As the leading manufacturer of bakeware in Asia, more than 80% of the baking molds in Taiwan are produced by SANNENG. How did the second-generation proprietor Chang Chih-Hao apply crisis awareness to overcome the thinking of conventional manufacturers to facilitate product and marketing innovation, and achieve a record high revenue amid the pandemic since the Company became a public company?
Inside the factory in Dali Industrial Park, Taichung, after the production line employee places the aluminum alloy plate into the hydraulic press, a bread baking tray was formed in no time. This is SANNENG Bakeware Corporation, the largest bakeware manufacturer in Asia.
The Company’s bread pans, baking trays, cake molds, bread tongs, and other bakeware are exported to 36 countries globally. In Taiwan, 80% of the baking industry uses the Company’s products, from the affordable Hankyu baking industry and Donutes Coffee & Cake Baking to the SAKImoto baking industry’s premium NT$100 toasts.
EPS of over NT$3 for 3 consecutive years
In 021, the company’s consolidated revenue exceeded NT$2 billion, a record high since listing. Although in the past two years of the most severe epidemic, the price of baking utensil materials has risen sharply, and many bakery industry players have been affected by the epidemic and their profits have declined, Sanneng still bucked the trend and handed over EPS (net profit after tax per share) of more than 3 yuan for three consecutive years. The key to making this Asian baking mold king maintain stable profits and create a new peak of performance at the time of rising international raw materials is the crisis awareness of the second-generation successor of Sanneng .
Back in 2014, Chang Jui-Jung, the chairman of SANNENG, decided in the board of directors meeting to announce that the Company would become a public company and join the capital market. At the time, his son Chang Chih-Hao did not agree with his decision. “It is as if the air froze during the meeting and everyone became silent because I was the only one who objected to the decision. I didn’t think the Company was ready at the time.”SANNENG Group marketing director Chang Chih-Hao stated his reason for determining to push for transition at the time during an interview with “Business Today”.
Although SANNENG is a leader in bakeware, he was concerned that since 80% of SANNENG’s products are sold through distributors, the Company would be less sensitive towards the terminal market and neglects the feedback of end users in the long run. In 2018, SANNENG’s unaudited revenue declined by 6.35%, of which the Taiwan market declined by about 20%; these statistics set Chang Chih-Hao’s alarm bells ringing.
“In the past era, manufacturers used whatever products they produced, and if they were not good to use, they would see if there were suitable products abroad, and Sanneng probably saw this problem and decided to change,” Wu Baochun, a well-known baker, observed.
The key to transitioning is to shatter the conventional thinking of manufacturers and introduce the spirit of proactively understanding the users’ needs from the service industry.This is easier than it sounds because changing someone’s thinking is no mean feat. In 2018, SANNENG launched a new brand SANNENG Premium by investing nearly NT$10 million to develop the first carbon fiber chef’s knife with antibacterial benefits. The Company also spent NT$2-3 million in marketing expenses and sent the new product to numerous renowned chefs.But, at over NT$3,000 a piece, the knife costs 2-3 times that of conventional products, so it did not sell well.
“The product did not fly off the shelves and the chairman constantly asked why the sales performance was so poor.” Chang Chih-Hao said with a wry smile. This experience also made him realize that it is necessary to comprehend the users’ pain points to strike a balance between brand value and sales.Subsequently, Chang Chih-Hao decided to seek advice from 100 bakers who have used bakeware for a long time. After spending a year interviewing frequent international award-winning bakers including Wu Pao-Chun, Chen Yao-Hsun, and Wang Peng-Chieh, he made improvements to over 50 products.
For instance, previously, SANNENG’s proofing box was made of opaque material, meaning that the baker needs to rely on his experience to determine the fermentation state, resulting in a higher scrap rate if not careful.
In light of this, the Company not only changed to a transparent material for the proofing box but also added a scale for the users’ convenience. Moreover, the Company launched a series of products such as fermentation cloth and dough flipping board, successfully doubling sales growth. The new products generated a turnover of NT$ 33 million in 2021 alone, double that of 2020.
Listen to the customers’ voices to facilitate a transition
For example, in 2019, SANNENG improved the existing bread pan products and introduced a dark non-stick coating to the box’s exterior to shorten baking time and enhance moisture retention. The Company also customized various mold shapes for different customers. Surprisingly, the products became an instant hit, and despite the 20% higher price tag, 660,000 boxes were sold in the last 2 years, generating close to NT$100 million in sales. “Making adjustments is not difficult, but the company adopted a manufacturer’s thinking in the past and never thought about listening to the voice of customers.” Chang Chih-Hao expressed his feelings about this journey.
“SANNENG’s transition introduces differentiation to bakeware products, giving toasts and pineapple cakes different shapes. This was simply impossible in the past.” Commented Hsu Chin-Yen, the second-generation proprietor of Grate Riches Food, the largest pineapple cake OEM factory in Taiwan.Rather than only optimizing the product based on users’ needs, Chang Chih-Hao also plans to expand product reputation and sales through opinion leaders. The innovative idea was conceived in 2019 by Wang Peng-Chieh, winner of the Master de la Boulangerie award when he visited the Sweet Heng baking industry in Singapore.
“At that time, they were distressed, there was a high and low difference after the bread fermented, which affected the appearance, Wang Pengjie suggested that they use our products, and they didn’t expect that the other party placed millions of orders without saying a word!” This experience also made Zhang Zhihao find that through word-of-mouth marketing, it is easier to build trust with customers than business and distributors. “I hope to create a baking ecosystem, where masters want to compete abroad and further their studies, and Saneng can provide equipment and even sponsorship, and when they affirm this product, they will become our best spokesperson, so as to create a win-win situation.”
Although there is a solid base of corporate customers, Zhang Zhihao does not hide that the epidemic has made the home baking market bigger and bigger, and how to break into every family and further expand the proportion of household goods revenue is the next challenge that Sanneng will face.