In September 2021, the National Radio and Television Administration issued a notice prohibiting the use of radio, television, and online audiovisual programs to promote and sell betel nut and its products. The Hunan Provincial Market Supervision Administration also clarified that starting from February 1, 2022, it would no longer grant food production licenses for betel nut, bringing many uncertainties to the industry.

Of course, we do not believe that the betel nut industry will be unable to develop from now on; instead, it will usher in a historic opportunity for more orderly and healthy growth. After all, against the backdrop of an accelerated pace of work and life, consumers need products that bring pleasure, such as coffee, e-cigarettes, trendy alcoholic beverages, and so on.

Moreover, betel nut is not only one of China's traditional medicinal and food ingredients but also concerns the livelihoods of millions of betel nut farmers behind the industry.

Let us first explore the essence of the problem: why does betel nut constantly attract criticism?

In August 2003, medical experts from the International Agency for Research on Cancer (IARC), affiliated with the World Health Organization (WHO), believed that frequent chewing of betel nut can cause oral submucous fibrosis, which is a major cause of oral cancer. The report listed more than 200 Group 1 carcinogens, including salted fish, smoked foods, fried foods, alcoholic beverages, and chewing betel nut.

Professor Xu Qitai, a specially appointed expert in traditional Chinese medicine research at the National Pharmacopoeia Commission, introduced that the health risks of traditional betel nut mainly stem from current consumption methods:

First, mechanical friction. Dried betel nut contains a large amount of crude fiber, which repeatedly rubs against the oral mucosa during chewing, causing local damage to the oral mucosa.

Second, chemical stimulation. During chewing, the toxic components in arecoline enter the body through the damaged oral mucosa.

Since market demand will not disappear, the betel nut industry needs transformation and reconstruction, taking the essence and discarding the dross, to achieve both consumer appeal and no health risks.

Recently, New Distribution had an in-depth exchange with the innovators in the betel nut industry—the founders of Bingguo Brothers, Mr. Wu Ming and Mr. Wang Jun. As pioneers of innovation in the betel nut industry, how do they view industry transformation, and how do they start a business in this context?

Establishing Innovation Direction and Repeatedly Polishing Products

Before discussing the direction of industry transformation, let's first understand why Wu Ming, the founder of Bingguo Brothers, entered the betel nut industry. He worked at Alibaba for 11 years, with his longest role being Product Director. In the past two years, new consumer brands have been rising continuously.

He found that in today's era, which believes "all consumer goods in China are worth redoing," no one is paying attention to the upgrade of the betel nut industry. As a Hunan native and a betel nut enthusiast, both his personal growth experience and his environment have made him particularly focused on betel nut.

On the other hand, during business trips across the country, Wu Ming also observed that betel nut has gradually spread from a niche regional product to the whole country due to population mobility and its own characteristics, evolving from a niche food to a more mainstream product.

Of course, nationwide circulation naturally brings nationwide attention. From national regulation to media scrutiny, health and hygiene are the biggest pain points in the betel nut industry. If not fundamentally solved, either the industry's development will be restricted, or betel nut enthusiasts will continue to suffer various oral health problems.

This is the "initial motivation" for Wu Ming's entrepreneurship. He hopes to establish a new health consumption concept for traditional betel nut products through technological innovation. On the basis of meeting user needs, he aims to make betel nut consumption healthier, more hygienic, and more modern.

Wu Ming believes that betel nut is often stigmatized. In fact, chewing betel nut has a long history in China and the world, and it is also a medicinal herb in the Compendium of Materia Medica. Why is it now subject to increased regulation?

The core reason is that traditional enterprises in the industry have run too fast in marketing and too slow in scientific research and innovation. Some companies have overwhelming advertising and excessive marketing. This is similar to the development of the e-cigarette industry in earlier years, but it is believed that it will gradually become standardized and developed in the future.

How can the betel nut industry innovate? Wu Ming mentioned, first, remove unhealthy substances to meet modern food hygiene and safety standards, while retaining beneficial parts and ensuring taste.

In 2021, Wu Ming began in-depth research on betel nut and invited university professors and R&D engineers to join. He mentioned that innovation and iteration of betel nut should not only satisfy users' taste experience and preferences but also avoid health risks to the oral cavity.

After nearly a year of experimental research, market research, upgrades, and polishing, they ultimately redefined betel nut in the form of "gum-based candy" and positioned it as "tech betel nut," hoping to provide an exploratory direction for industry transformation.

Of course, this innovative concept also gained recognition from well-known investment institutions, and they secured angel investment in the early stage of entrepreneurship.

Providing New Choices for Consumers and Establishing Long-term Mutual Benefit with Channel Partners

Now, the first product of Bingguo Brothers has been officially launched. Wang Jun, co-founder of Bingguo Brothers, who has marketing executive experience at Yihai Kerry and Liby, introduced that the target groups for this product are mainly three types:

First, existing betel nut users who continue to consume but have psychological burdens. Bingguo Brothers offers them a new choice, which is equivalent to converting some existing users.

Second, users who like betel nut but deliberately refrain from eating it due to concerns about oral health risks. This product provides them with a new attempt to meet their actual needs for refreshment and stress relief.

Third, heavy betel nut users who chew more than two packs a day and may already have severe tooth wear or even oral mucosal ulcers or fibrosis. Through product substitution, it helps them easily quit betel nut and avoid further deterioration of oral conditions.

Although the target group of Bingguo Brothers seems relatively broad, the reality is that the current betel nut consumer group has reached 80 million people. Bingguo Brothers hopes to provide a new choice for the vast number of users through product innovation. Of course, Wang Jun also introduced their subsequent series of product plans to better meet the needs of the above consumer groups.

Returning to the market operation level, in addition to full innovation in products, Bingguo Brothers has also abandoned various flashy marketing tactics common in the industry, such as "lottery draws" and "buy one get one free."

Bingguo Brothers hopes to bring the greatest benefit to target consumers, which is oral health, rather than attracting consumers through prizes. Wang Jun believes that if too many promotional gimmicks are added to consumer promotions, it will overshadow the product's value to users.

Of course, from another perspective, canceling fancy consumer promotions naturally increases investment in the channel level (distributors and terminal stores) to promote more opportunities for products to reach consumers.

This is also what Wang Jun has always emphasized: establishing long-term mutually beneficial relationships with channel partners. He also stressed the approach to distributor layout: achieve flat and professional coverage based on region and channel dimensions, implement regional protection, be market-oriented, and avoid overstocking and price chaos.

Traditional Industries Need Pioneers to Practice and Explore

Now, betel nut is an industry with nearly 100 billion yuan in output value. The industry's upgrade requires "catfish" to take the lead and explore and practice innovation. The consumer demand behind betel nut will not be a flash in the pan but has a long life cycle.

As innovators in the traditional betel nut industry, when talking about category competition, the two founders were also outspoken. Whether it is the follow-up of traditional betel nut enterprises or the influx of new entrepreneurs, it will bring more driving value to the traditional industry.

In this context, the traditional industry needs more people to join in the transformation and provide new ideas and solutions for the healthy development of the industry.

Of course, Wu Ming also emphasized that during the industry transformation period, Bingguo Brothers will focus and strive to maintain continuous leadership. Moreover, from the current perspective, after nearly a year of R&D and practice, they have accumulated certain technology and supply chain advantages, leading the industry transformation. The next step is to accelerate brand building and channel expansion.

At the end of 2021, the traditional betel nut industry faced a cold winter. In 2022, tech betel nut, represented by Bingguo Brothers, hopes to reinject health and safety product concepts into the industry and bring new practices for industry transformation.

Yuan Lai | Chief Editor of New Distribution, focusing on FMCG distributor new distribution/innovative consumer brand cases. For communication, you can add WeChat by long-pressing. Please indicate your company, position, and name when adding.

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