2014 was a bumper year for Yangyuan's Six Walnuts. After years of doubling growth and breaking through the 10 billion ceiling, it achieved over 30% growth, reaching a scale of over 15 billion yuan (retail price). Following the explosion of the walnut milk category, beverage giant Wahaha, well-known dairy companies Yili, Mengniu, and Wandashan, and food giants Panpan and Jinmailang have all entered the walnut milk field. Even small brands in the walnut milk sector are gearing up for a big push. The market situation has suddenly become unpredictable.
Expert Opinions Marketing experts have expressed their views on the walnut milk market landscape from a category development perspective, focusing on Six Walnuts facing a siege from many competitors. The main viewpoints and controversies are as follows:
A: The category has reached its peak, and competition among brands is inevitable, possibly leading to price wars. B: The entry of major brands will have a "more people, more fire" effect, expanding demand and growing the category.
The author believes that while these views are from an industry perspective, both lack in-depth analysis of the competitive landscape and fail to clearly analyze the category ecology and corporate mentality of walnut milk. They are like watching a fire from across the river, engaging in armchair speculation. Analysis of the market landscape is not a superficial glance; if companies mistakenly believe either viewpoint, it could lead to strategic thinking errors, which are fatal!
As an outsider to the walnut milk industry, I can only reluctantly explain the ins and outs of walnut milk, hoping to provide some inspiration to relevant companies.
Unraveling the Puzzle First Question: Will the walnut milk category continue to develop? Most people's judgment on the future of the walnut milk category focuses on whether the category has reached its peak. If it has, there will be severe mutual squeezing among brands; if not, they may jointly expand the category. This conclusion is based on the assumption that walnut milk has formed a stable market consumption scale, but in fact, the category boundary (fence) of walnut milk has not yet been formed. Eighty percent of walnut milk sales come from the holiday gift market in second, third, and fourth-tier towns, while the habit of daily consumption for brain health has not been popularized. In other words, the development of the walnut milk category currently depends not on consumers' recognition of category value and self-needs, but on consumers' gift-giving purchasing habits. Holiday gifts are heavily influenced by the trends of the times and are easily replaced, so the category foundation of walnut milk is not stable. Therefore, walnut milk cannot currently be considered a solid independent category; to put it bluntly, it is a parasitic category that has carved out part of the large holiday gift market. At this point, it is biased to claim whether the category has reached its peak.
To see whether the category will grow in the near term, the key is to analyze the gift-giving habits that account for 80% of sales. The walnut milk market has always been dominated by Yangyuan's Six Walnuts. Looking at Six Walnuts' current market layout, regional sales strength is quite uneven, which adds a layer of mystery to the future situation. Weak regions will be filled by Six Walnuts' intensive market cultivation and the aforementioned competitors, expanding the regional market capacity. However, Six Walnuts' weak regions may be related to local gift-giving customs (such as Fujian and Guangdong), and it is not just the strength of major brands' channels that can drive sales; habit cultivation takes time. The length of the process and market growth depend on everyone's marketing level. In strong regions, fierce competition with major brands is inevitable, and promotional battles during holidays will be intense, which is beneficial for strengthening consumption habits and attracting new consumption power. Therefore, from the perspective of consumption habits, the total market volume is almost certain to grow in the short term. But whether it will be replaced by a new category in the future is unknown. Expanding consumers' daily demand for category value is a major topic that companies based on walnut milk must address in the future.
Second Question: Will Six Walnuts be significantly impacted? Looking at the present, judging the impact on the holiday gift market can determine whether Six Walnuts will be significantly impacted. It is impossible to conclude just by seeing how many major brands are competing; we must analyze what consumers think. The purchase decisions of mass consumers for holiday gifts stem from three points:
- Well-known brands bring face;
- Good appearance shows class;
- Moderate price is acceptable.
Six Walnuts is almost a household name, its three-piece can packaging is more upscale than Tetra Pak, and the price range of 60-70 yuan is relatively moderate. At the same time, the brain-nourishing value promoted by Six Walnuts is a good gimmick, which is one of the weapons that allowed Six Walnuts to successfully cut into the dairy companies' holiday market. Other major brands' walnut milk also has these attributes, and it can be foreseen that when the wolf pack attacks, it will declare the end of the category dividend era for Six Walnuts. Six Walnuts is still under the protection of the leader's halo, and it will take time for other brands to establish professionalism in consumer cognition. Therefore, Six Walnuts will face challenges in strong regions and gradual development in weak regions. The most likely scenario is: total volume will still grow, but profits may decline.
Third Question: Guess what major brands will do? Wahaha, Yili, and other major brands have successively entered the walnut milk market, and many believe this will inevitably lead to a fierce industry battle, with the fittest surviving. I believe the situation may not develop that way. Let's first analyze the mentality of major brands. From the perspective of large enterprises, the optimal strategy is not to take risks to create new market opportunities, but to follow markets with potential. Once they discover a product rapidly rising, they leverage their brand and channel advantages to follow. If the pioneer in the field is not strong enough, they may even be starved or crippled.
The reason major brands are attacking walnut milk together is that through Six Walnuts, they saw that this previously overlooked field actually contains huge development space. So, they are entering to share the cake, and it can even be said they have high expectations for entering walnut milk. They want to pick up bargains in a market with a single dominant player and many gaps, and they also see the significant profit margins in Six Walnuts' price band. 2015 will be a trial period for major brands. If successful, they will increase investment to continue reaping benefits; if not, they may treat walnut milk as a sub-item with some sales, or even cut it. This is typical "when the walnut is ripe, come and share it" mentality: eat as much as you can, and leave when there's nothing left. Major brands need new profit growth points, not a quagmire of war. It can be foreseen that major brands will not release their hawks to fight to the death when they don't see the rabbit. But the momentum of initial entry must be maintained, early investment is inevitable, and marketing offensives are bound to happen; otherwise, they are like pigs standing at the mouth of a typhoon, soon falling to the ground. However, once the offensive is blocked, they may fall into a stalemate like "six states attacking Qin," possibly diverting the trouble by shifting risks to channels in the form of tasks, or they may start seeking differentiated competition to maintain stability. For example, Wahaha, from the start, distinguished its product form from the traditional three-piece can of walnut milk, with no intention of a head-on fight.
Strategies for Breaking the Deadlock First Question: Can walnut milk brands gain competitive advantage through concepts? Many walnut milk brands now use concepts like "original pulp" or "original pressed," aiming to emphasize the authenticity of raw materials, implying others are mixing. On the surface, this is differentiated competition, but in essence, it doesn't matter much to consumers. As mentioned earlier, the main consumption of walnut milk is for holiday gifts, and in consumers' purchase decisions, brand influence plays a key role. After all, it's not for themselves to drink, so who cares if it's original pulp? The bigger the brand, the more face. For daily immediate consumption, the walnut milk category lacks broad and stable consumption habits, and sales are small. People with strong brain health awareness buy walnuts directly, as raw materials are more functional than beverages. This is completely different from Wanglaoji's "reduce heat" concept. Wanglaoji can be a daily anti-heat beverage largely because the Chinese herbal formula cannot be replaced by raw materials, and its main dining market inherently has necessary consumption occasions (cutting into the huge regular beverage market). Walnut milk lacks both of these. Therefore, in the walnut milk field, concept differentiation cannot truly play a significant role at the market level. Its biggest role is to arouse distributors' interest, get them on board, and make them stock up before the holidays. So, the more impressive the concept, the better the effect, but it must be accompanied by systematic promotion methods; otherwise, the experienced distributors will slip away like loaches.
Second Question: What methods do dairy companies use to make walnut milk? Dairy companies have two paths for walnut milk: one is to imitate traditional walnut milk with three-piece cans, and the other is to use Tetra Pak and other dairy packaging forms. If they make three-piece cans, they can leverage brand and channel advantages to directly launch promotional battles during boxed sales occasions (holiday gifts, daily whole-box purchases), thereby gaining a share in the walnut milk market. If they use Tetra Pak, they can use the current "walnut fever" to launch popular items and squeeze other items in the dairy market to gain market share. The consumption occasions of the two forms are different, so the overall strategy is different. Therefore, dairy companies need to consider their own resource conditions when choosing which path. The weak are not suitable for the former path unless they produce "shoddy goods" for price wars, but that is not a long-term solution. For the strong, as long as the strategy is appropriate, which path is just a matter of corporate decision direction.
Third Question: What are the chances of food companies succeeding in walnut milk? I heard that food companies like Panpan and Jinmailang have entered the walnut milk field, and I am surprised. No matter how big the brand, its extension space cannot exceed consumers' cognitive width. For example, the failure of Overlord Herbal Tea is due to many consumers unconsciously thinking "the herbal tea might taste like shampoo." If making milk drinks and walnut milk can be somewhat related, then liquid beverages and solid snacks are in completely different fields in consumer cognition. A cake maker or instant noodle maker producing walnut milk will give consumers a sense of unprofessionalism, and distributors will feel the same! Therefore, food companies making walnut milk must first pass the distributor and retailer hurdle. Even with high gross margins, "unprofessional" products are hard to get them to work on seriously because they don't see the profit potential. At the same time, to cross the psychological barrier of consumers, besides time, they need to distance themselves from the old brand and invest heavily in communication, which becomes naked competition with the leader and is hard to gain an advantage. So, food companies should first do walnut milk within their own brand and strong "private plots," advancing gradually. It's fine to drink soup while others eat meat. The cost of rashly seeking national layout is: how many billions do you have to burn in the early stage?
Fourth Question: How can Six Walnuts effectively respond? As the leader in the walnut milk category, Six Walnuts must maintain its industry position from being diluted at the critical juncture of transitioning from the dividend era to the competition era. I believe the following issues need to be addressed:
Solidify the value of the walnut category to avoid the embarrassment of being questioned everywhere, as this is the foundation of the entire category. After entering the competition period, opponents are comrades who will jointly eliminate those with red-eye disease. This issue is not a trouble at this stage, but it is a historical leftover from the previous stage!
In communication and education, strengthen the leader position and strictly prevent fake brands from disrupting the market, especially a group of fake brands with strong backgrounds. Once consumers form a multi-polar pattern in their cognition of walnut milk, Six Walnuts will inevitably be dragged into a price war.
Increase corporate resources invested in channels, quickly expand territory. The walnuts are ripe; pick more and put them in your arms, or others will eat them.
Keep a close eye on dairy companies' education of the immediate consumption market, judge whether their market share is cut from dairy or beverages, and when the time is ripe, pursue and seize the bride. It is not cost-effective for the leader to do the cultivation work itself.
Use the influence of Six Walnuts to strengthen the "Yangyuan" brand, gradually expanding the brand keyword from "walnut" to "Yangyuan." These two characters have profound meanings and can extend to many beverages, pre-burying growth points for future new products entering the holiday gift market with a differentiated posture. Even if the walnut trend passes, new products can still be launched smoothly.
Fifth Question: What should weak small walnut milk brands do? With the successive entry of major brands, original small and medium walnut milk brands all feel the wolf is coming, and even many experts believe that second and third-tier walnut milk brands will face a tough winter. It is undeniable that some new major brands will compete with Six Walnuts in some regional markets at relatively lower price points, inadvertently killing some weaker small and medium brands. The era of muddling through is about to become a thing of the past. In a situation where inaction means death, the moment to test the courage of small and medium enterprises is coming. Investment in branding is inevitable. How to fight this decisive battle has become an unavoidable topic.
For regional battles, being a local bully first is the best choice. The first consideration in a decisive battle is the choice of battlefield. Don't be clever and choose the opponent's weak areas to attack. If the strong opponent hasn't done well, it may be because the market cultivation difficulty is high and they have temporarily slowed down, not that they really don't have the energy. If you choose the wrong battlefield, congratulations, the outcome is likely that you exhaust yourself to marry a wife, and he helps you consummate the marriage. So, you must choose markets where your existing brand power, channel power, and team control are strong.
Secondly, what if you can't withstand the opponent's massive advertising bombardment? Then deconstruct the role of advertising: one is to expand awareness, and the other is to prove corporate strength. To achieve the first, you need to think based on communication tactics, systematically integrate regional advertising with mobile internet media and offline promotion to create regional influence. To achieve the second, you can use an appropriate spokesperson, who should have a wise image and whose status can elevate the brand's grade. You can even use the spokesperson for a PR event to assist in awareness communication.
Thirdly, what marketing methods can be effective? For weaker walnut milk brands, they should give up exploring the self-purchase immediate consumption market; this problem that even Six Walnuts finds difficult is not something you can solve. Instead, focus on larger consumption occasions, cultivate consumer brand awareness and consumption habits. For example, imitate beer promotion in the dining market, and amplify the passive needs of gift recipients to guide gift givers.
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