Spicy Chicken Feet "Collapse" Scandal, Youyou Foods Gets Dragged In
Zebra Consumer, Chen Xiaojing
The "bleached chicken feet" incident exposed on March 15th has rapidly escalated, with Youyou Food, the "first listed company in pickled pepper chicken feet," being caught in the crossfire.
Despite the company issuing an urgent overnight statement clarifying it did not use the "hydrogen peroxide" mentioned in the report, as the leader in this niche segment, it still attracted significant attention from both within and outside the industry.
Ever since Youyou pioneered the pickled pepper chicken feet segment, industry pain points were already embedded—low entry barriers, severe product homogenization, and exceptionally fierce market competition.
According to preliminary statistics, there are currently over 600 pickled pepper chicken feet manufacturers in China, mainly concentrated in regions like Sichuan, Chongqing, Hebei, Guangxi, and Hunan. Among them, the output from the Chongqing area accounts for more than half of the national total. The massive influx of players has continuously increased survival pressure for small and medium-sized manufacturers.
In such a perfectly competitive market, Youyou Food has also encountered growth pressure, with sales of its pickled pepper chicken feet products declining year by year, already hitting a ceiling.
Against this market backdrop, small and medium-sized manufacturers risk bleaching chicken feet to improve product appearance, triggering a storm that has swept across the entire industry.
Caught in the Crossfire
After the CCTV March 15th Gala aired the "bleached chicken feet" report, it swept through the entire pickled pepper chicken feet industry. Youyou Food (603697.SH), as the industry leader and the first listed company in this segment, couldn't sit still. The company issued an urgent overnight statement, emphasizing it did not use any additives explicitly banned by the state, including hydrogen peroxide, and that its products have traceable quality control throughout the entire supply chain, attempting to stabilize market confidence.
However, the statement still couldn't fully sway market sentiment. Shortly after opening yesterday, the company's stock price fell, with intraday losses exceeding 2% at one point. After the midday break, it fluctuated within a narrow range, closing down 0.80% for the day at 11.17 yuan, with a total market capitalization of 4.777 billion yuan.
This incident mainly involves three companies: Sichuan Shufuxiang Food, Chongqing Zengqiao Food, and Chengdu Mingyang Food. CCTV reporters, through undercover investigations, confirmed that these companies are suspected of illegally using hydrogen peroxide to bleach chicken feet.
Chicken feet are the main raw material for products like pickled pepper chicken feet and braised chicken feet. The purpose of the involved manufacturers' "treatment" of chicken feet is very clear: by adding hydrogen peroxide to soak the chicken feet, they remove bloodstains and dirt to improve appearance. Additionally, it serves functions like sterilization and delaying product spoilage.
Among the three companies involved, Chongqing Zengqiao Food is relatively large, having been a national key leading enterprise in agricultural industrialization. According to reports, the sales scale of its "Guai Xifu" brand reached 400 million yuan in 2021.
Many market participants believe that after this incident, regulatory oversight will become stricter. Small and medium-sized brands, due to insufficient quality control capabilities and rising compliance costs, will gradually be phased out, potentially increasing industry concentration. As the industry leader, Youyou Food possesses the advantage of traceable quality control throughout the entire supply chain, which is beneficial for the company's long-term development.
In 1997, Youyou's founder, Lu Youzhong, spearheaded the development of pickled pepper chicken feet, creating this niche segment. Pickled pepper chicken feet have always been the company's absolute flagship product.
In 2024, revenue from pickled pepper chicken feet products was approximately 785 million yuan, accounting for 66.36% of the company's total revenue, with a gross profit margin of 31.62%.
Hitching a Ride on Sam's Club
Among snack food categories, the enduring popularity of pickled pepper chicken feet is not only due to its favored taste but also because the raw materials lend themselves easily to large-scale processing, which is another important reason.
Chicken feet consist of three parts: nails, bones, and skin. Compared to duck necks or chicken necks, there are no processing steps like removing lymph nodes, making the product more suitable for mechanized, automated production to achieve standardization.
Precisely because of this, Youyou Food quickly established a dominant position in this niche segment. In 2021, its pickled pepper chicken feet product revenue peaked at approximately 961 million yuan. However, several years later, it has still failed to break through the 1 billion yuan mark.
At the same time, the chicken feet product segment has rapidly expanded. Emerging brands like Wang Xiaolu are making aggressive moves, and braised food companies like Ziyan Food are increasing their focus on the chicken feet category, innovating in product taste, form, and production techniques. Youyou Food faces unprecedented pressure. The company's sales volume of pickled pepper chicken feet dropped from 25,044.45 tons in 2021 to 16,813.10 tons in 2024.
In response to the gradual decline in sales of its core product, Youyou Food adjusted its product structure, successively introducing skin crystal products, vegetarian products, chicken wing products, and other pickled/braised flavored meat products. However, the market performance of many new products has been mediocre. So far, only the boneless duck feet product has shown significant improvement.
To find new growth points, the company had to seek breakthroughs on the distribution channel front.
In July 2024, the company reached a cooperation agreement with Sam's Club, becoming the supplier of Sam's Club's boneless duck feet product. According to public reports, the product generated sales of 14 million yuan within a month of being listed.
After hitching a ride on this high-potential channel, the company's core poultry products business saw long-awaited growth, and its overall operating conditions improved simultaneously.
In the first three quarters of 2025, the company's poultry products (mainly pickled pepper chicken feet, boneless duck feet, etc.) achieved revenue of 1.077 billion yuan, a year-on-year increase of 47.13%. During the same period, the company's operating revenue and net profit attributable to shareholders both showed growth exceeding 40%.
But this is also a double-edged sword. As of September 2025, the company's accounts receivable were approximately 155 million yuan, a significant year-on-year increase of 107.52%.
At an investor relations event held last December, Youyou Food responded publicly, stating this is a normal situation in business operations.
Beyond the pressure of capital occupation due to payment terms, small and medium-sized investors are more concerned that the company might become a contract manufacturer for Sam's Club, lacking its own brand premium, which would in turn affect profit performance.
Regarding this question raised publicly by investors, Youyou Food did not respond directly, only emphasizing that it will leverage the integration efficiency of online and offline channels to accelerate the exploration of new channels to create incremental markets.
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