Follow and star ↑↑「New Distribution」 See how many friends are following industry trends with you According to a report by Ries, Junlebao squeezed out Guangming in the first half of the year to become one of the top three mass-market yogurt brands (mass-market yogurt: average price < 23 yuan/L) alongside Mengniu and Yili. Moreover, Junlebao's sales performance has been outstanding; while Yili and Guangming declined, Junlebao maintained high double-digit growth, which is commendable. Junlebao's journey to this achievement has not been easy. Today, we reveal how Junlebao turned its milk powder "mess" into a new legend. Wei Lihua, President of Junlebao Rising from the Ruins, Leading Domestic Milk Powder to Overtake Everyone knows about the melamine incident, the most influential food safety crisis in China. At that time, milk powder brands in Hebei were all in a slump, but in 2014 Junlebao rose to the challenge to produce milk powder. This task was equivalent to making the impossible a reality. At the very beginning, others advised me: New Zealand's pasture milk is excellent; you could buy a pasture in New Zealand and sell the brand. But I insisted that we should get up from where we fell, so I insisted on doing it in Hebei and using the Junlebao brand. Many people interviewed thought this was impossible; a SWOT analysis showed all disadvantages Location: Producing milk powder in Shijiazhuang, Hebei, was impossible; the melamine incident caused immense pain to China's dairy industry and consumers. Enterprise: Sanlu had once invested in Junlebao. Although Junlebao only made yogurt at the time and had no milk powder business, the collapse of the Sanlu brand also had a huge impact on Junlebao's brand. Industry: There was great distrust of Chinese milk powder, with foreign brands holding 80% market share, a monopoly already established. Self: Junlebao had never made milk powder before and didn't know how. No matter how we analyzed it, it seemed impossible for Junlebao to make milk powder. But Junlebao did not retreat. To achieve world-class quality, it pioneered two models: first, the full industry chain model, integrating pasture planting, dairy farming, and production processing to ensure product safety and reliability; Second, the "Four World-Class" model: world-class advanced pastures, world-class leading factories, world-class first-tier suppliers, and world-class food safety management systems, ensuring the high quality of Junlebao milk powder. Problems Are Opportunities After the milk powder was launched, pricing was a constant consideration. Most infant milk powder in the Chinese market of the same specification and stage was priced around 300 yuan. When we visited France, the price was 13.5 euros, about 150 yuan; in Germany, 13 euros, about 100-plus yuan. So consumers preferred to buy abroad. Domestic pricing was more than double the international market, or even higher, a market with severely inflated prices. I believed problems are opportunities, so we proposed 130 yuan per can to bring prices back to rationality. But when we announced the pricing, the whole industry exploded. Negative information came thick and fast. Some peers called us disruptors and price butchers. Some even reported us to relevant ministries. We went to defend ourselves; they asked if such a low price meant cutting corners. I listed the raw materials and suppliers, all top global suppliers, and calculated costs and gross margins, all legal and compliant. With widespread domestic media attention, this became a notable public event and also established a good brand image for Junlebao. Facing Consumers: How to Open the Market After Milk Powder Launch? When Junlebao milk powder first launched, to open the market, we initially gave it away. After giving it away, we followed up. The follow-up results showed that people didn't dare give it to children; adults ate it, some used it to steam buns, and even fed it to dogs. To dispel consumer doubts and win trust, we began opening our factories and pastures to let consumers see the production process. Junlebao milk powder obtained BRC A+ top certification and IFS international certification, the so-called "EU dual certification," which boosted sales. Subsequently, our milk powder was launched in Hong Kong and Macau markets, with "same quality, same price, accessible in mainland, Hong Kong, and Macau." Hong Kong's international high-standard market image is a high ground in consumer minds. Against the backdrop of Hong Kong's milk powder purchase restrictions, Junlebao's sales in Hong Kong proved our quality reached world-class levels. Now our brand awareness has reached 87%, of which 56% will learn more, and after learning, 86% will purchase. Most importantly, we have a 96% repurchase rate, 20 percentage points higher than the second place. In recent years, we have grown almost 100%. Now, under Junlebao's leadership, the share of domestic milk powder has increased from less than 40% to 60%, playing a leading role in the domestic market. Yang Hongbin, Vice President of Junlebao Dairy How to Create the Billion-Yuan Product "涨芝士啦" in Two Years Junlebao's "涨芝士啦" cheese yogurt has doubled this year. Last year it sold less than 500 million; this year it is expected to sell 1.1 billion. According to Nielsen data, in the first half of the year, "涨芝士啦" accounted for 61% of market sales and 56% of consumer mind share. Based on these two figures, "涨芝士啦" has become the true leader in this category. In summary, the core of creating this billion-yuan product lies in three points: First, understand trends, seize the right timing, and then discover the category. In low-temperature yogurt, cheese cannot be made big, but when a subcategory emerges, it becomes infinitely large. Promoting a category is also related to consumption trends. In fact, there are many cheese products on the market now, not just yogurt: cheese fried rice, cheese bread, cheese pasta, etc. Cheese has become very popular in the past two years, which is closely related to the category. Actually, cheese accounts for a high proportion of dairy products in EU countries, reaching 49%. Moreover, China's per capita milk consumption is about 40 kilograms per year, while EU countries reach 270 kilograms, so China's dairy market has great room for growth. Foreign dairy consumption mainly consists of fresh milk and cheese. It takes 10 kilograms of fresh milk to extract 1 kilogram of cheese. Cheese molecules are relatively small and easily absorbed. During fermentation, more than 20 beneficial components are formed, so cheese has particularly high nutritional value. Junlebao has made many attempts to let Chinese people eat cheese. As early as 2006, we launched a product called Jibike Youlur, which was taken off the market in less than a year. In 2011, we made another cheese product called Luojue European-style Yogurt Cheese. Although it is still sold now, it doesn't have much competitiveness. Summarizing why these two products failed: first, the timing was wrong; at that time, it was good enough for consumers to drink room-temperature milk, and dairy consumption popularization was the mainstream. Second, we didn't advertise or guide consumers to try cheese. Second, the core of doing business is product quality. If product quality is poor, no amount of PR or promotion will work. A product with only publicity and no quality is a flash-in-the-pan internet celebrity product. For a company to last long, quality is still an important factor. In fact, we developed "涨芝士啦" in 2015, but it wasn't launched until later because we were afraid of failing again. Then in 2017, when Heytea, known for its cheese foam, became popular nationwide, we saw the opportunity and launched this product. Later, we adjusted its taste to the extreme. Regional Pilot: Finding the Origin Market When it was first launched in 2017, we didn't do big promotions; we just made breakthroughs in a few cities. This is Junlebao's long-standing approach to new products: not nationwide, but first test in a few supermarkets to see consumer reactions. During the new product launch test, feedback was: "This product is so delicious!" So monthly sales exceeded 10 million. Then we chose Hebei and Shandong, two major provinces, to test. Later, Shanxi also performed well. Consumers all said it tasted good, so we came up with the slogan "So delicious it makes you want to cry." With just a few provinces focused, monthly sales reached 70 million. Then we worked with Mr. Zhang Yun to study how to define this category and occupy the first brand position in the category. Third, focus on the product and occupy the leadership position of cheese yogurt at all costs. In the second half of 2018, we held a press conference with industry media to formally separate cheese yogurt from the yogurt category, independently creating a cheese yogurt category, followed by large-scale PR releases. This year, we continue to occupy the first brand position through large-scale PR pilots and advertising, using the slogan "The cheese yogurt brand with leading national sales." Currently, "涨芝士啦" has led our growth of 1 billion in the low-temperature market, with "涨芝士啦" contributing 50%. Since its launch in 2017, sales have exceeded 500 million packs. People often worry that focusing on one product will cause other products to decline. That's not the case; other products will grow along with it because it can expand channels and also give our distributors and sales team more confidence in the product. Through this product's drive, our offline outlets have increased by 100,000. Zhang Yun, Global Partner at Ries Analyzing How to Help Junlebao Yogurt Achieve High Growth from a Positioning Perspective Below, we review and analyze Junlebao's growth from a positioning perspective. Junlebao has been in a high-growth stage over the past three years, and milk powder succeeded in the most unlikely place. In a sense, Junlebao has created a miracle in China's dairy history. If in the next couple of years we become the solid No.1 in Chinese milk powder and use that as a starting point to create a world-class milk powder brand, that would truly be a huge miracle. What positioning principles lie behind Junlebao's dual crown in milk powder and yogurt? From extensive consulting experience, the first step is a shift in strategic model. Junlebao had a shrub-like model: many brands under one company, but none strong. To transform from shrub-like to tree-like, the first step is also to focus on the trunk. When we first engaged with Junlebao's yogurt business, there were many products: room-temperature yogurt, low-temperature yogurt, low-temperature lactic acid bacteria drinks, bagged yogurt, boxed yogurt, etc., but basically none were strong. We believed that for the low-temperature business to be competitive, it needed a trunk. The trunk's role is to pave the way, pave the market, and pave the mind. If you don't have a trunk, you don't have a strong product to pave the way. That's why Junlebao's low-temperature yogurt market was mainly in North China (two mountains and two rivers) for many years; without a nationally influential product, it couldn't go out. We analyzed each category of Junlebao's products and found that Junlebao's best opportunity to gain an advantage was in the mass-market low-temperature yogurt segment. After comprehensive analysis, we believed the mid-to-short-term trunk should be yogurt, and in the long term, possibly milk powder. So how to break through in the low-temperature mass market? At that time, there was the problem of market homogenization; product quality, taste, packaging, etc., were all homogeneous. The best way to build a brand is to create a new category, but the risk is too high. All strategies must have certainty, so our first step was to introduce positioning to enhance overall momentum while discovering opportunities for new categories and finding the rolling stone. Junlebao first pulled through positioning differentiation, so we introduced the leadership positioning. In the market, we see many companies claiming leadership, but not all are effective. When is leadership positioning effective? I believe there are three elements: First, the product has no obvious differentiation; the yogurt market is highly homogeneous. Second, consumers must have a cognitive basis for the brand's leadership. In Hebei and Shanxi provinces, Junlebao's market share is leading, which brings a cognitive basis of leadership in the mind. Third, there must be a mind gap regarding leadership. If everyone knows you are No.1, communication is useless. If two or three out of ten people know you are No.1, and after communication all ten know, your mind share will significantly improve. In surveys, 80% of consumers considered Yili the leader, and 20% considered Junlebao, so there was a mind gap. The biggest opportunity for a company lies in defining the category. Cheese yogurt was not invented by Junlebao, but it was indeed first defined by Junlebao. Cheese yogurt is different from cheese-flavored yogurt. Concentrated yogurt has seven or eight flavors, such as chocolate and lemon, one of which is cheese flavor. But cheese yogurt is an independent category built around cheese as the core; in the future, there may be strawberry-flavored or chocolate-flavored cheese yogurt. The company that defines the category first must seize the opportunity to enter the mind. Once the category starts, resources must be invested to occupy the mind. Only by representing the category in the mind can you have the opportunity to harvest the category. Source: Ries Consulting Tips will be paid 400-2000 yuan upon adoption