From October 9 to 11, 2023, the 5th China FMCG Conference and the 1st China FMCG Distributor Conference grandly opened in Shenzhen! At the 1st China FMCG Distributor Conference held on October 11, New Distribution's Chief Content Officer Yuan Lai and New Distribution's Research & Consulting Partner Wendy Li released the "2022-2023 China FMCG Distributor Business Condition Survey Report" (hereinafter referred to as the Report), jointly produced by New Distribution and Zhoupu Data. Through a survey and research of 300 medium- and large-scale FMCG distributors across the country with different primary product categories, the report provides insights into distributor operations, management, efficiency, and development trends, reveals challenges and opportunities in distributor market operations and upstream/downstream cooperation, and provides cutting-edge first-hand information and inspiration for the upgrade of cooperation between distributors and brand owners. Before the official report, Yuan Lai first explained that based on New Distribution's past research and insights, the evolution of China's FMCG distributors can be summarized into six periods on a timeline: stall-ism, warehousing and distribution-ism, brand-ism, category-ism, channel-ism, and consumerism. In the course of development, distributors have also transformed from resource-based, relationship-based, and individual-based businesses to capital-based, professional, and company-based businesses. Since these are professional and company-based businesses, New Distribution has also identified five types of distributors in the overall commercial circulation industry: warehousing and distribution distributors, brand distributors, category distributors, channel distributors, and platform distributors, and provided standard definitions for each type. Based on New Distribution's classification of distributor groups, over a period of one month, in conjunction with Zhoupu Data, an in-depth survey was conducted on a total of 279 distributors within mainland China, spanning more than 14 categories, including water and beverages, convenience foods and non-staple foods, leisure snacks, rice, flour and cooking oil, seasonings, milk and dairy products, washing and daily chemical products, paper and sanitary products, baijiu, beer, other alcoholic beverages, infant products, and frozen foods. At the conference, Wendy elaborated on ten major insights regarding the current business conditions of distributors based on the survey of 279 distributor groups. Cooperation Functions with Manufacturers First, regarding the functions of distributor cooperation with brands. The survey found that distributors' brand cooperation functions are continuously improving and becoming more comprehensive, not limited to basic functions such as warehousing and distribution logistics, expense advances, and terminal services. According to data, the function of sales representative management has significantly increased compared to previous years. Compared to previous survey results, the proportion of distributors with only warehousing and distribution logistics functions has decreased; the proportion of distributors with sales representative management functions has increased. Pressure on Achieving First-Half Sales Targets 2023 is different from previous years, not only as the first year after the pandemic but also a year when many feel the "cold winter." The survey shows that distributors generally face certain pressure in achieving their first-half sales targets, with grain, oil, and seasonings and dairy products being particularly severe; while washing and daily chemical products, paper and sanitary products, and convenience foods and non-staple foods have relatively better sales performance. Only 23.7% of distributors achieved their brand sales targets for the first half of the year. The average target achievement rate for distributors in the first half was 85.4%. Organizational Performance System Innovation Organizational performance management is a core manifestation of distributors' daily operation and management capabilities. We divide organizational performance management models into four types:

  • Sales commission
  • Net profit sharing
  • Category partnership
  • Regional contract From the survey, we found that the innovation of distributors' organizational performance management systems has effectively promoted the improvement of enterprise labor efficiency, and combined performance management mechanisms show higher efficiency than single mechanisms. For a single organizational performance management model, the average labor efficiency is 1.415 million yuan per year. For a combined organizational performance management model, the average labor efficiency is 1.978 million yuan per year. Primary Reasons for Business Downturn Pressure from the external environment is a common consensus among distributors in their current operations. What specific pressures and challenges? Shrinking downstream store business, increased operating costs, and the impact of new channels are the primary reasons for the downturn in distributor operations. In addition to online channels such as B2C e-commerce, B2B e-commerce, and community group buying e-commerce, emerging offline channels such as discount supermarkets and snack quantity stores also have a widespread impact on distributors' businesses. Types of Cost Increases for Distributors Under the business downturn, from an internal perspective, the most common type of cost increase for distributors is personnel costs, and the primary cost growth type varies by product category. Ranked first, 52.1% of distributors saw an increase in personnel costs; ranked second, 36.1% saw an increase in sales expenses. Manufacturer Expense Support Distributors generally believe that manufacturer expense support has decreased. About 80% of distributors said that manufacturer expense investment did not increase or even decreased. Among them, distributors in grain, oil, seasonings, and daily chemical categories believe that a higher proportion of brand owners reduced market expense investment. Distributors in convenience foods and non-staple foods, water and beverages, beer, and baijiu categories believe that a higher proportion of brand owners increased market expense investment. Key Drivers of Revenue and Profit Growth Expanding outlets and channels, optimizing product structure, and improving operation and management are the top three drivers of distributor revenue and profit growth. Primary Path for Distributor Transformation and Upgrading Distributors believe that the primary path for transformation and upgrading is to improve execution, organizational capability, and operational capability. Integrated Cooperation between Manufacturers and Distributors Building regional key accounts is the trend in cooperation between brand owners and distributors. Brand owners deepen integrated manufacturer-distributor cooperation through key account development, building a community of interests and development, and forming local competitive advantages. Future Path for Distributors Being bigger, stronger, and more professional is the only way forward for distributors. *The above is part of the report. For more details, please refer to the full report. Add WeChat to obtain the report. Attachment: Outline of the full version of the "2022-2023 China FMCG Distributor Business Condition Survey Report" PS: Friends interested in the on-site speech content can follow the recent posts on the New Distribution WeChat official account. We will compile and publish all guest speeches for readers. Click Read the original text to see more about the 5th China FMCG Conference and the 1st China FMCG Distributor Conference...