Source | Dongjian New Research Institute

Can you recall the last time you used your household soy milk maker?

Three decades ago, Joyoung pioneered the soy milk maker category with the world's first fully automatic household soy milk maker, catalyzing the birth and growth of the small appliance industry.

However, by 2024, Joyoung's rapid ascent has finally stagnated. In the third quarter of this year, Joyoung reported its first quarterly loss since going public in 2008. Prior to this, Joyoung had experienced three consecutive years of declining net profit, starting from 2021.

Is it the soy milk maker that's failing, or is it Joyoung?

01 Joyoung Loses Momentum

In 1994, Wang Xuning, Joyoung's founder, created the "world's first motor-on-top soy milk maker" due to his love for soy milk. This machine could transform beans into soy milk in just 15 minutes, inspiring Wang to embark on a soy milk maker venture and establish Joyoung Electric Appliances.

To broaden the appeal of soy milk makers, Joyoung set up a specialized soy milk nutrition research room, gathering information on soy milk's benefits from medical texts like the "Compendium of Materia Medica" and "Shen Nong's Herbal Classic," categorizing them by medicinal properties, and printing brochures for distribution in busy areas. Simultaneously, Joyoung collaborated with over 500 media outlets to promote nutritional knowledge about soybeans and soy milk.

With its forward-thinking market awareness, Joyoung swiftly gained user recognition for its products, paving the way for a smooth early development. By 1999, Joyoung soy milk makers had achieved annual sales of 400,000 units and an annual output value of 120 million yuan.

As the business expanded, Wang Xuning founded Shandong Joyoung Small Appliances Co., Ltd. in 2002, aiming for diversified operations. However, soy milk makers remained Joyoung's primary revenue source. Two years later, annual sales of Joyoung soy milk makers surpassed 1 million units, reaching over 2 million units in 2005.

In 2007, Joyoung was restructured into a joint-stock company and invested nearly 100 million yuan to secure a post-news slot advertisement on CCTV's "Xinwen Lianbo." Additionally, it partnered with nine major retail chains, including Walmart, Carrefour, RT-Mart, GOME, and Suning, to host on-site experiential promotions. This synergy led to annual sales of Joyoung soy milk makers exceeding 5 million units, at one point accounting for 80% of the market share.

The image of Joyoung soy milk makers was deeply ingrained in people's minds. Riding on this success, Joyoung successfully listed on the Shenzhen Stock Exchange in 2008 with a market value exceeding 13.8 billion yuan, making Wang Xuning's net worth surpass 4 billion yuan.

However, after Joyoung's total revenue surpassed 10 billion yuan, peaking at 11.224 billion yuan in 2020, the company entered a downward spiral.

Since 2021, Joyoung's revenue and net profit have continuously declined for three consecutive years.

The 2023 annual report reveals that Joyoung's revenue was 9.613 billion yuan, a year-on-year decrease of 5.54%; net profit attributable to shareholders was 389 million yuan, a year-on-year decrease of 26.58%.

Entering 2024, Joyoung's performance has shown no signs of improvement, particularly in the third quarter of this year, when the company incurred its first quarterly loss since listing.

Joyoung's third-quarter report indicates that revenue for the first three quarters of this year was 6.182 billion yuan, a year-on-year decrease of 8.84%; net profit attributable to shareholders was 98.0639 million yuan, a year-on-year decrease of 73.02%; and net profit after deducting non-recurring gains and losses was 130 million yuan, a year-on-year decrease of 61.62%.

In the third quarter alone, Joyoung's revenue was 1.795 billion yuan, a year-on-year decrease of 27.12%; net profit attributable to shareholders was -77.3287 million yuan, compared to 116 million yuan in the same period in 2023.

In contrast, competitors have widened the gap with Joyoung.

Industry giant Midea consistently maintains steady progress regardless of external conditions, with net profit attributable to shareholders increasing by double digits year-on-year in the first three quarters of this year. Similarly, in the small appliance sector, Supor's net profit attributable to shareholders in the first three quarters increased by only 2.2% year-on-year, but its total profit still amounted to 492 million yuan, maintaining a solid foundation.

Moreover, companies like Bear and Xinbao have limited growth in operating performance but remain profitable.

02 No More Blockbusters

Joyoung's development is intimately tied to soy milk makers. Currently, it finds itself in a dilemma, largely due to soy milk makers.

When Joyoung planned to list on the Shenzhen Stock Exchange in 2008, the primary risk highlighted in its prospectus was "reliance on a single product." Soy milk makers were the mainstay of the company's revenue and profits, accounting for roughly 40-50% of total revenue, and market demand for soy milk makers was still steadily increasing. At that time, Joyoung occupied over 80% of the soy milk maker market share.

However, as market demand evolved, the soy milk maker market gradually cooled down after its heyday. A research report by Shenharbor Securities indicated that soy milk maker sales declined by more than 20% from 2015 to 2018.

Joyoung is well aware of its shortcomings and hopes to dilute its soy milk maker label by exploring other product categories. In its 2015 financial report, Joyoung specifically emphasized the strategic and brand enhancement transformation from "Joyoung = soy milk maker" to "Joyoung = quality lifestyle small appliances."

Therefore, centering around soy milk makers, Joyoung established a product line of food processors. Within the framework of its small appliance business, it also boasts product lines such as nutritious cookers and Western-style appliances.

In recent years, Joyoung has continued to expand its product lines, including cookware, cleaning appliances, and lifestyle appliances, venturing into electrical appliances it had not previously explored, such as water purifiers, water dispensers, and floor washers.

However, none of these product lines have produced a blockbuster capable of sustaining a second growth curve. Soy milk makers remain the backbone of Joyoung's performance.

From a macro perspective, the small appliance market encompasses numerous categories, each developing at a different pace. Different products have varying life cycles and development stages, making it challenging to achieve the scale effect seen in major appliances and produce blockbusters.

For instance, in 2019, the growth of the small appliance market was concentrated in personal care products. From 2020 onwards, the focus shifted to cleaning appliances and personal care appliances. Furthermore, influenced by the stay-at-home economy during the 2020 pandemic, multi-functional kitchen small appliances gained popularity. According to unofficial statistics, there are up to 13 categories of kitchen small appliances.

Evidently, the demand for small appliances has evolved, transitioning from personal care to cleaning appliances and then to kitchen small appliances. The supply side is highly sensitive to fluctuations in market demand, presenting an industry landscape characterized by rapid changes. Once the novelty wears off, interest in small appliances gradually wanes.

Taking kitchen small appliances as an example, AVC Revo's 2023 omnichannel push data shows that the industry's total retail sales were 54.93 billion yuan, a year-on-year decrease of 9.6%; online retail sales were 42.2 billion yuan, a year-on-year decrease of 10.7%; and offline retail sales were 12.7 billion yuan, a year-on-year decrease of 6.0%.

In its 2023 annual report, Joyoung warned of risks, stating that "some new manufacturers are also trying to enter this field. As new competitors join, market competition will intensify, potentially leading to a decrease in the profit margins of the company's products."

03 How to Break the Impasse?

To overcome challenges, companies typically adopt two strategies: one focuses on product development, involving technological research and development to introduce revolutionary products and regain market competitiveness; the other emphasizes marketing, particularly in a competitive market, where internal efficiency is improved, and external marketing strategies are employed to expand sales leads and gain user recognition.

Joyoung has always prioritized research and development. Even as revenue continued to decline after 2020, Joyoung's annual research and development expenses maintained a certain level of growth, with expenses of 346 million yuan, 357 million yuan, 390 million yuan, and 389 million yuan from 2020 to 2023, respectively.

Apart from enhancing the performance of products such as rice cookers, blenders, and air fryers, Joyoung also continues to invest in its "originating work" – soy milk makers. In 2022, the development of "intelligent self-cleaning soy milk makers" was listed as a major research and development project in the financial report.

At Joyoung's 30th-anniversary new product launch event this year, the concept of "paying tribute to great little problems" was introduced, emphasizing solving "little problems" through research and development to enhance user experience. However, in practice, Joyoung has occasionally deviated from this path.

A case in point is Joyoung's steam rice cooker with a water tank. This product somewhat revolutionized traditional rice cooker technology and design. However, for users, this product is not only slightly more expensive but also more complex to use, requiring regular maintenance and cleaning of steam pipes and the inner pot, or it may lead to malfunctions or shortened service life.

From the perspective of the small appliance industry, users' attitude towards small appliances is more akin to "trying something new." Once the novelty wears off, the frequency of use significantly decreases. Merely solving "little problems" is insufficient to reignite interest and enthusiasm for small appliances, let alone increase product usage frequency and applicable scenarios, or establish a competitive barrier for the brand.

As for marketing, Joyoung also seems to have missed the mark.

When Joyoung was first established, it created a soy milk nutrition research room to first capture market awareness and then drive product sales. On the eve of its listing, Joyoung leveraged a post-news slot advertisement on CCTV's "Xinwen Lianbo" and robust on-site experiential activities at retail chains to propel the brand to its peak.

In retrospect, Joyoung's previous marketing strategies were both innovative and bold, still relevant today. However, faced with new sales channels and diversified sales methods, such as online and offline sales, content e-commerce, and live streaming, Joyoung lost its focus.

This year, Joyoung's primary marketing theme has been "Space Technology Changing the Kitchen," extending the technological prowess of Joyoung's products on the Shenzhou spacecraft to other product lines.

Ordinary consumers may find "space technology" intriguing, but once the novelty fades and they return to real life, consumers will ultimately evaluate whether the product's price matches its quality and whether the actual experience can enhance their lives' efficiency and convenience.

Upon comparison, with a "mastering a particular skill" mindset, users still primarily purchase Joyoung's soy milk makers.