The 6th China FMCG Channel Innovation Conference, hosted by New Distribution, a professional new media platform for FMCG, was grandly held from April 1 to April 3 at the Chengdu Agile Howard Johnson Hotel. The event attracted 3,000 industry professionals from across the country, including distributors, community e-commerce platforms, brand owners, and internet companies, with a full house and unprecedented scale.

On April 1, at the main forum, Mr. Bi Chaojiao, General Manager of the Marketing Center of China Resources Snow Breweries (China) Co., Ltd., delivered a keynote speech, publicly revealing Snow Beer's channel strategy for its new development stage.

As the "double champion" with the highest single-brand sales volume for many years and the highest total sales volume in China, Snow Beer's every move in brand and channel strategy attracts strong attention from the entire FMCG industry. Snow Beer's channel model, strategies, and methods have always been highly symbolic and referential in the FMCG industry.

New Distribution has carefully organized and excerpted the essence of Mr. Bi Chaojiao's speech at the conference, and now publishes it for the benefit of New Distribution readers.

-01- The History of Snow Beer Is a History of Channel Development

From Snow's official entry into the beer industry, starting from Northeast China to today, the entire development process of Snow is essentially the history of channel development.

Why do I say this? In a sense, beer is a very typical FMCG category. Snow's ability to develop in this industry mainly comes from two aspects:

First, brand power; Second, channel power.

Starting in 1993, Snow set sail from Northeast China, successively adopting the "Mushroom Strategy," the "Along the River and Coast Strategy," and the "Comprehensive Development Strategy." In fact, these are strategies rooted in channel layout.

In the early days, Snow would often choose a production plant in a region with a good market as a production base to enter that regional market. After achieving a monopoly position, it would radiate to a larger area, roughly a 250-kilometer radius, thus "growing from a small mushroom to a big mushroom."

The "Mushroom Strategy" successfully captured large markets such as Sichuan, Tianjin, and Anhui, achieving near-monopoly status locally. Acquiring factories was the foundation of this strategy, but the most fundamental aspect was achieving channel coverage.

With this approach, in 2000, Snow crossed the Yellow River, entered the Yangtze River basin, and launched the Along the River and Coast Strategy. This was actually an extension of the previous strategy, laying out factories along the river and coast. With this strategy, in 2006, Snow's total volume exceeded 5 million kiloliters, securing the top position in China's market share.

In 2010, Snow launched the Comprehensive Development Strategy, laying out nationwide, which continues to this day. As early as 2011, Snow's single-brand sales exceeded 10 million kiloliters, achieving the world's number one single brand.

-02-

Snow Beer: Building the Largest and Strongest Channel Network in China's FMCG Industry

In recent years, whether in retail, society, or the internet, tremendous changes have occurred, but for Snow, channels still occupy a dominant position. So although Snow is selling beer, we are more eager to build the largest and strongest channel network in China's FMCG industry.

To achieve this goal, Snow, like everyone else, faces the challenges of the times.

The first is consumption upgrade.

Our product iteration is getting faster, and young consumers have increasingly personalized requirements for products. The era of a single big product dominating the market is over. Single taste, single packaging, single form, and single price can no longer adapt to market development.

Therefore, how to use a rich product portfolio and brand portfolio to meet the needs of today's young people is a major challenge for every brand enterprise.

Second, the development of the internet.

Everyone can feel that China's internet development is leading global internet development. The number of people in China using electricity and the internet is obvious to all. The rapid development of the internet has changed Chinese people's lives and consumption patterns. How to do brand marketing well under the current internet development is also a major challenge for every brand and enterprise.

Third, the continuous innovation of consumption scenarios.

We can see that the operations of some small stores have changed, and many scenarios have also changed. Leisure time can also become consumption time. I believe such changes are challenges for many enterprises.

Fourth, new retail is emerging one after another.

Currently, many leading internet companies are laying out new retail channels, so new retail channels are also channels that every enterprise needs to pay attention to.

-03- Snow Beer's Nine-Year Strategy: The "3+3+3" Strategy to Win the High-End Market

Under such challenges, Snow's strategy is clear: resolutely follow our own path.

How to do it specifically? The core is to win the high-end market under the guidance of the "3+3+3" strategy.

This strategy is actually a nine-year strategic plan from 2017 to 2025, divided into three phases, each lasting three years. The first phase has ended, that is, 2017-2019, with the strategic themes of quality growth, transformation and upgrading, and innovative development. In this phase, we solved several major problems:

1. Brand reshaping, establishing a portfolio of high-end Chinese brands.

2. Capacity optimization. Along the way, Snow acquired and built many factories, peaking at 100 factories. However, with improved production technology and consumption upgrades, we no longer need that many factories, so we took a major action to optimize many factories with surplus capacity.

3. Organizational restructuring. We further improved the capabilities of the entire Snow team. From 2017 to now, our employee count has decreased from nearly 50,000 to less than 30,000.

In addition, we also carried out channel secondary empowerment reforms. These efforts are actually to shed burdens, strengthen the foundation, and accumulate energy.

This year is 2021, and we are in the second three-year strategy phase, with the theme of winning the high-end market and quality development.

In these years, Snow's main tasks are to build channels, seize the high-end market, and build a high-end management team.

The final three years, from 2023 to 2025, have the theme of high-end victory and excellent development. We must win the entire high-end development. In this process, we need to continuously improve ourselves. We also have "dual benchmarking," benchmarking against international beer companies and excellent Chinese companies, with the ultimate goal of becoming first-class.

The "3+3+3" strategy is the core strategy running through our entire marketing business layout and development.

For channel development, we start from the brand and product portfolio, as brands and products are the important foundation for channel development. In recent years, Snow has built a portfolio of Chinese brands and international brands, including personalized and in-store product combinations. The launch of these products has laid a very good foundation for further winning and achieving cooperation.

In the future, Snow will continue to improve the combination of channel models. Previously, we focused on the construction of mainstream channels. In the future, we will combine different models to achieve quality development and win-win development with partners. To achieve this goal, we have done many things.

First, to further consolidate mainstream channels and achieve quality full coverage. The product channel construction represented by "Snow Brave Journey" is China's widest and deepest channel network. Currently, there are 4 million terminals in the entire system, and we can reach more terminals. We will continue to achieve the widest coverage.

Second, in terms of high-end channel empowerment, we hope to achieve quality control of high-end terminals. In Snow's team, there are also some distributors who are very good at nightclubs, high-end catering, on-site retail, and KA channels, but they are not strong enough. We will select excellent distributors from them and continuously empower them, so that they can have better customer relationships to control the commanding heights of terminals. This actually supports our battle for the high-end market.

The third thing is to forge swords, which means we hope to establish relationships with some leading channels. Whether you operate in the beer industry or not, as long as you are willing to come, have strength, money, and willingness to cooperate, we can establish good cooperative relationships with you and do the deepest market penetration.

The fourth thing is to create personalized channels. The current environmental changes, the internet, new retail, and long-term consumer development are actually a shock to the channel layout of FMCG brands. How to adapt to current changes and achieve development is what Snow will do next.

-04- Snow's Channel Strategy: Everything to Make Channels Bigger and Stronger

Snow's development in recent years can be summed up in one sentence: everything is to make channels bigger and stronger. To achieve this goal, we have done many things.

The first thing is actually digitalization. Currently, Snow has made many attempts in digitalization, but it is not systematic. The next step will be a comprehensive digital upgrade to promote online presence.

We want to put our factories, products, business, and people online. In simple terms, we want to put the millions of terminals we cooperate with online, including consumers, and integrate the so-called public domain traffic and private domain traffic of Alibaba, JD.com, and Tencent for better operation, achieving full-domain digitalization to enhance our ability to respond to market changes.

Efficient operation is a very important topic. What mechanisms, content, platforms, and organizations to use for operation is a project currently being initiated.

All digital transformation and upgrading are business-oriented and must support the current strategic development. C2M reverse customization of products, improving the efficiency of performance promotion, etc., are all areas where we need digital upgrades. The establishment of these functions will create a new platform for channel development.

The second thing is to promote channel empowerment in an organized manner and achieve quality development.

Currently, Snow has established a new organization called the Channel Development Department, under which it will operate nearly 20,000 channels nationwide.

The first is to build a platform; we will build a channel interaction platform.

The second is to carry out internal channel tiered and graded operation, dividing Snow's channels into three circles.

The first circle is nationwide channels. The second circle is large channels in each province. The third circle is large channels in each prefecture-level city.

We will rate distributors, identify their capabilities, shortcomings, and tasks they can undertake, and then empower and communicate with them. This includes case exchanges or inviting external forces like New Distribution to empower our channels.

These are all to better promote channel growth and achieve quality development. We do these things to make channels bigger and stronger and achieve multi-party win-win.

Our ultimate goal in serving large customers is to enable them to operate autonomously. Many brand owners want to control large customers themselves, but Snow wants large customers to operate autonomously. What does that mean? We want to select merchants with capital and strength to cooperate with us, divide work well, make plans, and even hand over the market to them for operation and investment, building a new manufacturer-distributor relationship. In this process, we achieve a win-win situation among terminals, channels, and brand owners, thereby meeting consumer needs.

-05- Strong Brand and Strong Channel Are Two Souls in One Body

Snow's confidence in channel development comes from strong brand support.

In recent years, Snow has been continuously building Chinese brands. For example, the brand styles of "Wind, Taste, Trend, Quality, Cool, and Courage." Wind is the Chinese cultural face series (Painted Face, Dan); Taste is Ingenuity Creation, with craftsmanship at every moment; Trend is the trendy Snow Marrs Green; Quality is the quality benchmark Snow Pure, making China's best pure beer; Cool is the blue bottle Brave Journey superX, aiming to communicate best with today's young people and become their first choice; Courage is Snow Brave Journey, which will continue to maintain our spirit of challenge.

In addition to Chinese brands, we will further introduce international brands, building a brand group represented by Heineken, Sol, Red爵, and Tiger. We will promote the landing of these international IPs in China, establish the highest-end international brand image, including using brand stories to interact more deeply with consumers and increase their brand loyalty.

There are also new tracks. In the future, with our strong channels, we will step out of the beer industry to make alcoholic beverages, and even water. These are future layouts. As you can see, we have already launched several new products in segmented fields this year.

Last year, we achieved certain results. Whether in terms of volume, brand value, or market share, we continued to maintain our leading advantage.

Some channel partners have not yet formed cooperation with Snow, which means Snow still has opportunities to establish new relationships with you. I hope that channel friends present and not present can board this ship of Snow heading to the future. Let us join hands and win the next decade of China's beer industry together. Thank you!

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