Benzinga | Jan 24, 2022 07:15AM EST

Missfresh Provides a Sales Update

Missfresh Limited ("Missfresh" or the "Company") (NASDAQ:MF), a pioneer in China's neighborhood retail industry, today announced its outstanding sales growth performance for Ready-to-Cook, Ready-to-Heat, and Ready-to-Eat products (referred to as 3R products), and its plans to further expand this category. In 2021, sales of 3R products on Missfresh's platform increased by more than 300% compared with 2020, with the gross margin for these products at least 15% above the platform's average.

By the end of 2021, more than 40% of Missfresh customers have purchased 3R products, and the repurchase rate for paid membership users was close to 70%. The strong sales of this category demonstrate consumers' growing appetite for ready meals, and a notable food consumption trend in China for 2022.

Ms. Catherine Chen, Chief Financial Officer of Missfresh, shared, "As the consumer awareness of the product category and popularity of ready meals skyrocketed in the past two years, Missfresh has invested in developing its own in-house brands of 3R products. We currently offer more than 800 SKUs of 3R meals, including 100+ SKUs of Missfresh's in-house premium line of ready meals. Missfresh plans to continue expanding its offerings of ready meals to include one-bowl meals for solo diners, hot pot dishes, and home-cooked fare with mass appeal. We expect 2022 sales growth to top 2021's figures.

"We see the ready meals offerings not just as a way to meet the 'consumption upgrade' trend (the growing demand for high-quality goods and services) among our platform users, but also as an important category to optimize our gross margins and improve profitability. We are confident that ready meals are poised to become an important driver for the Company's operational efficiency," Catherine continued.

In the lead up to the Lunar New Year celebrations in February, Missfresh has intensified efforts to launch ready meal gift boxes on its platforms (the Missfresh app and WeChat mini program). The Lunar New Year package selections include an eight-course Beijing-style cuisine gift box and a collection of nine famous dishes from the Xibei Restaurant chain -- both of which ranked among the top four products in gift box sales.

According to Askci Consulting's forecast, based on an estimated annual compound growth rate of 20%, China's ready meals market will exceed RMB 1 trillion (USD 128 billion) in the next six to seven years. In the long run, the scale of China's ready meals industry is expected to reach RMB 3 trillion (USD 473 billion). Enticed by the next "trillion-dollar food market," many food chains and retail companies have set their sights on expanding their own 3R products businesses.

Missfresh has taken a two-pronged approach to the ready-to-eat meals market. Firstly, by cooperating with well-known local brands such as Ziguangyuan, Guangzhou Restaurant, Tongqinglou Catering, and Sunya Food, the Company can adapt quickly to changing market demands and grow the ready meals sector on a targeted, regional basis.

Secondly, Missfresh has enriched its own brand matrix of ready meals by continuously upgrading its supply chain. In November 2021, the Company launched its "Missfresh Premium Dishes" in-house brand of high-end ready meals, which rapidly took off among platform users and ranked among the top three ready meals in sales.

Furthermore, Missfresh has adopted the OEM model for the production and processing of its own brands of ready meals. Ms. Tingting Wu, head of Missfresh's frozen food division, explained, "While the Company's ready meals business is still in its early stages, the OEM model helps to rapidly develop the category, enabling Missfresh to leverage the expertise and experience of multiple operators by partnering with the leading suppliers in various distinctive ready meals subcategories for the specialized and customized production of these products."