Scan the QR code in the image to register Despite the fierce pandemic, the new consumer track remained vibrant throughout 2020, with waves of new consumer brands rising strongly and growing rapidly. Some companies, founded only three or four years ago, have already rung the IPO bell, achieving what the old giants might have taken ten or more years to accomplish. "In the past, a brand company with 3 billion yuan in revenue might need 5-8 years to accumulate, but now it can incubate a company of that scale in just 3-4 years," said Weng Yinuo, founding partner of Hongzhang Capital. Given this trend, it's no surprise that online discussions about a "battle between new and old consumer brands" have emerged. After all, on one hand, new consumer brands like Genki Forest and Perfect Diary are flooding into daily life, while on the other, consumer goods giants like P&G and Coca-Cola have seen declining performance in recent years, and chocolate giant Hershey has even begun strategic contraction in the Chinese market. Thus, headlines like "Cola is being defeated, instant noodles that survived food delivery are losing to river snail rice noodles and self-heating pots" fill various media outlets. But will these new brands, born from market changes, truly become the "barbarians" knocking on the gates of traditional consumer giants? -01- The "Blitzkrieg" and "Protracted War" under the Consumption Feast Thanks to the channel dividends brought by mobile internet, content dividends, and demographic dividends from Generation Z, the consumer goods sector is forming a development window for local emerging brands. In this regard, brand expert and former vice president of Tsingshan Capital, Li Qian, optimistically stated, "For the next 20 years or so, it will be a window of opportunity for new consumer brands." The rise of new consumption is driven by intergenerational demographic dividends New brands develop rapidly and with great fanfare because, compared to the steady growth trajectory of traditional consumer brands, they have chosen a different lightning-fast approach. Thus, whether it's the earliest internet-famous brands like Three Squirrels and Miniso, or the currently popular Perfect Diary and Genki Forest, when we review the rise of these representative new consumer brands, we find that their strategy is almost always to occupy all possible online and offline channels at the fastest speed, forming a "lightning-style saturation attack." Indeed, adopting a high-density, continuous bombardment saturation attack marketing strategy can strengthen user awareness and make the brand deeply rooted in consumers' minds in the shortest time. However, in practice, many brands focus only on saturation attacks while heavily relying on OEM factories for their supply chains. This is a typical "trade time for space" tactic, where they first create market buzz to buy themselves "window time," then consolidate their supply chain fundamentals. The downside is that many internet-famous brands' strengths are not yet sufficient, but their weaknesses are already obvious, leading to reputation failures and quality control issues. For example, Three Squirrels, the first-generation internet-famous brand, has been repeatedly flagged for quality issues by market regulators. On the Black Cat complaint platform, complaints about Three Squirrels have reached 764. To some extent, this is one of the reasons its stock price halved within six months. Self-heating pot brand Zihaiguo is no exception. Its asset-light model with OEM partners has given products cost-effectiveness to some extent, but due to weak R&D and production control, product quality issues are often criticized by consumers. Moreover, the lack of industry standards for self-heating products poses food safety risks. According to Qichacha data, its parent company Hangzhou Jinlingyang currently has only 113 registered intellectual property rights, of which 100 are trademarks. In contrast, the "being defeated" instant noodle giants Master Kong and Uni-President have accumulated dozens of times more intellectual property and patent certifications through years of R&D. This is why Master Kong and others have thrived in the market for decades, with over a hundred product varieties. The secret lies in continuous R&D innovation, constantly enriching and updating product lines to keep instant noodles in line with the times and maintain their status as a national favorite. Looking at new consumer brands, while their operators are busy creating viral content, they might learn from the evergreen journey of old brands that the core indicator of a good consumer product is sustainability and repurchase rate, which is key to long-term brand success. This capability comes from decades of "dull effort" in continuously improving and stabilizing the supply chain foundation. It is precisely because of this solid foundation that old hands like Yili and Master Kong can consistently deliver on taste and quality control, maintaining that "same flavor" for decades. Therefore, even though there are many online claims of "a battle between new and old consumer brands, and a reshuffling of the consumer market," the clear trend is that old brand giants with unbreakable foundations are riding the new consumption wave to new heights, especially those deeply rooted local national brands. These old brands standing at the crest of the wave have always maintained a young heart to ride the wind and waves. According to the latest Kantar Worldpanel report, as of October 2020, 22 FMCG companies in China attracted over 100 million urban Chinese households within one year. Among them, Yili, Mengniu, and Master Kong, which rank high, are national brands that have been cultivating the consumer market for years. National brands occupy four of the top five spots in the household consumer list for FMCG brands From the consumer market's reaction, the talk of a "battle between new and old consumer brands" may be premature. After all, under the iron law of the consumer goods market—"rise by traffic, live or die by supply chain"—for new consumer brands with unstable foundations, surviving and gaining a foothold is the immediate priority. -02- "Internet-famous" brands come and go, but "evergreen" brands are rare However, new consumer brands eagerly seeking attention in the consumption feast, if they want to become "evergreen" brands that stand firm, still need to overcome the sustainability dilemma left by "trading time for space." The fruits of blitzkrieg victory still need to be tested by a protracted war. The strong rise of new consumer brands has a fundamental logic: product innovation direction is almost equated with the preferences of young people. Undeniably, for all consumer brands, "youthfulness" is always an important direction. In this regard, there is no distinction between "new and old brands." But every era has its own young people. As generations of young people alternate, the direction of the tide will change again and again. How to continuously win over each generation of young consumers is the ultimate question new brands face. This is why internet-famous new brands spring up like mushrooms, but truly evergreen companies are rare, and those that can consistently be the choice of hundreds of millions of households like Yili, Mengniu, and Master Kong are even rarer. Compared to these internet-famous new consumer brands that cater to contemporary young people, the evergreen development paths of traditional brands like Yili and Master Kong have sustainable competitiveness for a long future. This is also what new consumer brands need to learn before they can carry the banner of national products. First, be a brand that feeds every generation of young people, not one that is only fed by a certain generation. The new consumer brands that have risen in recent years, whether following the national trend or two-dimensional culture, whether focusing on healthy eating or the sugar-free market, have basically catered to the consumption needs of different circles of Generation Z. In fact, if we look further back in time, we will find that there were also brands born to please the post-80s and post-90s. For example, Ayaya, a trendy accessory brand that once swept the post-90s youth, has now become a tear of the times. The trends of young people always change rapidly, one after another. If you only focus on the preferences of one generation, after reaping the temporary dividends, you will inevitably be abandoned by them as they "grow up." Looking at those evergreen traditional consumer brands, almost all have signature products that can stand the test of time, while also innovating according to the preferences of consumers in different eras. For example, Coca-Cola has classic Coke and Sprite, and in today's health-conscious era, it has launched sugar-free fiber+ products. Dairy giants like Yili and Mengniu, with multiple classic products, also launch sparkling water favored by young people. Master Kong has many classic instant noodle flavors represented by braised beef noodles, while also launching vegetarian noodles, self-heating noodles, snack cups, and vegetable-rich noodles for different consumer groups such as vegetarians, outdoor enthusiasts, professional women, and children... It's not hard to see that despite the ever-changing trends of the times, these old masters can always come up with new tricks to meet the needs of emerging groups, ensuring that deliciousness never goes out of style. It is evident that for brands that can "feed every generation of young people," youthfulness is actually their norm. Beyond the super single product braised beef noodles, Master Kong's product matrix includes over a hundred different flavors and types of instant noodles Second, accumulate brand power that influences consumers, rather than competing in the ability to iterate viral products. Many new consumer brands capture the minds of young consumers by quickly creating viral products. Examples include Genki Forest's sparkling water, Zihaiguo's self-heating hot pot, and Perfect Diary's eyeshadows and lipsticks. The viral product marketing strategy is almost a "signature skill" for internet-famous brands. But if a brand relies on a viral product strategy to attract users, then users will develop expectations for product innovation. However, any industry has a certain innovation cycle. Once it hits a bottleneck, internet-famous brands will face the crisis of being quickly forgotten by users. In contrast, traditional brands in various tracks almost all have both viral products and a complete product matrix, creating brand power that influences consumer decisions. For example, when it comes to drinking water, consumers think of Nongfu Spring and Wahaha; when it comes to pure milk, consumers think of Mengniu and Yili; when it comes to instant noodles, consumers recognize Master Kong and Uni-President. But these traditional brands have not simply become "viral product machines." Instead, they have gradually occupied consumer minds through their product matrix, channel reach, and product reputation. When consumers enter scenarios like being thirsty, hungry, exercising, or staying up late, they naturally make choices in front of the shelf. As the saying goes, "companionship is the longest confession of love." These brands that have already entered consumers' hearts can withstand the test of time and remain "new even after a long time." Finally, take the supply chain as the foundation to adapt to new consumption changes, rather than using marketing as the foundation to "build a tower and feast guests." In the eyes of many young consumers, new consumer brands represent "knowing how to play," while traditional consumer brands mean "aging." In the business world, many "playful" new consumer brands face the crisis of becoming "has-been internet celebrities," while "aging" traditional consumer brands can occasionally pull off surprising moves that make people exclaim, "My youth is back!" Essentially, the "playfulness" of new consumer brands is built on a marketing-oriented foundation, with many tricks and gimmicks, but low competitive barriers. For example, Zihaiguo successfully broke out on the marketing foundation but has not yet formed a sufficient brand moat. After all, the factories it can find are also accessible to other brands, and it even faces competition from hot pot brands with their own supply chains. Additionally, its R&D investment is not high, resulting in relatively small product differentiation, so only a few products can break out. Looking at traditional consumer brands, although they are often said to be "aging," because their foundations are solid and their user mindshare is deep, occasional "playful" moves can directly win over a large number of consumers. Examples include Wahaha, White Rabbit, and Want Want. These old hands, with their solid fundamentals and occasional surprising moves that make people feel "my youth is back," can continue to stay in the sight of emerging groups, making youthfulness a norm for the brand. Moreover, traditional brands that adapt to new consumption changes with the supply chain as their foundation can achieve breakthroughs with overwhelming momentum. A generation will eventually grow up, but there will always be young people who love instant noodles with ham sausage Many consumers may not realize that, according to big data from the Meituan platform, instant noodles were one of the most popular fast food products last year. In an era where food delivery is so convenient, instant noodles remain a favorite for convenient dining among consumers. In a consumer goods market research report released by Tsingshan Capital, Master Kong, along with brands like Wufangzhai and Shuanghui, ranked in the top 10 for full-year 2020 sales on Taobao and Tmall platforms, defending the glory of traditional giants amid challenges from many internet-famous brands. Behind this surprising report card is the innovation process that Master Kong started early. It is understood that Master Kong has been promoting digital strategic transformation since 2018, reducing costs and increasing efficiency in operations while using intelligent means to connect supply chain, factories, logistics, and sales channels. Through big data, it continuously gets closer to consumers and terminals, making precise decisions and seizing market opportunities. Taking 2020 as an example, the well-received Sudamian, hand-rolled noodles, and Soup Master are important results of its digital innovation. If the "first-generation viral product" braised beef noodles, created in the 1990s, established Master Kong's market position, then the Sudamian and hand-rolled noodles introduced with the new era will keep the national favorite instant noodles enduring, making it a delicious companion for young people at any time. In fact, it's not just Master Kong. There are many traditional consumer brands that have reformed in line with new consumption trends on the supply chain foundation and achieved good results, such as the dairy trio Mengniu, Yili, and Bright, and the rival city competitors Nongfu Spring and Wahaha. The path these old brands have explored over decades may be the most stable road for consumer goods companies to achieve longevity, and it is also the road new consumer brands will take in the future. Wu Xiaobo once said in "The Turbulent Thirty Years": "Time has the same significance for every person and every era. Yesterday's rebellion will gradually evolve into today's orthodoxy, and then be nurtured into tomorrow's classics." From a more macro perspective, whether it's evergreen traditional consumer brands or explosive new consumer brands, they essentially represent the rise of national product power and the prosperity of national brands. The best scenario is for new and old brands to learn from each other's strengths, grow together in healthy competition, and ultimately represent the power of Chinese brands sailing into the ocean of the world consumer market. Source: Mantis Finance (ID: TanglangFin)