Click to read the original text for details 2021 has already passed more than half. Looking back at the past half year, what has happened in the industry? Recently, New Distribution held an internal brainstorming session, using keywords to describe the changes felt firsthand in the first half of 2021: stock peak, category explosion, traffic black hole, accelerated change, technology upgrade... These are the feelings of an industry media practitioner after acquiring massive industry information and communicating with many industry insiders. This may not represent the full picture of the industry, but at least it shows that the industry is rapidly transitioning. Based on this, New Distribution has compiled 13 keywords for the first half of 2021 to share with you, hoping that those in the midst of rapid industry changes can feel the era's leap and iteration, and find certain trends and opportunities amidst uncertainty. -01- Small Categories, Big Explosion The rise of innovative consumer brands is evident to many, whether in the annual 618 and 11.11 rankings or short-video live-streaming sales charts, many new consumer brands appear. Small categories, big explosion. For example, mouthwash, functional candy, and chicken breast categories, corresponding to Canban, BUFF X, and Sharkfit. In the past, these three categories had very limited market capacity, but now, with new demographics, new demands, and new media, small categories are experiencing explosive growth and a surge. -02- Zero Era, Light Wellness 0 sugar, 0 fat, 0 calories has almost become a must-have product selling point and communication tactic when promoting new products in the food and beverage industry. With Genki Forest, positioned as the "sugar-free specialist," quickly becoming a dark horse in the industry, more and more new products and brands are focusing on 0 sugar, 0 fat, 0 calories within their categories. Zero era, light wellness. Consumption upgrades coincide with the rise of Gen Z, and the trend of staying up late for wellness meets the rising health awareness from the pandemic. Under new consumer groups and consumption trends, new growth points have been created in the food and beverage market. -03- Appearance Control, Self-Pleasure, Love Expression Consumers born after the 1990s, especially those after 1995, are the first generation to have never experienced scarcity. With abundant material conditions, immersed in the internet world, a thriving country, rising incomes, improving lives, and surging national confidence. The rise of Heytea, Perfect Diary, KKV, HEMA, Pop Mart, and a series of ultra-high-appearance new consumer brands is enough to show that in today's Chinese FMCG industry, the transaction sovereignty is shifting from the earliest factory sovereignty, to brand sovereignty, channel sovereignty, and now to the era of consumer sovereignty. -04- Gen Z, New Wine and Tea The low-alcohol beverage market is currently booming. Following established low-alcohol brands like Jiangxiaobai Meijian and RIO cocktails, a large number of new brands such as Berry Sweetie, Drunk Goose Lady, and Miker Rice Wine have entered the fray. Of course, various capitals are also flocking in. Even beverage giants like Pepsi and Coca-Cola are seeking breakthroughs in alcoholic drinks; meanwhile, Nongfu Spring also released its first rice wine + sparkling wine product, TOT sparkling drink, in May. Of course, while we see the heat, we also see controversy: is low-alcohol drinking a pseudo-demand or a real future? It's worth pondering. -05- Martech, DTC, and Private Domain Traffic Martech: Martech is the integration of marketing, technology, and management, also known as smart marketing, meaning that enterprises can achieve full lifecycle management of users through technology. The logic behind it is data + algorithms + scenarios, ultimately achieving marketing automation. DTC (Direct To Customer) refers to a business model where manufacturers directly reach consumers. Against the backdrop of brand concentration among leading enterprises, DTC reduces intermediary links, which is conducive to the rise of emerging brands. Private domain traffic: refers to traffic that can be obtained without spending money and can be repeatedly purchased. Common examples include followers on official accounts, friends on WeChat Moments, and followers on corporate Weibo. In the past two years, these three marketing terms have been particularly hot, but what I want to say is that no matter how hot they are, they are not that complicated. Focus on three core handles: shorten distance, expand connections, and be precise and efficient; behind this are changes in the enterprise's connection model, organizational model, management model, and business model. We need to pay attention to these changes, as they are one of the important trends in future marketing and a key marketing focus for large enterprises in recent years. -06- Digitalization Behind digitalization is essentially the fourth industrial revolution, where technology, through digital transformation, tightly integrates the world: people to people, people to things, and things to things. It represents an emerging force that drives every aspect of the world, from convenience and entertainment to improving people's health, everywhere. Actions generate data, data reveals patterns, patterns help decisions, and decisions guide actions. Digitalization, for today, is a driving core that must be explored. Using data for precise decision-making and permeating data decision-making capabilities into business processes: for an enterprise, the essence of digital transformation is to reconstruct enterprise boundaries, reshape organizational structures, and build core competitiveness adapted to the new environment, centered on data as a production factor. However, for traditional enterprises, moving from traditional informatization to digital transformation is not an overnight task; clear goals and sustained endurance are very important. Tony Saldanha, P&G's global digital transformation leader, expressed in his book "Why Digital Transformations Fail": "70% of enterprise digital transformations fail, with the core reason being that founding teams are indifferent to digital expertise and terminology." For an enterprise to succeed in a transformation, it must adopt new business models and competitive strategies. In summary, the core of the digital wave is actually in the backend; essentially, it makes the frontend lighter and the backend heavier. But how to become lighter and how to become heavier are topics worth pondering for each of us. -07- BC Integration With countless enterprises facing the problems of increasingly high marginal costs of deep distribution, declining effectiveness, and decreasing store foot traffic, how to improve operational efficiency and reduce costs is a core issue that all enterprises must address. BC integration, where B represents distribution and C represents sell-through, is essentially the integration of distribution and sell-through. BC integration can significantly improve the efficiency of traditional marketing, reduce marketing costs, allow enterprises to engage in deep interaction and connection with consumers in physical stores on a large scale, and ultimately achieve rapid distribution and sell-through of products. But how to do this integration well? Many enterprises already have extensive practical cases; Jiangxiaobai, Six Walnut, Jingjiu, Uni-President, and other major brands have summarized their own market practices. -08- FMCG Distribution B2B The interconnection of the FMCG industry is not only between brand owners and consumers but also includes the full-link interconnection of distributors, wholesalers, and retailers, which requires our backend supply chain system to achieve omni-channel coordination. In the context of "all-scenario transactions" in today's era, it is necessary to realize separation of people, goods, and warehouses, independent delivery, and complete the full digitalization of the distribution B2B link. -09- Large Distributors and Digital Distribution From China Resources Snow Beer's recent clear push for distributors to transform into large distributors, to PepsiCo Foods' promotion of digital transformation for distributors, and over the past year or two, more and more FMCG companies are continuously adjusting and upgrading their channel strategies. The past deep distribution led by brand owners is gradually shifting to an era of deep distribution guided by brand owners and led by local distributors. The rising labor and management costs, the maturity of distributors, and the use of digitalization as a means are revitalizing the traditional commercial circulation system. -10- Community E-commerce: Midfield or Endgame? Community e-commerce has indeed been full of twists and turns, from giant invasions with unlimited investment, to government regulation, and now to the giants' exit and contraction. In just half a year, past grand ambitions have vanished. The pace of this stage of the track seems to have come much faster than outsiders predicted. With turbulent times and giants hitting walls one after another, has community group buying reached its endgame? Or is it a halftime break? -11- Heavy Investment in Same-City Retail (O2O) Catalyzed by last year's pandemic, same-city retail O2O is rapidly accelerating, with almost all first-tier brand owners increasing their O2O investment. Strategic cooperation, deepened cooperation, key cooperation—words like these constantly appear in promotional content about cooperation between O2O platforms and external brand owners. Currently, O2O is in a period of rapid growth, and more and more manufacturers realize that it is not just a sales channel but also an omni-channel marketing platform. A large number of young people and key decision-makers (married women) are active on various O2O platforms. -12- Short Video and Live Streaming Sales The two major short-video e-commerce platforms, Douyin and Kuaishou, have become new traffic pools for FMCG manufacturers. This year, I've heard more than one or two brand owner friends say they are heavily investing in Douyin and Kuaishou. On April 8, Douyin held its first e-commerce conference, first proposing the concept of "interest e-commerce"; on July 22, at the Kuaishou e-commerce service provider conference, head Xiao Gu proposed three keywords for Kuaishou e-commerce in 2021: vigorously develop trust e-commerce, vigorously develop brands, and vigorously develop service providers. Build trust e-commerce and continuously explore the second growth curve. -13- Quality Growth In the past, when enterprises talked about growth, they often referred to horizontal growth: opening more distributors, doing more coverage, price wars, product volume, and then gaining industry status. Now, when talking about growth, more people talk about "quality growth." Optimizing supply chain capacity and improving circulation efficiency, adjusting and optimizing marketing and channel models. By increasing gross profit, optimizing capacity, and reducing circulation costs, higher profit growth can be achieved. These 13 industry keywords are what New Distribution has seen and observed over the past half year. Of course, to help you see the changes and trends behind these 13 industry keywords, New Distribution will hold the 2021 (4th) China FMCG Conference from September 23-25, focusing on these 13 keywords, with 11 forums and over 100 industry executives, founders, and operators, to discuss the 13 changes in the industry, where the future is heading, and where business opportunities lie! Some of the confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Beer (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou e-commerce SKA brand operation center; 10. Li De, e-commerce general manager of Gold Hong Ye Paper Group... A grand gathering for FMCG people, you must be there! Are you "watching" me?