Summary of Key Points
Shuangta Food was once a leader in the domestic fan industry, transforming by extracting pea protein from waste water generated during fan production. It seized the opportunity in the plant-based meat market during 2019-2020 and saw its performance soar. However, as the plant-based meat sector cooled down (with foreign brands withdrawing and local companies failing), the company faced performance challenges. Now, by divesting from its low-profit fan business and expanding into diversified areas such as overseas manufacturing, edible fungi, and AI, it is trying to reduce its reliance on pea protein and plant-based meat, though a new growth engine has not yet been established.
Detailed Analysis
1. Turning Waste Water into Gold: Turning an Environmental Burden into a Profit Source
You may have eaten Shuangta's products, but you might not know that the company made its fortune from waste water. The production of fans generates large amounts of wastewater (13-15 tons per ton of fans), which contains pea and mung bean proteins and sugars. Treating this wastewater is costly and time-consuming, a common issue in the industry. Shuangta took a different approach: it collaborated with universities to develop a technology to extract pea protein from the waste water. Initially, the protein was only suitable for use as feed, but later, they improved the process to produce edible-grade protein. This protein has many advantages—it is non-GMO, free from allergens, low in fat, and easy to digest. It can be used in solid beverages, energy bars, and pet food, and it has even become a key ingredient in plant-based meat products. In 2012, revenue from edible protein increased by 97 times, with a gross margin of 37% (significantly higher than the 25% from fans). By 2018, the protein business had replaced fans as the main source of revenue, and by 2025, protein sales accounted for 36.5% of total sales, generating an additional 200 million yuan. This transformation has turned an environmental burden into a profit driver, serving as a model for traditional companies to transform.
2. The Plant-Based Meat Boom: A Rollercoaster Ride
The high profitability of pea protein depended on the booming plant-based meat market. In 2019, Beyond Meat went public in the US, causing its stock price to soar by 163%, and domestic brands like Starbucks sought partnerships, attracting a lot of investment. Shuangta invested in plant-based meat companies such as Zhenrou and Hey Meat and launched its own products (such as golden protein chicken cutlets and beef patties) in 2020, signing deals with retailers like Yonghui and Wumart. Plant-based meat accounted for 20% of its food-grade pea protein sales at that time. However, the boom was short-lived: Beyond Meat withdrew from China, and Hey Meat's related company was shut down. Consumers found plant-based meat to be tasteless and expensive. As a result, Shuangta's performance declined in 2022, with net profits dropping by 24% and a loss of 310 million yuan, followed by another 65% decrease in 2025, leaving it with just over 32 million yuan in net profit.
3. Divesting from the Fan Business: Focusing on Higher-Margin Opportunities
In 2025, Shuangta spun off its fan business as a wholly-owned subsidiary and invested an additional 45 million yuan. While they claimed it was to "optimize the structure," the data shows that the fan business generated only 580 million yuan in revenue with a gross margin of 7.76% (almost no profit), while the dietary protein business, despite generating only 110 million yuan, had a gross margin of 60.88%. Since the fan business was its initial success, it no longer provided significant profits, so resources were shifted to higher-margin areas.
4. Diversification: Seeking New Growth Paths
Under pressure from declining performance, Shuangta has diversified:
- Overseas Expansion: It invested 450 million yuan in a factory in Thailand, where production lines are already in trial operation, aiming to reduce raw material costs and expand into the Southeast Asian market.
- Edible Fungi: The company has invested in Qingdao Huagu and acquired Mofajun Food to enter the vegetable and edible fungi cultivation and sales industry.
- AI + Digitalization: It has partnered with AI companies, aiming to become a "digital economy benchmark," but the specific ways this will integrate into its business are not yet clear. While these diversifications seem promising, they also come with risks: overseas factories face exchange rate and policy uncertainties; the edible fungi market is highly competitive; and AI transformation requires technology and talent, which may take time to yield results. Shuangta is trying to break away from its reliance on pea protein but has not yet found a new growth core.
5. Lessons for Traditional Companies
Shuangta's story offers several insights:
- Environmental Issues Can Be Business Opportunities: Turning industry challenges into competitive advantages is a good strategy for transformation.
- Booms and Busts in the Market: Relying on market trends can be risky; success during a boom can quickly turn into failure when the trend fades.
- Diversification Must Be Practical: Diversification should be aligned with existing strengths. For example, could pea protein technology be applied to edible fungi production? How can AI improve manufacturing processes? Otherwise, resources may be wasted.
Shuangta is still exploring new growth paths, but whether it can find another success story like its pea protein business depends on the ability to effectively implement these new initiatives.
This news article illustrates how a traditional company can transform by addressing industry issues, leveraging market trends, and then adapting to changes when those trends subside. Each step in this process is worth reflecting on for readers in the financial and business communities.