In the name of organic, with a business of private labeling: How solid is the IPO of infant food brand "Grandpa's Farm"?

```

Parental anxiety is pushing infant and toddler supplementary food brands en masse into the capital market.

Recently, Grandpa’s Farm International Holdings Limited (hereafter referred to as "Grandpa’s Farm"), a baby and toddler snack brand, officially submitted a prospectus to the Hong Kong Stock Exchange.

Prior to this, industry leader Yingshi Holdings Group Co., Ltd. (hereafter referred to as "Yingshi Holdings") had also launched an IPO sprint at the Beijing Stock Exchange.

So-called infant and toddler supplementary food mainly refers to energy supplementation sources such as fruit puree and rice flour for infants over six months, other than breast milk, and has become an indispensable part of child-rearing in many families.

Although the overall revenue of Grandpa’s Farm is less than half of industry leader Yingshi Holdings, by focusing on segmented areas such as “organic”, it has successfully used consulting firm data to capture several “#1 in GMV” titles.

The most eye-catching part of Grandpa’s Farm’s financial performance is the 58.8% gross profit margin in 2024.

This high gross profit space is supported by Grandpa’s Farm setting higher prices for its products, leveraging “organic” and other unique qualities.

However, consumers’ perception of Grandpa’s Farm as “premium” is now facing challenges from a homogenized supply chain.

Xinfeng has noted that the entrusted manufacturer of Grandpa’s Farm’s “organic walnut oil” is Liaoning Shengmai Industrial Co., Ltd. (“Shengmai Industrial”), which is also the same supplier for similar products from its competitor Yingshi Holdings.

Now the core supplementary food category of Grandpa’s Farm is facing declining income, and the company is trying to expand its business boundaries to “cover the whole family’s dining table” by launching family foods such as liquid milk, rice, and condiments.

Although this business generated 153 million yuan in revenue in the first three quarters, doubling year-on-year, this strategy also pushes Grandpa’s Farm into a much more fiercely competitive red ocean market.

With this IPO application, Grandpa’s Farm will face even stricter market scrutiny.

Champions in the "Qualifier"

In recent years, as the concept of precise feeding has become entrenched, infant and toddler supplementary food has gradually entered the public eye.

In 2024, the penetration rate for infants and toddlers aged six months to six years reached 43.3%, and is expected to reach 52.2% by 2029.

Grandpa’s Farm has targeted this niche market, launching its first infant supplementary food product in 2018, and by the end of September 2025 its product portfolio will cover 269 SKUs.

In 2024 and the first three quarters of 2025, infant supplementary food contributed 576 million yuan and 418 million yuan in revenue to Grandpa’s Farm, accounting for more than 50% of total revenue each period.

On the basis of this business, Grandpa’s Farm has delivered an impressive segmented market report card in its prospectus, making a name for itself in the industry by leveraging a series of "qualifiers".

Even though Grandpa’s Farm admits: “Based on total GMV of infant supplementary foods in China, it ranked second in the industry in 2024,” it still cited data from Frost & Sullivan and CIC showing several “#1” placements: In China’s organic infant supplementary food sector in 2024, its GMV ranked first; in infant seasoning supplements, it also took the top spot; and in the even more vertical category of infant supplement oils, it was GMV champion three years running (2022-2024) in China.

From these dimensions, Grandpa’s Farm seems to have planted victory flags in multiple high-value segments.

However, when looking at the panorama beyond these “niche tracks,” one finds that the halo of “segment No.1” is not enough to hide the shortcoming of overall scale.

In 2024, Grandpa’s Farm’s revenue was 875 million yuan, while Yingshi Holdings' revenue for the same period reached 1.974 billion yuan.

This means Grandpa’s Farm’s annual revenue is not even half that of Yingshi Holdings.

In fact, this is a common trait in current Hong Kong IPO projects, where many companies add various qualifiers to their prospectuses to “raise their profile.”

For example, Tongshifu, which is sprinting toward a Hong Kong IPO, had total revenue of 571 million yuan in 2024, less than industry peer Zhu Bingren Copper’s 620 million yuan.

To highlight its market position, Tongshifu limited the industry scope to cultural and creative handicrafts: by revenue at the end of 2024, Tongshifu ranked first in China’s copper cultural and creative handicraft market.

This practice of achieving “#1” by setting a segmented field is under scrutiny by Hong Kong regulatory authorities.

In December last year, the Hong Kong SFC and the Exchange jointly issued a rare letter to IPO sponsors, pointing out that some IPO sponsor materials were of poor quality and inadequate review, such as selectively presenting industry data to exaggerate the applicant’s market status.

“Many Hong Kong IPO projects cite third-party data to package their market position – not just data from industry organizations, but also packaging of business narratives, such as chat software claiming its paid services deliver emotional value, or jumping on the AI bandwagon,” an investment banker in Beijing told Xinfeng.

OEM "Collision"

Although its revenue scale lags behind industry leaders, Grandpa’s Farm’s gross profit margin remains impressive.

In 2024, Grandpa’s Farm had a gross profit margin as high as 58.8%, basically level with Yingshi Holdings.

The direct source of high gross profits is high terminal pricing.

Unlike some domestic brands that focus on value for money, Grandpa’s Farm has shown high confidence in its pricing strategy. For example, on e-commerce channels, a 225g pack of "organic fortified iron rice cereal" under the Grandpa’s Farm brand sells for 67.2 yuan, or roughly 0.3 yuan per gram;

By comparison, a similar 258g premium product from Yingshi Holdings sells for 53.7 yuan, or only about 0.2 yuan per gram.

This means that Grandpa’s Farm’s unit premium is as much as 50% higher than Yingshi Holdings on comparable products.

The confidence behind the high price comes from an accurate grasp of the consumption psychology of new-generation families.

With the rise of the "precision feeding" concept, many parents have strict requirements for the ingredient lists of children’s products.

As such, Grandpa’s Farm binds its core brand asset to keywords such as “organic,” “healthy,” and “no unnecessary additives,” catering to the psychology of many families.

“In fact, this is also a way to filter out price-sensitive people, allowing it to maintain top-level profitability even without scale advantage,” an investor who closely follows the consumer sector pointed out to Xinfeng.

Since last year, Xibei Restaurant, which became embroiled in a public spat with Luo Yonghao over pre-made dishes, has also grasped this well.

Xibei once successfully positioned itself as a “second cafeteria” for urban families with the slogan “If you have a baby at home, eat at Xibei.” Data shows that in 2024, Xibei sold over 40 million children’s meals, serving over 200 million family diners.

As such, for Grandpa’s Farm consumers, what they buy is not just rice cereal and oil, but also a psychological comfort to alleviate parenting anxiety.

However, although Grandpa’s Farm tries to promote its “premium quality” far above its peers, the awkward reality is that its and its competitors’ products come from the same production line.

The prospectus reveals a key fact: Grandpa’s Farm did not build its own factory, but instead commissioned third-party manufacturers to produce almost all products under the OEM model.

Xinfeng checked product information and found that the entrusted manufacturer for Grandpa’s Farm’s “organic walnut oil” is Shengmai Industrial.

In fact, this supply chain overlaps directly with its biggest rival Yingshi Holdings, whose comparable organic walnut oil is also OEM-made by Shengmai Industrial.

As the "premium" veil is gradually lifted, revealing a homogenized supply chain, whether Grandpa’s Farm's high premium is sustainable is becoming uncertain.

In fact, fewer people are willing to pay for high premiums.

In the first three quarters of 2025, Grandpa’s Farm’s supplementary food products achieved revenue of only 418 million yuan, a 2.75% decline from the same period the previous year.

In response, Grandpa’s Farm is shifting its thinking, from “feeding babies well” to “covering the family dining table.”

Currently, Grandpa’s Farm is developing family foods, including liquid milk, convenience foods, rice, and condiments.

In the first three quarters of 2025, family food revenue reached 153 million yuan, more than doubling year-on-year.

"By comparison, the family food market is larger in size, has higher consumption frequency, and is more resilient to economic cycles. Entering this wide category will help the brand break through the growth ceiling of its original niche track and build a more sustainable long-term growth curve,” according to Grandpa’s Farm.

However, some consumer industry insiders believe the adult food market is a highly competitive red ocean with extreme price sensitivity, and whether the company can replicate its success in the infant supplementary food track faces substantial challenges.

Without focusing on “parenting anxiety” anymore, whether Grandpa’s Farm can continue to win over savvy consumers remains to be seen.

Risk Disclosure and DisclaimerThe market carries risks, investment should be done cautiously. This article does not constitute individual investment advice, nor does it take into account the unique investment goals, financial status, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular situation. Investment decisions based on this are at your own risk.

```