Supermarkets, small-scale stores, vegetable markets are still the main channels for fresh fruit retailing in China, will new platforms such as Hongjiu Fruits succeed?
Chinese fruit vendor Hongjiu Fruits passes the hearing for an IPO on the Hong Kong Stock Exchange, with CICC acting as the exclusive sponsor.
Hongjiu Fruits is a fast-growing multi-brand fresh fruit group in China, focusing on the full industry chain operation of premium fruits that originate from China, Thailand and Vietnam. The company has developed a fruit portfolio of 49 categories with durian, mangosteen, longan, dragon fruit, carrion and grapes as its core.
In terms of retail value, the market size of the fresh fruit market in China has increased from CNY 939 billion in 2017 to CNY 1,336 billion in 2021, per China Insights Consultancy. Among many types of fruits, Hongjiu Fruits has selected only six of the fastest growing fruit categories as its core fruit products, and they account for 64.6% of the total imported fruit market in China for the year 2021.
According to the prospectus, the firm’s revenue jumped significantly from CNY 2 billion in 2019 to CNY 10 billion in 2021. At the same time, its profits also recorded a surge from CNY 163 million to CNY 292 million.
The fresh fruit distribution market in China is competitive and exhibits the following characteristics. First, it is highly fragmented, with the CR5 metric being less than 5%. Domestic rivals include Pagoda (Chinese: 百果园) and Xianfengsg (Chinese: 鲜丰水果). Besides, there is a lack of a national distribution system, which hinders expansion plans.