"The Cost Reduction and Efficiency Enhancement of a Lemon": Four years into Tongnan, the profit margin of the lemon planting cooperative households of Mixue Bingcheng has increased by 30% | Frontline

Author | Zhong Yixuan

Since its inception, a super product has been the dream masterpiece of every company. By achieving the ultimate in differentiation with a single product, whether in terms of price, marketing, or product strength, it can create an opening in the market.

Mixue Bingcheng's lemonade is a prime example. In the freshly made tea beverage market, it offers an unbeatable and stable low price. Lemonade has also become one of Mixue Bingcheng's best-selling major products. In 2023, Mixue Bingcheng sold over 1 billion cups of lemonade, and the purchase volume of lemons alone was approximately 115,000 tons.

A significant portion of these lemons comes from Tongnan, Chongqing. Tongnan is one of the world's three major lemon production areas and the largest lemon production area in China. Compared to Yunnan and Guangxi, the lemon planting areas in Tongnan are concentrated, and the industrial supporting facilities are complete. In addition, because they grow in red soil, the lemons here also have stronger storability. Currently, the lemon planting area in Tongnan District is 320,000 mu, with a fresh fruit output of 350,000 tons in 2023, an output value of 2 billion yuan, and an annual comprehensive output value of over 7.5 billion yuan, achieving full coverage of the entire industrial chain from seedling cultivation, standardized planting to deep processing and marketing.

Just a few years ago, due to the lack of a unified purchasing standard, local lemon farmers in Tongnan often faced the awkward situation of "not being able to sell at a good price". Before 2019, Mixue Bingcheng often had to purchase lemons through intermediate trading companies, but they soon discovered that demand and price are not inversely proportional, but rather directly proportional. When the demand is high, more than a dozen intermediaries simultaneously raise the selling price of fruit farmers, and at the highest point, the settlement price of lemons per jin rises to more than 4 yuan. In contrast, the average selling price in Guangdong in the same year is only 80 cents per jin.

But these profits do not flow into the pockets of the growers. For Mixue Bingcheng, the stability of the raw materials for its popular products is particularly important. Any fluctuation in the intermediate links such as bagging, picking, and storage of lemons will directly affect the maturity of the fruits. Moreover, the most intuitive problem is that, judging from Mixue Bingcheng's growth rate at that time, its demand has exceeded the purchasing capacity of any local trader.

In 2020, Mixue Bingcheng's wholly-owned subsidiary, Xuewang Agriculture, was established, mainly engaged in lemon purchasing and processing. Over the past four years, Xuewang Agriculture has controlled production from the source, making the lemon industrial chain more standardized, and uncovering the low-price secret behind 1 billion cups of lemonade - continuously reducing costs and increasing efficiency for lemons.

According to 36Kr, Xuewang Agriculture has currently reached a cooperative purchasing agreement with lemon planting areas totaling 150,000 mu in Tongnan. Through the introduction of technology, talents, and refined management by Mixue Bingcheng, the finished product rate of lemons in the cooperative planting areas has increased from the initial 50% to 85%, and the profit rate of some local growers has increased by 30%.

How exactly does Mixue Bingcheng reduce costs and increase efficiency for a lemon? What changes has Mixue Bingcheng brought to Tongnan and local lemon growers in the past four years?

"Cost Reduction and Efficiency Enhancement"

For Tongnan lemons, this year is not a favorable season.

Since the second half of the year, Chongqing has experienced frequent droughts and floods, and the weather has been unpredictable, which has directly affected the growth cycle of lemons. It is common knowledge that drought will affect the juice yield of lemons, and if there is too much rain, it will delay the application of pesticides and fertilizers, making lemons prone to pests.

For Lao Lu, a lemon grower in Tongnan, this might be another worrying year. In the past, when relying on the weather for a living, the impact of adverse weather on the yield and quality of lemons would inevitably be reflected in the profit of each lemon. But after the arrival of Xuewang Agriculture, sales and purchase prices are no longer issues that Lao Lu worries about.

36Kr has learned that currently, Xuewang Agriculture has established cooperation with 150,000 mu of orchards in Tongnan, including 30,000 mu of core orchards. Xuewang Agriculture will purchase all the lemons from these orchards at the guaranteed base price, accepting all the products for sale, and the price is "set at the higher end rather than the lower end". In addition, Xuewang Agriculture also actively promotes order-based agriculture, providing quality requirements such as weight and fruit surface to farmers, and setting prices according to different fruit grades. The better the lemons are grown, the higher the selling price will be.

In the past, like all traditional agricultural plantings, some Tongnan growers adhered to a one-size-fits-all strategy, using the same planting plan for several years. Before the arrival of Xuewang Agriculture, the average finished product rate of local lemons was only about 50%, and the production efficiency was not high.

Xuewang Agriculture deeply participates in the important agricultural seasons of lemons. At different growth stages of lemons, such as pruning, picking, and fruiting, it provides targeted suggestions to growers at each stage. Batch picking is one example. Previously, when Tongnan growers sold lemons to local purchasers, the Purchasers only pursued short-term efficiency and required all the fruits to be loaded into the vehicle at the same time, which led to a mixture of large and small fruits. If the small fruits were underweight, they might not be able to be sold at a good price, resulting in waste. But after the arrival of Xuewang Agriculture, it suggests that farmers pick the fruits according to the grading standards, and the lemons that meet the Grade A standard are picked first to maximize the elimination of differences in the growth cycle of lemons. Last year, the finished product rate of lemons in the cooperative planting areas of Xuewang Agriculture in Tongnan has reached 85%.

In addition to improving the finished product rate and enhancing the standardization of the lemon industry, the cost reduction of Xuewang Agriculture occurs in various aspects.

After picking and removing the bags from the trees, before storage, in order to delay the loss of moisture, each lemon needs to undergo another bagging process. Judging from the current fresh fruit throughput of Mixue Bingcheng, bagging more than 100,000 tons of lemon fruits will require an unimaginable amount of manpower and time. At least 1,500 people need to work simultaneously. Recognizing this problem, Xuewang Agriculture has realized mechanized automatic bagging through technical means. Currently, only 40 workers are needed for the bagging project of these more than 100,000 tons of lemon fruits.

After bagging, the next step is a long period of fresh-keeping storage. In the early days, Xuewang Lemon did not have its own freezer. During the lemon picking season, it had to borrow freezers everywhere. However, due to the substandard conditions of the rented freezers, the lemons picked in October could only be stored until August of the following year at most, and the lemon supply for the remaining months had to be supplemented by fruits from other provinces and overseas. In order to reduce the spoilage rate of lemons, Xuewang Agriculture has established a 120,000 cubic meter freezer, which can achieve low-temperature refrigeration of lemons and use storage bagging technology to extend the freshness period of lemons.

Soon, by reducing the spoilage rate of lemons, the cost of building the freezer has been recovered. 36Kr has learned that in 2020, the spoilage rate of lemons was still around 7%, and this year, the average spoilage rate has been reduced to 1.4%.

In addition, Xuewang Agriculture also helps fruit farmers uniformly order necessary items such as paper bags and fertilizers required for lemon planting. The price advantage brought by large-scale purchasing is 10% cheaper than what farmers buy in the market on their own.

The "cost reduction and efficiency enhancement" of each lemon not only enables Mixue Bingcheng to achieve an extremely low price that is different from other tea beverage brands, but also brings the most substantial benefits to the growers. "After Xuewang Agriculture came to Tongnan, the biggest change is that the profits are given to the farmers. The profit margin of selling lemons to Xuewang Agriculture has increased by about 30% compared to before," Lao Lu exclaimed to 36Kr.

A Lemon Bringing Common Prosperity

Yaha Village is located in Tongnan, Chongqing. When the Eureka lemons are harvested, the village will be extremely busy.

In the afternoon, 46-year-old Lao Zhai is leading 25 fellow villagers to pick lemons. Each person has a pair of scissors and holds up three fingers. If the size is right, they cut along the position above the fruit stalk with force, and the golden lemons quickly fall into the bags. From here, the lemons end their journey on the trees and officially embark on the adventure of becoming a cup of lemonade.

Grandma Chen, who is over 60 years old, said that in the past, she stayed in the village and occasionally planted some kohlrabi, relying on the weather for a living with a meager income. Now, after becoming a "lemon picker", she has a stable income. In the countryside, such employment opportunities are already very rare.

Over the past four years, the massive lemon orders from Xuewang Agriculture have not only driven the large-scale development of the lemon industry in Tongnan but also brought great employment opportunities to the local area.

In 2017, Li Zhi switched from the construction industry and returned to his hometown to become a lemon grower. He has been cooperating with Xuewang Agriculture for four years. Now, Li Zhi manages a 1,500-mu lemon orchard and also operates the Xingmeng Fresh Fruit Sorting, Processing and Storage Base jointly established by the economic cooperatives of seven villages including Tianchi Village and Yaha Village, Mixue Bingcheng, and Chongqing Yuxin Agriculture. While promoting the systematization and standardization of the lemon production and sales system, it also provides a large number of jobs for the local area. Every October during the lemon picking season, in the lemon processing factory in Baizi Town, Tongnan, which Li Zhi is in charge of, at most, 500 local villagers will simultaneously carry out lemon unpacking, boxing, and other tasks.

This young man has also witnessed the changes in the lemon production area in Tongnan over the years. "The lemon industry has always existed in our local area, but in the past, it was like 'millet plus rifles', with only very simple processing factories and no automatic sorting equipment, and it was very scattered," Li Zhi said.

Now, more and more young people have seen the opportunities brought by lemons and have returned to their hometowns to start businesses. The addition of young blood has also brought new ideas to the local lemon planting industry. Li Zhi found that in recent years, the intelligent sorting equipment and management of local lemon factories have improved by many levels compared to before. This year, Li Zhi's factory has also added a new automated production line, and his business has also expanded. He has begun to undertake pre-processing work such as lemon sorting for Mixue Bingcheng.

And the opportunities brought by a lemon are far more than that. Although the lemon industry in Tongnan has a solid foundation, there is still room for improvement in aspects such as agricultural machinery equipment, fresh-keeping technology, and talent cultivation. Taking Li Zhi's orchard as an example, in order to ensure that the lemons "eat well" and "drink enough" during the growth process, it is necessary to carry out the transformation of agricultural materials and equipment such as integrated water and fertilizer application and unmanned aerial vehicle spraying, which requires a large amount of investment. In addition, with the expansion of the planting scale and the advancement of refined management, industrial talents who understand planting and have technical skills have increasingly become an important factor restricting the high-quality development of the lemon industry.

36Kr has learned that for this reason, Mixue Bingcheng launched the "Public Welfare Project to Support the High-Quality Development of the Lemon Industry" in October this year. The project plans to invest 5 million yuan in the first batch and will cooperate with domestic first-class agricultural colleges to support lemon technology innovation and the transformation of scientific research results, carry out work such as the cultivation of improved lemon varieties, fresh-keeping technology research, and the cultivation of industrial talents, and focus on solving common problems. In addition, Xuewang Agriculture will continue to support the high-quality development and brand building of the lemon industry in Tongnan, carry out professional training, upgrade agricultural machinery equipment and intelligent management in lemon bases, improve the technical level of large lemon growers, cultivate new farmers, and deeply participate in the revitalization of rural industries.

The small lemon still has great potential.