Zhou Hei Ya "Open For Business" Outside China - Investors Cheer The Move

Benzinga_recent_news12-11 19:37

The chain offering snacks made from braised duck necks has opened its first store in Southeast Asia as it concurrently aims to revive its flagging China operation Some might call snack chain Zhou Hei ...

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Some might call snack chain Zhou Hei Ya's latest store opening a \"$35 million outlet.\". That's how much market value the well-known but aging brand gained after it announceda store openingin Port Klang, Malaysia, as its stock rose by 7.7% in the next three trading days. The excitement owed to the fact that the store's Dec. 5 opening marked the first waddle outside China for the chain, known for its braised duck neck snacks.Hao took over the reins from founder Zhou, who stepped back from management shortly after the listing. Two years later the top s","collect":0,"end_time":0,"defaultTopTitle":"benzinga.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"603517":"ST绝味","BK0028":"国家队","BK4211":"区域性银行","BK0070":"员工持股","ISBC":"投资者银行","BK0077":"质押式回购","002695":"煌上煌","BK0238":"农副食品"},"translate_title":"周黑鸭在中国境外“开业”——投资者为此举欢呼","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"603517":1,"002695":1,"ISBC":1.5},"content_text":"The chain offering snacks made from braised duck necks has opened its first store in Southeast Asia as it concurrently aims to revive its flagging China operation\nSome might call snack chain Zhou Hei Ya's latest store opening a \"$35 million outlet.\"\nThat's how much market value the well-known but aging brand gained after it announced a store opening in Port Klang, Malaysia, as its stock rose by 7.7% in the next three trading days. The excitement owed to the fact that the store's Dec. 5 opening marked the first waddle outside China for the chain, known for its braised duck neck snacks.\nThat seems to show investors are waiting – or hoping – the baby step abroad could provide some lift to a company that was a top brand a decade ago but has slumped lately amid a sea of competition from younger upstarts. The bigger hope is that the move could signal a broader turnaround for the company under founder, Zhou Fuyu, who has come back from semi-retirement to try to get Zhou Hei Ya International Holdings Co. Ltd. (1458.HK) back to a growth track.\n\"The opening of this store marks a substantial step forward in the group's overseas expansion strategy and is an important move toward exploring new markets and achieving long-term sustainable growth,\" Zhou Hei Ya said in announcing the new store. \"The company believes that this successful launch will not only enhance the brand's influence in the international market, but also lay a replicable operational foundation for the group's steady expansion in Southeast Asia and other overseas markets.\"\nPort Klang, where the company has set up its first overseas shop, is Malaysia's largest port, located about 42 kilometers from Kuala Lumpur, the country's capital and largest city.\nZhou Hei Ya has become somewhat passe these days in a Chinese snack food market where consumers now have many more choices. Zhou Hei Ya was still in its prime at the time of its 2016 Hong Kong IPO, 22 years after founder Zhou set up his first shop in a wet market stall in the Central China city of Wuhan. He experimented with braised duck sauce initially before founding the chain with wife Tang Jianfang in 2002. \nAt the time of its listing, Zhou Hei Ya had 715 stores in 38 cities, with annual revenue of 2.4 billion yuan ($339 million) in a braised foods market niche worth 52.1 billion yuan annually. The braised duck necks that are its specialty are a traditional dish that improbably gained favor among Chinese millennials a decade ago, thanks to shrewd marketing across social media.\n\"The success is not all about taste,\" its chief executive Hao Lixiao said in 2017, shortly after the listing. \"What we're selling is a distinguished experience.\" Playing to its youthful audience, Hao stocked Zhou Hei Ya stores with the latest virtual reality games and introduced packaging that appealed to the company's favored 18-35 age bracket.\nHao took over the reins from founder Zhou, who stepped back from management shortly after the listing. Two years later the top spot was taken over by Zhang Yuchen, a veteran of multinational consumer goods companies including Procter & Gamble, L'Oréal, Mattel and Hasbro, who pioneered a strategy of building scale through franchising.\nBut a new wave of rival braised food snack purveyors with names like Juewei (603517.SH) and Huangshanghuang (002695.SZ) quickly crowded that segment of the snack food nest, posting strong profit growth as Zhou Hei Ya began to slump. Zhou Hei Ya's revenue fell by 0.8% in 2019, as its profit for the year tumbled 29.7%. Zhang couldn't arrest the slide, and resigned in June 2024, when founder Zhou assumed both the chairman and CEO roles.\nZhou quickly went to work slimming down the company's bloated operation. He closed nearly 1,000 underperforming stores, taking the number down from 3,816 at the end of 2023 to 2,864 by the middle of this year.\nZhou Hei Ya's 2024 results were dismal, with revenue down by 10.7% year-on-year to 2.45 billion yuan and profit down 15% to 98.2 million yuan. But the company's midyear report for the first half of this year showed signs of hope. Despite a slight decrease in revenue to 1.22 billion yuan for the six-month period, the company's profit more than tripled to 107.9 million yuan, a sign that Zhou's strategy was working.\nTotal sales volume for the six months was 14,383 tons, only slightly down from 14,618 tons in the year-ago period, despite the company having many fewer stores. More crucially, average spending per order dropped to 53.56 yuan from 55.57 yuan a year earlier, part of an intentional campaign to change perceptions of Zhou Hei Ya as a high-end product as many Chinese were growing increasingly reluctant to part with their cash in a slowing economy.\nIn the second half of this year, according to Everbright Securities, Zhou Hei Ya planned to refine its store operations, revitalize its brand image and focus on renewing its appeal to millennials. In the first half, it expanded into membership stores such as Costco and Wamart's Sam's Club, and mass-market channels such as snack retailing chains Busy Ming and Wancheng Group.\nBut store closings and new channel development can only take the company so far in the current sluggish Chinese market. According to Chinese media, Zhou Hei Ya established its latest overseas strategy in early 2025, starting with the introduction of its vacuum-packed products through Malaysia's MiX specialty convenience store chain. Overseas business will be a \"crucial engine of growth\" starting with Southeast Asia and gradually expanding to Europe, the Americas and the broader global market, according to the company.\nSoutheast Asia is a frequent first stop for Chinese consumer brands looking to expand abroad to grow and diversify from fierce competition at home. At least 60 Chinese brands had opened 6,100 outlets in the region by the end of last year, seeking growth in a market that is aligned with Chinese culinary tastes due to its large ethnic Chinese population.\nThe overseas expansion idea isn't completely new for Zhou Hei Ya. In November 2020, the company raised HK$1.55 billion through a corporate bond issue, in part to bankroll overseas expansion. Its goal at that time was to offer its products in the market through 10,000 points of sale over the following three years.\nBut that expansion, a project under previous chief Zhang, apparently never happened. Now Zhou is trying to make up for lost time, pitching his products on social media for audiences both at home and potentially abroad. He has been livestreaming for years to promote the company's products.\nLast December, Zhou was camping when a camp stove near him blew up, leaving him burned and in bandages. Despite that, he still went live the next day on Douyin, the Chinese counterpart of TikTok. Such tenacity may be just what Zhou Hei Ya needs right now, as it tries to reclaim a prominent place at China's snack table and also spread its wings abroad.\nBenzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"corporation","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.11","shortVersion":"4.35.11","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2590590765","isCrawlerRequest":true}