Core Summary
This news article focuses on the development of domestically produced Western-style compound condiments (such as salad dressings, ketchup, and marinades) in China. The industry began with foreign brands dominating the market in the 1980s, but it saw a shift when local, affordable Western fast-food chains (such as Wallace and Tasting) expanded rapidly, leading to the rise of Baili Food as the industry leader. However, these companies generally face structural issues such as over-reliance on supplying restaurants (B2B market) and a weak presence in the consumer (C2C) market. While some companies (like Baoli Food) have successfully diversified into the C2C market, Baili is still working to improve its shortcomings.
1. How did domestic Western condiments emerge during the foreign monopoly era?
In the 1980s, when KFC entered China, Western condiments like salad dressings and ketchup were dominated by foreign brands such as Hi-Chew, Kraft, and Wise-Me. Domestic companies had little influence, whether in restaurant procurement or supermarket retailing. As Western-style dining became more popular, there was a growing demand for localized supply chains, which prompted domestic companies to start making inroads:
- In 1998, Baili's predecessor began producing breadcrumbs; in 2001, Richen started making sauce seasonings, and Baoli supplied coating materials to KFC.
- During this period, domestic companies shifted from copying foreign technologies to developing their own products, but due to the limited demand for Western food, their market share was still small compared to Chinese condiments.
- It wasn't until 2007 that Baoli became a direct supplier to PepsiCo (KFC's parent company), and in 2008, Baili supplied products for the Olympics, although its sauce business had not yet taken off.
2. The expansion of local fast-food chains boosted domestic condiment sales
In 2012, Baili separated from its parent company to focus on Western compound condiments, with salad dressings as its core product. Instead of competing directly with foreign brands in supermarkets, it partnered with rapidly growing local affordable fast-food chains (such as Wallace, which had over 3,000 stores at the time, and Tasting, which was just opening its first store).
As these chains expanded, they needed a stable supply of condiments. Baili leveraged customized formulas, affordable pricing, and nationwide distribution to secure their business, leading to significant growth:
- Revenue increased from 1.6 billion yuan to 2.1 billion yuan between 2023 and 2025, with net profit rising from 220 million yuan to 320 million yuan, of which sauce products accounted for about 80%.
- Baoli and Richen also saw growth, with revenue increasing by 10.66% (to 2.9 billion yuan) and 15.7% (to 468 million yuan), respectively.
Baili is now seeking to raise funds on the Beijing Stock Exchange to expand its production capacity due to insufficient capacity.
3. Baili becomes the industry leader, but others benefit too
In 2023, Baili surpassed Hi-Chew in the Western compound condiment market and has since maintained its leading position as the largest domestic company in this sector. Its competitors also benefited from the expansion of local fast-food chains:
- Baoli's net profit increased by 12.59% last year, and Richen's by 31.87%.
4. Hidden risks: Over-reliance on restaurants can hinder growth
These companies have a common issue: they rely heavily on supplying restaurants (B2B market) and struggle in the consumer (C2C) market. They face two main risks:
- Customer concentration: Baili's top five customers account for 17% of its revenue, mainly from Wallace and Tasting. If these chains close down or cut costs, Baili will be affected.
- Product diversity: 80% of Baili's revenue comes from sauces, leaving it vulnerable to market fluctuations since other products (such as powders and ready-to-eat ingredients) are less profitable.
Additionally, since their supplies are customized for restaurants, they cannot easily raise prices when raw material costs increase, resulting in declining product prices (e.g., sauce prices dropped from 9.79 yuan/kg to 9.76 yuan/kg). Jiahe Food, which previously focused on tea milk ingredients and suffered due to changes in the tea milk industry, is a cautionary tale: relying solely on the B2B market without a C2C presence increases risk.
5. Diversifying into the consumer market: Some succeed, others struggle
To mitigate these risks, leading companies are entering the C2C market with various strategies:
- Baoli Food: It diversified into C2C products several years ago, launching popular “air-fried noodles” and selling sausages and soups. Its online revenue accounts for over 30%, with a gross margin of 55%, demonstrating strong resilience through a balanced B2B and C2C approach.
- Baili Food: It also launched household products like jam and red beans, but with limited success—online revenue in 2025 was only 61 million yuan, accounting for less than 3% of total sales. Baili still needs to improve its presence in the C2C market.
This news highlights that while domestic Western condiments have benefited from the B2B market, sustained growth requires addressing weaknesses in the C2C sector. Otherwise, any issues with the restaurant industry could impact these companies as well.