Source Haixi Business Circle (haixishangjie)
Author A Dolphin
The "sugar reduction craze" has made the sugar substitute industry "skyrocket", and related companies have entered the The track "No More Sweetness".
In the past month, sucralose, one of the main sugar substitute products, has increased by more than 20%. Jinhe Industrial, the world's leading artificial sweetener company, has seen its stock price rise by the daily limit for two consecutive days, and its financing balance has hit a new high in the past year. Baolingbao, which specializes in "erythritol", also hit the daily limit before.
It is understood that Jinhe Industrial is a major manufacturer of the sweeteners acesulfame potassium, sucralose and the flavoring maltol. Among them, the production of acesulfame potassium and sucralose ranks first in the world. In the national sweetener market of about 6.661 billion yuan, Jinhe's sugar substitute sales are 1.5 billion yuan. There is no doubt about Jinhe's strength.
However, in the early days, Jinhe was a state-owned fertilizer factory on the verge of bankruptcy. Jinhe's brilliant achievements from a small factory to the world are inseparable from Yang Yingchun and the vigorous development of China's sugar substitute industry.
In 1997, with the lingering heat of the Asian financial crisis still lingering, China’s economy declined. At the same time, the small nitrogen fertilizer industry also began to lose its former glory. Yang Yingchun, who was in his thirties, was appointed as the director of Lai'an Fertilizer Factory when he was in danger. He abandoned politics and went into business.
At that time, the fertilizer factory had an annual loss of 15 million yuan and was insolvent. Employees were panicked and the company was in chaos. After Yang Yingchun took office, he immediately formulated a competitive employment system, standardized management, and increased subsidies and equity incentive policies to attract talents. At the same time, in order to escape the decline of the fertilizer industry, Yang Yingchun encouraged increased research and development and investment in the development of new products.
In 1999, the company launched a spice production line, breaking the long-term pattern of solely producing chemical fertilizers. Since then, industrial magnesium oxide and melamine projects have been launched, maltol production technology has been introduced, and the product structure has been basically diversified.
In 2003, Yang Yingchun acquired the fertilizer factory and reorganized its assets, getting rid of the old state-owned business model. But the real opportunity for it to cross-border food additives industry from fertilizer production came in 2005.
At that time, the German company Nutrinova’s patent on acesulfame potassium expired. This gave Yang Yingchun, who had already targeted the acesulfame potassium market and completed pilot trials through self-research, an opportunity. When his peers intensively introduced acesulfame potassium production technology, he immediately launched a large-scale acesulfame potassium production line.
Acesulfame potassium is an artificial sweetener produced from diketene. Its sweetness is about 200 times that of sucrose. Because it is not metabolized and absorbed, it is an ideal "for weight loss and diabetic patients" Sugar substitute".
It is understood that there are six generations of artificial sweeteners, and acesulfame potassium is the fourth generation. Before this, the main artificial sweeteners on the market were saccharin, cyclamate, and aspartame. However, Saccharin and cyclamate have long been listed as banned additives by many countries because they do not meet the standards. Acesulfame potassium became a relatively popular sugar substitute product at that time.
With the continuous expansion of scale, in 2011, Jinhe successfully landed on the small and medium-sized board of the Shenzhen Stock Exchange. In its first year of listing, Jinhe achieved total operating income of 2.284 billion yuan and net profit of 182 million yuan.
In fact, Jinhe’s development is inseparable from Yang Yingchun’s precise grasp of every opportunity. In 2015, Suzhou Haobo, the only domestic company that could compete with Jinhe and supply diketene and acesulfame potassium, fell into losses after failing to go public. In less than 2 years, it ended in bankruptcy.
Jinhe is rapidly expanding production here to seize market share. Jinhe's good luck does not stop there. The shock in the raw material diketene industry has directly brought Jinhe into the spotlight.
In 2016, "Jiangsu Tiancheng" with an annual output of 8,000 tons of diketene was forced to stop production due to non-compliance with environmental protection standards. In the same year, Ningbo Wanglong Group, a major manufacturer of diketene, also stopped production due to leaks. Major manufacturers have had troubles one after another, and the price of diketene has risen rapidly due to shortages.
The biggest rival fell. Other peers were also in trouble due to the rise in raw materials and could only rely on outsourcing to survive. At that time, Jinhe relied on its complete advantage of self-production of raw materials to reduce safety. The cost of Acesulfame K has grown rapidly through price wars and directly jumped to become the largest manufacturer of Acesulfame K.
Today, Jinhe produces up to 12,000 tons of acesulfame potassium per year, becoming the largest acesulfame potassium supplier in the world directly, occupying more than 60% of the market share, and reaching cooperation with companies such as Wahaha, Mengniu, and Yili.
The development of the company has also pushed up the value of the person at the helm. According to the "2020 Hurun Rich List", Yang Yingchun and Yang Le's father and son have become the richest people in Chuzhou with a wealth of 7.5 billion yuan.
The success of Acesulfame potassium convinced Yang Yingchun that he could copy the second and third "Arcesulfame potassium".
After acesulfame potassium, there is the fifth-generation sweetener sucralose developed by the British company Tate & Lyle. Yang Yingchun has never hidden his optimism about sucralose. When expanding the production of acesulfame potassium, Yang Yingchun wanted to introduce sucralose, but the domestic production technology of sucralose had not been broken at that time.
Originally wanted to use the existing financial strength to directly acquire related companies, but Yang Yingchun, who has a sense of research and development, ultimately chose to give up taking shortcuts and conduct self-research and development by introducing technology. This decision also laid a solid foundation for Jinhe to later win the sucralose market.
In 2014, Jinhe completed the research and development of the complete production process and system of sucralose and successfully trialed it. This year, Yang Yingchun also transferred half of his equity to his son Yang Le, allowing him to join the board of directors to prepare for the second generation to take over.
In Yang Yingchun’s view, as long as the second generation is willing to take over, the first generation can retire early because new blood can stimulate the vitality of the enterprise. And Yang Le lived up to expectations. Under his leadership, Jinhe's "sucralose" business gradually expanded.
In 2017, Yang Le became the vice chairman, and Yang Yingchun began to gradually fade away from the outside world and focus on behind-the-scenes business. By 2019, Yang Le officially took over. The smooth transition between the old and the new has also allowed Jinhe to maintain stable development.
Since then, Yang Yingchun and his son have worked together, one after another, to nearly double Jinhe's production capacity.
Data shows that Jinhe’s sucralose production capacity will reach 8,000 tons in 2021, far exceeding the sucralose creator Tate & Lyle, accounting for approximately 33% of the global total production capacity. In other words, Jinhe Industrial will become the global production double champion of acesulfame potassium and sucralose.
Although today, compared with the international chemical giants DuPont and Dow, as well as the largest domestic MDI chemical company Wanhua Chemical, there is still a big gap in all aspects between Jinhe. But in the sugar substitute industry, Jinhe can be said to "dominate".
Data show that in 2020, Jinhe's operating income was 4.133 billion yuan, and its net profit reached 912 million yuan. It is one of the industry champions in the A-share segment with the most stable growth.
Looking back at Jinhe’s success, in addition to the founder’s keen grasp of opportunities, investment in technology research and development and the “lifeline” of always maintaining green production, the new helmsman Yang Le also played a major role contribution.
Unlike most "second generation rich", Yang Le, who graduated from the United States with a master's degree in finance, still wears blue work clothes and stays in the factory.
Before joining Jinhe, he worked at a securities firm and investment bank, started his own business, and his start-up company was even listed on the New Third Board. It was these experiences that gave him more understanding of the capital market. With a sense of awe and prudence, we realize the importance of doing business in a down-to-earth manner.
Therefore, although Jinhe has strong financial strength, there have not been many cross-border investments and mergers and acquisitions so far. According to Yang Le, Jinhe will always focus on the main chemical industry. Even if there are mergers and acquisitions in the future, it will be for the main industry.
Of course, the explosion of the sugar substitute industry has also given Jinhe a great boost.
As "Vital Forest" becomes popular in the capital market, the beverage industry has set off a trend of "sugar-free" drinks. It seems that with the word "sugar-free" on it, the product means health and fashion.
To achieve a “sugar-free” drink, the main thing added is sugar substitute, which has a sweet taste but does not produce calories. Take Coca-Cola as an example. Sucralose is added to the latest version of Coca-Cola.
As "sugar reduction" becomes the lifestyle habit of young people, the replacement of sucrose with sweeteners will also become a trend. Data show that China is already the world's largest producer of sugar substitutes, accounting for 75% of global sweetener production. From the perspective of market space, the market for sweeteners is very broad. In the future, there will be no surprises for Jinhe, and it will be able to reach a higher level.