Click image for details Introduction No industry has suffered a catastrophe like infant formula. As long as there is market demand, no market situation is a dead end. Domestic formula, seemingly at a dead end, still has opportunities. 01 In early 2014, I visited a maternal and child store in a mountainous area of Guizhou. A man in his early twenties came in, looking like a new father, somewhat nervous. He told the clerk he needed a can of formula for his newborn. The clerk recommended a domestic brand. He held the can without examining it, but asked a memorable question:
"Is this formula poisonous?" There are many similar awkward moments. At promotional events for domestic formula, consumers often ask: "Is it domestic or imported?" When they hear "domestic," almost everyone leaves with a look of disdain, some even making exaggerated gestures of avoidance. The data reflects the same. According to the General Administration of Customs, in 2016, China's infant formula imports exceeded 200,000 tons, a nearly 30% increase on top of the 60% growth the previous year. Imported formula's market share rose from 35% in 2008 to 50% in 2015. With cross-border e-commerce, it's estimated that imported formula will exceed 65% this year. That's not all. Of the remaining 35% non-imported share, most is produced domestically by international brands like Dumex and Nestlé. Not done yet. Of the pitifully small share left for domestic brands, most claim their milk sources are imported. In other words, Chinese consumers who can afford imported formula basically all buy imported; if not, they buy international brands; if not, they buy formula with imported milk sources. Milk from Chinese cows has little chance of becoming formula for Chinese babies. 02 But here's a fact that might make you feel sorry for domestic formula. According to reports: "Formula has become the safest food category in China. With strong government supervision in recent years, the regulatory intensity for formula, especially infant formula, is far higher than international standards. Formula is now the safest food category in China. According to data from the China Food and Drug Administration: among 2,532 batches of infant formula tested, only 0.9% truly failed to meet national food safety standards, with a pass rate over 99%. The rest were issues like not meeting label claims." Our government's advantage is the ability to concentrate resources on major tasks. Once the government is determined to do something, it does it well, and formula is one such thing. After all, the Sanlu incident severely tarnished the government's image and public trust. After years of effort, the fact is: Domestic formula not only has higher safety standards than international ones, but its actual safety is also higher than international formula. Some might say: "Lao Miao, you're not in our shoes. If your child were still on formula, would you choose a domestic brand?" "Of course not! My son is my own flesh and blood!" Yes, Lao Miao, who knows the industry and standards well, even knowing that domestic formula is safe, still wouldn't choose it now. This is what we often call: Perception is greater than fact. Once a thief, always a thief. A reformed prostitute is still not seen as a decent woman. Once you've told a huge lie, you're never trusted again. That's the current predicament, or rather, the miserable state of domestic formula. 03 Is there any hope for domestic formula? Should we give up treatment? As long as there is market demand, no market situation is a dead end; it's just a matter of difficulty. Undoubtedly, the difficulty level for domestic formula is extreme. With consumers having almost zero trust in domestic formula, relying solely on traditional methods like recruiting distributors, distribution, ground promotion, store clerk brand switching, member activities, plus some advertising and promotions, is basically ineffective. The brand's supposed N product advantages are completely lost on consumers. To save domestic formula, we must start with "perception" and change the "stereotype" that has formed in the market. 04 The first method can be called "borrowing a path to conquer Guo." First, sell the product in the international market, leveraging consumers' trust in foreign regulations, safety standards, and supervision, then promote it in the domestic market. After gaining some international exposure, it becomes a genuine "international standard product," and consumers' trust in it will greatly increase. Junlebao is one of the few domestic formula brands that has been relatively successful in recent years. While focusing on the domestic market, it has always emphasized its sales in Hong Kong, removing many trust barriers. 05 Of course, that's not enough. The second method is to find authoritative endorsements. The more authoritative and numerous, the better. You must "borrow the tiger's might." Certification bodies should be high-end, authoritative, and professional, whether international or domestic. Through authoritative endorsement, transfer consumers' trust in the institution to the brand. Using celebrity endorsements is also a method, but for infant formula, it's different from other products. Many brands currently have misconceptions. For example, a goddess-level star once endorsed a Northeast brand formula. The TV ad made young mothers sneer: "How is that possible? She's so rich; she wouldn't let her child drink domestic formula." For domestic formula using celebrity endorsements, remember: "PR effect is greater than advertising effect." The celebrity should genuinely recommend the product, participate in sales events, and make consumers believe she really uses the brand. Otherwise, it's a waste. 06 The third method is "turning from guest to host." Due to their "criminal record," domestic formula has been in a passive position in competition with imported formula. Imported formula has always emphasized its safety, implying domestic formula is unsafe. In recent years, domestic formula has been trying to prove its innocence, but consumers choose not to believe. It's like two people arguing: "You're a liar!" "I'm not!" "How are you not a liar?" "I... one... two... three... so I'm not a liar." "I don't believe you! Because you're a liar!" Bystanders say: "Right! Don't believe him; he's a liar!" Domestic formula has been in a situation where it can't clear its name even by jumping into the Yellow River. So regarding safety, domestic formula should do more and say less. Make the product well, strengthen endorsements, and do trust-building work. In publicity, avoid the "safety" battle and target the weak point of imported formula. What is the weak point of imported formula? Exorbitant profits! We know a 900g can of imported formula costs around 300 yuan, which is about 300,000 yuan per ton. What does that mean? Those familiar with the formula market should know: the raw materials, packaging, and processing profit for a can of imported formula total about XX yuan (the exact number is not convenient to disclose, but suffice it to say it's a two-digit number). Are Chinese people rich but stupid? Willing to spend money for their children? But they don't want to be taken for a ride! Is imported formula's recipe better? That's nonsense. All formula recipes are based on breast milk and strictly follow proportions. As long as they meet standards, all formulas are the same. The so-called added nutrients are just tricks. Junlebao's pricing is a highlight. Most products are priced at 100-200 yuan, with online specials as low as 79 yuan per can. Truly the conscience of the industry. But currently, domestic formula has not used "affordability and fighting industry profiteering" as its main selling point. It's time to stop being passive on "safety" and open a second front: "Are you treating the people as fools?" 07 If you're just starting in formula with no foundation and find the above methods difficult, there's one last method: taking a roundabout route. For a high-involvement product like formula, regaining trust is extremely difficult. That's why many industries have been exposed for serious quality issues, but only formula has never recovered. But companies can start with other infant foods, using products with lower attention to gain market trust: such as complementary foods and nutrients: rice cereal, meat floss, juice, fruit puree, probiotics, calcium, iron, zinc supplements, etc. These have good market opportunities. First build consumer trust in the brand, then extend to formula. Beingmei used to make rice cereal, and Biostime used to make probiotics. After transitioning to formula, they both achieved good results. Assess the situation; sometimes taking a step back is the best choice. Domestic formula has come to this point largely due to its own doing. But after years of rectification, the original wrongdoers have mostly been punished and left the market. Under current strict supervision, product quality and safety issues have been thoroughly addressed, but market perception hasn't changed at all. Can domestic formula companies make effective responses to market perception? I won't say more; it's up to their fate. -END-