30+ industry experts, 100+ B2B platform founders, 800+ manufacturer friends, gathering in Fuzhou to jointly explore the internet transformation path of the FMCG industry. **Recently, have your social media feeds and apps been flooded with news that Tencent's market value exceeded HK$2 trillion, ranking first in Asia? Indeed, Tencent has been listed for 12 years, and its market value has grown from HK$6.2 billion to HK$2 trillion, making it a well-deserved legend. But while being amazed by Tencent's market value, don't forget that in our food industry, there are also 'giants' with extremely high market values. Today, let's talk about them. International Brands Unit: RMB (100 million) No.| Company Name| Market Value 1| Nestlé| 16310.49 2| Coca-Cola| 12690.29 3| PepsiCo| 10387.29 4| Kraft Heinz| 7270.92 5| Mondelez| 4643.80 6| Danone| 3155.21 As the world's largest food company, Nestlé's market value exceeds RMB 1.6 trillion, nearly HK$1.9 trillion, which is more than Greece's GDP last year. This year marks Nestlé's 150th anniversary. In the 1980s, Nestlé opened the Chinese market through instant coffee, letting Chinese people know that such a beverage exists in the world. Today, through multiple acquisitions, brands such as Totole, Yinlu, Hsu Fu Chi, and Maggi are also under Nestlé's umbrella. The two cola companies we are familiar with (Coca-Cola and PepsiCo) both have market values exceeding RMB 1 trillion. They have also been rated by Fortune as companies that changed the world, and their sales networks cover the globe. Of course, as consumers' requirements for product health increase, these two companies, which started with carbonated beverages, have encountered bottlenecks in recent years and have begun to expand into other beverages. Kraft Heinz, which merged last year, has a market value of RMB 727 billion. Since this year, Kraft Heinz has increased its investment in the Chinese market. Not only has it built factories in China to promote Weishida nationwide, but in July, it also introduced its $1 billion nut brand, Planters, to China. Mondelez and Danone have market values of RMB 464.3 billion and RMB 315.5 billion, respectively. In addition to the familiar Oreo and Ritz, following Stride and BelVita, Mondelez recently introduced the chocolate brand Milka to China, and Mondelez has stated that it places great importance on the Chinese market. Danone's most successful brand in China should be Mizone. According to relevant institutions, Mizone's sales last year approached RMB 10 billion, and this year it is expected to create another RMB 10 billion single product in the Chinese market. Domestic Enterprises After talking about international giants, let's look at our local Chinese food companies. Unit: RMB (100 million) No.| Company Name| Market Value 1| Yili Industrial| 1004.00 2| Haitian Flavoring| 849.20 3| Shuanghui Development| 789.20 4| China Want Want| 561.87 5| Mengniu Dairy| 527.74 6| Dali Foods| 510.94 7| Master Kong| 401.72 8| COFCO Tunhe| 249.10 9| Uni-President China| 217.23 10| Bairun Co., Ltd.| 203.40 11| Meihua Biological| 199.20 12| By-Health| 192.30 13| Taoli Bread| 190.60 14| Bright Dairy| 175.40 15| Royal Group| 154.10 16| Angel Yeast| 146.90 17| Sanyuan Foods| 124.00 18| Beingmate| 123.70 19| Shanghai Maling| 120.40 20| Biostime| 118.96 21| Zhongju Hi-Tech| 117.30 22| Chengde Lulu| 110.80 23| V V Food & Beverage| 101.30 24| He Niu Food| 97.74 25| Jinhua Ham| 97.46 26| Qiaqia Food| 95.06 27| Huang Shang Huang| 94.25 28| Shuangta Food| 92.35 29| China Foods| 85.85 30| Zhongxing Mushroom| 83.92 31| Jiajia Food| 82.48 32| Guitang Group| 77.47 33| Shenzhen Shenbao A| 77.45 34| Quantum Hi-Tech| 75.98 35| Nanning Sugar| 73.57 36| Longda Meat| 72.83 37| Modern Farming| 72.52 38| Fuling Zhacai| 70.94 39| Sanquan Food| 70.21 40| Longli Bio| 68.77 41| Hengshun Vinegar| 67.87 42| Fufeng Group| 66.55 43| Huiyuan Juice| 65.92 44| Xiwang Food| 64.18 45| Jialong Food| 63.56 46| Kedi Dairy| 63.37 47| Tianrun Dairy| 61.91 48| Tianbao Group| 59.46 49| Lotus Health| 58.41 50| Qianhe Flavoring| 57.12 51| Keming Noodle| 56.90 52| Delisi| 56.68 53| Haixin Food| 55.86 54| Maiquer| 54.39 55| Anji Food| 51.44 56| Haoxiangni| 51.38 57| Baolingbao| 49.59 58| Zhongji Health| 45.35 59| Yantang Dairy| 44.69 60| Black Sesame| 43.93 61| ST Xinghu| 41.37 62| SDIC Zhonglu| 41.04 63| Tenuo International| 38.33 64| Ausnutria Dairy| 30.57 65| Yurun Food| 16.93 66| Original Ecology| 16.80 67| Qinqin Food| 11.29 68| Andeli Juice| 11.07 Yili ranks first among domestic listed food companies with a market value of RMB 100.4 billion. Since its listing in 1996, Yili's market value has continued to soar, increasing by more than 250 times. Yili's latest first-half results show that corporate profits have again achieved double-digit growth, with the star product Ambrosial (Anmuxi) growing by more than 130%. Haitian and Shuanghui rank second and third with market values of RMB 84.92 billion and RMB 78.92 billion, respectively. Haitian's revenue exceeded RMB 10 billion for the first time last year, and in the first half of this year, it exceeded RMB 6 billion, with a gross margin as high as 44%. Overall performance has been improving, which is reflected in the capital market as a continuous increase in market value. Shuanghui also achieved double growth in revenue and net profit in the first half of this year. In addition, familiar companies such as Want Want, Mengniu, and Dali also have market values exceeding RMB 50 billion, entering the top ten. Overall, the total market value of 68 domestically listed food companies exceeds RMB 992.4 billion, of which 23 have market values exceeding RMB 10 billion, and basically all the well-known companies we are familiar with are among them. There are also 28 companies with market values between RMB 5 billion and RMB 10 billion. Of course, due to poor operating conditions, there are also many companies whose market values are declining. Although there are no domestic food companies with market values exceeding RMB 1 trillion like Nestlé and Coca-Cola, in terms of years of establishment, domestic food companies are much younger compared to Nestlé and Coca-Cola. With the accumulation of management experience and increasingly frequent participation in international activities, domestic food companies still have greater development space in the future. Appendix: Analysis of the FMCG Food and Beverage Industry and Leading Enterprises The FMCG food and beverage industry is undergoing significant changes. This article combines consumer reports from Kantar and McKinsey to analyze some leading enterprises in the food and beverage sector from two perspectives: industry trends and leading companies. The conclusions are at the end. I. Industry Trends

  1. With the increase in per capita income, the proportion of disposable income allocated to FMCG is decreasing. From 2011 to 2015, per capita disposable income increased at a rate of 9.4% with no obvious signs of slowing down, but the growth rate of household spending on FMCG has been declining each year, approaching zero growth in 2015. According to McKinsey's survey of Chinese consumers, if income increases, the number of consumers willing to increase spending on FMCG increases slowly, with a significant decrease in those willing to increase spending on food, while the number of consumers willing to increase spending on life services and entertainment (such as watching movies, traveling, massage, etc.) increases significantly.
  2. Within FMCG, there is a clear polarization: care products are relatively favored, while packaged food and beverages are the opposite.
  3. To specifically measure the consumption of a sub-category, it can be broken down into its penetration rate and consumption frequency. Penetration rate refers to how many households out of 100 have purchased the product within a year, and consumption frequency refers to the number of times a household purchases in a year. The penetration rate determines the sales volume of this category. Penetration rate often depends on the category's position in its life cycle. When a new product is launched, its penetration rate can increase from zero to 100%. If it leverages rapidly expanding channels (such as e-commerce), penetration can increase quickly (e.g., Three Squirrels), but the average consumption frequency of most FMCG is limited by people's spending proportion in this category and the diversification of choices, so there is limited room for improvement. The increase in penetration rate can largely explain the increase in sales volume.
  4. With the enhancement of people's health awareness, the penetration rate of most traditional food and beverage FMCG is declining, especially categories with unhealthy labels such as high sugar, high energy, and additives. Ready-to-drink tea, carbonated beverages, fruit juice, candy, and instant noodles can be classified into this category. Categories associated with health, such as low sugar, low energy, no additives, pure natural (organic), and added vitamins, are favored by people. For example, the penetration rate of bottled water, chocolate, milk, and biscuits has not changed much, while the penetration rate of functional beverages and yogurt has increased significantly.
  5. Why do people pay so much attention to a healthy diet? According to a McKinsey survey, 42% of consumers believe it is more difficult to enjoy life, and 45% believe they will face more pressure in the future. This leads more consumers to pursue a more balanced life by consuming healthier and safer food. Food safety scandals exposed in the past decade have intensified this trend. In the survey, 72% of consumers worried about food safety in 2015, compared to 60% in 2012. The emphasis on health is not only reflected in food and beverages but also in the purchase of private medical insurance, regular physical examinations, participation in outdoor sports, and the purchase of outdoor sports goods. The proportion of urban residents participating in sports increases by 3-4% each year, which may be one of the reasons contributing to the rise of functional beverages and the formation of a fashion trend.
  6. In addition to the health trend, food and beverages also show a premiumization trend. Here, premiumization of a category refers to the increase in average selling price in recent years due to product and image innovation. Since consumption frequency is difficult to increase, premiumization is a good way to hedge against declining penetration rates. Premiumization can leverage the health concept but is not limited to it, such as incorporating images that fit current trends, emphasizing better ingredients and taste, etc. There are three main ways to achieve premiumization:

Upgrade the original category with a new image. (Telunsu, Xiaoming Classmate, Sea's Words, Tang Daren, etc.).

Create new products and new processes. (Ambrosial (Anmuxi) room-temperature yogurt, organic milk, draft beer, NFC juice, etc.).

Import foreign high-end brands. (Imported beer, room-temperature milk, and infant milk, etc.).

  1. Urbanization is also a process of high division of labor and competition, bringing pressure, desire, and loneliness. People need various ways to relieve physical and mental stress, and food and beverage FMCG is just one reflection of this big picture. This need for physical and mental health, including the need for self-improvement and self-reward, can be expressed in watching movies and concerts, traveling abroad, shopping with family, participating in outdoor sports, etc. It is these services and experiential consumption that take a larger share of residents' disposable income, causing the consumption growth rate of FMCG products to be lower than income growth, while the growth rate of household and personal care products is higher than that of food and beverages. In simple terms, the past food and beverage FMCG categories have limited ability to meet this change in demand originating from the spiritual level. New food and beverage categories with health labels and high-end positioning can enjoy the demand trend, while traditional food and beverage categories will find it difficult to adapt to the new trend without deep transformation. But the good news is that the continuous increase in Chinese consumers' income supports the premiumization attempts of food and beverage FMCG, meaning that as long as consumers recognize that a product has new demand attributes, a limited time and limited extent of premium can be obtained. Importing is also a high-end attempt because consumers are not loyal to domestic or foreign brands, but only to the value in their hearts. II. Company Analysis 1. Uni-President China Except for packaged water, several of Uni-President's products are in segments where penetration is continuously declining. Compared to the negative growth of the previous categories, packaged water is growing faster, with 5.7% national growth in 2015, and has recently achieved rapid growth with premiumization, but its share is still small. The company has made almost all of its products innovative in terms of premiumization and health, except for imports. Uni-President has excellent market insight, product innovation, and marketing capabilities. For example, its Laotan Sauerkraut Beef Noodles successfully improved a local flavor and promoted it nationwide, achieving success. But even so, it has not jumped out of the category area with declining penetration and entered the two major categories that have seen rapid penetration growth in recent years: functional beverages and herbal tea. With the significant decline in penetration of its main categories, the fact that Uni-President's revenue has not declined significantly in recent years is mainly due to its ability to steadily take market share from Master Kong each year, leveraging its superior capabilities mentioned above. Uni-President's valuable aspect is its accurate insight into the development trends of its categories. Although it has not jumped out of its original circle, it has effectively carried out improvement innovations including health and premiumization. In contrast, Master Kong, constrained by institutional issues, has only made imitative responses to Uni-President's innovations. Uni-President's revenue from 2012 to 2015 has barely grown but has clearly outperformed the market. Its gross margin has increased slightly by 3 points to 37%, its sales expense ratio has been stable at 28-29%, and its net profit has fluctuated significantly. The market has given Uni-President a valuation premium over Master Kong, but it only offers trading opportunities. 2. Dali Foods Dali's product chain mainly includes packaged foods such as pastries, potato chips, and biscuits, and beverages such as herbal tea, plant protein beverages, and functional beverages. Among them, the penetration of packaged foods like pastries and potato chips is declining, biscuits are at a high penetration level, herbal tea and plant protein beverages have seen rapid penetration growth in recent years but with signs of slowing, and functional beverages are growing rapidly with low penetration. Dali, like Uni-President, has excellent market insight and product innovation. But what surpasses Uni-President is that although Dali adopts a follow-the-leader strategy that seems conservative, it often enters new categories with rapidly increasing penetration at very accurate times in hindsight, as evidenced by Heqizheng and Lehu. With one accurate category bet after another, its revenue surged by 56% from 2012 to 2015, and its gross margin increased from 16.5% in 2012 to 39.1% in the first half of 2016. The reason Dali adopts a follow-the-leader strategy and dares to improve the cost-effectiveness of high-end products is that it started in food trading, firmly controlling traditional channels and third- and fourth-tier city channels. These channels have much lower channel costs than modern supermarket channels, and the target consumers have lower incomes. Unlike Uni-President, Dali rarely does expensive promotions like traditional media advertising, so its sales expense ratio has been below 10% in the past, far lower than Uni-President. However, as its original channels reach saturation, it must attack the strong modern channels and first-tier cities, and its product unit prices must increase to cover the increased channel and promotion costs. Therefore, in the past two years, while Dali's gross margin continued to rise, its sales expense ratio has increased from 7.4% in 2014 to 15.7% in the first half of 2016. Previously, Dali products emphasized cost-effectiveness. When facing the objects it once imitated head-on, the price increase driven by expenses hits a ceiling, and the gross margin increase also has an upper limit. Therefore, Dali's product innovation and category expansion must continue to succeed and suppress the above new pressures to form sustainable growth, which is worth watching. 3. China Want Want Want Want's product chain mainly includes milk and beverages (Want Want Milk), rice crackers, and snacks (candy, jelly, Want Want Little馒头). Want Want's snow rice crackers and snacks are mainly in the declining penetration categories of puffed foods and candy, which are high in sugar, while Want Want Milk is a sugary reconstituted milk made from milk powder. Most of Want Want's products focus on child consumers, emphasizing taste over health, but even so, its high-sugar, puffed, and reconstituted milk products have gradually faded from people's sight. Want Want's revenue declined from $3.82 billion in 2013 to $3.43 billion in 2015, and continued to decline by 12.8% in the first half of 2016. However, Want Want's gross margin increased from 41.5% in 2013 to 47.8% in 2016, mainly benefiting from the continuous decline in the prices of milk powder and sugar, the two largest raw materials. The decline in milk powder prices led to an increase in the gross margin of dairy and beverages, centered on Want Want Milk, from 41.8% in the same period last year to 50.4% in the first half of 2016. Recently, sugar prices have rebounded, and raw milk prices have gradually found the bottom of the big cycle. If milk prices rise in the future, the gross margin may peak and decline. The company has not responded adequately to the fact that its main products are being abandoned by health-conscious consumers. Its profit level, maintained by declining raw material costs, is unsustainable. Although the company continues to buy back shares, the investment opportunity is not obvious. 4. Yili Industrial Yili's product chain mainly consists of liquid milk, with less ice cream and milk powder. Among liquid milk, high-end room-temperature milk and room-temperature yogurt are the core revenue growth drivers. The penetration of room-temperature milk is very high and stable; the penetration of yogurt is even higher and still increasing. Both of Yili's main product lines fall into areas where penetration is stable or increasing. This can largely explain its ability to maintain revenue growth for many years (the advantage over Mengniu is another reason). Jindian is the premiumization of room-temperature milk, while room-temperature yogurt Ambrosial (Anmuxi) conforms to health trends and premiumization. Another sign of premiumization in room-temperature milk is the increasing share of imports, which is taking away its share. It is worth noting that yogurt is favored mainly because it meets people's health needs, but Yili's Ambrosial (Anmuxi) transforms low-temperature yogurt into a room-temperature, long-shelf-life product to expand sales scope, but it kills the beneficial bacteria, the healthiest component of yogurt. The difference between the product's actual value and the value in consumers' minds will inevitably disappear, causing the hot sales of room-temperature yogurt to be relatively short-lived. Yili's total revenue in the first half of 2016 has approached zero growth. If the main growth engine Ambrosial (Anmuxi) slows down, it will increase revenue growth pressure. At the same time, no new engine capable of driving such a large volume has been found. The most noteworthy thing is that Yili's gross margin improvement (in addition to product structure premiumization) greatly benefits from the significant decline in world raw milk prices. If raw milk prices enter a cyclical recovery phase, Yili's profit level will peak or even decline. III. Conclusions
  2. From 2012-2013 to the present, the growth rate of China's FMCG consumption has slowed significantly, mainly because people are allocating a larger share of their growing disposable income to life entertainment and services, as the latter better meet people's spiritual needs for physical and mental health and relaxation. This is not due to the macroeconomic or overall consumption environment being poor.
  3. During this period, the growth rate of medical care products within FMCG was significantly higher than the overall, while the growth rate of food and beverages was significantly slower than the overall, because the food and beverage category generally finds it difficult to provide people's physical and mental health needs. This indicates that within FMCG, there is also a differentiation caused by health trends.
  4. During this period, within food and beverages, categories that conform to health trends have stable or increasing penetration, while categories that do not conform to health trends have seen significant and continuous declines in penetration. This indicates that within food and beverages, there is also a differentiation caused by health trends. At the same time, with the increase in people's income, consumption premiumization has become another trend.
  5. During this period, among the leading FMCG food and beverage companies, some have enjoyed the benefits because their product portfolios conform to health and premiumization trends (Yili), while those whose product portfolios do not conform to trends either actively engage in improvement innovation (Uni-President) or bravely enter new categories that conform to trends (Dali). Among them, the effect of laying out advantageous categories is far better than improving innovation in original categories. Some leading companies, due to institutional rigidity, lack of strategic vision, or short-term benefits from cost declines, have not sought change and may lose in the long run (Want Want, Master Kong). -END- The best domestic FMCG distributor learning platform Focusing on providing professional, practical, and useful tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brand | 016 Distributor B2B transformation | [Long press QR code to follow]