The context: KFC, which is owned by Yum! Brands, entered China in 1987. Though the rest of the company put their energy into Pepsi, KFC took off in China. The franchise expanded to over 7,900 outlets, spanning 1,600 cities as of 2021.
- Yum China was spun off from the main brand in 2016. It began looking for local suppliers to reduce costs. Cue Baoli’s entrance and growth alongside Yum China.
- Among the largest stakeholders is Hosen Capital, a big food-sector private equity firm backing major Chinese consumer brands such as hot pot chain Haidilao and spicy snack company Weilong Latiao. In 2020, Hosen acquired 11% of Baoli Food for 96 million yuan ($15 million).
- Funds from the IPO will go to the construction of a manufacturing base in Jiaxing, Zhejiang, an IT center, and to replenish capital.
The takeaway: Yum China, Baoli’s biggest customer, has had a slower economic recovery amid supply chain disruptions and lockdowns throughout the course of 2021. Yet the long-term growth prospects of China’s food industry are still rosy. By diversifying into prepared meals Baoli is responding to a rise in direct-to-customer (DTC) options spurred on by the pandemic.