Wei Long Spicy Strips: Another Snack Company Rumored to be Filing an IPO
In China, there is a popular snack called La Tiao or spicy strip (辣条). The best-known brand in the industry is called Wei Long (卫龙) and there are voices saying this spicy strip king will file an IPO in Hong Kong this year.
Wei Long was founded by Liu Weiping (刘卫平). Though Liu’s education stopped at high school, this has never limited his ambition and he is often praised for his marketing talent.
Source: Tmall store: 卫龙食品旗舰店.
In 1999, Liu opened the Wei Long factory in Henan Province and he hired poor workers to help him sell spicy strips on the street. As his first goal he set the factory as the centre of his business circle and tried to get his products selling in all Walmart, Carrefour (家乐福), schools and convenience stores which were within 200 kilometers and also advertised in those stores with Wei Long posters.
To reach one of its important customer groups: students, Wei Long’s spicy strips are sold at those stationery stores around schools. I remember when I was at primary school, a pack of spicy strip cost no more than 2 RMB, which was very affordable for students. Whenever we had a break, we went to those stores and bought snacks. Knowing that the product was popular among students, Wei Long shortened the package of its spicy strips by 1 centimeter to make it easy for students to carry within their pockets.
Crackdown on the Spicy Strip Industry
Only 5 years after he launched the brand, 2004 was the most unfriendly year for the spicy strip industry. CCTV, the mouth of Chinese government, revealed a spicy strip factory from another company that had applied forbidden chemicals in its products which caused consumers to doubt all the companies in the industry. At that time, there were also rumors saying spicy strips were stamped by groups of old ladies who didn’t wash their feet.
This heavily influenced other spicy strip factories a lot but not for Wei Long, for the reason that Liu had already invested his money to improve his production line. Before the scandal, he bought an expensive production line from Europe and changed his machines from half automatic to fully automatic. When other factories were cutting their budgets, Liu did the opposite. He was able to show consumers that his factories were modern and clean.
Other than this, Liu also realized solely relying on spicy strips was risky and he started expanding Wei Long’s product lines to include Qinzui Dougan (亲嘴豆干) or Bean Kiss.
From 2008 to 2014, the number of spicy strip factories in China decreased from 2,000 to 500. Wei Long survived this crisis.
Marketing Tactics
Surviving from the crisis didn’t make Liu’s empire as a top runner in the industry. What helps him to achieve this is his marketing strategy.
In 2014, Wei Long was moved to a new factory with updated and advanced machines and a professional working environment. Liu invited a team of photographers to film the new fatcory. Later the company posted these images and videos on Weibo and within 18 hours, they attracted over 1M views. This made Liu realize the power of Internet marketing.
So he reacted quickly on this and invited an entertainment influencer called Zhang Quandan (张全蛋) to his factory to livestream! Heads up, it was 2014 in the very, very early stages of live streaming in China. Viya just started her livestream career and Austin Li just signed with his company Mei One (美ONE).
Liu also worked with a comic illustrator and created many viral stickers for people to use when they are chatting on WeChat. These stickers and the slogans in it are so popular even now.
In 2016, when Apple fans were waiting for the launch of iPhone 7, Wei Long changed its Tmall flagship store’s decoration just like Apple’s official web page jokingly advertising spicy strips 7.0 and describing the features of spicy strips like you would describe a smart phone. This went viral as traditionally, spicy strips are sold at convenience stores or those stationery stores near schools, they are down-to-earth. The contrast between spicy strips and Apple, who is the representative of advanced technology grabbed people’s attention.
Wei Long loves presenting its products in all sort of innovative and creative ways. In addition to the iPhone 7 layout and design, on the Double 12 shopping festival in 2019, instead of showing sophisticatedly designed posters of its products, Wei Long went to the opposite and placed its products in an excel sheet. The bold try made the brand stand out among competitors for the reason that no other brands had done this before.
Grabbing hot topics and making use of them are also Wei Long’s effective way of getting attention. For example, back in 2018 when luxury brand Balenciaga launched a bag which was very similar to bags that people would carry during the Spring Festival travel season. Those packaging bags are very cheap, which cost no more than 10 RMB per one, but when it comes to Balenciaga, it costs 14k RMB. It generated lots of buzz on social media and Wei Long reacted quickly on this topic and launched similar bags and call them snack bags, which had Wei Long’s products in it.
Wei Long keeps changing its designs to meet those hot topics. At some point, this is good, for the reason that it keeps refreshing itself and bringing something new for customers. Chasing after hot topics is also an effective way to grab attention. But in the long run, I am not sure whether this is a good idea to constantly have big changes. One day, customers might get tired of this and can’t recognize the brand.
Future Challenges
Wei Long’s revenue reached 4.9 billion RMB in 2019, achieving 43% growth year over year.
The gross margin of spicy strips is so high that it reaches 50%, and thus many snack companies are joining the industry, such as Three Squirrels, Bestore Co (良品铺子) and Be & Cherry (百草味).
But actually all these newcomers joining the industry is not the main challenge for Wei Long. The real challenge is the changing mindset of Chinese consumers who are trying to have a healthy lifestyle. Spicy strips are a junk food high in salt and oil, so to keep up with the times, Wei Long needs to make changes to its products.
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