Good News on Listing | Frost & Sullivan Assists Fuyuan Group in Successful US Initial Public Offering (TWG.US)

Top Wealth Group Holding Limited (hereinafter referred to as 'Fuyuan Group') successfully went public on April 16, 2024. Fuyuan Group issued 2 million common shares at $4 per share, raising a total of $8 million.

During the process of listing in the US, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important sections), helping the issuer communicate with the SEC and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various SEC industry-related issues.

The company is a rapidly growing luxury caviar supplier;

The company's caviar product has obtained permission under the International Convention on International Trade in Endangered Species of Wild Fauna and Flora;

The company possesses high-quality caviar products that have been market-tested, as well as the capability for large-scale commercialization of products;

The company has a stable customer base and diversified sales channels in Hong Kong;

The company maintains a good partnership with leading enterprises in the industry;

The company has an experienced management team and a strong shareholder base.

According to a report by Frost & Sullivan:

From 2018 to 2022, global caviar production increased from about 406.4 tons to about 627.7 tons, with an annual compound growth rate of 11.5% during this period;

In 2022, China, the EU, Russia, Uruguay, the United States, and Iran accounted for approximately 45.6%, about 31.2%, about 10.1%, about 3.7%, about 3.0%, and about 2.8% of global caviar production, respectively.

The upstream includes sturgeon suppliers and caviar suppliers. Breeding sturgeon for caviar production is costly because female sturgeon take up to 10 years to reach sexual maturity under artificial conditions. Caviar exporters are usually internal export teams within caviar suppliers, responsible for preparing licenses and certificates, traceability documents, ensuring compliance with import country regulations, and following customs procedures.

The midstream includes distributors, wholesalers, and caviar importers. For caviar sold domestically, it is directly transported to distributors or wholesalers where they label and sell it to consumers. For caviar exported overseas, it is first processed and packaged locally before being exported to overseas distributors or wholesalers.

The downstream includes commercial institutions and individual consumers. Commercial institutions include: 1) the catering industry, including restaurants, bars, hotels, where caviar is served; 2) non-catering industries, including supermarkets and stores, where caviar is available for purchase in stock. In terms of individual consumers, it operates through online platforms, with customers directly purchasing caviar through these platforms.

Data source: Analysis by Frost & Sullivan

China's caviar production soared from about 135.3 tons in 2018 to about 286.5 tons in 2022, with an annual compound growth rate of 20.6% during this period. In fact, China's caviar production started with a negligible amount of about 0.7 tons in 2006 and has witnessed explosive growth over the past two decades. In 2018, China's caviar production accounted for only 33.3% of global caviar production, but by 2022, this proportion will rise to 45.6%. The European Union ranks second in global caviar production, with its output increasing from about 164.0 tons in 2018 to about 195.8 tons in 2022, with an average annual compound growth rate of 4.5%. It is expected that by 2027, it will further reach about 234.5 tons, with an average annual compound growth rate of 3.7%.

Data source: Analysis by Frost & Sullivan

According to data from the General Administration of Customs of China, the total export volume of caviar increased from about 128.5 tons in 2018 to about 266.4 tons in 2022, with an annual compound growth rate of 20.0% during this period. In fact, the export volume of caviar in 2020 was adversely affected by the COVID-19 pandemic, which hindered logistics, cross-border transportation, and labor supply. Looking ahead, it is expected that by 2027, China's caviar export volume will reach 465.6 tons, with an average annual compound growth rate of 11.8% from 2022 to 2027. In China, strict business licensing and approval procedures pose demanding requirements for emerging market participants. Therefore, as of March 2023, only six certified sturgeon farming companies have been officially authorized to export caviar products in China.

Source:Frost & Sullivan analysis

The downstream demand for caviar products is diversified, with the target customer base continuously expanding, and global consumption of caviar products has been growing rapidly year by year. During the period from 2018 to 2022, the market size increased from about $1.3817 billion to about $2.2304 billion. The growth in 2020 was relatively small because global logistics faced supply chain disruptions during the COVID-19 pandemic, resulting in a large amount of demand not being met in 2021. From 2022 to 2027, the global caviar market is expected to experience rapid growth, reaching about $4.2513 billion by 2027, with an annual compound growth rate of 13.8% during this period.

Source:Frost & Sullivan analysis

According to data from the Census and Statistics Department of the Hong Kong Special Administrative Region Government, the total import volume of caviar increased from about 20.2 tons in 2018 to about 22.3 tons in 2022, and is expected to reach about 40.6 tons by 2027. Although Hong Kong's caviar exports showed a significant decline between 2018 and 2022, there are expectations for a noticeable increase in 2023, climbing to about 8.4 tons, and it is expected to reach about 10.8 tons by 2027, maintaining a steady growth.

Source:Frost & Sullivan analysis

• Downstream consumer demands are diverse

Due to the proven excellent source of omega-3 and six types of fatty acids, as well as other vitamins and minerals, caviar has gained high recognition in the global market for its nutritional value. The diversification of downstream consumer demand has helped introduce caviar into the fields of nutritional health products, cosmetics, and pharmaceuticals. Currently, caviar is also used in products such as skin moisturizers, skin conditioners, and obesity treatment. It is expected that the application of caviar in the cosmetics and pharmaceutical fields will thrive in the coming years.

• Emerging brand trends inject vitality into the market

Currently, since most market participants are wholesalers providing raw materials for top brands, the market layout of caviar is relatively fragmented. However, due to their strong bargaining power, well-known brands earn higher profit margins from terminal retail than producers and suppliers. Sturgeon farming enterprises are expected to launch their own brands, invest more funds in brand building, and promote their products to global consumers.

• The Chinese caviar market will experience explosive growth

Driven by the modernization of aquaculture in China, the increase in sturgeon farming has spurred the domestic production of caviar. Currently, Chinese-produced caviar is one of the most affordable and high-quality options in the world, which helps the Chinese caviar cartel gain considerable market control. However, for most Chinese families, caviar remains a delicacy on the family dining table. Driven by sustained economic growth, consumers in first-tier cities in China are paying more attention to and capable of developing healthy and high-quality lifestyles. It is expected that this trend will promote explosive growth in the Chinese caviar market in the future.