△2018 China (Luohe) Food Marketing Innovation Summit and the 3rd Leisure Food Manufacturers-Distributors Precision Matchmaking Meeting Free registration is in full swing; scan the QR code for details. The 'national soy milk' Doubendou has been on the market for over a year, with mixed results. On one hand, distributors report high inventory; on the other, sales are good and rising. Which is more real?

Inventory Crisis

"New Qingmei, over 4,000 pieces, clearance sale, 10 yuan per piece." A distributor of beverages under Dali Foods Group (hereinafter referred to as Dali) sent this 'distress' signal to peers. This move means giving up.

The so-called 'New Qingmei' is a tea beverage under Dali, originally called Qingmei, which is essentially 'green plum with green tea.' After changing the packaging and flavor, insiders use this name to distinguish it from the old version.

After a while, someone replied with a price: "5 yuan per piece, and if the date is worse (near expiry), then 3 yuan."

A piece is actually a box, containing 15 bottles of 500ml. On an e-commerce platform, a box sells for 48 yuan. "Over 4,000 pieces is more than a full truckload," the person who replied said to the reporter. Recently, there have been a sudden increase in people dealing with New Qingmei, from Guangdong, Hebei, Henan, everywhere... And the situation for Doubendou, which had already been exposed by the media, is not much better.

In fact, the 'inventory' of Dali's beverage products has long been criticized by industry insiders. Some even believe that its good performance after listing is largely due to the inventory sitting in distributors' warehouses or filling the channels.

Data shows that in 2017, Dali's performance steadily improved, with revenue increasing 11% year-on-year to 19.8 billion yuan.

"The beverage segment achieved revenue of 8.598 billion yuan, with a growth rate of 12.5%, far higher than the industry average. Among them, Lehu and Doubendou performed outstandingly," Dali stated on its official website.

'Doubendou' is a product that has been controversial over the past two years. Its popularity is much higher than New Qingmei. With the support of the 'National Empress' advertisement, it achieved sales of 1 billion yuan last year.

However, at the end of February this year, the inventory problem of Doubendou products erupted and was exposed by the media. The report mentioned, "Doubendou manufacturer forces heavy shipments, terminal sales are slow, and a large amount of inventory is near expiry. The manufacturer does not provide any solutions or measures..."

Now, two months have passed, and similar situations are still occurring.

Unbearable

"People have been dumping Doubendou near-expiry stock all along, in Hebei, Shandong, Zhejiang, Anhui..." said the insider who can help handle near-expiry products.

A senior practitioner also revealed to the reporter that the current 'hardest-hit areas' are Guizhou and Guangxi, where product backlog in the market and channels is far more serious than imagined.

A distributor in Guizhou who tried to defend his rights through self-media said his main problems are: old and expired goods are not handled; salespeople and supervisors have resigned one after another, and the company has been indifferent; expenses such as displays and promotions that were promised to be reimbursed have only been verbally agreed by managers but not actually reimbursed; the problem of forced shipments is serious, regardless of how much old stock remains or whether sales are moving, they demand shipments, and if not, they threaten to withhold expense reimbursements. But even after shipping, the expenses are not reimbursed...

Similarly, a Doubendou distributor in Guangxi told the reporter that his losses have reached nearly 50,000 to 100,000 yuan, including promised but unreimbursed display and promotion expenses, old stock handling costs, and expired products. Among the more than ten people with similar experiences, the largest loss was 200,000 to 300,000 yuan.

Importantly, "The city manager was transferred, the supervisor resigned, and the salesperson resigned. Since before the Chinese New Year, no one has been managing. Last November, when the sales staff wanted to transfer some poorly performing products from other distributors to me, I flatly refused and decided not to pay the company anymore. For the past six months, I have had to find my own ways to run promotions and handle products," the aforementioned distributor said.

The distributor who handled New Qingmei near-expiry products said that last year he lost over 100,000 yuan, and many distributors of that product also lost money.

The experiences are almost all similar.

These distributors were all promised '100% refund and handling, with no cost to the distributor' when they were 'developed' by Dali's sales staff, but the reality is not so.

Under Control

Interestingly, regarding the serious inventory problems reported by distributors, the reporter sensed a different scene from Dali's official response—everything is under control and improving.

"There is no such thing as 'serious forced shipments' or 'warehouse overflow'," Dali emphasized in its response.

It claimed that since Doubendou was launched in April last year, the brand has been in a stage of rapid and healthy development. In April 2018, two new products, Black Soy Milk and Clear Soy Milk, were launched. Judging from the current situation, the company has full confidence in achieving sales of 2-3 billion yuan for the Doubendou brand in 2018. It also expressed similar confidence in New Qingmei, saying that with the launch of new products this year, sales will further strengthen.

As for inventory, "Reasonable inventory turnover is the guarantee of efficient operation. Our company attaches great importance to the reasonable control of distributors' safety stock and timely service management. We have formulated a series of management systems related to distributor inventory management, and through more than 10,000 sales personnel across all sales regions nationwide, we control, track, and handle inventory situations. To help distributors in various regions manage inventory, our sales personnel are required to visit weekly, regularly check the inventory of each item for each distributor, including the production date of the stock. Once abnormalities are found, they will promptly handle or adjust with the distributor," Dali officially stated.

In response, the aforementioned distributor helplessly said, "Perhaps the top management doesn't know the real situation at all. It's possible that the company's requirements for sales personnel are indeed like this, but the extent to which the sales personnel implement them is worth investigating. Also, for those regions that have not had sales personnel for half a year or even longer, who should solve the distributors' problems?"

However, in Dali's official view, they maintain smooth and direct communication channels with distributors at all levels. They will not 'let go' of risky inventory situations in the distribution channel or let them develop.

Source: New Financial Observation -END-