---
title: "Master Kong's H1 Financial Report Shows Double Decline; If It Still Relies on Copycat Follow-up Strategy, It Will Become a Second-Tier Brand Within Three Years!"
description: "On August 24, Master Kong released its H1 financial report, which still failed to reverse the downturn. In H1, Master Kong's revenue fell 11.52% year-on-year, and net profit for the first six months dropped 18.9% year-on-year. Among them, instant noodle revenue declined 11.88% year-on-year, beverage business fell 33.22%, and convenience food business declined 25.41%. The company attributed the decline to China's economy entering a 'new normal' with slower growth, with GDP growing 7.0% year-on-year, the lowest in six years, and consumers becoming more conservative."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-08-26"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/wl2x5fub7whydDVhiHviWg"
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# Master Kong's H1 Financial Report Shows Double Decline; If It Still Relies on Copycat Follow-up Strategy, It Will Become a Second-Tier Brand Within Three Years!

> On August 24, Master Kong released its H1 financial report, which still failed to reverse the downturn. In H1, Master Kong's revenue fell 11.52% year-on-year, and net profit for the first six months dropped 18.9% year-on-year. Among them, instant noodle revenue declined 11.88% year-on-year, beverage business fell 33.22%, and convenience food business declined 25.41%. The company attributed the decline to China's economy entering a 'new normal' with slower growth, with GDP growing 7.0% year-on-year, the lowest in six years, and consumers becoming more conservative.

On August 24, Master Kong released its H1 financial report. Overall, it still failed to reverse the downturn. In H1, Master Kong's revenue fell 11.52% year-on-year, and net profit for the first six months dropped 18.9% year-on-year. Among them, instant noodle revenue declined 11.88% year-on-year, beverage business fell 33.22%, and convenience food business declined 25.41%.

For the decline, Master Kong officially explained that in the first half of 2015, China's economy was in a stable and slow 'new normal,' with GDP growing 7.0% year-on-year, the lowest in six years. The food and beverage industry returned to basic demands such as safety and affordability, consumption became conservative, and category growth slowed.

In terms of market share, Master Kong still holds absolute share in multiple categories within instant noodles and beverages, but its product structure has shown serious signs of aging and decline. Although the H1 report proposed strengthening beverage category completeness and focusing on new products, launching products like Weidongli, Shuiyang, and Haijing Lemon, there were no highlights and no innovation.

Old rival Uni-President, after breaking away from Master Kong's price war in the past two to three years, has seen new products blossom across the board, launching nearly 10 new products, including star products like Xiaoming Tongxue and Hai Zhi Yan. Its H1 financial report also delivered very satisfactory results: net profit of 687 million yuan, up 93.2% year-on-year. The beverage business unit saw the most significant growth, with revenue of 8.11 billion yuan and profit of 890 million yuan, up 30% year-on-year.

From the comparison, it is not difficult to see that Uni-President has finally escaped the price war with Master Kong, and the huge success of its full line of new products has brought it substantial profits and growth space.

**Commentary:**

As long as the market continues to grow, Master Kong's low-price copycat strategy will remain effective. But once market growth stops, the advantage of its low-price copycat strategy becomes less obvious. This phenomenon has already occurred in many industries (milk, beer, instant noodles). Of course, this is not to say that Master Kong's low-price copycat strategy is bad. This statement has two meanings:

Master Kong has rarely innovated successfully in categories during market competition. Due to its overly conservative marketing strategy, its structural product problems are unlikely to change in the short term. It typically quickly follows with low prices when a new category with large capacity emerges in the market. Typical examples are Laotan Sauerkraut Noodles and Rock Sugar and Pear Drink, including the recent Haijing Lemon. To borrow the words of Nalan Zuitian: **Original products are severely aging, and new products look like they have the face of a close-relative marriage.**

1. As China's economy further declines, various industries have experienced varying degrees of decline, and double-digit growth is unlikely. As industry leaders, it is difficult to remain immune to industry recession. However, it is certain that Uni-President's new product strategy, although lacking strategic focus, is still an effective method. For Master Kong, where the gap between the second and first is not large, it will be unsustainable to solve growth problems not through innovation but by imitating the second player and grabbing market share through special offers and low prices. In the future, new categories will further take away Master Kong's existing consumers.

This viewpoint is not just my own; the stock price fell 10% immediately after the earnings release, showing investors' expectations for its development.

2. The emergence of the internet has greatly shortened the time and space limitations for new product growth, increasing the possibility that new categories can dominate the industry. Coupled with the fact that post-90s and post-00s users are less price-sensitive and demand higher quality, the gap between category leaders and followers will further widen!

Therefore, I dare to say boldly: **If Master Kong still relies solely on copycat low-price strategies and does not make strategic adjustments in the short term, the gap between Master Kong's 1.3 billion profit and Uni-President's 700 million will definitely reverse within three years. Not only will it be difficult to maintain its leading position, but becoming a second-tier brand is only a matter of time!**

The future competitive trend in China's FMCG market has shifted from price war to value war. The strategy of imitating and quickly following using market growth space will be difficult to replicate the huge success of Rock Sugar and Pear Drink in the internet era. Instead, product upgrades and category innovation to open new blue oceans have become the preferred choice for enterprise growth in the internet era. Otherwise, companies will definitely be abandoned by consumers who are always looking for the new!

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