---
title: "2016 FMCG Financial Report Summary: Companies Face Internal and External Challenges, Seeking Breakthroughs in the Fog"
description: "According to the overall data from the 2016 annual reports of the industry, among the 49 representative companies that disclosed their performance, 37 achieved revenue growth, accounting for about 74%, and 30 achieved net profit growth, accounting for about 60%, reflecting an upward development trend in some representative industries. Even so, the overall FMCG industry in 2016 remained unoptimistic, with companies still facing difficulties, and many saw revenue growth but profit decline. All companies hope to get closer to the market, but some are drifting further away from the times."
author: "New Distribution"
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published: "2017-03-30"
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# 2016 FMCG Financial Report Summary: Companies Face Internal and External Challenges, Seeking Breakthroughs in the Fog

> According to the overall data from the 2016 annual reports of the industry, among the 49 representative companies that disclosed their performance, 37 achieved revenue growth, accounting for about 74%, and 30 achieved net profit growth, accounting for about 60%, reflecting an upward development trend in some representative industries. Even so, the overall FMCG industry in 2016 remained unoptimistic, with companies still facing difficulties, and many saw revenue growth but profit decline. All companies hope to get closer to the market, but some are drifting further away from the times.

According to the overall data from the 2016 annual reports of the industry, among the 49 representative companies that disclosed their performance, 37 achieved revenue growth, accounting for about 74%, and 30 achieved net profit growth, accounting for about 60%, reflecting an upward development trend in some representative industries. Even so, the overall FMCG industry in 2016 remained unoptimistic, with companies still facing difficulties, and many saw revenue growth but profit decline. All companies hope to get closer to the market, but some are drifting further away from the times. What we see is not only the rigorous data in the annual reports, but also the ever-changing face of the world. While facing crises and challenges, companies must also adapt to this era and seek innovation and development.
After reviewing the performance table, let's follow the editor to see a detailed analysis of the performance of major companies! In 2017, competition is becoming increasingly fierce, the entire industry is undergoing earth-shaking changes, and companies are seeking new development and breakthroughs.
**Mengniu Dairy**
On the evening of March 29, Mengniu Dairy (02319.HK) released its 2016 annual results announcement in Hong Kong. The announcement showed that Mengniu achieved full-year sales revenue of RMB 53.78 billion, a year-on-year increase of 9.7%, far exceeding the industry growth rate.
The impairment of goodwill related to its subsidiary Yashili and the one-time loss from selling bulk milk powder inventory did not have a significant impact on the company's finances. The announcement stated that the company's financial condition is very healthy, and operating cash flow also increased significantly. Mengniu also announced a dividend of RMB 0.089 per share, with a total dividend of RMB 349 million.
In the highly challenging market environment of 2016, from an overall performance perspective, Mengniu's annual growth exceeded the industry average, achieving higher-than-industry growth for multiple products including basic white milk, Telunsu, Chunzhen, and Guanyiru, with ice cream also showing counter-trend growth. This is the result of the company's proactive adjustments in response to the sluggish market environment, including increasing market development and strengthening channel control.
Since the appointment of new President Lu Minfang in September last year, in response to the upgrading of consumer demand in the new economic environment, Mengniu proposed the slogan "Focus and Gather Strength, Unite Hearts and Minds" and carried out rapid organizational restructuring by dividing the original core business segments into independent business units for ambient, low-temperature, ice cream, and milk powder, giving each business unit more autonomy and enabling the organizational model to serve the market and consumers more quickly and efficiently. These measures have received unanimous recognition from the company's major strategic shareholders.
While using more appropriate tactics to respond to the current market landscape, the long-standing internationalization strategy has also provided more practical help to Mengniu. Cooperation with Danone and Arla Foods has brought world-class factory operation management methods and world-class pasture management systems into Mengniu's daily operations; cooperation with New Zealand's AsureQuality has taken the lead in covering pastures with world-class food quality and safety certification. In 2016, Mengniu became the first dairy company in China to pass the certification under the "Same Line, Same Standard, Same Quality" project for export food enterprises launched by the General Administration of Quality Supervision, Inspection and Quarantine and the Certification and Accreditation Administration.
In terms of milk sources, Mengniu continues to strengthen its control over quality. On January 5, Mengniu announced an increase in its stake in China Modern Dairy, securing more stable and high-quality milk sources while consolidating its leading position in the high-end dairy market; and on March 24, it announced a strategic partnership with Universal Beijing Resort, giving Mengniu another strong quality endorsement after Shanghai Disney Resort, NBA, and China Aerospace. The joint venture to be established with partner Arla Foods will build a cheese production factory with international standards in China, selling cheese produced domestically and imported from Denmark, in line with the "Great Health National Strategy" and the booming trend of cheese consumption in China.
"From the current market situation, these measures have achieved initial results," said Lu Minfang. 2017 is a very important year for Mengniu to realize its 2020 strategy. Mengniu will adhere to the four "no compromises" in product, quality, values, and execution, making quality a core value, fostering a sense of "milk craftsman" among all employees; making innovation a core competitiveness, promoting the reengineering of industry value, and continuously creating high-quality, personalized product experiences for consumers; making international standards the new normal for development, building a world-class Chinese dairy national brand with the world's strictest standards. Seize the trend, undertake great undertakings, and lay out the overall situation, steadily advancing the improvement of the company's operational efficiency and profitability.
**Uni-President**
On March 24, Uni-President China (hereinafter referred to as "Uni-President") released its 2016 performance report. The report showed that Uni-President achieved revenue of RMB 20.986 billion in 2016, a year-on-year decrease of 5.1%; net profit was RMB 607 million, a year-on-year decrease of 27.2%.
Looking back at 2016, the trends in the instant noodle and beverage industries were not optimistic. Uni-President, known for its innovation, has always been regarded as a bellwether in the industry. What reference significance does this report card have for the industry? What new moves will Uni-President make in 2017? Let's discuss in detail.
Instant noodle business hits new high, Tang Daren "leads" the 5-yuan price band
The report showed that instant noodle sales rebounded in 2016, with revenue of RMB 8.221 billion, an increase of 8.6% compared to the same period last year, outperforming the overall market (industry growth of 1.3%), and market share increased to 21.0%, creating a new pattern.
In terms of brand performance, "Uni-President Laotan Sauerkraut" always prioritizes providing consumers with the "most authentic sour and refreshing" experience. On the one hand, it continuously optimizes product strength, implementing traceability management for the production process of the core sauerkraut flavor packet to improve its taste and quality; on the other hand, it accelerates brand rejuvenation and optimizes packaging.
It is worth mentioning that "Tang Daren" achieved high-speed growth under the strategy of continuously promoting the development of mid-to-high-end instant noodles, becoming a major brand in the price range above RMB 5. In addition, new products such as "Duhui Xiaoguan," "Xiangban Yicheng," "Manhan Yan," and "Manhan Dacan" also achieved their respective category positions.
Beverage business declines, Sea Words scale continues to shrink
In 2016, the overall beverage market remained sluggish, with sales value and volume slightly recovering compared to 2015. Consumption trends still favored high-end, personalized products, and growth categories also changed. Ready-to-drink tea (excluding milk tea) performed most prominently, showing double-digit growth, with products priced above RMB 5.0 quickly occupying market shelves and being sought after by consumers, sweeping away the years of continuous decline in the ready-to-drink tea market and injecting positive energy into the beverage market.
Uni-President's beverage business adjusted its sales rhythm in 2016. Starting from the second half of the year, based on seasonal and market size differences, it promoted sales rhythms that align with economic benefits and established a moderate inventory concept. Affected by this, full-year beverage revenue was RMB 12.181 billion, a decrease of 13.3% compared to the same period last year.
**Performance by category:**
**1. Tea beverages.** In 2017, tea beverages will continue to adhere to the "value marketing" strategy, strengthening market layout and brand building. The three main brands have clear positioning: Uni-President Ice Black Tea and Uni-President Green Tea continue to optimize products and enhance product strength, mainly to stabilize sales scale; Xiao Ming Tong Xue will build on its success, focus on building strategic bases, actively expand the market, and revitalize the ready-to-drink tea market to meet the preferences of today's young people.
**2. Juice beverages.** In 2017, Uni-President Fresh Orange will continue to focus on orange flavor operations, continuously improving product taste and packaging, focusing on online media communication, and continuing brand rejuvenation;
In 2016, Sea Words adjusted its sales rhythm. In 2017, it will bring consumers a more refreshing physical and mental experience with the slogan "Drink Sea Words, Instant Refreshment";
In 2017, Yin Yang Si Ji will add the character "stew" to the packaging, strengthen the process, and use the official membership points platform to deeply interact with young consumer groups, continuously injecting fresh vitality into the brand;
In 2017, Li Lai Wu San will focus on caring for consumers' needs in response to weather changes, cultivating the gift box market and winter hot drink market with the theme "Clear and Moisturizing Gift, Like a Drink Accompanying You";
Optimize the existing Uni-President Fresh Orange and Orange Plus, add "grapefruit" to Uni-President Fresh Orange, highlight the grapefruit pulp selling point, and provide a "refreshing orange juice + plump grapefruit pulp" chewing experience.
**3. Comprehensive beverages.** In the milk tea segment, a new "Rock Salt Cheese" milk tea flavor will be launched in 2017, initially sold in key markets and gradually promoted nationwide, giving young consumers a differentiated new experience;
In 2017, the Yaha brand will be integrated, adopting a consistent smiling face trademark, and in addition to Iced Coffee, Italian Series, and Hey Series, Dear fancy coffee will be launched to provide consumers with a better overall experience;
ALKAQUA Aikua packaged water will launch a 6-person sharing pack and a 1.5L family pack to provide consumers with more convenient products in different consumption scenarios.
Uni-President ushers in the Liu Xinhua era, 2017 target of 21.9 billion
In June 2016, Uni-President announced a major personnel change: Chairman Lo Chih-cheng announced he would relinquish the concurrent position of General Manager, to be succeeded by Hou Ronglong, General Manager of Uni-President China; Liu Xinhua succeeded Hou Ronglong as General Manager.
Since then, Liu Xinhua has led the promotion of the "zero inventory" policy, which is highly difficult in the mainland market and one of the boldest in the industry. Shipments were suspended in the third quarter, like cleaning a waterway thoroughly without pollution, allowing for healthy operation in the fourth quarter. General product shipments are "8+X" days, with smaller X numbers being better, representing consumers buying the freshest products. The ideal situation is "8+0" days, but currently the industry's X number exceeds 200 days. Uni-President hopes to compress the X number to 45 days, and currently milk tea products can already be compressed to single-digit days.
**Uni-President 2004-2015 revenue table**
Subsequently, Liu Xinhua boldly carried out structural reforms—merging food and beverage operations—then transforming the business model, gradually shifting from "direct operation" to "customer operation," and promoting the "zero-based budgeting" mechanism internally, actively reorganizing resources. Uni-President is presenting a brand-new appearance.
Looking at Uni-President's revenue over the past 13 years, it peaked at RMB 23.329 billion in 2013, followed by consecutive slight declines. It is reported that Uni-President will accelerate the pace of reform, with a target sales revenue of RMB 21.9 billion in 2017 and reaching RMB 30 billion in revenue within three years. From the 2017 target, Uni-President still focuses on stability, using one year to digest the aftershocks of adjustments in various links. As Liu Xinhua said, **"When economic depression comes, times create heroes. Uni-President has the confidence and foundation to withstand the test and achieve success."**
**Master Kong**
The announcement showed that in 2016, Master Kong Holdings achieved revenue (equivalent to operating income) of USD 8.3719 billion, a decline of about 8% compared to USD 9.1028 billion last year; profit attributable to shareholders of the company was approximately USD 176.9 million, a decline of about 31% compared to USD 256.3 million in 2015.
It is gratifying that in 2016, Master Kong Holdings' beverage business net profit rose against the trend, with a year-on-year increase of about 54%; at the same time, the decline in Master Kong Holdings' instant noodle business slowed in the fourth quarter of 2016.
Beverages become the biggest highlight, net profit increases by 65.88%
Overall, Master Kong's fourth-quarter 2016 profit improved significantly year-on-year.
Among them, instant noodle business revenue was USD 3.2392 billion (approximately RMB 22.260 billion), accounting for 38.69% of the group's total revenue. Beverage business overall revenue in 2016 was USD 4.9041 billion (approximately RMB 33.701 billion), accounting for 58.58% of the group's total revenue, with net profit increasing 65.88% year-on-year. Convenience food business revenue was USD 137.1 million (approximately RMB 942 million).
**Master Kong 2016 market share of three major businesses (Nielsen data)**
| By sales volume | By sales value | Market share ranking
Instant noodles | 42.9% | 51.1% | Leading market position
Ready-to-drink tea | 53.2% | | First
Juice | 17.9% | | Second
Packaged water | 15.1% | | Third
Egg rolls | | 18.1% | First
Sandwich cookies | | 11.7% | Second
Black and white pepper monthly sales exceed all new products in the same period
Master Kong's performance stabilization is closely related to the outstanding performance of new products this year.
**In the beverage business**, in the ready-to-drink tea segment, it created a multi-price band, launched the new product "Nong Nong Lemon Tea," creating an upgraded thick enjoyment, entering the 5-yuan market to meet the demand of young white-collar workers for taste and high-end enjoyment. "Ice Black Tea" leveraged hot events such as the NBA China Games and NBA players visiting China, launching NBA commemorative cans on the e-commerce platform Yihaodian, and also launched 1-liter commemorative products with Mickey and Minnie dolls on the occasion of the opening of Shanghai Disney. The new product "Jasmine Fruit Tea" expanded the overall jasmine product market and consolidated the category's leadership position.
In the packaging water segment, **"Master Kong Bottled Water" in 2016 adjusted its strategy, returning to the affordable market, striving to regain market share, with results fermenting in the third quarter, significant performance growth, and promoting whole-box family consumption.** "You Yue" has seen its market share continue to climb since its launch in April, gradually establishing brand awareness in the mid-price water market.
Among juice products, Western-style juices continued to grow driven by honey grapefruit and mango cheese; Master Kong juice series launched new products including Xiang Ning Lychee and Golden Orange Passion Fruit.
**In the instant noodle business**, in June, the "Classic Series" was relaunched, accompanied by the launch of high-end new products such as simmered broth, improving sales in the second half of the year. In addition, healthy innovative products such as "Black and White Pepper," "Golden Soup," "Craftsman Soup," and "Ai Xian Big Meal Upgraded Version" were launched successively, **especially Black and White Pepper, whose brand awareness continued to grow after its launch in February, with monthly average sales surpassing all new products in the same period.** In December, the "Golden Soup" series was launched, with the selling points of compound broth nutrition and compound sour health attributes, achieving impressive sales results.
In 2016, in the face of multiple challenges such as economic downturn and rising raw material costs, food companies faced varying degrees of operating pressure, and Master Kong was no exception. Under pressure, Master Kong gradually stabilized its position through product innovation and upgrading and diversified marketing activities, with performance gradually recovering.
Master Kong stated that 2017 is a year of both opportunities and challenges. The company will leverage the opportunities of urbanization and the rise of the middle class to get closer to consumers' actual needs; strengthen interaction with consumers through new media and new technologies, and continue to deepen channel cultivation.
**Coca-Cola and PepsiCo**
Recently, Coca-Cola released its latest financial report for 2016, which showed that both revenue and profit declined in 2016. Revenue was USD 41.863 billion, a year-on-year decrease of 5.49%; net profit was USD 6.527 billion, a year-on-year decrease of 11.21%. This is the fourth consecutive year of declining performance for Coca-Cola.
In 2012, Coca-Cola's revenue peaked at USD 48 billion, but then declined by about USD 6 billion in sales over five years.
Similarly, Coca-Cola's old rival PepsiCo also faced declining performance. On the evening of February 11, PepsiCo released its fourth-quarter and full-year financial report for fiscal 2016. The report showed that PepsiCo's fourth-quarter net revenue was USD 19.948 billion, a 1% decline from USD 20.118 billion in the same period in 2015.
In response to the decline in performance, Coca-Cola stated that because the company is implementing a global bottling business restructuring plan, these businesses have been given to franchise partners, so the company's profit and sales revenue have decreased. In 2017, these impacts will continue until the bottling restructuring is completed, and the largest part of this plan will be completed.
In the context of consumption upgrading, a single large product is difficult to simultaneously meet the five tiers into which China's beverage market is gradually dividing. Coca-Cola also realized that relying solely on a traditional product will make it difficult to achieve healthy market development in the future, especially in the carbonated beverage market, where high sugar content has always been criticized by consumers. At Coca-Cola's executive meeting, the company proposed implementing a "One Brand" strategy globally, where original Coca-Cola, Coca-Cola Life, Coke Zero, and Diet Coke will no longer operate as independent sub-brands, meaning that in future advertising, marketing, and brand strategy, the four products will be integrated into one product operation.
**Dali Foods**
On March 23, the highly anticipated Dali Foods Group (hereinafter referred to as "Dali") announced its 2016 financial report in Hong Kong. The 2016 financial report showed that despite the increasing downward pressure on the overall economy, Dali still achieved relatively rapid development. In 2016, Dali's performance was all positive, and it heavily launched a new soy milk product, aiming to create a new performance growth point.
Three major strategic measures lay the foundation for Dali's future profit growth genes
The 2016 Dali financial report showed that Dali achieved revenue of RMB 17.842 billion for the full year. In 2016, China's food industry faced many difficulties. In response to market changes and to adapt to changes in purchase channel structure caused by consumption convenience, and to enhance Dali's competitive advantage in modern channels, Dali focused on three major strategic measures in 2016.
First, restructure the sales organization, introduce senior management personnel, and improve market response and practical capabilities. Second, adjust the channel structure, shifting channel operations from traditional channels to modern channels, focusing on building modern channels and enhancing modern channel operational capabilities. Third, focus on building Douben Dou soy milk, laying out nutritional beverages for families beyond ready-to-drink beverages, and improving the overall profitability of the beverage industry. By implementing the first two strategic tasks, the group's profitability in modern channels will be enhanced, laying the foundation for market response for innovative products. By building the soy milk industry, Dali's competitiveness in the family market will be enhanced!
Leisure categories grow steadily, Zhenhao Cookies perform impressively
As is well known, Dali started with leisure food, successfully creating leading brands in sub-categories such as Daliyuan, Haochidian, Kebike, and Landibao, providing domestic consumers with many high-quality leisure foods. As consumption becomes younger and healthier, in 2016, Dali's pastry, potato puffed food, and biscuit products faced significant sales pressure, but through product upgrades, packaging upgrades, and new product launches, Dali's leisure categories developed steadily in 2016, achieving full-year revenue of RMB 9.765 billion, with sales revenue for the three major categories increasing by 0.2%, 5.4%, and 9.8% respectively compared to 2015.
The three major leisure food categories showed an overall upward trend, but each category performed differently. In the pastry category, Daliyuan egg yolk pie, soft bread, and other products developed relatively steadily, while croissant products, although growth slowed, showed a good overall development trend. In potato puffed foods, to make packaging more interesting, Kebike upgraded product packaging and also launched cucumber-flavored potato chips favored by young consumers.
In biscuits, Haochidian biscuits have a stable market position, and Landibao high-end cookies firmly occupy the gifting channel. Among biscuit products, Zhenhao Cookies, positioned as mid-to-high-end with quality not inferior to Landibao, performed impressively in the market, becoming the most "eye-catching new star" in the leisure food category. As one of Dali's two pillars, in 2017 Dali will pay more attention to the development of healthy new products, such as breakfast bread products, and will also upgrade the packaging of some original products to make the design more fashionable and interesting to meet the needs of young consumers.
Beverage categories achieve multiple breakthroughs, heavily launching Douben Dou soy milk
With the rapid growth of the functional beverage market, Lehu timely adjusted product capacity and packaging image, while improving the advantages of traditional channels, focusing on expanding special channels such as schools and internet cafes, ultimately achieving a coverage rate of about 50% in Dali's sales outlets, resulting in a 43.5% increase in functional beverages compared to last year. Heqizheng herbal tea still occupies the third position in the herbal tea beverage market. In 2016, by increasing investment in catering channels, Heqizheng herbal tea achieved relatively rapid development in catering channels, with product revenue increasing 6.3% compared to last year.
Based on consumption upgrading and the unprecedented strong awareness of healthy consumption, Dali is full of confidence in the future. At yesterday's performance press conference in Hong Kong, Xu Shihui stated that in 2017, Dali will focus on cultivating and developing breakfast foods, launching healthier potato chip products, and heavily launching Douben Dou soy milk beverages.
It is understood that after two years of research and preparation, in 2016 Dali invested in multiple soy milk production lines at ten production bases nationwide, and in 2017 will heavily launch Douben Dou soy milk beverages. Douben Dou soy milk beverages will include three series, three packaging types, and seven products. Dali believes that with its advanced technology and product taste that suits Chinese preferences, Douben Dou will seize "half of the market" in the soy milk beverage market, and relying on brand and channel advantages, will build Douben Dou into a leader in the soy milk beverage category.
Dali has high hopes for Douben Dou. At yesterday's press conference, Xu Shihui emphasized multiple times that Dali, as always, adheres to the concept of "Creating Quality with Heart" and a pragmatic and enterprising corporate culture, opening up a new market worth hundreds of billions through the ambient-stored pure soy milk brand "Douben Dou," and promoting the company to a higher level with more effective work.
**Want Want**
On March 14, Want Want released its 2016 annual performance report. In 2016, Want Want's total revenue was RMB 19.7101 billion, a decline of 7.9% compared to 2015. Net profit increased 4.0% compared to 2015, reaching RMB 3.5192 billion.
**Performance data:**
The financial report showed that **in 2016, Want Want's total revenue was RMB 19.7101 billion, a decline of 7.9% compared to 2015. Net profit increased 4.0% compared to 2015, reaching RMB 3.5192 billion, with a net profit margin of 17.9%.** Rice cracker product revenue increased 4.6% compared to 2015, reaching RMB 5.4494 billion; dairy and beverage revenue declined 13.4% compared to 2015; leisure food revenue was mainly affected by weather impacts on the ice cream sub-category, declining 8.6% compared to 2015.
The proportion of the three major product categories to total revenue was: rice crackers and leisure foods combined accounted for 52.5%, and dairy and beverages accounted for 47.2%.
Looking at Want Want's overall revenue in 2016 by half-year, the first half of 2016 was RMB 9.7095 billion, a decline of 12.8% compared to the first half of 2015, while the second half of 2016 was RMB 10.0006 billion, a decline of 2.4% compared to the second half of 2015. The narrowing of the year-on-year trend in the second half was mainly due to: longer Chinese New Year period for rice cracker products, dairy sales gradually stabilizing, and new products contributing more than 3% of total revenue in the second half of 2016.
**Multi-brand strategy:**
Now, customers in different regions, age groups, and even consumption habits have different preferences. In response to the differences in consumer demand, Want Want has **strengthened multi-brand operations, including "Heipi," "Aiyou," "Beibimama," "Naduoli," "Laren," etc.,** with each brand having targeted customer groups and product appeal points. The multi-brand strategy not only meets consumer needs more broadly but also improves capacity utilization efficiency (these brands can be produced using existing resources without new investment). **For these brands, Want Want plans to seek new distributors to develop new terminal outlets and increase the shelf presence of Want Want products.**
At the same time, starting from the second half of 2016, two new dairy beverage products were launched, aiming to meet consumers' current new needs while also enriching Want Want's dairy beverage product range and providing consumers with more diversified product choices.
**Channel differentiation:**
**In 2016, Want Want differentiated products across channels,** with some brands exclusive to certain channels, such as "Beibimama" exclusively in maternal and infant channels, and "Laren" series exclusively in e-commerce channels; even star products like "Want Want Milk" strive for packaging and specification differentiation across channels. This measure also effectively avoided potential conflicts between channels.
In 2016, focusing on breakthrough research in modern channels, **based on consumers' purchasing habits in modern channels, Want Want launched packaging combinations suitable for family consumption, which not only improved the original sales specifications of Want Want Milk but also drove high single-digit revenue growth for dairy beverages in modern all-channels in 2016;** it also attached importance to emerging channels such as e-commerce and maternal and infant. At the same time, in 2016, Want Want's e-commerce and maternal and infant channels achieved double-digit revenue growth on the basis of 2015.
Want Want Milk revenue of RMB 8.4779 billion, down 12.0%
Rice crackers: In 2016, rice cracker revenue was RMB 5.4494 billion, an increase of 4.6% compared to 2015, with the second half of 2016 achieving high single-digit growth compared to the second half of 2015. In 2016, the rice cracker category achieved double-digit growth in modern channels compared to 2015.
**Dairy and beverage revenue was RMB 9.298 billion, a decline of 13.4% compared to 2015. Among them, "Want Want Milk," which accounts for about 90% of dairy and beverage revenue, had revenue of RMB 8.4779 billion, a decline of 12.0% compared to 2015,** but the decline in the second half of 2016 narrowed to mid-single digits compared to the second half of 2015, while in 2016, "Want Want Milk" achieved high single-digit growth in modern channels compared to 2015.
**Want Want stated that in 2016, due to consumer demand shifting to new sub-segments such as ambient yogurt, the overall revenue of children's flavored milk in China declined. Although "Want Want Milk" still ranks first in market share in this sub-segment, it was deeply affected by the shift in consumption categories.**
It is worth noting that Want Want introduced that based on research on consumer shopping habits in modern channels, **it launched new specifications suitable for family periodic purchases** and matched them with appropriate marketing strategies, effectively breaking through the long-standing predicament of "Want Want Milk" being surrounded by competitor price promotions in modern channels, achieving high single-digit growth.
**At the same time, Want Want stated that it plans to launch a new product "Extra Rich Want Want Milk" in early 2017** to meet consumers' current new needs while effectively supplementing dairy beverage products.
Affected by counterfeit products, Want Want Small Steamed Bun experienced double-digit decline in the first half
In 2016, Want Want's leisure food revenue declined 8.6%, from RMB 5.3746 billion in 2015 to RMB 4.9141 billion in 2016. **The high-margin Small Steamed Bun product was disturbed by low-priced counterfeit products, showing double-digit decline in the first half, but with the implementation of Want Want's anti-counterfeiting actions, sales gradually stabilized in the second half of 2016**; the promotion of brands such as "Aiyou," "Heipi," and "Naduoli" effectively enriched leisure products and drove sales momentum in the second half.
For 2017, Want Want stated that it will continue to implement the multi-brand strategy and diversify dairy beverage products. It will also deepen the "Send Want Want to the Countryside" channel cultivation, and plan to increase terminal manpower and resource investment for "key items" to strengthen Want Want's brand service at terminal outlets.
**JDB**
On March 25, the China Food Industry Association released the "2016 Annual Report on the Overall Operation of the Beverage Industry." The report showed that in 2016, the herbal tea industry's market sales revenue reached RMB 56.12 billion, a year-on-year increase of 4.2%, accounting for 8.8% of the overall beverage industry market share, ranking as the fourth largest category in the beverage industry.
From an industry-wide perspective, the sales revenue growth of the herbal tea market in the past year was only 4.2%, while in 2015 this figure was 10%. Consulting firm Frost & Sullivan's research report also confirmed this trend, stating that **before 2014, the compound annual growth rate of the herbal tea category was 22.7%, but from 2014 to 2019, the compound annual growth rate will decline to 15.4%.**
**Under the situation of slowing growth in the herbal tea industry,** JDB's operating revenue last year was RMB 24 billion, an increase of about 10%. **Pang Zhenguo, Party Secretary of JDB Group, stated that JDB ranks first in China's herbal tea industry with a 52.6% sales market share.**
In order to keep the herbal tea market "not cold," JDB has been actively making new attempts in products, marketing, and even the capital market.
**1. Products:** JDB has increased investment in the gift market, with gift sales increasing by more than 30% during this Spring Festival alone; in addition, to meet the immediate consumption needs of young people, it has begun large-scale promotion of plastic-bottled JDB in the national market, and is currently distributing goods in the northern market.
**2. Marketing:** JDB invested RMB 100 million in cash to launch a "scan code to win cash" sales strategy. Scanning the QR code on the pull ring of cans or inside the cap of bottles gives a 20% chance of winning prizes of RMB 999, RMB 0.99, or RMB 0.19.
In addition, in 2017, JDB will focus on the needs of young consumers and will also invest marketing resources in games and web dramas to cater to their preferences.
**3. Capital market:** It is understood that in December last year, under the operation of its founder Chen Hongdao, JDB was secretly planning to list in Hong Kong, with the fastest possible listing on the Hong Kong stock market in the first half of 2017. Listing details also include information such as "JDB and Beijing Enterprises Group reached a strategic cooperation, and even Beijing Enterprises took a stake in JDB, with the goal of listing in Hong Kong."
In response, Pang Zhenguo responded for the first time: "Actually, as long as it is beneficial to the development of the industry and the larger-scale development of the industry, we can consider all resources; whether to list or not, what everyone hears now is still a legend. Whether listed or not, as long as these resources and platforms are beneficial to the development of the entire group and the industry, we will do it and focus on investment."
**Wanglaoji**
On March 16, Guangzhou Baiyunshan Pharmaceutical Group Co., Ltd. (hereinafter referred to as "Baiyunshan") released its 2016 annual report. The annual report disclosed the performance of its three main businesses, including Wanglaoji herbal tea.
In 2016, Baiyunshan's total operating revenue was RMB 20.036 billion, a year-on-year increase of 4.76%; total profit was RMB 1.945 billion, a year-on-year increase of 19.47%; net profit attributable to shareholders of the listed company was RMB 1.508 billion, a year-on-year increase of 15.97%.
Wanglaoji herbal tea revenue about RMB 7.7 billion, flat with last year
Baiyunshan's business mainly involves three segments: "Great Southern Medicine, Great Health, and Great Commerce." In 2016, the revenue of the three segments was RMB 6.906 billion, RMB 7.769 billion, and RMB 5.748 billion respectively.
Among them, **the Great Health business increased 0.01% year-on-year, basically flat with last year, with a profit margin of 40.73%.** It is worth noting that the main products of the Great Health business include Wanglaoji herbal tea, bottled water, throat lozenges, turtle jelly, solid beverages, etc., and Baiyunshan also stated in the annual report that the main source of income for the Great Health business is Wanglaoji herbal tea. **So, in 2016, Wanglaoji herbal tea's revenue was approximately RMB 7.7 billion.**
However, a Wanglaoji company insider said that Wanglaoji herbal tea sales revenue has three statistical calibers: one is calculated by pharmaceutical caliber, corresponding to output value; the second is calculated by FMCG caliber, that is, calculated by market retail price; the third is calculated by ex-factory price caliber. **The Wanglaoji herbal tea data disclosed in Baiyunshan's annual report is calculated at ex-factory price caliber. If calculated by FMCG caliber, Wanglaoji herbal tea's revenue in 2016 should have exceeded RMB 16 billion.**
Expanding catering channels, entering the plant protein beverage market
Baiyunshan stated that in 2016, it further consolidated and enhanced the brand influence and market position of Wanglaoji herbal tea, actively promoted the diversified development of Great Health product categories, and established a Great Health product system. The main work carried out included:
First, vigorously expand catering channels. In 2016, Wanglaoji, **centering on the main line of "Marketing Catering Year,"** vigorously expanded catering channels, and through cooperation with large catering enterprises, promoted new development in the catering market.
Second, seize consumption seasons, build the gift market, and promote the maximization of Wanglaoji herbal tea's market.
Third, enrich marketing content and forms. In 2016, Wanglaoji consolidated the brand and market position of Wanglaoji herbal tea through various forms, including initiating the establishment of the China Time-honored Brand Alliance, developing campus football, establishing the Wanglaoji Scholarship with Tsinghua University, carrying out the "Let Love Go Home on Time" activity, cooperating with Zhejiang Satellite TV's popular show "Challenger Alliance," bundling the popular IP "Report Boss" Season 2, and launching cross-border marketing with Taobao and mobile games.
Finally, Wanglaoji also actively promoted the diversification of Great Health products. Taking the opportunity of the Summer Davos Forum, **it launched low-sugar and sugar-free Wanglaoji herbal tea new products. It cooperated with Shanxi Dazhai Beverage to develop the walnut milk beverage market** and cooperated with related enterprises and institutions to operate Great Health chain experience stores to achieve diversified development of the Great Health category.
For the 2017 work plan, Baiyunshan mentioned in the annual report that Wanglaoji Great Health will continue to follow the brand strategy of "Fashion, Technology, Culture," promote the "four modernizations" of the Wanglaoji brand: popularization, popularization, modernization, and internationalization, **continue to strengthen channel construction such as catering, develop the Great Health product group, and improve the quality and efficiency of Great Health.**
**Tenwow**
On March 21, Tenwow International released its 2016 annual financial report. The report showed that Tenwow's 2016 revenue was RMB 5.219 billion, a year-on-year increase of 6.3%; net profit was RMB 205 million, a year-on-year decrease of 41.6%.
2016 revenue of RMB 5.219 billion, own brands grow ideally
In 2016, China's food and beverage market continued to face various challenges. Non-alcoholic beverage sales were affected by weak overall market demand and more rainfall. At the same time, the food and snack market was impacted by online sales. Against this difficult market background, Tenwow's 2016 revenue increased 6.3% to RMB 5.219 billion compared to 2015. Benefiting from the growth of its own brand business and the continuous optimization of third-party brand business, gross profit increased 11.2% to RMB 1.018 billion, with gross margin up 0.8 percentage points year-on-year to 19.5%. Own brand business grew ideally, with revenue increasing 10.1% year-on-year to RMB 2.282 billion.
Revenue proportion of Tenwow's various categories
Third-party brand product business resumed growth in the second half, reversing the decline in the first half of 2016, driving full-year revenue growth of 3.6% to RMB 2.937 billion. Tenwow Group focuses on expanding its own brand business, with own brand product revenue proportion increasing from 42.2% last year to 43.7%, and gross profit proportion at 64.2%.
Own brand products are the inherent development focus of Tenwow Group. On the basis of consolidating existing product varieties, Tenwow will continue to innovate and enrich its own brand products. Looking back over the past three years, the compound annual growth rate of own brands has been as high as 17%, with revenue proportion growing from 30.2% to 43.7%.
Looking back at 2016, among Tenwow's non-alcoholic beverage products, sales of C Man E, fruit tea, and Charcoal Roast series did not meet expectations, with the "Charcoal Roast" series even experiencing a significant decline. Although new products such as "Pure Cocoa" coconut water, "Bano" high-end coffee series, and "Tenwow Idea" cold-brew tea series were launched, their contribution to overall sales remained very limited.
To change the situation, Tenwow will focus on core advantages, upgrade the "Fruit Tea" series brand, and separate "Honey Grapefruit Tea" from the "Fruit Tea" series for independent operation; the "C Man E" series will also be upgraded to seize more market share; "Jingongquan" natural mineral water will undergo packaging upgrades, and a younger water brand "Xinshui" will be launched.
Expanding distribution network, striving to develop southwest and north China
To seize the opportunities brought by rising terminal consumer demand for Tenwow products, Tenwow Group will further expand its distribution network to increase market coverage. In addition to deepening its presence in East China and Central China, Tenwow Group will strive to develop new markets such as Southwest and North China.
Sales proportion of Tenwow in various regions
Tenwow Group strategically establishes parks across the country, self-producing own-brand non-alcoholic beverages, food, and snacks, achieving a "sell locally" model to reduce transportation costs, assist inventory management, and allow flexible adjustment of production capacity according to changing markets, ensuring supply can quickly meet market demand.
In terms of channel expansion, by improving special channels, immediate consumption channels, modern channels, and circulation channels, a FMCG platform will be formed, allowing Tenwow Group's products to be sold faster through more channels.
Sales proportion of Tenwow in various channels
Reforming internal mechanisms, Lin Jianhua personally handles administration
The report also pointed out that in order to attract high-level talent to join the group to cope with increasingly fierce market competition, Tenwow will gradually strengthen internal incentive mechanisms, linking sales and profit indicators with the income of the operating team. After the sales team exceeds the group's set profit targets, they will receive more profit sharing. In addition, Tenwow Group will study various internal incentive mechanisms to commend and reward outstanding employees, thereby creating greater value for the group.
Interestingly, a personnel change was also announced simultaneously with the financial report: effective March 22, Wang Juewei resigned as Executive Director, Chief Executive Officer, and member of the Remuneration Committee; Lin Qi was appointed as Executive Director; Yan Zhixiong was appointed as Non-Executive Director; Shen Yalong was appointed as Independent Non-Executive Director; and Chairman and Executive Director Lin Jianhua was appointed as Chief Executive Officer and member of the Remuneration Committee. According to the financial report, in 2016, Tenwow Group had a total of 3,646 employees, with total compensation of RMB 265 million.
Chairman Lin Jianhua personally serving as CEO and member of the Remuneration Committee will surely lead to a major internal overhaul!
**Haitian**
The condiment industry is relatively stable, with relatively low concentration, uneven enterprises, and numerous sub-fields. Compared with other industries, the condiment industry does not have prominent cyclical characteristics. With the upgrading of household and catering consumption, more new varieties guiding consumption, and increased health awareness, per capita condiment consumption expenditure will steadily increase, promoting the stable development of the condiment industry, and industry concentration will also become increasingly high.
On March 23, Haitian Flavoring & Food released its 2016 performance report. During the reporting period, Haitian achieved operating revenue of RMB 12.459 billion, a year-on-year increase of 10.31%; net profit attributable to shareholders of the listed company was RMB 2.843 billion, a year-on-year increase of 13.29%; net assets attributable to shareholders of the listed company were RMB 10.013 billion, a year-on-year increase of 14.43%; overall gross margin was 43.95%, an increase of 2 percentage points year-on-year.
**Main business by industry**
Unit: yuan
Soy sauce: Effective combination of creating premium products and expanding markets
During the reporting period, operating revenue was RMB 7.579 billion, a year-on-year increase of 12.84%. Through the effective combination of creating premium products and expanding markets, the competitiveness of the soy sauce category was further strengthened, with visible achievements in overall growth, structural upgrading, sustained development of basic products, and gross margin improvement.
Seasoning sauce: Proactive adjustment of traditional old markets for seasoning sauce
During the reporting period, operating revenue was RMB 1.814 billion, basically flat. Haitian strengthened proactive adjustments to the traditional old markets for seasoning sauce, optimized product structure and reduced dependence on old specifications, laying the foundation for the redevelopment of seasoning sauce and also laying the cornerstone for the simultaneous development of soy sauce and non-soy sauce products.
Oyster sauce: Absolute leading advantage expanding
During the reporting period, operating revenue was RMB 1.863 billion, a year-on-year increase of 4.8%. Haitian further upgraded the quality of oyster sauce and increased promotion efforts across all regions of the country. Although oyster sauce growth did not meet expectations, the "first-mover" market for oyster sauce is increasing relatively quickly, laying some foundation for development in 2017 and beyond, and the absolute leading advantage of oyster sauce is expanding.
From a market layout perspective, during the reporting period, Haitian effectively accelerated network development. After the optimization and consolidation of the southern and eastern regions was basically completed, they maintained a certain development and accelerated; the central, western, and northern markets maintained relatively rapid development.
**Shengmu**
Recently, China Shengmu released its first annual report after joining the Yili camp, and its performance was impressive.
2016 revenue of RMB 3.467 billion, own brands perform well
The annual report showed that in 2016, Shengmu's revenue was approximately RMB 3.467 billion, a year-on-year increase of 11.8%; gross profit was RMB 1.675 billion, an increase of RMB 1.34 billion compared to last year; sales revenue was RMB 3.467 billion, an increase of 11.8% compared to last year, of which own-brand full-process organic liquid milk sales revenue reached RMB 2.054 billion, an increase of 24.1% compared to 2015.
Among them, Shengmu Group's own-brand liquid milk business played an important role in revenue growth, driving the group's business growth. Own-brand liquid milk business sales revenue increased approximately 27.2% compared to last year, with the proportion of total sales revenue increasing from 53.4% in 2015 to 60.8% in 2016.
With the gradual awareness and prevention of pollution in China, the organic food market is booming, and more and more consumers are inclined to choose organic food. At the same time, in China's dairy market, products mainly focused on high-end organic are also performing more impressively in the market. As China's largest organic dairy company, China Shengmu maintained a relatively high level of profitability despite intensified competition in China's dairy industry and relative pressure on upstream raw milk.
Focusing on developing organic milk sources, initial results achieved
As of December 31, 2016, Shengmu Group had 23 operating organic pastures and 12 operating non-organic pastures. The herd size of organic and non-organic dairy cows changed from 72,843 and 38,552 on December 31, 2015, to 94,815 and 34,514 on December 31, 2016. At the same time, in 2016, Shengmu Group produced 421,023 tons of organic raw milk and 177,365 tons of non-organic raw milk, while in 2015 it produced 357,434 tons of organic raw milk and 179,866 tons of non-organic raw milk.
It can be seen that in 2016, Shengmu catered to the market, focused on developing organic milk sources, and achieved certain results. This can also be seen in Shengmu Group's plans for 2017. The annual report showed that in 2017, Shengmu will continue to increase investment in organic pastures, build garden-style comfortable organic pastures, further improve the cattle growth environment, employee working environment, and overall pasture environment, and strive to further transform the current high-standard advanced pastures into world-class most beautiful pastures, providing the best living welfare for desert organic dairy cows, making them the happiest "happy cows, healthy cows."
Yao Tongshan, Chairman and CEO of China Shengmu, said at a press conference that last year's industry consolidation was not completed, and he believes it will continue this year. Currently, industry price wars continue, but the company has no plans to join; it will only improve brand image and deepen sales channels. First-quarter performance is expected to be flat or slightly lower year-on-year, while second-quarter sales performance will be better, and in the next two to three years, industry sales are expected to grow at a rate of more than 25% annually.
**Tibet Water Resources**
Tibet 5100, known for high-end mineral water, changed its name from Tibet 5100 Water Resources Holdings Co., Ltd. to Tibet Water Resources Co., Ltd. in February 2016, and Tibet 5100 also became a hot topic in the industry due to the termination of supply to China Railway Express in 2015.
Performance: Revenue of RMB 868 million, net profit up 11%
Recently, Tibet Water Resources announced its 2016 performance report. Tibet Water Resources stated that despite facing intense competition and a challenging economic environment that particularly harms high-end products, it continued to develop product diversification, deeply penetrate target retail channels, and develop more strategic partners in 2016, **increasing 2016 revenue by 4% year-on-year to RMB 868 million, with net profit attributable to owners of the company increasing 11%.**
**Total sales of the water business segment increased 10% from RMB 441 million in 2015 to RMB 484 million in 2016** , mainly due to increases in water product sales and preform and cap sales. The beer business segment's sales decreased 2% from RMB 392 million in 2015 to RMB 384 million in 2016.
Products: Two new products perform well
Regarding the core business of the water business segment, due to the end of the supply contract with China Railway Express in June 2015, from 2015 to 2016, sales volume of 5100 Tibet Glacier Mineral Water ("5100 Glacier Water") decreased 20%; if excluding the sales of 5100 Glacier Water to China Railway Express that ended in June 2015, the group's 5100 Glacier Water sales volume and sales value increased 30% and 8% respectively in the same period, **with the growth benefiting from strong performance in retail channels**.
In addition, the new **"Gesangquan"** brand product launched in early 2016 achieved sales volume of 12,611 tons and revenue of RMB 39.71 million. The co-branded product **"Yijie Zhuomaquan"** of associate company Plateau Natural Water continued to sell well in Sinopec's Yijie convenience stores at gas stations nationwide in 2016, with the group's share of Plateau Natural Water's after-tax profit at RMB 29 million, a year-on-year increase of 38%.
Channels: Covering 108 cities, 249 distributors
In 2016, through strategic partners and retail channels including supermarkets, convenience stores, hotels, cinema chains, airports, e-commerce platforms, catering, and health and entertainment outlets, water products were sold in mainland China and Hong Kong. As of December 31, 2016, in mainland China, through third-party retail distributors, **water products covered 108 cities, with the number of distributors and retail sales outlets reaching 249 and 9,776 respectively.** In 2016, sales revenue from retail channels accounted for more than 60% of total water product sales revenue. Revenue from 5100 Glacier Water bottled water exchange cards ("water cards") accounted for 8% of total water product sales revenue in 2016.
Future: Continue product diversification, develop retail channels
The group will continue its product diversification strategy, market-oriented business approach, internationalization strategy, and deepen channel strategic cooperation in the future, and will continue brand promotion through a series of marketing activities. In the past two years, it has launched the high-end diamond series of 5100 Glacier Water, 10L/12L "5100 Family Pack Soft Water," and mid-priced bottled water under the "Gesangquan" brand. **These new products will be further promoted in 2017, and new products will continue to be launched in the future.**
It will continue to expand the retail network, not only in traditional retail channels, **but also strive to develop target retail channels including hotels, cinema chains, airports, e-commerce platforms, catering, and health and entertainment outlets.** Family and overseas markets are two potential markets, and resources will be allocated to develop these markets.
In the past year, Tibet Water Resources maintained and developed strategic partners to achieve both sales and brand marketing success. To develop water product sales, it will continue to optimize resource allocation with strategic partners, expand product market share in the **aviation beverage** segment with airline partners, promote products in the **railway channel** with China Railway Express, cover more **gas stations** with Sinopec and PetroChina, penetrate more communities with **Country Garden**, and promote "5100 Family Pack Soft Water" and "Gesangquan" with **Moutai Group and Zhongshang Huimin**.
**Bright Dairy**
Bright Dairy's annual report showed that in 2016, Bright Dairy achieved total operating revenue of RMB 20.207 billion, an increase of 4.30% year-on-year; net profit of RMB 675 million, an increase of 36.11% year-on-year; net profit attributable to owners of Bright Dairy of RMB 563 million, an increase of 34.63% year-on-year. However, it did not mention the much-concerned big product Momchilovtsi at all. Seeing this, one cannot help but reflect on where the brightness of Momchilovtsi is?
In 2016, Bright Dairy launched several new products such as Chocoli, Youbei 0 Lactose, and Shangwei Yogurt, achieving good market results. In 2016, Bright Dairy achieved impressive performance, but it did not mention the big product Momchilovtsi that was always mentioned in previous years.
It is worth noting that in 2016, Bright Dairy's yogurt production was 848,700 tons, an increase of 1.31% year-on-year; yogurt sales were 816,300 tons, an increase of 4.31% year-on-year; inventory was 37,900 tons, a decrease of 1.77% year-on-year. From the data comparison, Bright Dairy's yogurt production and sales did not change significantly. The market opportunities left for Momchilovtsi are running out!
Momchilovtsi running hard
Momchilovtsi is currently Bright's first big product. Momchilovtsi ambient yogurt was launched by Bright Dairy in 2009. Since its launch, sales revenue has grown rapidly until 2015, when this year-on-year doubling growth momentum suddenly stopped. In 2014, it achieved about RMB 6 billion, while in 2015, revenue was RMB 5.874 billion.
Bright once planned for Momchilovtsi to break through RMB 10 billion in the next few years. In 2016, Bright Dairy avoided discussing Momchilovtsi's performance, but it is certain that Momchilovtsi is still some distance from the RMB 10 billion target.
At the end of 2016, Bright Dairy President Zhu Hangming admitted in an interview that in making ambient milk, Bright Dairy is indeed not as good as Yili and Mengniu, and latecomers have surpassed them. This year, Momchilovtsi's market share is likely to be surpassed by Yili Ambrosial.
In order to retain Momchilovtsi's overall contribution to Bright Dairy, in 2016 Bright Dairy also adjusted the taste of Momchilovtsi and added two new series of products. It is worth mentioning that the usually low-key Bright Dairy, in 2016, in order to inject new vitality into old products, stimulated consumption by signing celebrities, accompanied by a large amount of advertising and brand landing activities.
In 2016, the Bright brand image was upgraded again, with the concept of "Happy in Freshness," and "Let more people feel the joy of deliciousness and health" became the company's responsibility and vision. In 2016, Bright Dairy seized the Olympic marketing theme, as the official strategic partner of the Chinese Women's Volleyball Team, and introduced celebrity spokespersons such as Mayday, Hu Ge, and Wang Kai to enhance the vitality of the Bright brand. It planned market theme activities close to the terminal, such as the Colorful Carnival and the first Yogurt Festival, to show consumers the core brand value of "Health, Deliciousness, and Happiness" of Bright Dairy.
Annual report data showed that in 2016, Bright Dairy's advertising expenses were as high as RMB 1.035 billion, while in 2015, advertising expenses were RMB 640 million, a year-on-year increase of about 61.65%.
The ambient yogurt landscape will be rewritten
Founded in 1949, Bright Dairy has a history of more than 60 years. As the largest fresh milk production and sales enterprise in the country, Bright Dairy was once the largest listed dairy company by market value under the market attack of Mengniu and Yili, which quickly seized national sales share with ambient milk. Now, it has become what the media calls "A Dou that cannot be supported," how sad.
Before 2014, Momchilovtsi had almost no strong competitors in the market and developed in a dominant position. By the end of 2013, dairy giants Yili and Mengniu launched their own ambient yogurt brands—Ambrosial and Chunzhen. The addition of Ambrosial and Chunzhen completely changed the market competition pattern, especially Ambrosial, which grew rapidly with the help of Yili's strong channel and resource capabilities once launched.
Data from the first half of 2016 showed that Ambrosial's sales in the first half were about RMB 4 billion, Momchilovtsi's sales were about RMB 3 billion, and Chunzhen's sales were over RMB 2 billion. At the end of December, at Mengniu's annual meeting, Lu Minfang pointed out that ambient yogurt Chunzhen achieved RMB 6 billion in 4 years. In the 2016 ambient yogurt war, this is a thought-provoking set of numbers.
The market that Momchilovtsi worked hard to develop is about to be handed over to Ambrosial and Chunzhen, and there is also Junlebao Kaifeir chasing behind. Facing competition from giants like Yili and Mengniu, which occupy channel and resource advantages and can always catch up, how should Momchilovtsi respond? Where is the brightness of Momchilovtsi?
01 Reposition product selling points
Momchilovtsi is the pioneer of ambient yogurt, but it has been surpassed by Ambrosial and Chunzhen. Momchilovtsi promotes longevity, Ambrosial promotes richness, and Chunzhen promotes no additives. The noisy shouting makes it difficult for consumers to distinguish good from bad, and Momchilovtsi's advantages are gradually lost. As the category pioneer, Momchilovtsi should proactively promote its original and leading identity in the category. If it simply competes on channels and publicity, Bright is far from being a match for Yili and Mengniu. Only by transforming consumer perception can it gradually reverse the defeat.
02 Strengthen brand awareness of Momchilovtsi
As the third player in the dairy industry, Bright's performance is being increasingly widened by Yili and Mengniu. As a big product under Bright, Momchilovtsi's brand endorsement is inevitably far behind that of national dairy giants. Strengthen consumers' brand awareness of Momchilovtsi, so that when consumers think of ambient yogurt, they will inevitably think of the Momchilovtsi brand.
03 Increase brand publicity
Compared with Ambrosial's RMB 216 million title sponsorship of "Running Brothers" and inviting Angelababy and Li Chen as spokespersons; Chunzhen also sponsored variety shows such as "Our Challenge" and invited Deng Chao as spokesperson; regional dairy company Junlebao Kaifeir also invited Huang Xiaoming as spokesperson; in contrast, Momchilovtsi's resource investment is much inferior.
In 2016, Bright Dairy's advertising expenses were as high as RMB 1.035 billion, while in 2015, advertising expenses were RMB 640 million, a year-on-year increase of about 61.65%. Reasonable and vigorous marketing investment is directly proportional to sales.
04 Insufficient product innovation
Compared with the innovation of Ambrosial and Chunzhen, Momchilovtsi is much inferior. Ambrosial, launched in 2013, has introduced original, blueberry, vanilla, and other flavors. As 2017 approaches, Ambrosial has launched a yellow peach oatmeal flavor, using new packaging and flavors to focus on the 2017 ambient yogurt market. In addition, Chunzhen has successively launched cheese flavor and the spring 2017 new packaging "Truth Confession Bottle," using a series of new product actions to occupy the market.
Momchilovtsi, launched in 2009, only launched new packaging in the second half of 2015, and only added new flavors 2 Fruits 3 Vegetables in early 2016. It should be noted that 2009 was the first year of domestic ambient yogurt development. And Momchilovtsi only launched new packaging after 6 years.
05 Solve channel promotion difficulties
In those years, Bright relied on the big product Momchilovtsi to develop rapidly in the dairy field. However, as a regional dairy giant, Bright Dairy did not seize the 4-5 year window period for ambient yogurt development. Bright's channel shortcomings became increasingly prominent in the development process. Bright's main battlefield is in East China and South China, but it is powerless in the broader North China, Southwest, Northwest, and other markets, a hard flaw in channels and promotion.
In contrast, Yili and Mengniu's sales networks have long been extended nationwide, even down to counties and townships. Promoting Ambrosial and Chunzhen new products is just adding one more product to existing channels, equivalent to improving the utilization rate of existing channels. When Yili and Mengniu, which started with ambient liquid milk and have complete national channels, join the battlefield, Bright's advantages are no longer so obvious.
Having worked hard to create the ambient yogurt market, it has been surpassed instead. Time waits for no one, and there is not much time left for Momchilovtsi to find its brightness!
**Qinqin Food**
Qinqin Food achieved revenue of approximately RMB 981 million in 2016, a year-on-year decrease of 3.8%; profit attributable to shareholders of the company was RMB 31.522 million, a year-on-year decrease of 50.6%. Among them, jelly product sales decreased 13.8% to RMB 529 million, while puffed food sales increased 13.8% to RMB 280 million.
In 2017, the group will further increase innovation and upgrading of jelly products, while increasing promotion and brand publicity for new jelly products to promote revenue growth in the jelly business. It will also further enrich and improve the packaging and flavor of potato and shrimp products, continue to launch fashionable innovative puffed food categories, and maintain the sustained growth of the puffed food business.
**V V Food & Beverage**
V V Food & Beverage achieved operating revenue of RMB 4.463 billion in 2016, an increase of 14.81% year-on-year, with net profit attributable to the listed company of approximately RMB 70.31 million, a decrease of 30.91% year-on-year.
V V Food & Beverage stated that in the future it will focus on the policy of "Profit Priority, Deep Contracting" and make the following operating plans: marketing innovation, creating a new situation for plant protein beverage marketing; accelerating the grain logistics project process, rationally laying out warehousing nodes; optimizing production, improving quality and efficiency; continuously optimizing production processes and improving the level of production automation; continuously pursuing excellent operating performance and implementing information system upgrades.
**Shuanghui Development**
Shuanghui Development achieved operating revenue of RMB 51.822 billion in 2016, an increase of 15.94% year-on-year; net profit attributable to shareholders of the listed company was RMB 4.405 billion, an increase of 3.51% year-on-year.
The annual report also showed that Shuanghui Development's industrial layout is more complete. The poultry industry's 50 million broiler breeding and slaughtering project achieved full production, further improving the industrial chain; the completion and operation of Zhengzhou Shuanghui American-style factory and Shanghai Shuanghui Western-style factory achieved brand upgrading, conforming to the new trend of high-quality life consumption, and will promote the structural adjustment and transformation and upgrading of the meat industry.
In 2016, Shuanghui's net profit increased 3.51% year-on-year, and in the same year, China's M2 broad money supply increased by 11.3%.
In 2016, Shuanghui's fresh product sales revenue, after exceeding meat products for the first time in 2015, once again achieved a significant gap of nearly RMB 10 billion, with a year-on-year increase of 30%. We can regard this as an important turning point in Shuanghui's development over the past decade.
**Yurun Food**
Yurun Food's 2016 revenue decreased 17.2% year-on-year to RMB 14.778 billion; net loss decreased 21.3% year-on-year to RMB 2.07 billion.
The report showed that in 2016, the group's chilled fresh meat sales were HKD 13.669 billion, a decrease of 15.3% compared to last year, accounting for about 81% of the group's total revenue before offsetting internal sales, and about 93% of upstream slaughtering business revenue; low-temperature meat product revenue was HKD 1.886 billion, a decrease of 15.5% compared to last year, accounting for about 11% of group revenue before offsetting internal sales, and about 90% of downstream deep-processed meat product business revenue.
**Haixin Food**
Haixin Food achieved operating revenue of RMB 925 million in 2016, an increase of 13.48% year-on-year; net profit was RMB 13.0716 million, an increase of 133.08% year-on-year; earnings per share were RMB 0.05.
In 2017, the company will focus on the policy of "Enlarge Scale, Create Benefits, Optimize Structure," continue to base itself on the new ocean and great health, deeply cultivate deep-sea fish protein categories and brands, upgrade and strengthen the century-old Haixin and high-end Yuji series, and actively develop marine leisure categories.
**Qianhe Flavoring**
Qianhe Flavoring achieved operating revenue of RMB 770 million in 2016, an increase of 23.62% year-on-year; net profit was RMB 100 million, an increase of 50.44% year-on-year.
The company will focus on the condiment development strategy in the future. First, further improve the product quality and consumption experience of core categories such as soy sauce, vinegar, and cooking wine, while increasing innovation and research and development efforts, enriching product categories, and further meeting the consumption needs of different consumer groups; second, continuously increase the proportion of mid-to-high-end product revenue and improve the company's profitability; third, expand the national market and seize opportunities to lay out overseas markets, enhance the height of the Qianhe brand, and give back to the domestic market.
**Andre Juice**
Andre Juice's 2016 operating revenue increased 7% year-on-year to RMB 875 million; net profit increased 66.3% year-on-year to RMB 122 million; gross margin increased 5 percentage points year-on-year to 28%.
The report mentioned that with the gradual implementation of specific measures of the national macroeconomic policy favoring agriculture and the gradual improvement of national laws and regulations, the group will also face better development and financing opportunities. To seek the group's scale development, the group will continue to make further efforts in broadening markets, improving production capacity, diversifying products, expanding sales and diversifying markets, and broadening financing channels.
**Yanjin Shop**
Yanjin Shop achieved operating revenue of RMB 683 million in 2016, an increase of 17.09% compared to the previous year; net profit was RMB 85.6565 million, an increase of RMB 20.2126 million compared to the same period last year, an increase of 30.88%; basic earnings per share were RMB 0.92.
In 2017, the company will take the listing as an opportunity, seize the good development opportunities and related policy guidance of leisure food, strengthen brand building, enhance product competitiveness, combine the introduction and cultivation of talent, improve technical level, optimize product structure, improve sales network, strengthen the company's comprehensive advantages at sales terminals, comprehensively enhance the company's core competitiveness, and build the company into a leading enterprise in China's traditional specialty small-category leisure food industry.
**Compiled and edited by <New Distribution>**
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