Founded in 2015, Hubang Chili Sauce avoided industry giant Laoganma and rose rapidly through the food delivery channel, with annual sales exceeding 200 million yuan in 2019 and maintaining double-digit growth this year. Before founding Hubang, Lu Wenjin was Vice President of Marketing at Tsingtao Brewery, leading the team to conquer Shandong market and create the second brand 'Laoshan Beer'. In an exclusive interview with New Distribution, we explored the secrets and underlying logic of building successful new consumer brands: ** 1. How can new brands leverage their strengths to break out from established brands?** ** 2. How should new brands set pricing strategies and find their customer base?** ** 3. How can new brands build a well-trained team?** We have a unique sales management model Before doing anything, I ask myself: Why can you succeed? We have our own set of methods, which is our core competency. It's hard for others to learn; even if an individual learns it, turning it into a team approach is difficult because it's a team effort, not just one person. This set of methods is the sales management system. The key to FMCG marketing is building a sales management system based on goals, strategies, team, and sales models. This system is organic, able to dynamically adjust to different marketing environments, self-correct, continuously learn, and improve. For example, at Tsingtao, I mainly solved the problem of sales team building. Originally, Tsingtao used a direct sales model with many employees nationwide, having their own warehouses, vehicles, finance, drivers, and warehouse keepers. A team of 20 might have 15 in logistics, with very few actual salespeople. I felt this organizational structure was wrong; it should be reversed, perhaps needing 15 salespeople and only 4-5 back-office staff. I made many changes then, shifting from direct sales to a distribution model, more than doubling efficiency. We also stopped setting up regional branches, making things simple, like a Mongolian setting up a tent—very flexible, with no baggage, just ride and fight. A manager recruits 20 salespeople, decides which areas to cover, how many stores to visit, when to meet daily, and how to plan routes for morning, noon, and evening visits and deliveries. This is essentially an industrial logic applied to sales, emphasizing process, standardization, and systematization, following the PDCA closed-loop logic. We spent 2004 promoting this method, and the process was 'brutal', but it was this micro-operations model that helped us conquer the Shandong market and build the Laoshan Beer brand at Tsingtao, and more importantly, we built a well-trained team. After establishing the channel and team operations system, I felt this wasn't the whole story of sales. I believed we still needed to build the brand; brand building is the highest level of marketing. Later, through studying positioning books, I realized that brand building must focus on consumer mindshare; only if you exist in the consumer's mind will it work. Then I had practices like 'Betis' olive oil and Hubang Chili Sauce. During 'Betis', we gained experience dealing with supermarket channels. Previously, we worked with convenience stores and food service, but with olive oil, we had to enter supermarkets. We discovered that supermarkets have systems; you must connect with the system and headquarters, then plan each store's approach and promotions. We quickly mastered this. We formed a sales management system and accumulated offline supermarket channel experience—these were our fundamentals before starting Hubang. Cutting off retreats to force innovation No innovation, no entrepreneurship! When doing Betis, conditions were relatively comfortable. For Hubang, I decided to change tactics and adopt a lean startup approach. Why spend so much money? Can we innovate? This cut off our retreats, forcing us to break through and innovate. If you have plenty of money and resources, innovation becomes difficult. Innovation is born of necessity; it's hard, but with limited conditions, you have no choice but to innovate. We chose the chili sauce industry because there's an opportunity to build a brand. The current competitive landscape is like 'a towering tree plus many low shrubs': Laoganma dominates, but industry concentration is low, meaning there's an opportunity to create a second brand. On the other hand, the industry is challenging; no second brand has broken through over the years, indicating constraints. For Hubang to succeed, we must solve problems predecessors couldn't. 1. Strategy: Break through with channel innovation At the start, our primary concern was survival. Forget everything else; based on current conditions, survive first. We started with channel innovation. Our team's strength is channels. The chili sauce industry lacks 'nuclear weapon' products; we tested our product and it was fine, so we needed to solve problems through marketing innovation, especially channel innovation. We conducted many experiments: traditional e-commerce, content e-commerce, O2O, wholesale markets—none worked because they couldn't solve survival. We had about 20 people internally, gave them a relaxed environment, set up several offices nationwide, and let them try. In our Jinan office, an employee frequently ordered food delivery, got familiar with a store owner, and asked him to try selling our product. At first, we didn't notice, but then I read a WeChat article claiming food delivery was a fake demand. Intuitively, I disagreed. I investigated and found our product had sold out. My first reaction was that this was viable and promising. It was pure intuition, but in that moment, I considered several factors. First, food delivery is a closed channel with no competitors; even if competitors emerge, they'll be few, giving us more options. In supermarkets, with dozens or hundreds of brands, how can you compete? Second, food delivery involves meals. Due to delivery conditions, the food often isn't tasty; adding chili sauce improves it significantly. Third, the target audience suits us: Laoganma's customers are older, so to avoid competition, we need younger customers, and food delivery users are mostly young. Fourth, our team had extensive channel management experience from beer, and offline visits are our strength. Fifth, food delivery channels have good cash flow; regardless of daily sales, cash flows daily. In supermarkets, promotion cycles are long. So I felt this could be our biggest survival path, avoiding Laoganma. No matter how strong Laoganma is, in this channel, they're not as good as us. If we can enter, we can survive. 2. Provide operational services to food delivery merchants to build competitive barriers To deeply integrate into food delivery, we must understand and familiarize ourselves with the ecosystem, forming a symbiotic relationship. During this period, we helped merchants design images, set up activities, do simple operational optimization, or help them build groups. Later, we even held salons and summits for food delivery merchants, proactively offering such services. For online, it's not necessarily about making a lot of money; products like chili sauce, alcohol, and beverages aren't suitable for online sales, and making money through e-commerce is tough. The online function is primarily for product innovation: testing, screening, and continuously innovating. Offline testing of new products takes too long. Online is fast: launch, evaluate, keep good products, discard bad ones, then expand to other markets. Second, online spreads quickly; offline you start city by city, county by county, taking years to cover the country. Online, you can become nationally known in months. For consumer goods of similar scale, online brands often have greater influence. Offline requires continuous accumulation and deepening. For example, if I enter a supermarket today with one method, tomorrow I might change, then switch channels. The offline channel strategy should be: choose a regional market as a center, like Shanghai, and advance channel operations in a tiered manner, establishing roots. Currently, we mainly use food delivery channels, but also e-commerce and offline. In the first two years, offline drove traffic online, but recently there's a trend of online moving offline. First, for a business to succeed, it must achieve certain effects. For example, our industry doesn't have network effects. In FMCG, we focus on two effects: first, scale effects, like the beer industry; in the 1980s, 100,000 tons might be the national number one, but now a plant producing 100,000 tons might lose money. Without scale, costs can't be reduced; this applies to any consumer product. Second, synergy effects: channels must synergize, and products must synergize. For instance, if I didn't do food delivery, entering supermarkets would be hard. But after doing supermarkets, food delivery becomes more stable because of it. These combine to complement each other. Not every product or channel will be profitable, so e-commerce leverages its strengths like fast product updates and high communication efficiency, while offline food delivery and supermarkets cooperate for stability.