"Last year, the low-temperature lactic acid bacteria beverage industry maintained a growth rate of 5%, and Wei Chuan's growth was similar. However, starting this year, the low-temperature lactic acid bacteria beverage market has begun to decline, and Wei Chuan has also followed the industry into negative growth," said a relevant person in charge at Wei Chuan during the recently held 11th International Symposium on Lactic Acid Bacteria and Health.
Currently, low-temperature lactic acid bacteria products include major brands such as Yakult, Mengniu U Excellent C, Yili Each & Every Day, and Wei Chuan. The entire industry is experiencing a decline—what does this mean?
Who is eating away at the low-temperature lactic acid bacteria market?
In fact, since 2013, the domestic lactic acid bacteria beverage market has been on the verge of an explosive growth. According to Nielsen retail monitoring data, the lactic acid bacteria beverage market has continued to grow rapidly in recent years, with the fastest annual sales growth rate reaching 50%. By 2014, the market size had exceeded 10 billion yuan, making it the fastest-growing category in the dairy beverage industry. This includes both strong dairy companies like Yili and Mengniu making high-profile moves in the low-temperature segment, beverage companies continuously exploring cross-industry innovation, and a large number of second- and third-tier brands engaging in fierce competition in the room-temperature segment.
One noteworthy phenomenon is that "the overall lactic acid bacteria beverage market is still maintaining positive growth. Therefore, it can only be said that negative growth is currently confined to the low-temperature lactic acid bacteria category. In contrast, room-temperature lactic acid bacteria beverages are leading the overall industry growth," analyzed an industry insider.
Beverage companies are also keeping pace in the lactic acid bacteria field. According to information collected by reporters from New Food over the past few months on new dairy and beverage products from major first-tier brands, among the 25 new beverage products compiled, 8 featured the lactic acid bacteria concept. In other words, lactic acid bacteria beverages have become the current mainstream new product development trend for companies.
For example, in April, Uni-President's star product Xiao Ming Tong Xue launched a new packaging with a new flavor—"lactic acid bacteria fermented flavor." Experts said that Uni-President's move was to leverage the rapid growth of Xiao Ming Tong Xue to enter the lactic acid bacteria beverage market with a lactic acid bacteria flavor. Another new product, Shui Qu Duo, is also a flavored lactic acid bacteria beverage. The product is fermented with Lactobacillus LV108 from Bama, the longevity village in China, and features a simple and unique design of yogurt droplets in transparent water, highlighting the three-dimensional and appetizing effect of the yogurt dripping down, giving the product a strong sense of fashion.
At the same time, Huishan's Hua Yao fruit and vegetable lactic acid bacteria beverage, launched early this year, and Jianlibao's Hong Cha Jun lactic acid bacteria beverage have also made "+lactic acid bacteria" innovations in the traditional fruit and vegetable juice and black tea beverage fields. These products are also directly or indirectly dividing up the lactic acid bacteria market.
Why is the room-temperature category "staging a comeback"?
Nielsen monitoring data shows that in 2014, there were as many as 79 room-temperature lactic acid bacteria brands (those sold in supermarket channels with annual sales shares above a certain scale). Among them, room-temperature lactic acid bacteria products are mainly from third- and fourth-tier companies, such as Wei Dong Li, You Le Duo, Chuang Kang, and Yang You.
Currently, in the national market, room-temperature lactic acid bacteria products are active in markets represented by Northeast, North China, East China, and South China. Among them, Shandong is the main market for category explosion, gathering brands such as Yang You and Dong Jun, which entered the room-temperature lactic acid bacteria beverage market competition earlier. South China and East China coastal markets are more competitive for room-temperature lactic acid bacteria beverages, dominated by brands like Wei Dong Li, You Le Duo, and Shu Wei, while local regional brands such as Chuang Kang also perform strongly.
Overall, room-temperature lactic acid bacteria beverages are still mainly from second- and third-tier brands. In terms of pricing, these products are cheaper than low-temperature lactic acid bacteria products that require stricter cold chain logistics and storage conditions. In terms of taste, they are similar to low-temperature products with good flavor. In terms of channels, they avoid large KA stores and large supermarkets, mainly focusing on circulation, special channels, supermarkets, and some catering outlets. The market is mainly in second-, third-, and fourth-tier cities; although first-tier cities are involved, they are not the main market. In terms of marketing and promotion, except for Xiao Yang's high-profile TV advertising, other brands mostly use extensive marketing methods...
Both are lactic acid bacteria beverages, but the one-word difference between room-temperature and low-temperature brings different business ecosystems to the industry.
Why can room-temperature lactic acid bacteria rise quickly? Through investigation, reporters found the following reasons.
First, many distributors believe that the room-temperature lactic acid bacteria market was cultivated by the low-temperature lactic acid bacteria market. Wu Tian, general manager of Foshan Tengyang Trading Co., Ltd., which distributes You Le Duo, said, "In the low-temperature lactic acid bacteria beverage market, leading companies such as Wei Chuan, Mengniu, Yili, and Yakult are all making unremitting efforts to promote the products. The selling point of promoting intestinal digestion also hits the psychological needs of consumers, including young people, the elderly, and children, who are the main consumer groups. The consumer base is large."
Second, room-temperature lactic acid bacteria beverages have more diversified channel operations, with lower channel costs and higher returns. Currently, the main sales areas for low-temperature lactic acid bacteria beverages are limited to large KA stores and supermarkets with cold storage systems. Room-temperature lactic acid bacteria beverages, due to their advantages in distribution, storage, shelf life, and returns, break through channel restrictions and can be sold in convenience stores, wholesale markets, internet cafes, schools, bakeries, and terminal stores.
Third, compared with first-tier low-temperature lactic acid bacteria beverage brands, room-temperature lactic acid bacteria beverages have greater profit margins, and distributors are willing to do market promotion. Low-temperature lactic acid bacteria beverages are mainly operated by international or domestic first-tier companies with strong brand power, so manufacturers don't need to do much work to generate terminal pull. Room-temperature lactic acid bacteria beverages, on the other hand, rely on close cooperation between manufacturers and distributors to achieve scale effects through volume, so market expansion is faster. For example, the pricing of active and room-temperature lactic acid bacteria products is roughly the same: taking Mengniu U Excellent C, an active lactic acid bacteria beverage, as an example, a 340g bottle sells for 6.5 yuan, while a 125g×5 pack of Wahaha's room-temperature lactic acid bacteria beverage sells for 11.5 yuan, and a 100g×4 pack of Xiao Yang brand lactic acid bacteria sells for 7 yuan. After conversion, the average price of the entire category is roughly 1.7-2 yuan per 100g. Zhu Danpeng said bluntly that due to factors such as production processes and transportation conditions, the cost of room-temperature lactic acid bacteria beverages is about 25% lower than that of low-temperature ones. In other words, the profit of room-temperature lactic acid bacteria beverages is even higher, which is why more and more small and medium-sized enterprises are flocking to produce room-temperature lactic acid bacteria beverages.
Fourth, from the product itself, some distributors analyze that low-temperature lactic acid bacteria beverages taste sour, while room-temperature ones taste sweet. For ordinary consumers, sweeter tastes are more acceptable, which is conducive to product promotion.
Regardless of whether it's room-temperature or low-temperature, both categories face a shake-up test.
However, behind the high profits, many problems in the industry and enterprises are exposed. Zhu Danpeng believes that the phenomenon of room-temperature lactic acid bacteria products being passed off as good and falsely marked with high prices reflects the lack of supervision and lagging industry standards in the domestic lactic acid bacteria industry.
At the same time, the lactic acid bacteria beverage standard has not been updated for 24 years. It is understood that the current industry standard for lactic acid bacteria beverages is QB1554 "Lactic Acid Bacteria Beverages," formulated by the former Ministry of Light Industry in 1992. In 2003, the Ministry of Health revised it to GB16321 "Hygienic Standard for Lactic Acid Bacteria Beverages."
Dairy expert Wang Dingmian pointed out that many lactic acid bacteria beverages currently selling well on the market claim to be beneficial to the intestines, which misleads consumers. He noted that first, lactic acid bacteria beverages are not milk; they are beverages made by fermenting milk with lactic acid bacteria and then adding water, sugar, etc. Second, these products are divided into sterilized (non-viable) and unsterilized (viable) types; only viable types are beneficial to intestinal health. Moreover, viable lactic acid bacteria beverages should be transported and stored at 2-10°C and should indicate the number of viable bacteria.
Second, many lactic acid bacteria beverage companies are "vague" in labeling the number of viable bacteria. Reporters noticed that some lactic acid bacteria beverages label the viable bacteria content on the packaging, while others do not. Wang Dingmian said that national standards require viable bacteria products to label the number of viable bacteria, while sterilized, non-viable lactic acid bacteria beverages do not need to be labeled. Wang Dingmian reminded that currently, viable lactic acid bacteria beverages come in various packaging sizes such as 100ml, 200ml, and 500ml. Consumers must pay attention to the unit content of viable bacteria when purchasing. Some products only simply label "500 billion" without specifying the specific unit and the weight of the contents in the package.
In addition to the number of viable bacteria labeled by companies, "the survival of active bacteria in lactic acid bacteria beverages requires high temperature and environmental conditions. The number of viable bacteria when consumers finally drink them is much less than at the factory, or even none. However, relevant departments do not strictly supervise this," Wang Dingmian said.
In the view of Zhu Danpeng, a researcher at the China Brand Research Institute's food and beverage industry, the standardized management of the room-temperature lactic acid bacteria beverage market by relevant departments will bring a shake-out fate to companies that mix the good with the bad, and the development scale of enterprises themselves is also being restricted.
There is a critical point in the development scale of lactic acid bacteria beverage companies. Once this scale critical point is crossed, it is not conducive to their development. For consumers in first- and second-tier cities, low-temperature lactic acid bacteria beverages are still their first choice, and room-temperature products are not advantageous, limiting market expansion. The market size in third- and fourth-tier cities and townships is also limited. If companies only do these regions, they ultimately cannot grow big.
He further pointed out that in recent years, with the general development of the lactic acid bacteria beverage market, some companies have achieved some results in regional markets. However, in the FMCG industry, where product updates are very fast, if there is a lack of product innovation and R&D capabilities, the survival space is very limited in the long run, and they will inevitably face elimination in the near future.
Source: New Food Review (ID: zgsppj)
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