---
title: "How Can the FMCG Industry Reduce Costs and Increase Efficiency? See How the Top Students Answer"
description: "Finding growth is the eternal mission of every enterprise and marketer, but achieving it is often elusive. A clear trend is that domestic consumption growth has slowed in recent years, compounded by recurring pandemic outbreaks, making growth increasingly difficult. On June 15, New Distribution invited four guests—Liu Xinggang, CEO of Hsu Fu Chi International Group; Zeng Jian, Co-founder and Senior Vice President of Xinchao Media; Zhou Weiping, Founder and CEO of a1 Snack Research Institute; and Cheng Xiao, Head of New Retail at Qianwei Central Kitchen and General Manager of Qianwei Youxuan—to discuss the main battlefield for FMCG growth after the pandemic."
author: "小新"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-06-23"
language: "en"
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# How Can the FMCG Industry Reduce Costs and Increase Efficiency? See How the Top Students Answer

> Finding growth is the eternal mission of every enterprise and marketer, but achieving it is often elusive. A clear trend is that domestic consumption growth has slowed in recent years, compounded by recurring pandemic outbreaks, making growth increasingly difficult. On June 15, New Distribution invited four guests—Liu Xinggang, CEO of Hsu Fu Chi International Group; Zeng Jian, Co-founder and Senior Vice President of Xinchao Media; Zhou Weiping, Founder and CEO of a1 Snack Research Institute; and Cheng Xiao, Head of New Retail at Qianwei Central Kitchen and General Manager of Qianwei Youxuan—to discuss the main battlefield for FMCG growth after the pandemic.

Finding growth is the eternal mission of every enterprise and marketer, but achieving it is often elusive. A clear trend is that **domestic consumption growth has slowed in recent years, and with recurring pandemic outbreaks, growth has become increasingly difficult.**

On June 15, New Distribution invited four guests—Liu Xinggang, CEO of Hsu Fu Chi International Group; Zeng Jian, Co-founder and Senior Vice President of Xinchao Media; Zhou Weiping, Founder and CEO of a1 Snack Research Institute; and Cheng Xiao, Head of New Retail at Qianwei Central Kitchen and General Manager of Qianwei Youxuan—to discuss the topic "The Main Battlefield for FMCG Growth After the Pandemic."

**1**
**Future Growth Will Mainly Come from the "Convenience Store Economy, Small City Economy, and 1-Kilometer Economy"**
Liu Xinggang, CEO of Hsu Fu Chi International Group, believes that the clearest future growth will come from the "convenience store economy, small city economy, and 1-kilometer economy."

**1) Convenience Store Economy: Mainly Refers to Community Retail Formats Such as Convenience Stores, Community Supermarkets, and Community Dining**
Data shows that among all offline retail formats, **community retail** has been the biggest growth highlight in recent years.

In 2019, among all offline retail in China, only community supermarkets and convenience stores saw high growth rates of 16.5% in sales and 16.9% in store count. In the following two years, the pandemic accelerated the development of community retail formats.

At the same time, centered around the "community," there have been numerous upgrades and innovations in both online and offline formats. For example, community supermarkets have evolved into convenience stores, vegetable and fruit stores, fresh food stores, seafood stores, and pre-prepared ingredient stores. In same-city e-commerce, there are O2O and delivery-to-home models, as well as community group buying models.

**2) Small City Economy: Refers to the Fact That Consumption Growth in Third- and Fourth-Tier Markets Has Been Higher Than in First- and Second-Tier Cities in Recent Years**
Consumers in these areas face relatively lower life pressure, have faster growth in disposable income, and consumption upgrades are accelerating. Competition in first- and second-tier cities has been intense for a long time and has been greatly affected by pandemic controls. In contrast, third- and fourth-tier markets are much better off. **If you want to seek growth today, you must not ignore third- and fourth-tier markets.**

**3) 1-Kilometer Economy: Refers to the Consumer's 1-Kilometer Living Circle**
This is also a community-based concept, but it includes both online and offline. FMCG brands should focus on the consumer's 1-kilometer living circle and complete a thorough layout whether online or offline.

At the same time, brands should identify core consumer scenarios based on their category. For example, Hsu Fu Chi found that in the first week of the pandemic, consumers stocked up on rice, flour, and cooking oil; in the second week, they began stocking up on snacks, beer, and beverages. Tourism has now shifted to suburban camping, making snacks a must-have for outings.

It is by focusing on convenience stores, small cities, and the 1-kilometer circle that Hsu Fu Chi achieved high growth in the first half of 2022.

After the sharing, Liu Xinggang pointed out that the most important thing for FMCG brands is to **"stay true to the original intention and return to the essence"** —to focus on making a product that consumers are willing to repurchase.

**2**
**China's FMCG Marketing Will Enter the "Community Era"**
Zeng Jian, Co-founder and Senior Vice President of Xinchao Media, stated that China's FMCG marketing is about to usher in the **"community era."**

Looking at the development of retail formats in Japan, South Korea, and the United States, when social retail progresses to a certain level, community commerce will inevitably rise, and the same applies to the Chinese market.

In the past, consumers seeking a good consumption experience went to shopping malls and hypermarkets, but with the progress of community commerce, whether in facilities, products, atmosphere, or services, it is getting better and better. Now, community supermarkets, various specialty stores, and community dining in first- and second-tier cities can meet quality needs in terms of product quality, brand, variety, environment, and service.

Zeng Jian also shared the change in consumer behavior of **"stockpiling"** under the pandemic. Home refrigerators are getting bigger, even multiple refrigerators; non-perishable goods can be bought in large quantities at once. Some of these habits may disappear with the pandemic, while others may solidify into consumption habits.

At the same time, Zeng Jian mentioned the polarization of community consumption: **budget and discount consumption is very popular; ultra-high quality and ultra-high price consumption is also rising.**

In terms of marketing, Zeng Jian gave an important suggestion: **The wider the distribution of a category, the more effort should be put into community and office building terminals; the narrower the distribution, the more effort should be put into online and integrated online-offline channels.**

China's communities are evolving—from scarcity to abundance, from monotony to diversity, from desolation to vibrancy. Therefore, whether in brand communication or channel marketing, China is about to enter the "community era."

Xinchao has been deeply involved in communities for 9 years, and its elevator screen count ranks first in communities. Now, based on communities, it has partnered with 100 high-quality elevator poster companies to create China's first open platform for elevator posters. In addition, by creating China's first 100% pure commercial elevator broadcast network, today's Xinchao Media has formed a new elevator media ecosystem with community elevator smart screens as the core, and the "pure commercial broadcast network" and "Niukuangkuang elevator poster open platform" as the "one body with two wings," helping clients save more than 50% of communication costs.

**3**
**Zhou Weiping: a1 Snacks Invests 70% of Its Advertising Budget in Communities**
a1 Snack Research Institute is one of the hottest new consumer brands in recent years. Its founder, Zhou Weiping, has over 20 years of hands-on experience in FMCG entrepreneurship and has successfully created multiple hit products such as "Yake V9" and "Aishang Fei Cake."

In the past few years, a1 Snacks has successfully created multiple hit products such as egg yolk pastry, cloud cake, watermelon toast, and milk-shredded butter bread, earning the title of "hit product maker" in the food industry. Currently, a1 Snacks has received four consecutive rounds of investment totaling hundreds of millions of yuan from leading institutions such as Capital Today, with a valuation exceeding $1 billion.

Although a1 Snacks is currently one of the most powerful new consumer snack brands, Zhou Weiping believes that a1 Snacks' biggest advantage is its dual nature of being both a "traditional brand" and a "new consumer brand."

Take channels, for example. Unlike other new consumer brands that focus on online, a1 Snacks places offline channels in the most important position among all channels. Today, a1 Snacks has covered more than 500,000 terminal outlets through distribution channels. Such strong offline channel capabilities are almost unique among new consumer brands.

Every internet-famous brand must grow into a long-lasting brand to have value. Zhou Weiping once pondered, "Why do traditional brands that were once very loud often still win after changing their battlefield?"

The conclusion reached was: **Brands endure, traffic is fleeting.** An idealistic brand should invest its budget in "mind-share advertising" to build the brand, rather than in "traffic advertising" to convert into short-term sales.

So in 2022, a1 Snack Research Institute reached a deep strategic cooperation with Xinchao Media. Zhou Weiping said: "We invest more than 70% of our advertising budget in communities, investing in Xinchao."

He originally thought that online sales might be affected, but the facts were unexpected. Traffic entering the store through category keywords did decrease, but traffic entering through brand keywords and product keywords increased significantly.

**"Only by building a brand can you have the greatest traffic sovereignty. Building a brand is to stay away from traffic competition in the general sense,"** Zhou Weiping said. "And the best carrier for mind-share advertising is elevator media. It has high traffic, an enclosed space, and is a must-pass route."

Finally, Zhou Weiping gave three suggestions to distributors:

**First, maintain a positive mindset.** Gathering together to complain about hardships is meaningless. Actively embrace new products; finding one hit product can bring several years of growth to your company.

**Second, pay attention to the sinking market.** Focus on high cost-performance products; focus on fresher short-shelf-life products. However, short-shelf-life products require high operational capabilities, and distributors should improve in this area.

**Third, pay attention to near-field retail.** Any scenario that gets closer to consumers is of great value.

Finally, Cheng Xiao, General Manager of Qianwei Youxuan, also interpreted the development and opportunities of the "pre-prepared dishes" category during the live broadcast. She pointed out that pre-prepared dishes were previously a B2B business, and the B2C business is just emerging, with great opportunities but also hidden risks.

For distributors, if you have community channel resources, you can consider adding the pre-prepared dish category. Cheng Xiao pointed out that pre-prepared dishes differ significantly from traditional FMCG in terms of channels and operational methods, and it is recommended to have an independent team to operate pre-prepared dishes.

Cheng Xiao believes that B2C pre-prepared dishes are still in the early stages of development, mainly operating online, but **in the future, the decisive role will be played in communities.**

Great article! Must like, watch, and share.


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