In 2001, a series of mergers and acquisitions occurred in the seasoning industry, revealing that foreign companies are determined to succeed in the Chinese seasoning market. Heinz of the US fully acquired Guangzhou Meiweiyuan; France's Danone, in addition to owning Amoy, added the time-honored brand Haiou; Nestlé, after acquiring Shanghai Totole, purchased 60% of Sichuan Haoji, the world's largest chicken essence production base; Unilever's subsidiaries Lao Cai and Knorr expanded aggressively in the Shanghai-centered region; Lee Kum Kee and Japan's Kikkoman also made huge investments to bet on the Chinese seasoning market. Foreign companies place such high importance on the domestic market mainly because they see that the brand concentration in China's seasoning market is insufficient, most manufacturers are small-scale, and products are highly regional. Currently, the competition level in the national seasoning market is low, with ordinary consumers having low brand awareness, while foreign enterprises hold advantages in capital and talent. So, facing these aggressive foreign companies, can Haitian's previous advantages continue? Where are Haitian's new growth points? In fact, the actions of foreign companies in China over the years have not affected Haitian's rapid growth. A careful analysis shows that these companies have not created a head-to-head competitive situation. Each company understands its own strengths and weaknesses and focuses on its target market, without trying to seize market share in the professional catering market. This seems to align with Trout's view: a brand can only represent one product. When people think of Haitian, they think of soy sauce; when they think of Knorr, chicken essence and chicken powder come to mind; when they think of Lee Kum Kee, sauces and oyster sauce are recalled. No one can successfully replace a competitor's product with their own, not only because of product advantages but also because they represent regional limitations. For example, soy sauce in Shanghai is mostly used in ordinary households and rarely in hotel kitchens. In the eyes of professional chefs, truly good soy sauce is produced in Guangdong. Therefore, from this perspective, Haitian's advantage in the catering market cannot be shaken by any company in the short term. Similarly, Knorr's chicken powder is the leading brand in catering consumption and will continue its strong growth momentum. Currently, the growth points in China's seasoning market are mainly the following:

  1. Domestic catering industry consumption;
  2. Domestic household consumption;
  3. Institutional or key account consumption, mainly where manufacturers use seasonings as raw materials or semi-finished products;
  4. Product exports. In response to these growth points, manufacturers can adjust their channel focus: For domestic catering consumption: directly target catering end-users. Companies like Totole and Knorr have made good attempts. For domestic household consumption: manufacturers need to perform well in supermarkets and other retail outlets. For institutional or key account consumption: McCormick has gone far in this area, and now many domestic food seasonings are produced for them. The development levels of seasoning enterprises vary greatly across the country, with Shanghai and Guangdong having the most well-known and reputable products. Guangdong's seasoning market mainly focuses on catering consumption, where Haitian excels; while Shanghai manufacturers have the strongest advantage in household consumption, with key products like Knorr chicken powder and Amoy soy sauce. Most local seasoning manufacturers position their products for ordinary residents, primarily because they have a price advantage. With the continuous increase in exports of products or semi-finished goods, manufacturers demand higher quality and larger quantities of seasonings, so this market segment will gradually grow. Currently, the largest export volumes are from "Pearl River Bridge" and Haitian. So, is Haitian's position in the seasoning market truly unshakable? Where do future challenges come from? What problems does Haitian currently face? Thin distributor margins. Like most well-known products, when a product reaches maturity, market prices become transparent, and distributor profits become thin. Typically, the product only serves to drive sales of other items. Especially since most distributors lack long-term vision and care only about profits, once they see a product's profit decline, they treat it as a "chicken rib" (something of little value) and shift their attention to competing products. Therefore, for some lesser-known manufacturers, because their profit margins are larger, they always have opportunities to enter the market. In other words, Haitian has always faced the threat of distributors abandoning it for other products. In places like Shandong and Anhui, some distributors have given up their distribution rights. It's only because competitors' quality hasn't yet reached Haitian's level that Haitian's market hasn't been significantly impacted. This is also due to Haitian's product quality setting a high entry barrier in the industry, but if competitors' R&D capabilities can break through this barrier, Haitian's position will become precarious. The multi-distributor model is challenged. In the early stages of market development, Haitian adopted a multi-distributor model. This approach played a significant role in Haitian's rapid sales growth, especially in commercial hubs like Guangdong, Shanghai, Beijing, and Wuhan, where the multi-distributor model helped these markets grow quickly. Why did this model lead to such rapid growth at that time? Under the planned economy, merchants were responsible to their superiors, and their performance was mainly measured by sales volume, not profits. This naturally promoted sales growth, but it wasn't profit-driven. Now, distributors are mainly private enterprises that focus more on profits, so they demand exclusive distribution to ensure their margins, which seems to contradict Haitian's sales policy. As a result, when developing new markets, Haitian often encounters resistance from distributors, especially in markets controlled by a few distributors. For example, in Wenzhou, Zhejiang, Huacheng soy sauce from a Guangzhou factory holds the main market share. Therefore, Haitian needs to adjust its sales policy in the new market environment. In some mature markets, Haitian continues the multi-distributor model, and sales are indeed growing. In mature markets, product growth relies more on the product's own pull rather than distributor push. Increasing the number of distributors can supplement multiple sales channels, so sales naturally grow, but the main driver is still end-consumer recognition of product quality. Thus, the experience gained in mature markets may not be suitable for the changing distribution landscape. However, if Haitian still uses the old distribution model to face new markets, it will be ill-adapted to the new market environment, making it difficult for good products to succeed in new markets. Haitian's experience in the Qingdao market is a typical example. When Haitian first developed the Qingdao market, it found 6 distributors, just like when it developed the Wuhan market years ago, 5 of which were private wholesalers. Without good policy support, the multi-distributor approach inevitably led to price transparency. But the product didn't take off locally, making re-entry even harder. To this day, Haitian's market in Qingdao remains slow-growing. However, in a certain place in Jiangsu, due to exclusive distribution and strong product competitiveness, the distributor, driven by higher profits, distributed the product across the province, and the market share remains quite high. Facing the new market environment, it seems necessary for Haitian to adjust its sales policy. In supermarkets and hypermarkets, foreign companies are pressing hard. Foreign FMCG companies have always focused on terminal market building and market share competition. The advantages and problems mentioned above are all about professional catering consumption. Professional consumption requires professional judgment of product quality, and Haitian's quality has almost become the benchmark, so in this regard, other manufacturers, even foreign products, find it hard to shake Haitian. However, in modern supermarket channels, foreign companies have accumulated rich experience. Due to Haitian's influence in the industry, it still holds a large market share in retail terminals like supermarkets, especially in East and South China, where it controls most retail terminal share. Most of Haitian's supermarkets and hypermarkets are operated by distributors. This naturally has some benefits: first, it avoids tying up the manufacturer's capital; second, the distributor bears the risk of bad debts for the manufacturer. But household consumers buying at terminals judge product quality more based on past buying habits, advertising, price, manufacturer strength, and even terminal display and salesperson recommendations. If Haitian cannot operate its own terminals, it will be at a disadvantage in the battle for sales terminals. Haitian has focused on succeeding in the catering consumption market and hasn't paid much attention to household consumption terminals (mainly outside Guangdong), allowing some foreign companies to take the lead in this channel. For example, Danone's Amoy brand shows strong competitiveness at sales terminals, able to compete with Haitian in East and North China, and in the southwestern city of Chengdu, it is far ahead of Haitian. Where will future growth in seasonings come from? Catering or household consumption? Opinions vary. I believe that as the pace of life accelerates, catering consumption will grow more significantly, so Haitian has more growth potential. But household consumption is also a market not to be ignored. Moreover, competition between Haitian and foreign companies will inevitably occur at sales terminals. Does Haitian have the competitiveness for this? Few product highlights, lack of innovation. Haitian has always been the representative of good soy sauce in consumers' minds and maintains the largest market share in the largest market, but its oyster sauce, sauces, vinegar, and chicken powder have not become industry leaders. Moreover, its main soy sauce products are priced low, with no high-end varieties to enhance brand influence. The lack of brand operation will become one of the main bottlenecks for Haitian's next stage of development. Source: "New Third Board Food Research" -END- The best learning platform for FMCG distributors in China Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent Article Selection | 002 Distributor Market Operations | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Increase Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor Internal Operations Management | 010 Team Management | 011 Efficient Distribution Techniques | 012 Sales Manager's Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brand | [Long press QR code to follow] To join QQ/WeChat groups, click: Read Original