Click image for details The first black swan of 2017 appeared earlier than usual, and history shows that once a black swan appears, it flaps its huge wings and spreads rapidly. On the second day of the new year, Ting Hsin Group announced the dissolution of Taiwan Master Kong. Prior to this, Master Kong's performance had been declining for several years, with its market value plummeting by 90 billion yuan in the past five years. Six months later, on August 13, Uni-President announced that it would gradually exit the entire instant noodle market. Clearly, the once-dominant convenience food giants, including Ting Hsin, are suffering a catastrophic disaster, but they are not alone:
Mengniu Dairy's stock price has plunged from a peak of 45 yuan to the current 11 yuan in the past two years;
Coca-Cola's revenue in the first half of 2016 fell 4.6% year-on-year, mainly dragged down by the Asia-Pacific region, especially the Chinese market;
Wahaha has seen declining performance for three consecutive years, with its once star product Nutrition Express nearly halving in sales;
KFC and McDonald's are struggling in the mainland market and have sold their mainland operations to offload them quickly;
COFCO's Wugu Daochang, Great Wall Wine, Fulinmen Cooking Oil, Jiajiakang Meat Products, and Jinde Chocolate almost all fell into losses in 2016... This is almost a collective retreat of traditional food and catering camps. So who has such immense power to deal repeated blows to these strong giants without them being able to fight back? To understand why they are failing today, we need to look back at two seemingly more ethereal but actually more meaningful propositions: Who are they? And why did they succeed in the past? Who are they? They are the kings of various categories in the domestic food and catering industry. In that era when Chinese people first drank packaged milk, first drank cola, first ate hamburgers and fried chicken, first drank wine, and first ate instant noodles, they emerged as category popularizers and became representative brands in their respective categories. But stripping away the superficial brand imprints that people impose on them—whether young or traditional, passionate or steady, pragmatic or sweet—you will be surprised and embarrassed to find that each of these brands is actually a complex value contradiction: Mengniu: Some think it is healthy and nutritious, but it is actually unsafe;
Coca-Cola: Some devotees love its taste, but everyone knows it is unhealthy;
Wahaha: Some think it tastes good, but more and more people know it is unhealthy;
KFC and McDonald's: Fast, some think it tastes good, but everyone knows it is unhealthy;
Great Wall: Low price, but the wine made from grapes is hardly pure in taste;
Master Kong and Uni-President: Convenient, some think it tastes good, but everyone knows it is unhealthy... Their past glory depended on two basic premises: Customers had no desire to choose. In that era just emerging from food and clothing shortages, people were deeply attracted by the basic category value of these brands (such as the "speed," "filling," and "novel taste" of convenience food), and did not have many complaints about taste diversity, health and nutrition, or even price.
Customers lacked the right to choose. With neither the emergence of numerous niche brands nor the borderless platform provided by the internet, the lack of both dancers and stage made tolerance and compromise the only choice for customers. Want fast and convenient Western food? Besides KFC, there is only McDonald's; want to quickly solve the hunger problem? Besides Master Kong, there is only Uni-President on the supermarket shelf. So we see the common practices of these successful brands in the past: leveraging their first-mover advantage in the category, food brands aggressively seized channels and shelf space, intercepted traffic, while catering brands sought good franchisees and prime locations, and then made bold investments in advertising to build brand awareness as quickly as possible. All actions were aimed at one purpose: ensuring that when you have a need, it becomes the brand you first think of and first discover, whether on the supermarket shelf or in the business district closest to you. But this traditional approach is gradually failing because three key elements of the battlefield are changing: Escalating consumer demands. After basically solving the problem of food and clothing, urban consumers are making comprehensive and demanding requirements for food consumption. They not only have zero tolerance for products that are harmful to health, but also, on the basis of basic quality assurance, require brands to provide them with overall pleasure in taste, environment, service, and purchase convenience, while also expecting high cost-performance that exceeds value for money. Extreme abundance of supply. Past category champions are facing great challenges: with customer specialization and information symmetry, the emergence of more and more similar brands is giving customers nearly unlimited choice. They can compare each brand's value elements professionally based on their skilled information gathering and judgment. The first-mover advantage of brands is disappearing, and the brand's value promise and ability to fulfill it become key to winning customers. Technological leaps. As a means of connecting supply and demand, rapid technological progress is fundamentally dismantling and rebuilding our business ecosystem. The popularization and maturity of new technologies such as smart terminals, mobile internet, digitalization, central kitchens, and cold chain transportation are comprehensively transforming our consumption and supply models. The traditional barriers of brands based on core locations, shelf space, and brand awareness are being completely overturned, and the integration of technology and model innovation relying on new technology become the new moat. Customers, brands, and technology are jointly launching a "revolution on the tip of the tongue," the essence of which is a comprehensive value upgrade of the traditional brand camp with value defects: People's pursuit of health and the rise of food delivery based on O2O technology have jointly strangled traditional instant noodle brands, essentially replacing unhealthy with healthy on the basis of equal convenience. The market share left by Coca-Cola and Wahaha is being rapidly eroded by functional drinks, natural herbal drinks, and fresh juice brands, essentially a comprehensive leap in consumer demand toward taste, health, function, and freshness. The rapid expansion of fashionable and affordable catering brands such as Grandma's Home and Green Tea is challenging traditional fast food like Subway and Kung Fu, behind which is replacing bland taste and cafeteria atmosphere with better taste and more personalized environmental experience. Traditional high-end catering brands such as South Beauty and Xiang-E-Qing are also showing a decline in competition with fashionable and affordable catering, actually due to people's harsh pursuit of cost-performance under rational consumption. Even within fashionable and affordable catering, brand format innovation is flourishing (Grandma's Home has nurtured as many as 16 brands), also to cater to consumers' dining needs in different scenarios, providing more differentiated and personalized taste, environment, service, and higher cost-performance. So, when we deconstruct brands from the dimension of value genes, we find that the current retreat of Master Kong and Uni-President stems from the "unhealthy" attribute that conflicts with the consumption upgrade trend. But their "convenience" attribute has not been eliminated; instead, it has become the value foundation for the rise of substitutes like food delivery. Instant noodles, as an important "species" in the food ecosystem, will not easily disappear, but they need to inherit the past good genes and adapt to the mainstream trend of consumption upgrade by modifying and repairing some genes, thereby evolving from "unhealthy junk food" to "healthy convenience food" in consumers' minds. Amid the wailing in the domestic traditional convenience food market, Japanese and Korean instant noodle brands, which cannot compare with domestic brands in taste diversity due to their pursuit of boiling, lightness, non-frying, and no seasoning packets, are invading the mainland market at an average annual growth rate of 20%. Can this not give our food and catering brands more enlightenment? Click image for details The 3rd China FMCG + Internet Conference (CFIC) will be held in Chongqing in October 2017. At this conference, New Distribution has invited 1000+ distributors, 500+ brand owners, founders of 200+ B2B platforms, and 100+ investment and financing institutions to participate. The theme of this conference: New Forces, New Ecosystem. At that time, we will invite well-known domestic B2B industry experts, mentors, and B2B platform founders to discuss the following topics: ********How can the FMCG industry leverage B2B to achieve new growth opportunities
********How to build the new supply chain behind new retail
********How can intra-city logistics help B2B achieve leapfrog development Highlights of this conference: The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Closed-door matchmaking meeting between B2B and investors
********Conference site + exhibition center, dual internet technology exhibition
********Alibaba, Etern, Best Store Plus, GLP, Unilever, Hd, and leaders from the most well-known enterprises in various fields will give on-site speeches and present pioneering views. October 17-18, 2017 Chongqing Convention and Exhibition Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend with note "Conference Registration" -END-