With its formula and key raw materials unchanged for years, what new possibilities remain for the once-popular Wangzai Milk? In fiscal 2023, China Want Want (00151.HK) told the outside world that through the return of the 56-ethnic-group cans and penetration into special channels such as restaurants and gas stations, this canned milk achieved high single-digit growth. Relying on the blind-box gameplay of "collecting cans" to drive sales is no different from the old tactic of finding cards in instant noodles years ago. The card-collecting craze was once hot but was soon discarded by teenagers. Wangzai Milk and its parent company Want Want are simultaneously facing the problems of brand and product aging, having been stuck in a bottleneck for as long as a decade. If it cannot make a bold break, China Want Want will find it difficult to escape its midlife crisis. The "Collecting Cans" Game In fiscal 2023 (April 2023 to March 2024), China Want Want (00151.HK) achieved operating revenue of 23.586 billion yuan and profit attributable to equity holders of the company of 3.99 billion yuan, up 2.9% and 18.4% year-on-year respectively, reversing the previous fiscal year's decline in both revenue and net profit. Among this, the dairy and beverage business revenue was 11.956 billion yuan, up 7.4% year-on-year, with Wangzai Milk, accounting for 90% of this segment, achieving high single-digit growth, emerging from the shadow of double-digit decline in the previous fiscal year. For the growth of Wangzai Milk, the company attributed it to the return of the 56-ethnic-group cans, which stimulated consumers' desire to collect. Additionally, combined with specific scenarios such as the back-to-school season and graduation season, terminal scenario marketing was strengthened; special channels such as restaurants and gas stations contributed, resulting in double-digit growth for its canned milk products. The 56-ethnic-group cans are a product launched by Want Want in 2019, where each can of Wangzai Milk corresponds to an ethnic image. The blind-box gameplay increased the fun of collecting cans. To this end, the company also cooperated with Tmall to release the crossover song "He Er Wei Yi" (Unity). At that time, the Wangzai images of 56 ethnic groups extended from Wangzai Milk to multiple products such as rice crackers and senbei, which can be called textbook-level packaging marketing. However, in the 2019-2020 financial report, the company did not highlight the ethnic cans. Unexpectedly, years later, they would become one of the important forces driving sales. Similar marketing tactics are not new in the FMCG industry. Uni-President China (00220.HK)'s Xiaohuanxiong crispy noodles, born in 1994, successively launched card collections such as "Zou Tian Xia," "Long Juan Biao," and more than 50 sets based on "Journey to the West," "Water Margin," and "Three Kingdoms," with at least three generations having searched for cards in Xiaohuanxiong. Subsequently, Master Kong Holdings (00322.HK) launched Xiaohudui crispy noodles with a similar approach. Around 2009, Zhuhai Huafeng Instant Noodles introduced card-collecting marketing thinking, but it was a latecomer; the teenagers once obsessed with collecting cards had already grown up. The Days of Easy Money Are Over Seeing the image of Wangzai, many people's minds first recall the advertisement with the magical performance of classmate Li Ziming from Class 2, Grade 3. This milk, which he drank from childhood, holds a pivotal position in China Want Want. From fiscal 2017 to fiscal 2023, its revenue contribution rate rose from 45.4% to 50.69%. In fiscal 2020 and fiscal 2021, Wangzai Milk achieved revenue of approximately 9.910 billion yuan and 11.586 billion yuan, up 11.3% and 18.4% year-on-year respectively. However, this momentum did not continue. In fiscal 2022, Wangzai Milk's revenue fell into the danger of double-digit decline. Wangzai Milk has been stuck in its bottleneck for over a decade. After achieving approximately 11.2 billion yuan in revenue in 2013, it hovered below the 10 billion yuan scale for years, until a turning point in fiscal 2021 when it again exceeded 10 billion yuan. Why is it difficult for Wangzai Milk to keep "prospering" as the advertisement says? The reason is simple: after the rise and popularization of room-temperature and low-temperature milk, consumers have many choices, and pure milk is the mainstream. Wangzai Milk is reconstituted milk with large packages of milk powder as the main raw material, and its market size inevitably shrinks. According to Euromonitor data, the size of China's flavored milk market fell from 102.6 billion yuan in 2014 to 60.4 billion yuan in 2020. In subsequent years, as room-temperature and low-temperature milk strongly penetrated lower-tier markets, the reconstituted milk market continued to be squeezed. Like Wangzai Milk, Want Want's rice cracker products such as Senbei, Xuebing, and small steamed buns were popular nationwide in the 1990s, but now they are under similar pressure. They watch helplessly as snack brands like Three Squirrels, Bestore, and Mingming Henmang grow and attract young consumers. Is There an Optimal Solution? In the early years, Wangzai Milk sold well nationwide because the supply of dairy products was limited, providing room for reconstituted milk to grow. The growth of Wahaha's AD calcium milk, Nutri-Express, and other milk-containing beverage products was no different. Before 2005, reconstituted milk products were in a gray area. Starting in October 2005, such products were required to be labeled as "reconstituted milk." Ten years later, the industry was further regulated, with strict labeling measures for products using raw milk or milk powder as raw materials. Times have changed, from the post-80s and post-90s to the post-00s and post-10s, Want Want still relies on a few old products. Reconstituted milk products are gradually being marginalized, and rice cracker products are labeled as high-salt and high-sugar. After 2000, Want Want rarely had blockbuster products, and the myth of Wangzai Milk is hard to replicate. As the head of the company, Tsai Eng-meng sees this and is anxious. The company once adopted a strategy of launching new products in a broad net, but the results were not good. After going around in circles, it returned to the Wangzai IP. In fiscal 2018, the company accelerated cross-border initiatives, releasing a large number of Wangzai peripheral products, involving clothing, palace-style pastries, furniture, and even co-branding with Chando to launch cushions and masks. In fiscal 2019, the company launched more than 100 new products in one go, covering rice wine, candy, lactic acid bacteria drinks, fruit juice, and other sub-sectors. Among them, the Mitailang and Dashixiong rice cracker products were merely upgraded versions of original products; from 2015 to 2023, the company also launched energy drink products seven times. The result was that money was thrown into the water without even a splash. Brand aging and product homogenization are thorny problems that are difficult to break through for now. In the recently published fiscal 2023 results, the company's chairman and CEO Tsai Eng-meng said, "No matter how difficult the environment, there are always opportunities in the market." But where is the confidence? From August 20 to 22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Shrinking Era," along with the "3rd China FMCG Hard Discount Conference" and the "3rd China FMCG Distributor Conference," will be grandly held in Shanghai. At this conference, all roles in the FMCG industry chain will gather, allowing you to overview industry trends, discern hot track directions, penetrate industry resources, and precisely connect with first-line brand owners, head retail platforms, and excellent merchants with over 100 million in sales nationwide, providing you with precise decision-making, efficient cooperation opportunities, and on-site learning of exclusive methodologies from FMCG giants! Keynote speeches, roundtable dialogues, report interpretations, closed-door salons, and networking dinners—this thousand-person event is sure to have something for you! 🔺Scan the code for ticket consultation🔺 Recommended Reading