Evergrande Spring "Flips the Table and Leaves"—What Are Old FMCG Hands Cheering About?

Introduction Evergrande has left, but there will be more like it; we are still in the game, so what are we cheering about? Check out Lao Miao's completely different, unconventional critique of Evergrande Spring! Evergrande Spring is done playing; as one colleague put it, they "flipped the table and left," going back to the promising career of real estate. For many veterans in the FMCG industry, this is a cause for celebration.

The FMCG waters are deep, right? You don't know how to play, do you?

Rich but stupid, right? The tycoon turned into a bumpkin, right? From its high-profile launch in 2013 to the "table flip" now, from blinding brilliance to a dim exit, Evergrande Spring has never been without controversy. The topics alone could fill a book. If written as a blog, it would generate at least a dozen articles with 100,000+ reads. When any outsider enters a new field, it often disrupts the existing order, posing a threat to incumbents and inevitably inviting hostility. If the newcomer acts humble, like a shy bride, and says upon arrival, "I don't understand; please guide me," the veterans would be much happier, patting them on the head like Duncan and saying, "The future is yours." But if a tough guy comes in and says, "You bunch of idiots, after all these years, you've only got that little trick; watch me show you how it's done," then the crowd blocking their door and watching the spectacle becomes the norm. Moreover, this outsider is a real estate developer, a public enemy, so it's a chance to settle both personal and national grievances. When Yunnan Baiyao started making toothpaste, the FMCG industry initially jeered, but that was in the personal care sector. Even in the food industry, when Dali Group moved from baked snacks to beverages, seasoned experts were initially skeptical. Baiyao and Dali quickly proved the skeptics wrong, but Evergrande caved. Those experts who had predicted Evergrande's failure from the start felt vindicated, and even people around Lao Miao were gloating. However, predicting a product's failure is easy; the failure rate for new FMCG products is over 95%. Pick any new product on the market, close your eyes, and say it will fail—you'll be right most of the time, second only to predicting the Chinese national football team losing. But finding the real reason for a product's failure is not easy. Although many articles have revealed the reasons for Evergrande Spring's failure, few are truly convincing. Some mistake the consequences of poor sales for causes, such as chaotic channel pricing and distributor policies. Others take superficial symptoms as root causes, like the ugly packaging of Evergrande Spring. Some are pure self-indulgence, like thinking that because Evergrande is in real estate, it's unsuitable for mineral water, with brand associations of "reinforced concrete smell." That's overthinking. Brand extension has its rules, and it's not that simple. Some are outright nonsense. Critics point to the heavy early advertising investment, inconsistent messaging, and multiple endorsers. In fact, few companies have achieved nationwide fame in such a short time in recent years. From a communication effectiveness standpoint, Evergrande's advertising mix and placement were very successful. One well-known reason that did have a significant impact was the mismatch between pricing and marketing operations. If you sell at 4 or 5 yuan, you're positioned as mid-to-high-end water. High-end products need to be sold with an air of exclusivity. But Evergrande flooded the market, selling everywhere—places where water should be sold and places where it shouldn't—losing all its premium feel. How could consumers of mid-to-high-end water feel about that? This problem is significant and could be fatal for many companies, but not for Evergrande. Although important, it was still at the tactical level and easy to correct, albeit at the cost of time and money, which Evergrande could afford. After all, in its first year, Evergrande Spring generated over a billion yuan in sales, which is quite impressive compared to competitors at the same price point like Kunlun Shan and Aikua. In fact, Evergrande later did adjust the price, albeit a bit late, but it was changeable. If we don't analyze what Evergrande did and simply attribute its failure to not understanding FMCG, that's a stretch. Xu Jiayin might not understand, but the operators were star professional managers poached from major FMCG companies. Saying they had no say at Evergrande is shirking responsibility. Whether you're a professional manager or a professional team, your influence is earned through performance, agreements, expertise, and communication skills. Surely Evergrande didn't hire these professionals just to sit on the sidelines. Let's look at it from another angle. Compared to successful "cross-industry entrants" like Yunnan Baiyao and Dali, Evergrande's actions didn't seem too "amateurish" but rather too "professional." In the era of channel dominance, the three classic strategies—advertising, distribution recruitment, and terminal sales—were all executed exceptionally well by Evergrande. We've already discussed advertising; Evergrande's ad communication efficiency was extremely high. The distribution conferences and industry hype, new product launch buzz, leveraging the AFC Champions League, and a conference with thousands of distributors and over 5 billion yuan in signed orders—these were masterful. And in terminal distribution and promotion, which the FMCG industry values most, they went to the extreme. Insiders know that this couldn't be achieved just by throwing money at it; it must have been the work of FMCG veterans, and top-tier ones at that. Evergrande didn't fail because it didn't understand FMCG; it understood it too well. In contrast, those who succeeded in cross-industry moves often seemed "out of touch" at the start. Yunnan Baiyao's biggest "out-of-touchness" was that, in a market dominated by international brands, with high-end toothpaste priced around 10 yuan, a newcomer with no brand foundation set its price at over 20 yuan (that industry veteran who said Baiyao's pricing was "crazy"—I wonder if they've gone into hiding by now). Yet this was Baiyao's biggest innovation: using high price as a lever to boost brand image, consumer attention, and channel space, then backing it with Baiyao's reputation, creating a new set of rules. When Dali entered beverages, it didn't initially choose many "professional" beverage distributors, nor did it follow traditional beverage brands in deep channel cultivation or direct terminal control. Instead, it stuck to product and brand pull, with manufacturer-distributor collaboration, which was called "not knowing the ropes" at the time. But now, Dali has almost no channel baggage, and its profits exceed the combined profits of Master Kong and Uni-President. In today's tough economic environment, its profitability is so good that countless companies want to bang their heads against a wall. The innovations and successes of Baiyao and Dali were seen as losing moves by "industry insiders" at the time, as "not understanding the FMCG market" or "not understanding the beverage market." Going further back, Nongfu Spring's parent company, Yangshengtang, started in health products before entering FMCG. Yangshengtang emphasized product concept creation but downplayed channel construction, and was ridiculed for not understanding FMCG. A distributor in Anhui reportedly loaded a train car with Yangshengtang products and only made 2,000 yuan per car. Many in the industry said that's not how FMCG works and that Yangshengtang wouldn't last. But days turned into years, and now Nongfu Spring has been around for thousands of days, and it seems it can last at least a few thousand more. More importantly, the practice of emphasizing product concept and differentiation has become widespread in FMCG. Yangshengtang promoted the importance of product concepts; Dali showed the beverage industry that abandoning deep channel cultivation might lead to greater success; Baiyao toothpaste demonstrated a strategic approach of changing the competitive landscape through high pricing and technological barriers. In an environment where local FMCG companies typically compete with international brands through imitation, follow-up, and low pricing, this was a refreshing "mudslide." Even local FMCG veteran Wahaha started with a health product, "Children's Nutritional Liquid," and its distribution alliance was borrowed from the home appliance industry. Lao Miao has many entrepreneur friends in FMCG who came from other industries: the boss of Baima Huatian, Mr. Qi, and the boss of Qiaoma Ma, Mr. Xu, came from foreign trade; the boss of Xiaomei Snacks, Mr. Chen, came from catering. For them, not knowing the FMCG industry was never a disadvantage; they could even borrow innovative ideas from other industries. They believe the most important thing is grasping market opportunities and understanding consumers. In contrast, Evergrande's FMCG operations—advertising, hype, distribution conferences, and channel cultivation—were classic tactics from the channel-dominant era. Although impressive, they were outdated. If this were ten years ago, Evergrande's operations could almost be included in marketing textbooks, and any single element might have guaranteed success. But not now. Not only Evergrande, but the old hands are also failing. Master Kong is in serious decline, Wahaha is in serious decline, Chando and Osmanthus are in serious decline, Haocaitou, Heiniu, and so on. It's no wonder that Evergrande, a newcomer clinging to old FMCG methods, crashed. Years later, Evergrande Spring in 2013 will surely be a prominent industry marker. A product that took the traditional methods of the "channel-dominant" era—advertising bombardment, distribution recruitment, terminal promotion, even human-wave tactics—to near perfection, yet rapidly declined, once again demonstrating the overwhelming power of the times. Evergrande Spring will be remembered as a classic failure of using "channel-dominant" methods and thinking to face a "content-dominant" market. Evergrande is gone, but there will be more like it entering FMCG. Whether they come in tough or humble, as an FMCG veteran, Lao Miao welcomes them all. The FMCG industry has become the most market-oriented industry precisely because it is inclusive and continuously absorbs ideas, concepts, and methods from different industries. Outsiders entering this most market-oriented industry should not feel inferior. The so-called industry practices and special characteristics are just illusions, a paper window ready to be poked through. What you've gained from years of market experience and independent thinking—grasping market opportunities, judging technology trends, deeply understanding human nature, and insight into consumer behavior—are the true core competencies that can genuinely drive the FMCG industry forward. Evergrande is gone. You FMCG veterans who watched the spectacle, you've had your fun, seen the show, and shared plenty on your moments. It's time to get back to work. But remember, Evergrande's failure is not a victory for traditional FMCG; it's a wake-up call for traditional FMCG practices. Put away the superiority complex of being in the "most market-oriented industry." Traditional FMCG players still know very little about understanding consumers, tools that influence consumer behavior, and how to market in the "content-dominant" era—very, very little... Let's start together! New Food Era · New Distribution — 2016 China "FMCG + Internet" Summit Forum — This is a grand event focused on how FMCG industry channels will transform under the trend of Internet+ Agenda 08:00-09:00 Registration 09:00-09:05 Host opening 09:05-09:35 2016 China FMCG Industry Trend Analysis Report — Zhao Bo 09:35-10:05 FMCG Enterprise Transformation Strategy and Path — Liu Chunxiong 10:05-10:35 Opportunities and Challenges from FMCG Channel Transformation — Liu Zhao, CEO of Waiqin 365 10:35-11:05 Reconstructing Distribution Channel System to Promote Urban Retail Upgrade — Tian Yuan, General Manager of Alibaba Retail Connect Backend 11:05-11:25 Channel Efficiency in the Internet Era — Fu Xiaoyun, Vice President of Benlai Holding 11:25-12:00 Roundtable Forum — Brand Transformation: Improvement vs. Reconstruction? Guests: Liu Zhao, Liu Chunxiong, Fang Gang, Chen Feng, Shi Zhengchuan, Deng Xia 12:00-13:30 Lunch 13:30-13:50 Distributor Transformation: Trends in Urban Distribution — Wang Qi, CEO of Weijie City Distribution 13:50-14:20 Roundtable Forum — Why Should Distributors Transform into Logistics? Guests: Zhao Bo, Wang Qi, Liu Zhongmin, Tang Guangliang, Wang Cheng, Sheng Yan 14:20-14:40 How FMCG Enterprises Can Leverage the Internet to Take Off — Wang Hui, E-commerce Operations Director of Xijiu 14:40-15:00 Detailed Explanation of Zhongshang Huimin's "One Machine, Two Wings" Strategy — Su Xiaoxin, Vice President of Zhongshang Huimin 15:00-15:20 Category Value and B2B E-commerce Development Strategy — Wang Chaocheng, CEO of Yijiupi 15:20-15:40 Supply Chain Finance as a Lubricant for B2B Driving Traditional Commerce — Chen Xian, CEO of 51 Order 15:40-16:00 Zhanghe Cloud Factory Boosts FMCG Supply Chain Upgrade — Yang Lixiang, CEO of Zhanghe Tianxia 16:00-16:30 Integrating Micro Retail to Reconstruct Business Ecology — Miao Dong, Vice President of Quanshi 16:30-16:50 B2B Investment Principles and Approaches — Zhao Mingwei, Vice President of Junlian Capital 17:00-17:30 Roundtable Forum — Who Is the King of FMCG B2B Models? Guests: Fu Xiaoyun, Zhuang Jianzhong, Jiang Tao, Zeng Weiqin 17:30-19:30 Dinner For manufacturers and distributors looking to transform, this is an event you can't miss. Interested friends can long-press the QR code below or click "Read Original" to register. Registration: Long-press the QR code below or click "Read Original" ↓↓↓ Click "Read Original" [Register]