Since the 2008 global financial crisis, the world economy has been in constant turmoil, and China's economic growth center has gradually declined. The 6.9% GDP growth rate confirms the arrival of the 'new normal' economy, and China's economy will soon shift from an 'investment and export-driven' model to a 'consumption-driven' one. A recent consumer goods report by Roland Berger (hereinafter referred to as the 'Roland Berger Report') points out that Chinese consumers are exhibiting richer consumption behaviors: declining disposable income and extensive consumption experience are making consumption decisions more rational and sophisticated, while rapid changes in consumer demand and differentiation are creating new needs. Consequently, it is an indisputable fact that traditional consumer goods leaders are experiencing significant performance declines, showing early signs of failure and facing downward pressure, including well-known companies such as P&G, Belle, and Coca-Cola. The new era for the consumer goods industry is accelerating.
Consumer Goods Enterprises: Individual Lifecycle Changes, Different Treatment Methods
The Roland Berger Report argues that, based on enterprise size and growth rate, the lifecycle of Chinese consumer goods enterprises exhibits a distinct and highly regular operational trajectory, passing through five major development stages and four key turning points, from weak to strong and then from victory to decline, with rare exceptions.
The lifecycle stage of a Chinese consumer goods enterprise is strongly correlated with the enterprise's characteristics, the problems it faces, and the challenges it encounters. Therefore, enterprises need to set differentiated development goals at different lifecycle stages, along with corresponding strategic and management priorities, to achieve long-term development.
Enterprise Founding Stage: Enterprises face high operational risks and rapid market changes. Whether the enterprise has high flexibility and adaptability to quickly seize market opportunities is key to success in the founding stage. Strategically, they should continuously 'trial and error,' adjusting quickly based on market reactions to products. In management, they should build a highly flexible, practical management system.
Enterprise Growth Stage: Products have been initially accepted by the market. The primary goal is to enable rapid growth and further expand market share. Strategically, they should keep pace with the market and rapidly develop and strengthen core businesses. In management, they should establish a strategic planning and resource allocation system to achieve oriented and standardized internal management.
Enterprise Maturity Stage: The peak of enterprise development, with stable sales revenue and generally low capital expenditure. At this point, enterprises should consider how to extend their advantage period by exploring new business growth points. Strategically, they should strengthen the management of existing business portfolios and develop promising new businesses. In management, they should optimize organizational structure and management systems to improve operational efficiency.
Enterprise Decline Stage: Enterprises begin to face major internal or external crises and need to undergo significant strategic and management transformations, aiming to achieve a leap forward through corporate reinvention. Strategically, they should re-examine and adjust the overall strategic direction. In management, they should further transform the business and management systems based on the adjusted strategy. Successful reinvention leads to a new round of rapid growth, while failure leads to extinction.
Enterprise Extinction Stage: Transformation has failed, and there is no way to recover within the existing business segment. The lifecycle will return to the founding stage, and consideration must be given to how to restart entrepreneurship in the existing market or other markets.
Case Study: P&G Fails to Keep Up with Consumers, Struggles to Regain Past Glory
P&G Founding Stage (1988-1990): After entering the Chinese market in 1988, P&G conducted extensive market and consumer research to fully understand the Chinese market and capture Chinese consumers' demands for daily necessities, precisely launching Head & Shoulders, Olay, and Rejoice brands, quickly opening up the market.
P&G Growth Stage (1991-1998): P&G successively launched brands such as Tide, Crest, Safeguard, and Pantene, and through distribution plans, penetrated 600 Chinese towns and further expanded into rural markets to fully occupy shelves. The sharp increase in market share made P&G the largest daily chemical enterprise in China.
P&G Maturity Stage (1999-2007): In addition to mass-market products like Rejoice, Head & Shoulders, Pantene, and Olay, P&G launched new mid-to-high-end product lines such as VS Sassoon, Herbal Essences, and SK-II, finding new business growth points in market segments and achieving success.
P&G Decline Stage (2008-present): Strategic misjudgment, underestimating the spending power of China's middle class, and persisting with low-price and mass-market strategies while Chinese consumers pursued consumption upgrades and personalization, led to the aging of its original mid-to-high-end brands and a failure to launch attractive new product lines. This caused P&G's market share to shrink continuously after 2008, gradually losing its industry leadership.
Consumer Goods Industry: Cyclical Evolution, Accelerated Leader Turnover
Enterprises are the micro-units of an industry, and the superposition of multiple enterprise development paths can map the overall industry landscape. Based on enterprise development paths, the Roland Berger Report's dynamic research on multiple consumer goods market segments reveals highly consistent operational patterns: the evolution of China's consumer goods industry always passes through five major stages: 'Sprouting from the Soil,' 'Rising Sun,' 'At Its Peak,' 'Crisis Brewing,' and 'Termites Devouring the Elephant.' This process is accompanied by the competitive replacement of industry leaders, with more industries cycling through the latter three stages.
Sprouting from the Soil Stage: The industry is in its infancy, with market demand gradually emerging, fragmented competition, and instability. Both new and old enterprises seize opportunities to enter the blue ocean, leveraging their understanding of market demand to develop new products and users to capture market share. At this point, differences in scale and growth rates among enterprises are limited, presenting a scene of chasing and competing. Industry leaders have not yet emerged, leaving the position vacant.
Rising Sun Stage: The industry gradually matures and shows high-speed, stable growth. External trends and competitive conditions are clearer, and industry cognition is converging. Entry barriers rise, and overall market demand is stable. Quality enterprises begin to stand out, with above-average scale and growth, eyeing the leader position. Other enterprises chase closely, striving to narrow the gap.
At Its Peak Stage: The industry is in a mature stage, with slow market demand growth and intensified competition. Entry barriers are high, and signs of segmentation and breakthroughs in market demand and business models appear. Leading enterprises are far ahead, with stable positions and strong competitive moats. New challengers take different paths, emerging in market segments, with limited scale but rapid growth.
Crisis Brewing Stage: The industry is fully saturated, with significantly slowed market demand and competition in a red ocean. Despite high entry barriers, market segmentation demands and business model innovation are unstoppable. Industry leaders cannot escape growth inertia, and insufficient adaptability leads to early signs of failure and decline. New challengers, with keen capture of market segments and rapid rise through innovative business models, achieve both scale and growth, eyeing the throne.
Termites Devouring the Elephant Stage: Former overlords are nearly powerless to reverse their decline, with shrinking scale and growth rates far below the industry average, gradually being eliminated by the market. New overlords, through rapid growth, aggressively rise to power. The Roland Berger Report shows that the past five years have been a period of rapid change with stars shifting and new replacing old across industries, with more industries frequently experiencing the collapse of giants and changes in leadership. The dairy industry is in the 'At Its Peak' stage: Mengniu and Yili, as industry leaders, have established strong competitive moats in the room-temperature milk segment through strong control of upstream quality farms, extensive distribution networks, and strong brand advantages. Regional enterprises also show good development momentum, challenging traditional dairy giants to some extent: Yangyuan clearly targeted the walnut brain-health milk beverage market, creating the 'Six Walnuts' hit product; Shengmu keenly captured the 'organic' trend in the food sector, focusing on organic high-end white milk; Yakult, with its deep lactic acid bacteria research and first-mover advantages, has become a leader in China's low-temperature lactic acid bacteria industry; Junlebao is rapidly growing by leveraging room-temperature yogurt and room-temperature lactic acid bacteria beverages to expand into the national market. The sports shoe market is in the 'Crisis Brewing' stage: Nike focuses on professional sports, Adidas on fashion and leisure, with distinct brand characteristics and strong R&D capabilities, maintaining a solid leadership position. However, as consumer value demands within the market segment, brands like New Balance and Skechers, which focus on sports fashion, and Anta, which focuses on lower-tier market consumers, have their own distinct market positioning and are challenging traditional leaders. Traditional Chinese sports leaders like Li-Ning, 361°, and Xtep, due to increasingly blurred brand positioning, insufficient product innovation and R&D capabilities, and channel sinking, are seeing their dividends disappear, facing growth difficulties with growth rates below the industry average, and gradually losing market share. The non-sports shoe market is at the junction of 'At Its Peak' and 'Crisis Brewing': Affected by rapid changes in consumer demand and the decline of department store channels, traditional women's shoe enterprises are facing significant decline and difficulty in short-term reversal. Low-priced leather shoe brands represented by Dadong, and fast-fashion cross-industry brands like Zara and H&M, are growing rapidly. Men's shoe representative brand Aokang has performed well in recent years, leveraging street store channel advantages and multi-brand and large-store renovation strategies. The bottled water industry is in the 'Termites Devouring the Elephant' stage: Under the impact of new challengers, traditional bottled water leaders Kangshifu and Wahaha are retreating and experiencing negative growth. Nongfu Spring has achieved great success in recent years with its core selling point of high-quality water sources and the 'natural porter' concept. C'estbon and Ganten have seized the high-end bottled water market opportunity, quickly entering and achieving rapid growth. The daily chemical (skincare) industry is in the 'Termites Devouring the Elephant' stage: Due to solidified brand and product positioning, Dabao, a former skincare brand leader in China, failed to adapt to the times and eventually fell. Existing leaders like L'Oréal Paris and Olay have failed to respond quickly and flexibly during the industry's diversification, unable to meet consumers' increasingly segmented value demands, leading to weak growth and signs of fatigue. Chando, as an emerging local brand, focuses on the value demands of lower-tier market consumers, relying on flexible distribution policies and promotional methods tailored to lower-tier consumers, deeply cultivating cosmetics specialty stores, achieving rapid expansion in lower-tier markets. Hanshu precisely targets the pain point of dry skin among office workers, quickly capturing the market segment with hydration and moisturizing concepts. Pechoin has recently repositioned its brand, returning to the Chinese concept of natural herbs, winning a great response. Chando, Hanshu, and Pechoin are gradually eroding the market share of former overlords and challenging for the throne. The non-sports apparel market is in the 'Termites Devouring the Elephant' stage: Due to insufficient grasp of fashion trends and weak product R&D capabilities, former leading enterprises such as Meters/bonwe and Bosideng are gradually losing market share in the rapidly changing apparel market, being replaced by fast-fashion brands like Zara and H&M, which adhere to design as the core and quickly respond to consumer demand changes, and brands like Uniqlo and HLA, which offer basic styles but win with high-quality fabrics and exquisite craftsmanship. -END- The best learning platform for FMCG distributors in China Dedicated to providing professional, practical, and actionable 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 Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brands | 016 Distributor B2B Transformation | [Long press QR code to follow]