The relationship between manufacturers and distributors has changed dramatically in the past two years, and the model that persisted for over 20 years no longer exists. I have a metaphor. 2024 was the “marriage-fearing year” for manufacturers and distributors, and 2025 is the “divorce year.” If we liken the manufacturer-distributor relationship to a marriage, then in 2024, it was the “marriage-fearing year”: manufacturers couldn’t recruit distributors, and distributors wouldn’t take on brands. In 2025, it has escalated further into a “divorce year.” Terminations of partnerships between manufacturers and distributors are very common. A particularly striking phenomenon, which I call “clearing out big brands,” is intensifying. Initially, I thought it was an isolated case, but as isolated cases multiplied, it became a widespread phenomenon, even representing a trend in brand and channel changes. What is “clearing out big brands”? It means distributors give up all first-tier brands but continue to operate other brands. If they completely withdraw from distribution and give up distribution altogether, that wouldn’t be called “clearing out big brands,” even though the phenomenon of distributors quitting is also widespread. When I first heard a distributor mention “clearing out big brands” this year, I was very surprised. I thought something major had happened to the distributor personally. One distributor told me that they had won a major award last year for distributing a certain first-tier brand but were planning to give it up this year. I didn’t believe it until I saw the warehouse of near-expiry products. If the manufacturer didn’t subsidize the near-expiry products that took up half the warehouse space, they would definitely give it up. I talked about this phenomenon at a distributor conference. A distributor privately told me, “You’re absolutely right; I’ve given up all of them.” How far has “clearing out big brands” gone? A friend on a self-media platform told me that many markets have long been unable to recruit distributors. Clearly, “clearing out big brands” has become a raging fire. It’s just that because the channel profitability of first-tier big brands varies, it hasn’t yet turned into a disaster. “Clearing out big brands” while still operating other brands is absolutely not ordinary; it hides certain signals of changes in channels and distribution models. Manufacturers and distributors are increasingly out of sync In the early days of deep distribution, manufacturers and distributors were highly in sync. Both sides had only one goal: growth. Sales growth meant profit growth. Distributors are businesspeople; they care about profits. Around 2010, there was a change in the manufacturer-distributor relationship, specifically regarding attitudes toward supermarkets. At that time, there was a saying that for first-tier big brands, 70% of sales came from supermarkets, but 70% of profits came from small shops. Profits and sales were in different types of markets. For first-tier big brands, it was inevitable to go all out in supermarkets. For distributors, if there’s no profit, what’s the use of sales? At that point, first-tier big brands began operating by market classification. In provincial capitals and above, and even in some better prefecture-level cities, manufacturers directly handled order functions, while distributors only took on “capital advance” and delivery functions, becoming limited-function distributors. But in county-level markets, distributors remained full-function distributors. Now, this is the third major change in manufacturer-distributor relationships since deep distribution. There are two reasons: First, new supply chains have emerged, such as supermarket renovation stores and retail collection stores, with a large number of factory-to-store direct supply chains. Distributor sales have plummeted and will continue to decline. Second, in the era of shrinking volume, manufacturers are “held hostage by growth,” sparing no cost to maintain sales and listed company reports, causing the price system to collapse. The collapse of the price system is the last straw for distributors “clearing out big brands.” This year, I’ve been telling every boss I meet: price system first, sales second. But who is willing to bear the blame for being the first to see sales decline? The more distributors are unwilling to act and sales decline, the more importance is placed on online sales. Because the fastest way to boost online sales is to cut prices or promote big single products. And online promotions bring even greater chaos to the price system. Price system chaos makes distributors see no hope of profit. It’s not just one distributor losing hope; it’s a large number of distributors. It’s not a short-term loss of hope; it’s been going on for a long time. So, the only choice is to “clear out.” Clearing out individual big brands is different from “clearing out big brands.” The difference between an isolated case and a phenomenon is that a phenomenon represents a trend. First-tier big brands are becoming Coca-Cola-ized Coca-Cola-ization is a phenomenon I’ve named. In the FMCG field, Coca-Cola is definitely the number one brand. The second might be debatable, but Coca-Cola’s position is undisputed. But have you seen any retail store making money selling Coca-Cola, or any agent making money distributing Coca-Cola? Coca-Cola’s distribution model is the most unique. Some people call Coca-Cola deep distribution, which is easy to misunderstand. Coca-Cola can only be called a direct supply model; it’s deep distribution without distributors. The new supply chain model is essentially factory-direct supply to retail stores. In supermarket renovation stores, the future product structure will roughly be: about 50% private label, about 25% differentiated products, and about 25% first-tier big brands. First-tier brands remain traffic-driving products in supermarket renovation stores. It’s the same abroad. How could traffic-driving products known to everyone have high distribution margins? China’s first-tier brands have already reached world-class scale, and the Chinese market has entered an era of shrinking volume. The combination of these two factors makes the Coca-Cola-ization of first-tier big brands inevitable. First-tier big brands, because they are big brands, are demanded by consumers, and retail stores have to sell them. But because prices are transparent, all channel players have no profit, and distribution enthusiasm is low. Consumers are willing to buy, retailers have to sell, and distributors are unwilling to distribute. This is the dilemma that first-tier big brands inevitably face in Coca-Cola-ization. The Coca-Cola-ization of first-tier big brands is a test for them. If they withstand the test, they will move closer to Coca-Cola. Price system chaos: a management issue or a time for change? Is price system chaos good or bad? This is a question worth pondering. For the existing channel structure, it’s definitely not good. But in the history of China’s channel changes, when has there not been price system chaos? Around 2000, when Chinese supermarkets rose, price system chaos occurred because the pricing system differed from traditional circulation. Early circulation traders also resisted. Around 2010, when e-commerce rose, price system chaos occurred. Manufacturers and traditional distributors resisted. B2b platforms had price system chaos. Instant retail had price system chaos. In the new supply chain period, price system chaos occurred. Price system chaos may have two causes. First, poor channel price control, which is a management issue. Second, the time for channel change has arrived, and it’s necessary to embrace the change. Currently, both factors are present. China’s current market environment can be described as: structural growth in an era of shrinking volume. First, in terms of total volume, it’s an era of shrinking volume. The main body of shrinkage is big single products. The reason first-tier big brands are big brands is that their big single products have sufficiently large sales. The shrinkage of big single products for first-tier big brands has no solution. In fact, as early as 2013, the total volume of various FMCG industries had already reached historical peaks. But big single products were still growing, and squeezing second-, third-, and fourth-tier brands still brought growth. So, although the era of shrinking volume had already arrived, first-tier big brands didn’t feel it. Now, it’s internal competition among giants in the era of shrinking volume, which can’t bring any growth or defeat competitors, only mutual harm. It affects not only manufacturers’ sales and profits but also price system chaos and distributors’ confidence in first-tier big brands. Second, there’s growth in segmented products. Big single products are mass products; Coca-Cola is a mass product, the greatest common denominator of all consumers. Segmented products are not suitable for the mass market or deep distribution. But channels have growth and profits. Although a single brand’s sales may not match first-tier big brands, as long as you represent a champion in a small category, your position is relatively stable. First-tier big brands enter maturity In the domestic market, the good days for first-tier big brands are over. When growth is gone, they enter the maturity stage. When Chinese people talk about marketing, they often refer to the 4Ps. Europe, America, and Japan actually practice 1P marketing. 1P is product and brand. Price is part of the product, channels are third-party platforms, and C-end promotions are blocked by supermarkets. 1P marketing is marketing in the maturity stage. With supermarket renovation trends and future channel changes, first-tier big brands will inevitably enter 1P marketing. It’s better to plan and prepare early. First, strengthen brand power like Coca-Cola. Since they’re going to be Coca-Cola-ized, they must have brand power like Coca-Cola to survive. Second, hand over distribution to third-party B2b platforms. Since B2b platforms are already distributing first-tier big brands in the form of secondary wholesalers, it’s better to strategically cooperate with B2b platforms. Of course, this is also a favorable opportunity for B2b platforms to develop rapidly. From this perspective, first-tier big brands should gradually and orderly retreat from deep distribution. Note: orderly retreat. Third, seize high-energy channels and hand over kinetic channels to third parties. Supermarket renovation stores, snack collection stores, and e-commerce flagship stores are all high-energy channels, the commanding heights of channels. Seize a few high-energy channels and hand over kinetic channels to third-party platforms. Fourth, enter the international market. The capacity for mass products is limited; don’t treat the rapid growth of the past 40-plus years as the norm. Fifth, acquire segmented brands. The growth of Coca-Cola and Procter & Gamble is a history of worldwide acquisitions. It’s not a good idea for first-tier brands to do segmented products. Segmented products are “fish that slipped through the net” that grew naturally, and often “there’s a leader but no second.” First-tier big brands doing segmented products would be awkward. A single segmented product isn’t enough to fill the gap, but together, segmented products are huge. In the growth stage, it must be growth-oriented; in the maturity stage, it must be profit-oriented. Adapt to this shift. Traditional manufacturer-distributor relationships face a moment of reckoning Clearing out big brands means distributors have made a break with the past. The era of relying on big brands for growth and profit is gone forever, and the deep distribution model is gone forever. Don’t complain, don’t miss the past. Move forward. The future market structure is not a battle between first- and second-tier brands, but a structure of mass, segmented, and niche products. First-tier big brands do mass products; niche is too small, and segmented products are the focus for distributors. Segmented products can’t be branded or deeply distributed. At this point, high-energy scenarios become very important. Because high-energy scenarios can drive both the C-end (IP-driven) and the b-end (channel-driven). Therefore, scenario marketing with high-energy scenarios as the starting point becomes an inevitable choice for distributors. At this point, the functions of distributors have changed significantly; they can no longer be called distributors but should be called operators. In recent years, I’ve been emphasizing that distributors have two major future directions: one is to become third-party B2b platforms; the other is to become operators of segmented products.