In 2024, the FMCG market changed quietly. New products emerged endlessly, and consumer demands became more personalized and picky. Facing a dazzling array of choices, distributors are confronting more complex product selection challenges: which products can stably bring cash flow and become reliable 'cash cow products'? And which new products have explosive potential and are expected to become 'star products' in the market?
According to recent industry research and market feedback, despite the overall market slowdown, sugar-free beverages and health-functional products are growing rapidly, reflecting consumers' continued attention to health, convenience, and cost-effectiveness. These changes bring new opportunities but also place higher demands on distributors' market insight and strategic adaptability.
To gain an in-depth understanding of frontline market trends, I interviewed 10 distributors from different provinces and covering multiple categories. From their practical experience, I summarize their genuine views on cash cow products and star products, and explore their criteria for 'good products' and their market predictions for 2025. I hope these frontline voices can provide valuable insights and decision-making references for brand owners and distributors.
2024 Market Review:
Cash Cow Products and Star Products
For distributors, cash cow products and star products are the two pillars of their business. The former have stable sales and ample cash flow, serving as the 'cash cow' that enterprises rely on for survival; the latter, with innovation and high profit margins, quickly become the 'traffic drivers' of the market. Both are indispensable.
1. Cash Cow Products: Stability Amid Change
Most distributors indicated that in 2024, cash cow products remained those classic products with stable sales and ample cash flow. They maintained strong competitiveness due to high market awareness and mature channel networks.
In the beverage category, typical cash cow products include: cola (Coca-Cola/Pepsi), iced tea (Master Kong/Uni-President), packaged water (Nongfu Spring/C'estbon/Ganten), sugar-free tea (Oriental Leaf), electrolyte drinks (Genki Forest/Dongpeng), and ambient milk (Yili/Mengniu).
Notable trends include:
- The strong rise of sugar-free cola: Many distributors revealed that the market share of sugar-free cola is approaching that of regular cola, especially growing rapidly among younger consumers. A distributor in one market said, "The share of sugar-free cola is already close to that of regular cola, which was unimaginable a few years ago."
- Market opportunities from specification differences: The same product in different specifications shows significant market performance differences. For example:
Nongfu Spring's 500ml packaged water remains a cash cow product, while its 5L large package has become a star product;
Master Kong's 1L iced tea sales have surpassed the 500ml specification, becoming a new favorite in channels;
Nestlé Tea Extract 500ml performs mediocrely, but the 250ml Tetra Pak 6-pack has received enthusiastic response in some markets.
These differences indicate: 'Cash cow products' are also evolving. A product can gain new market vitality by changing sugar content, packaging specifications, or even sales scenarios, and even overtake older products in the same series. This is worth pondering for manufacturers and friends.
2. Star Products: Rapidly Rising Market Newcomers
Unlike stable cash cow products, star products quickly rise to prominence with their 'freshness' and high profit margins, becoming market traffic drivers. In 2024, many new products exploded in the market within a short period, even driving growth across entire categories.
For example, a distributor from an eastern city shared: "In the second half of last year, the coconut water we introduced suddenly saw a surge in popularity. From trial to full distribution, sales nearly multiplied several times. It was truly eye-opening."
Star products in distributors' eyes include:
- Coconut water (if, etc.): From trial to full distribution, sales doubled in just half a year, becoming a market dark horse.
- Health water (Genki Forest, etc.): Leveraging health and functional claims, successfully attracting young consumers.
- Tea beer (Jinxing Craft Beer, etc.): An innovative category combining tea and beer, capturing social and gathering scenarios.
- Vitamin drinks (Nongfu Spring Shui Rong C, etc.): Obvious trends toward functionality and health.
- Juice/fruit and vegetable juice (NFC juice, grapefruit juice, prune juice, birch sap, etc.): Emphasizing natural and additive-free, catering to health consumption trends.
- Soda water: As a substitute for traditional soda water and sugary carbonated drinks, some also focus on pairing with meals and alcohol.
It is worth noting that distributors generally believe the boundary between these two types of products is sometimes not so clear. Some star products, after continuous innovation, packaging improvements, and enhanced user experience by brand owners, are also beginning to show the potential of cash cow products.
However, star products often attract significant resource investment due to strong market response and high profit margins, but they also bring considerable risks—the product life cycle of new products is short, and whether they can continue to be popular requires further market verification.
Therefore, some distributors also stated: Distributors are not suitable for chasing trends.
"The life cycle of new products is short and fleeting; chasing the wind is easy to be chased by the wind."
3. Product Selection Notes: One Policy per Region, One Product per Channel
The performance of cash cow products and star products is significantly affected by regional and channel differences, and distributors need to respond flexibly.
In addition, there are other factors that affect the distinction between these two types of products, such as regional differences.
For example, Dongpeng Buzhila is a cash cow product in Guangdong, but in other cities, it has poor market foundation but product potential. If the distributor operates well, they can turn it into a star product in their own market; otherwise, it may face local incompatibility.
Therefore, for distributors, if a product has been validated in another region, they can consider whether it is suitable for their market to introduce and operate.
Another example is channel differences. For instance, the new beverage birch sap has been reported by some distributors to sell well in online live streaming, but offline channels have a lukewarm response. This reflects that young consumers have higher acceptance of novel products, while traditional retail channels rely more on brand awareness and price competitiveness.
Therefore, product sell-through is greatly influenced by store type and customer consumption scenarios, and distributors need to precisely match channels.
Distributors' Definition of a 'Good Product'
In the busy market competition, distributors have their own unique insights into what constitutes a 'good product.' Through interviews, we found that whether it is a stable cash cow product or a rapidly rising star product, distributors share common evaluation criteria and key considerations when selecting and promoting products.
1. What Does a 'Good Product' Look Like?
Most distributors mentioned that for them, a good product must first have a 'money-making effect.' This includes not only high gross margins and stable sales but, more importantly, the product must maintain high market recognition amid fierce competition.
As a distributor from a central provincial capital said: "The product itself must be attractive, not just for short-term explosion, but also to support our channel operations in the long run."
This sentence highlights the core of a 'good product'—it must be both profitable and enduring.
2. Key Factors Influencing Distributors' Evaluation
When discussing how to evaluate products, distributors summarized several important factors that influence their judgment:
(1) Profit Margin and Turnover Speed
High gross margins are certainly tempting, but if inventory turnover is too slow, it will also affect overall returns. Therefore, a balance must be found between 'gross margin' and 'turnover.'
A distributor from the South China market said bluntly: "Even if the gross margin is high, if the stock is held for too long, it affects cash flow, and no matter how high the gross margin, it's useless."
Therefore, choosing products with fast turnover and high replenishment frequency has become a common strategy for many distributors.
(2) Brand Support: Quality Endorsement and Channel Management
Large brands often have strong supply chains and marketing systems, providing distributors with powerful quality endorsement and channel support. A distributor who has long cooperated with major brands said: "The brand's quality endorsement and promotional strength are the confidence for us to stock up in large quantities."
Standardized promotions, publicity, and channel management can effectively reduce issues like price chaos and cross-regional selling, which is particularly important in the current context of channel diversification.
(3) Consumer Experience and Word of Mouth
With the rise of social media and e-commerce reviews, consumers' real feedback has an increasing impact on sales. Distributors emphasize that "good products are not pushed out, but brought about by consumers' active repurchase." If a product can gain high praise through word-of-mouth, it often leads to sustained sales growth.
(4) Differentiation and Innovation
As market competition intensifies, differentiation has become key to breaking through. Distributors believe: "Even in mature categories, as long as there is innovation in taste, packaging, or function, the market can be reactivated." For example, traditional beverages that innovate in sugar-free and health aspects have successfully attracted consumers pursuing a healthy lifestyle.
3. Different Regions and Categories Have Different Priorities
In the interviews, we also found that distributors from different regions and categories have their own priorities for 'good products.' Whether a product has national or even cross-regional marketability is a very important concern for them. A good product is not only popular locally but also has the potential to replicate success in other markets.
In addition, beverages and snacks are different. Beverage distributors pay more attention to taste, packaging design, and health trends, such as sugar-free, low-calorie, and functional drinks.
Snack food distributors, on the other hand, focus more on taste diversity, packaging innovation, and differentiation. Examples include internet-famous snacks and small gift boxes.
A seasoned distributor shared his insight: "If a beverage distributor wants to switch to snacks, it's worth visiting discount stores."
Currently, in discount stores, beverages and snacks are the two main categories, and mature product selection logic and strategies have been formed. Distributors can draw inspiration from them.
This distributor summarized a 'two-step' product selection strategy:
1. 'Look at the category first, then the brand': First, analyze the trends of best-selling categories in discount stores to find categories with market potential. Then, within that category, select products with high brand awareness and guaranteed quality.
2. 'Adjust based on your own channels and target groups': Further adjust the product selection strategy based on your own channels, target customer groups, price bands, and gross margin requirements.
Advice from Distributors for 2025
Facing 2025, full of opportunities and challenges, distributors generally remain optimistic and actively seek market breakthroughs. Many said they would visit more during the Spring Sugar Fair in March to learn about new industry trends and find potential new products.
1. Health Demand Drives Market Growth
Many distributors believe that health consumption will be an important driver of the market in 2025.
Beverage distributors generally favor healthy drinks such as sugar-free, low-sugar, organic, and natural ingredient beverages, such as sugar-free tea and plant-based drinks.
Food distributors remind that the 'silver economy' should not be ignored. With the aging population, the demand for low-sugar, low-fat, and easily digestible healthy foods among middle-aged and elderly groups is surging, becoming a new market blue ocean.
2. Energy Allocation: Steady Progress, Flexible Layout
In the new year, distributors generally believe that cash cow products are the 'ballast stone,' stability above all, and should account for 50% of energy investment; star products are the engine of profit growth, with increased promotion efforts, accounting for 30% of energy; new products, although riskier, also represent future growth points. Under controllable risks, moderate exploration is appropriate, accounting for 20% of energy.
This 50-30-20 energy allocation strategy ensures a stable cash flow foundation while leaving ample room for new product innovation and market breakthroughs. Of course, distributors with different organizational structures can also have different allocation principles.
3. Distributor Experience Sharing: Stability First, Cautious Operation
(1) Stability First: Control Risks, Avoid Being Aggressive
A seasoned distributor vividly summarized: "You can be competitive, but not aggressive." He emphasized that the current market is in a reshuffling phase, with fierce industry competition, competing on efficiency, price, and internal management, rather than blind expansion and customer grabbing.
This may seem like a 'lying flat' strategy. He said, "Lying flat does not mean doing nothing, but holding the bottom line, not taking risks, not getting involved in vicious competition, not engaging in price wars, not grabbing channels, and not doing high-risk business."
Especially in internal management, he focuses more on improving operational efficiency and refined management rather than blindly pursuing scale expansion. "Don't do business on credit," he admitted. He would rather earn less than do high-risk credit sales. He even joked: "Leave such business to competitors; I only do business with healthy cash flow."
This strategy of 'stability first, holding the bottom line' reflects the importance of risk control during market fluctuations and reshuffling.
(2) Strict Management of Accounts Receivable and Cash Flow: Don't Do High-Risk Business
Another distributor emphasized the importance of accounts receivable and cash flow management and shared a personal story:
- "An old customer who had cooperated for over ten years turned hostile overnight."
He had cooperated with an old customer for many years, and the other party had always been punctual in repayment. But earlier this year, when he went to the store to collect payment, he was "cursed at and even kicked out of the store," which shocked and frustrated him.
- "During the big reshuffle, risks are everywhere."
He reminded that around March every year is the peak period for industry reshuffling. Many terminal retail stores experience a decline in business after the Spring Festival peak season, with increased operating pressure, and some may even close down or run away.
Three Major Risk Control Suggestions:
Regularly visit stores and observe sell-through: Pay special attention to whether there are long-term slow-moving products with large dates, such as best-selling items like cola and iced tea. If sales are abnormal, follow up promptly.
Closely monitor customer operating conditions: "Even with the best relationship, maintain risk control awareness."
Control accounts receivable and prioritize cash flow: During the reshuffling period, cash flow is the lifeline. Collect payments promptly, control payment terms, and even reduce order volume to ensure a healthy capital chain.
Conclusion
The plan for the year lies in spring. March is an important node for FMCG manufacturers. Although the 10 distributors interviewed come from different provinces and cities, their views and experiences reflect some commonalities and trends in the industry, representing the typical operating conditions and market thinking of distributors.
"When the tide surges, the brave stand at the forefront." As a seasoned distributor said: "In a market undergoing major reshuffling, risks are everywhere, but staying clear-headed and optimistic is the only way to discover new opportunities."
In 2025, may all distributors stand at the forefront and ride the wind!