In recent years, you must have noticed these changes:

  • Companies with many major brands, such as Nestlé, Coca-Cola, Master Kong, and Wahaha, are increasingly losing ground, constantly being challenged by various small brands that suddenly emerge, and their ability to suppress these small brands is becoming weaker.
  • In the past, marketing budget was most important; a plan with a 10 million yuan budget, no matter how poor the strategy, could outperform a plan with a 500,000 yuan budget. But now it's increasingly difficult to crush competitors with budget alone.
  • Not only in business operations, but also in personal growth, more and more young people are able to rise rapidly. Why is this happening? Why could established players continue to succeed through capital, traffic, resources, and other means, while now small brands lacking resources and visibility have so much opportunity? Today's article is actually a research report on the FMCG industry. It analyzes the overall situation of the food industry from global industry data, reveals the true reasons for the decline of giants, and the real secrets behind the rise of emerging categories and companies, in order to find the current growth direction and momentum for the food industry. To provide more practical inspiration for our readers, we have added some marketing strategies and case analyses. Recently, major brands released their financial reports. Many traditional giants showed varying degrees of decline or slowdown globally or in China, with some even experiencing four consecutive years of decline. Giants often attribute the reasons to "economic slowdown and insufficient consumer demand" or "challenging macroeconomic environment." However, looking at the global and Chinese markets, a number of rapidly growing new products have emerged, shining stars rising against the trend, aggressively eating into the market share of giants. Given the contrast between giants and new products, we must ask: Is the market declining, or are the giants failing? How are those new products rising against the trend? ** 1. Giants Are Declining** According to Nestlé's data, 2016 sales were 89.5 billion Swiss francs (100 Swiss francs = 705.25 yuan), with actual growth of only 2.4% excluding price factors, far below the 5% plan. In 2016, Nestlé's sales in Greater China fell 7.4% compared to 2015. Compared to Nestlé, Coca-Cola is in a worse position. Full-year 2016 sales fell 5.49% year-on-year, and Coca-Cola's global performance has been declining for four consecutive years. China's traditional giants are even more concerning. Master Kong's overall performance has been declining since 2014, with profits in the first three quarters of 2016 plunging 32%. In addition, Uni-President, China Want Want, and Wahaha also hit a turning point in 2014 and have continued to decline since then. As for the reasons for the decline, the most common phrases in corporate financial reports are: "Slowing growth in emerging markets and weakening consumer demand."

2. Is Demand Really Weakening?

It is an indisputable fact that the global economy remains weak. Even emerging markets are seeing slowing growth. China's economic growth rate fell from 10.6% in 2013 to 6.7% in 2016. The food industry is also affected. Euromonitor data shows that global food industry growth fell to a 10-year low of just 1.1%. Kantar data also shows that China's FMCG market annual sales growth in 2016 was 2.9%, lower than the 3.5% growth in 2015, hitting a new low in nearly a decade. However, despite the slowdown in global and Chinese data, it is still continuous growth, not decline. Nielsen, in interpreting "2017 China Consumer Trends," also stated that "consumer spending contributes significantly to GDP growth, at 71%, indicating strong consumption willingness." This means that Chinese consumers' demand has not weakened; on the contrary, it is generally rising. Similarly, some categories are growing rapidly. With consumption upgrading, consumers are pursuing higher quality and healthier food and beverages, so even in a slowing environment, some categories are growing rapidly. **1.**Snack Foods: A Trillion-Yuan Market Recent years can be described as a period of explosive growth for snack foods, running counter to the overall food industry growth curve. In the United States, due to personalization, faster pace of life, and smaller dining groups, "snackification of meals" is becoming a rapidly rising trend. In China, with improved living standards and urbanization, there is also huge growth space for snack foods. Flavored snacks, nut snacks, and mixed dried fruit snacks are the main drivers of snack growth (while sweets, candies, and ice cream continue to decline). According to Innova Market Insights, the market share of new fruit snack products globally has more than doubled, from nearly 8% to nearly 18% now. Fruit snacks are growing at a rate second only to flavored snacks and nut/seed snacks. In 2016, the snack market reached $87 billion (likely referring to North America), with snack consumption accounting for 51% of all food consumption in the U.S., compared to 40% in 2015. China's snack food market is equally impressive. The retail market size of China's snack food industry was 401.4 billion yuan in 2010, and in 2016 it reached 822.4 billion yuan, with projections to reach 1,298.4 billion yuan by 2020. Main Alternative Beverages **2.**Alternative Beverages: Expected to Double in Three Years This should be the highlight of beverage industry growth. Also driven by consumers' pursuit of health and seeking alternatives to traditional high-calorie, high-sugar drinks, alternative beverages are becoming increasingly popular. Currently, alternative beverages mainly include plant-based waters and NFC juices. According to Zenith Global, global sales of alternative beverages surged 21% in 2016 to $2.7 billion, and are expected to double by 2020, compared to just $533 million five years ago. Among them, "coconut water" is clearly the star, currently accounting for 96% of the total plant-based water market. Coca-Cola and Pepsi have long recognized this trend; Coca-Cola acquired the coconut water brand Zico, and Pepsi has also been laying out plans, acquiring ONE Coconut Water and Kero Coco Coconut Water. These companies, along with Vita Coco, dominate the global alternative beverage market. In China, we have also seen many coconut water entrants, including Vita Coco, which was introduced to China by Huabin Group in 2014, sparking a tropical trend, followed by many new products. The popularity of coconut water has put pressure on traditional coconut juice giant Ye Shu. The NFC juice market also has potential. According to Tetra Pak's "Tetra Pak Juice Index" report released on September 19, 2016: Globally, the 100% pure juice market is showing unprecedented vitality. From 2012 to 2015, functional 100% pure juice products had a compound annual growth rate of 31%, while new products with vegetable juice as the main ingredient had a CAGR as high as 43%. "Natural and healthy" has become the primary factor for consumers choosing 100% pure juice. **3.**Functional Foods: From Oligopoly to Fragmentation