, 7 Fentian, Mixue, Nayuki, Shuyi Tealicious, Xiabu Xiabu, IKEA, Wallace, Ovaltine, Lelecha, Haidilao, Yonghe King, and Three Squirrels.
According to the prospectus, Dexin Foods generated revenue of RMB 393 million, RMB 357 million, and RMB 529 million from 2019 to 2021. Net profit attributable to the parent company was RMB 80.1227 million, RMB 68.7191 million, and RMB 95.4726 million over the same period.
Dexin Foods' major customers were mainly coffee and tea chains such as Luckin Coffee, Starbucks, 7 Fentian, and Mixue.
Starbucks was Dexin Foods' largest customer in 2019, with transaction value of RMB 128 million. Its purchases then declined year by year: RMB 79.466 million in 2020, still ranking first, and RMB 69.76 million in 2021.
In 2021, Luckin Coffee became Dexin Foods' largest customer, with transaction value of RMB 127 million. That year, the top five customers contributed 54% of Dexin Foods' sales.
Shuyi Tealicious remained among Dexin Foods' top five customers, with 2021 transaction value of RMB 21.438 million.
For suppliers like Dexin Foods, payables and receivables are important operating indicators. In 2021, the company had RMB 11.45 million in prepayments and RMB 63.07 million in receivables. Its top five receivables customers were Luckin Coffee, Starbucks, Wallace, Mixue, and 7 Fentian.
Before the planned listing, Dexin Foods received RMB 296 million in financing from investors including Jinlun Investment, associated with CITIC Capital, and Shengyuan Partnership.
The article noted that supply-chain companies of this type can often continue growing through internal cash flow unless they are pursuing faster expansion or an IPO.
Chairman Lin Zhiyong directly and indirectly controlled Dexin Foods through Dexin Industrial and other entities, giving him strong control over the company.
Dexin Foods relied mainly on direct sales, with distribution as a secondary channel and trading customers as a supplement.
From 2019 to 2021, revenue from direct customers was RMB 330 million, RMB 290 million, and RMB 430 million, accounting for 83.51%, 80.83%, and 82.14% of sales.
Direct customers included freshly made tea companies, freshly ground coffee companies, restaurant chains, and food manufacturers. Under this model, Dexin Foods obtained order leads through customer visits, industry exhibitions, business partner introductions, and online business platforms, then signed sales agreements through bidding, negotiation, or direct discussions.
Non-direct revenue accounted for 16.49%, 19.17%, and 17.86% during the reporting period.
Dexin Foods' products were mainly divided into beverage concentrates, flavored syrups, and beverage inclusions. In 2019, 2020, and 2021, beverage concentrates and flavored syrups together contributed 92.49%, 90.1%, and 87.74% of revenue.
Beverage concentrates included fruit and vegetable juice concentrates, plant-protein beverage concentrates, and NFC tea bases. This category was Dexin Foods' largest revenue source, accounting for 62.8%, 61.2%, and 60.3% of main business revenue from 2019 to 2021.
In 2021, revenue from beverage concentrates grew nearly 50% year on year, mainly because of strong sales volume growth for new plant-protein beverage concentrate products. Annual sales volume of plant-protein beverage concentrates reached 8,263.87 tons, with an average selling price of RMB 13.1 per kilogram and revenue of RMB 110 million.
Flavored syrups were made primarily from sugar and starch sugar, or from erythritol and stevia, and were used to add flavor to foods and beverages. Flavored syrup revenue was RMB 120 million, RMB 100 million, and RMB 150 million from 2019 to 2021, accounting for 29.7%, 28.9%, and 27.4% of main business revenue.
Beverage inclusions covered creative add-ins for freshly made drinks, including cookie crumbs, agar crystal balls, and jellies. To support one-stop procurement, Dexin Foods also supplied solid beverages such as coffee and plant-protein products, refined tea products including tea leaves and tea bags, and other products or services.
Revenue from beverage inclusions and related products was RMB 29.529 million, RMB 35.349 million, and RMB 64.832 million from 2019 to 2021, accounting for 7.5%, 9.9%, and 12.3% of main business revenue.
Dexin Foods' business was concentrated in East China. From 2019 to 2021, this region had a relatively high revenue share, which the prospectus attributed to higher urbanization, a large resident population, and stronger consumer spending. Another factor was centralized procurement by some major customers, with goods then allocated across regions.
In 2021, East China accounted for 54.5% of Dexin Foods' revenue.
Note: IPO, financing, and planned fundraising figures are historical, based on the article dated July 7, 2022.