△Scan the QR code to follow New Distribution's video account and reserve the live stream 2020 has finally come to an end. This year, FMCG professionals experienced too much—hardship and inspiration—but through the industry's continuous adaptation and innovative transformation, amid a volatile market environment, we have made it to today. This year, we saw many new technologies, tools, channels, and models emerge in dazzling succession. There were many pitfalls and crises, but more so, we saw glimmers of hope in adversity. Now, New Distribution takes stock of the major industry events worth reviewing in 2020, seeking inspiration in change and pondering how to find new directions in a new environment! **-01-**COVID-19: A Global Black Swan **When it comes to major events, nothing this year was bigger than the COVID-19 pandemic that swept nearly the entire world. Strictly speaking, this event is not exclusive to the FMCG industry, but its impact has been so profound that nearly all changes this year, across the world and all industries, are related to it. Thus, the first major event is the COVID-19 pandemic. COVID-19 has had a tremendous impact on the FMCG industry, creating a tale of two extremes: many restaurants suffered losses or closed, channels nearly stalled during the outbreak, and offline channels like KA and convenience stores were hit hard; gift boxes, alcoholic beverages, and other categories suffered huge losses, with countless distributors facing high inventory and cash flow difficulties. Conversely, new models like O2O home delivery, community group buying, and livestream e-commerce accelerated; convenient ready-to-eat foods, grain and oil, and other categories performed well, and some brands and distributors that adapted quickly and benefited from category tailwinds reaped substantial gains. Although the pandemic was severe, China has achieved basic, stable control, demonstrating the nation's strength. The fundamentals will not be shaken, and the national economy will adjust briefly before moving toward healthier development. New Distribution Commentary:

  1. In the face of the pandemic, most companies and merchants have managed to pull through, and safety is basically stable. However, the impact of the pandemic may intermittently persist in the future, so it is crucial to maintain the right business mindset.** **Business inevitably has ups and downs; they are just temporary gains and losses. As long as people are here and the business is still standing, it is not easy to collapse. Stay calm and analyze the situation carefully. 2. The pandemic is both a crisis and an opportunity. Use this time to adjust organizational structures, optimize product systems, actively embrace emerging channels, and pay attention to changes in the industry, market, and policies. Avoid a "sit, wait, rely" mentality; respond proactively. Future business operations will become increasingly professional and complex. Only by actively adapting can you avoid being eliminated. **-02-**Community Group Buying: Stay Calm, Even If You Don't Embrace It, Shake Hands **The hottest topic in the industry is undoubtedly community group buying. In 2018, community group buying was red-hot, but by 2019 it cooled down, with many in the industry labeling it "can't scale, won't last." However, no one expected the "slap in the face" to come so quickly. With the pandemic's impact, community group buying exploded, and internet giants like Alibaba, Tencent, JD.com, Meituan, Pinduoduo, and Didi joined the fray. Powerful capital turned this field into a bloody battle, with fierce competition for group leaders and subsidy wars even driving prices below cost, causing chaos. Then People's Daily called it out, and market regulators stepped in for talks, gradually calming everyone down. Clearly, the internet giants' goal is not to sell vegetables but to compete for the last C-end traffic. However, the subsidy wars, often involving billions, undoubtedly caused headaches for vegetable vendors, distributors, and brand owners alike. That's why the authorities called for "moderation." New Distribution Commentary:
  2. Community group buying itself is not a problem. While we see the impact and feel anxiety, we should also calmly consider its underlying value: improving overall industry efficiency, reducing costs, and creating new opportunities and iterations for traditional businesses. 2. While competing, giants should also consider the normal market order, rather than relying on money to disrupt the market, which only leads to unprincipled competition. 3. Distributors and brand owners may not embrace it, but they must shake hands with it. Industry changes bring pain, but the subsequent orderly competition in community group buying also presents development opportunities. **-03-**Don't Forget O2O Home Delivery **Under the pandemic, not only community group buying benefited. Traditional trade circulation channels were blocked, making O2O e-commerce home delivery a necessity. Seeking cooperation with O2O e-commerce platforms for home delivery and exploring new business opportunities became the most discussed topics among FMCG brand owners and distributors. In fact, according to data, as of early this year, Meituan had 290 million monthly active users and over 15 million daily orders. Ele.me had 60 million monthly active users and over 15 million daily orders. The order volume of these two alone far exceeds the total orders of the most popular community group buying platforms. FMCG giants like Mars, Coca-Cola, PepsiCo, Yili, and Mengniu have all increased their investment in new retail O2O, showing the enormous opportunities hidden in the O2O field. New Distribution Commentary: New retail O2O has erupted again, and the future battle is unknown. But regardless, every brand owner must stay vigilant and follow up promptly. For brand manufacturers, the thinking should not be just about the development of a single channel, but rather based on the brand's own characteristics, continuously innovate around core consumer needs, combine consumption scenarios, and think holistically about category and channel layout, leveraging the tripartite cooperation of e-commerce, O2O platforms, and retailers to maximize brand investment efficiency. -04-

FMCG Companies' IPO Fever

In 2020, despite the impact of the COVID-19 black swan, the consumer sector was highly favored in the capital market, and some well-known brands successfully went public and performed impressively: On September 8, Nongfu Spring successfully listed in Hong Kong, with a market value of HK$370.3 billion on the first day, and hit a record high on November 17, exceeding HK$500 billion, firmly occupying the top spot among 83 listed food and beverage companies in Hong Kong. Founder Zhong Shanshan consequently topped the list of China's richest people twice. On October 15, Yihai Kerry Arawana successfully listed on the ChiNext board of the Shenzhen Stock Exchange, with its stock price rising 118% on the first day, and total market value exceeding 300 billion yuan. On December 29, its stock price broke through 100 yuan in early trading, with a market value exceeding 530 billion yuan, earning the nickname "Moutai in oil." On December 16, Blue Moon officially listed in Hong Kong, with a market value exceeding HK$90 billion on the first day. This broke the monopoly of foreign daily chemical products like P&G and Unilever, making it the first stock of domestic daily chemical products. New Distribution Commentary: For companies, going public can solve financing problems, address some management issues, facilitate rapid expansion, and quickly enhance brand influence. In the context of consumption upgrades and increasingly fierce platform competition, going public will become a key consideration for many companies. Listing is just a means; the goal is to fulfill the corporate mission and assume more social responsibility. We hope these companies can leverage their listings to reach new heights and truly realize the birth of one or more world-class FMCG brands and companies in China. **-05-**Traditional Consumer Companies Reach New Market Value Highs **In addition to newly listed companies, established traditional companies that have been listed for years are not to be outdone. On November 20, China Resources Snow Breweries reported HK$59.5 per share, hitting a record high, with a total market value of HK$193 billion. On December 11, Tsingtao Brewery's stock price broke 100 yuan, with a market value of nearly 150 billion yuan. On December 16, Haitian Flavoring, the first stock in the condiment sector, saw its stock price rise to a new high of 204.88 yuan, with a market value exceeding 660 billion yuan. On December 30, the liquor sector led the market rally, with Kweichow Moutai's stock price at 1925.13 yuan, and a total market value of 2.41 trillion yuan, hitting another record high. New Distribution Commentary: In the long run, leading companies with core value will continue to attract capital from all sides. Behind this is China's strong recovery after the pandemic, making it the only major economy to achieve positive growth. ** **As consumer goods support the people's livelihood economy, the development of these blue-chip stocks will inevitably benefit from national development. Market value is only one aspect; companies must not forget their original aspirations. Truly creating more value for the country and consumers is the foundation of their existence. **-06-**Antitrust: Too Much Is as Bad as Too Little; Know When to Stop **On December 24, the State Administration for Market Regulation filed a case against Alibaba Group for suspected monopolistic practices such as "choose one from two." Subsequently, Ant Group was also summoned for talks for the second time. A single stone stirs a thousand waves! Another giant, Meituan, also faced an antitrust lawsuit and was placed on file for review! These actions undoubtedly demonstrate the national regulators' determination to enforce antitrust laws. New Distribution Commentary:

  1. Why antitrust? Without strict regulation, some companies inevitably engage in behaviors that hinder fair market competition in their daily operations.** **The investigation of giants does not mean a change in the state's attitude of encouraging and supporting the platform economy; rather, it is precisely to better regulate and develop the platform economy, guiding and promoting its healthy growth. 2. Why these internet giants? The platform economy inherently has network externalities: the more users a platform has, the greater the traffic, the more data it accumulates, the easier it is to improve product and service quality, and the more it attracts users, forming a virtuous cycle through advantage accumulation. **This also leads to a natural tendency toward concentration and monopoly, easily evolving into a "winner-take-all" pattern. 3. For the FMCG industry, these internet platforms have become an important channel. In the long run, regardless of company size, antitrust compliance in transactions and operations is imperative. The arrival of an era of strong antitrust regulation may have a significant impact on the entire industry, but overall, it should be positive. **-07-**Livestream E-commerce: Carnival, Ebb, and Chaos **Under the pandemic, people stuck at home became enamored with livestream shopping, and this special period accelerated the breakout of livestream e-commerce among consumers. Due to the pandemic's impact, livestream e-commerce experienced explosive growth, becoming a massive new channel. As of September 2020, livestream e-commerce users reached 309 million, accounting for 41.3% of online shoppers. But who is responsible for the chaos in this channel? In the first half of the year, events like Luo Yonghao's single-session sales exceeding 100 million yuan, Viya selling rockets, and Xinba's apprentice on Kuaishou achieving 480 million yuan in sales marked the rapid explosion of livestream e-commerce. However, near the end of the year, livestream e-commerce frequently hit the hot searches again, but this time due to repeated exposure of fraud and negative news. After "Double 11," professional counterfeit hunter Wang Hai exposed Xinba's bird's nest fraud during a livestream. In December, the spotlight turned to Luo Yonghao, with successive revelations that his livestream sales of mouthwash involved false advertising, and low-price travel groups that failed and closed. Incidents of fake sales data and slot fees higher than sales revenue poured cold water on livestream e-commerce. New Distribution Commentary:
  2. "Livestream e-commerce" is a new form of online shopping that has emerged in recent years. Livestream effectively shortens the link between B-end and C-end, empowers traditional offline real economy, promotes the iterative upgrading of traditional manufacturing, and can effectively open up traffic pools, achieving traffic reuse and long-term brand service. However, online livestream e-commerce still needs legal supervision. Streamers should also be responsible for consumers when selecting products, and strengthen the review of products sold through livestream with a more cautious attitude to realize the original intention of livestream e-commerce.
  3. With the continuous scandals and fraud in livestream, we should also calm down and re-examine the livestream e-commerce model. It is just an emerging channel that needs attention, but we should avoid over-mythologizing or relying on it, or fantasizing about building a brand overnight through livestream. **-08-**National Trend: Rise of New Consumer Brands **A large number of domestic new consumer brands rose rapidly this year. With the gradual establishment of Chinese cultural confidence, "national trend" is becoming a new favorite in youth fashion culture. Genki Forest, which created a new category perception and locked in the track; Perfect Diary and Florasis, which became popular through supply chain-based differentiated experiences; Milkground, which focused on segmentation and conquered many foreign brands with a blank-mind occupation strategy; And convenient foods that went viral due to the pandemic (such as Li Ziqi's Luosifen), self-heating foods (like Zihaiguo), and other brands. Whether seizing time windows, targeting channel dividends, or taking differentiated routes to impress consumers, many emerging domestic brands achieved great success this year. New Distribution Commentary: The rise of a large number of national trend new consumer brands is largely due to this era of high consumer nationalism and cultural confidence, which is a great opportunity for domestic brands to develop and break through. On the other hand, although it can bring strong momentum and traffic to brands, the core of long-term development remains product quality. After leveraging national trend elements to empower the brand, continue to deepen product quality for sustainable development. Avoid letting quality "regress" after brand awareness expands, which would ruin a great opportunity. **-09-**Industry Mergers and Acquisitions **This year, several mergers and acquisitions were also a hot topic in the industry. First, PepsiCo acquired Baicaowei for 5 billion yuan at the end of February, and a month later acquired functional drink Rockstar for 26.8 billion yuan. Mengniu first acquired 1.197 billion new shares of China Shengmu in July, becoming the single largest shareholder, and then in December announced plans to acquire control of Milkground, the "first stock in cheese," for no more than 3 billion yuan in cash, and also formed a joint venture with Coca-Cola called "Keniule." Nestlé first sold its domestic packaged water business to Tsingtao Brewery, and then sold Yinlu back to Food Wise Co., Ltd., controlled by Yinlu's founder, for about 2 billion yuan. What signals do these release? New Distribution Commentary:
  4. These acquisitions and divestitures are actually strategic adjustments based on changes in consumer demand. In recent years, companies like PepsiCo, Mengniu, and Coca-Cola have continued to diversify their products. With consumers' growing health awareness, the cola category has declined, while low-sugar, tea beverages, high-end cheese, and other categories have grown rapidly, prompting these companies to accelerate their M&A pace. Nestlé, on the other hand, hopes to shed underperforming businesses, focus more, and achieve efficient resource utilization, concentrating in China on key areas: infant nutrition, confectionery, coffee, seasoning foods, dairy products, etc.
  5. Mergers and acquisitions, as well as business and asset sales, are essentially means to quickly achieve strategic goals. Success depends on how companies integrate and utilize resources afterward. There is no need to establish new companies; they can quickly leverage other companies' channels, production lines, and other resources. However, it is worth noting that after M&A, the question of who takes the lead is a problem, and there are many cases of failure if not careful; vigilance is needed. **-10-**Efficient Connection: The Explosion of Private Domain Economy **In September this year, the WeChat team released the "Mini Program Economic Circle" report card: daily active users exceeded 400 million, mini programs exceeded 1 million, covering more than 200 sub-industries, with over 40,000 third-party service providers and 5.36 million mini program practitioners. From January to August this year, the GMV of physical goods in mini programs increased 115% year-on-year, and brand merchants' self-operated GMV increased 210% year-on-year... Meanwhile, Youzan, a WeChat ecosystem private domain operation service provider, released its financial report showing that in the first three quarters, the number of new paying merchants reached 5,328, a year-on-year increase of 22%, and annual GMV is expected to exceed 100 billion yuan, making it the first domestic SaaS service provider to enter the "100 billion club." These figures undoubtedly herald the rapid development of the domestic private domain economy, and one trillion is just a starting point; private domain traffic, due to its efficient and low-cost ability to connect consumers, has been widely discussed in the industry. New Distribution Commentary:
  6. Private domain is not a panacea; it is more like an upgrade package. It can help brand owners or distributors do better business, but truly doing private domain well depends on whether you can provide value and enhance user experience. 2. Not all companies and brands are suitable for the private domain economic system. It depends on whether private domain improves business efficiency, reduces supply costs, or helps customers lower user retention and repurchase costs. 3. When doing private domain economy, do not over-focus on improving business efficiency, helping merchants with group sends, fission, and adding fans. Of course, this is an important aspect, but do not ignore the user experience direction. 2020 is about to pass. For most FMCG professionals, this year has been difficult, but it has also been the year with the most opportunities, a chance for transformation and upgrading. In 2021, we hope every FMCG professional will seize the opportunities under change after the baptism of the past year. In this rapidly changing era, only by learning more can we go further. New Distribution will continue to be committed to providing valuable content and activities for FMCG practitioners, staying true to our original aspiration, and working together with you all! Heavyweight | New Distribution's New Year's Eve Live Speech **December 31, 9:00 PM 「2020, Goodbye; 2021, Hello」 The New Year's Eve live event will be held on New Distribution's official video account at 9 PM on December 31. Scan the QR code below to follow New Distribution's video account and lock in tonight's live stream. The content is full of dry goods, not to be missed! Tips will be paid 400-2000 yuan once adopted.