In recent years, China's economic situation and market environment have undergone tremendous changes. As a result, sales of old products have declined, and new products have struggled to move. Even large food companies with strong channel networks and ample funds face the same challenges. To this end, Food Board conducted in-depth telephone interviews with distributors in Henan, Shandong, Fujian, Zhejiang, Anhui, Jiangxi, Hunan, Sichuan, Shaanxi, and other regions regarding the inventory status of food industry distributors, and also released a survey questionnaire on the WeChat public platform, collecting a total of 533 valid questionnaires, covering leisure, beverages, dairy products, condiments, convenience foods, and other categories. Overall, most distributors have indeed experienced increased inventory pressure compared to previous years. However, distributors of different scales, categories, and channels exhibit varying levels of inventory pressure. The following is an analysis of the main issues from this survey. Beverage and dairy distributors face greater pressure, with first- and second-tier brands exerting heavier pressure During the survey, 75.0% of beverage distributors and 51.1% of dairy product distributors said that their inventory pressure was "very high and difficult to bear" or "relatively high but bearable," while for leisure and condiment distributors, this proportion was 29.1% and 28.4%, respectively. In another set of survey data, among distributors who attributed inventory pressure to factory pressure to stock up, dairy and beverage distributors accounted for 30.8% and 25.6%, respectively, leisure distributors accounted for 21.1%, and 17.6% primarily dealt in condiments. Comparing these two sets of figures, there is an inherent correlation between the product categories distributors handle and the inventory pressure they bear. In the current market environment, beverage and dairy distributors face greater inventory pressure, while leisure and condiment distributors face less, especially condiment distributors, whose input-output ratio has not fluctuated significantly due to the essential nature of their products. The survey shows that the current inventory backlog mainly consists of three types of products: 45.2% are products from traditional first-tier enterprises, 25.3% are OEM products from companies with insufficient strength, and 20.5% are gift box products. Because first-tier brands have stronger brand power and wider reach, and their factory costs are higher, pressing stock is often a market operation tactic. Therefore, in the overall sluggish market environment, the inventory pressure on beverage and dairy distributors comes more from first- and second-tier brands. In addition, over the past two years, inventory problems have been widespread across the market. Under high inventory conditions, manufacturers' market control has begun to loosen, potentially leading to a nationwide wave of cross-regional selling, affecting the entire channel price system. As a result, many beverage distributors are considering giving up agency for major brands due to the high risk. Meng Xiang, general manager of Henan Dream Trading Co., Ltd., primarily represents first-tier brand products such as Want Want and Jin Sihou. He said that compared to last year, the inventory pressure for a certain first-tier bottled water brand has increased this year. At the company's "water head meeting" at the beginning of the year, policies were used to press a large amount of stock onto second-tier distributors and sub-distributors, resulting in the loss of one distribution channel for his sales tasks. Currently, the inventory of Nongfu Spring alone exceeds 200,000 cases. Nearly half of distributors see inventory rise, with the highest increase reaching 30% The survey shows that 153 distributors saw their inventory increase by less than 10% compared to the same period last year (January to July), accounting for 28.7%; another 94 distributors saw their inventory rise by 30% to 50% year-on-year, accounting for 17.6%; the majority of distributors saw increases concentrated between 10% and 30%, with 241 distributors, or 45.3%; the remaining 8.4% saw inventory increases of more than 50%. From the above, it is clear that distributors generally experienced inventory increases, with the majority seeing increases between 10% and 30%. Jiangxi distributor Li Xinping, who primarily represents beverage products, spoke bitterly about this year's inventory situation: "This year's inventory is 40% higher than last year. To put it simply, if last year's inventory was 1 million yuan, this year it's about 1.4 million yuan, which restricts most of our cash flow." From a channel perspective, the proportions of surveyed distributors operating in supermarkets and circulation channels were 78.4% and 91.6%, respectively. Among these, the supermarket channel already ties up distributor funds due to payment cycles, coupled with high entry fees and barcode fees, making it less capable of bearing inventory risks. When inventory pressure arises, the supermarket channel performs worse. Anhui distributor Hao Xiaonan said: "Some distributors are already starting to experience capital chain ruptures." The core of the inventory problem is the capital chain; inventory backlog is just a surface phenomenon. Distributors of major brands can no longer bear the capital occupation by manufacturers and channels, because distributors borrow money from banks, and it is easy to go bankrupt if the capital chain breaks. In addition, although the circulation channel has lower entry barriers and no excessive entry fees, it is also the channel with the highest overlap of distributor terminal networks and the most intense competition, making it the most prone to inventory pressure due to poor sell-through. Medium-sized distributors face obvious inventory pressure In terms of sales scale, distributors with annual sales below 10 million yuan and between 10 million and 30 million yuan accounted for 37.6% and 36.3%, respectively, making small and medium-sized distributors the main respondents in this survey; correspondingly, distributors with annual sales exceeding 50 million yuan accounted for 10.9%. According to the survey data, 60% of distributors currently have excess inventory (excess inventory refers to more than 1.5 times the safety stock). Among distributors with inventory backlog pressure, medium-sized distributors face more obvious pressure, while larger and smaller distributors have similar inventory levels to before. Among the surveyed distributors, those who still reported inventory pressure were mostly medium-sized distributors with annual sales between 10 million and 50 million yuan. Their operational capabilities are relatively strong, but their reach and sales capabilities still have room for improvement. Some manufacturers, in order to meet target tasks, propose to "share difficulties" with these distributors by pressing stock, which burdens them with heavy inventory. Although large distributors with annual sales exceeding 50 million yuan are also "sales champions" for manufacturers, the scale of distributors determines their ability to bear inventory. Large distributors with sales over 50 million yuan and super distributors with sales over 100 million yuan have wide market coverage, involve multiple channel types, and have higher inventory tolerance, so they feel less inventory pressure. Zhejiang Fuda Trading Co., Ltd. has annual sales of over 80 million yuan, primarily representing beverage products, with channels covering supermarkets, retail stores, catering, and circulation. Its current inventory is nearly 10 million yuan, still within acceptable limits. In addition, small and medium-sized distributors with sales below 10 million yuan reported less inventory pressure, essentially none. The reason is mainly that these distributors are "small boats that can turn around easily," usually purchasing on demand, and manufacturers do not press too much stock, so their inventory is naturally low. When consumer demand cools, inter-distributor transfers are also flexible and convenient. Seeking policies and promotions become mainstream measures The survey results show that distributors choosing to negotiate policies with companies for promotions and to grab terminal slots for special sales accounted for 52.9% of the total. When facing inventory pressure, 241 distributors chose to negotiate with manufacturers to reduce purchase volumes, accounting for 22.1%. Whether it is negotiating policies with companies for promotions or grabbing terminal slots for special sales, these are methods distributors use to stimulate terminal sales and drive sell-through. The proportion of distributors choosing this approach reached 50.1%, clearly making it the most direct means to solve poor sell-through and inventory backlog. Zhang Zhongchi, general manager of Anhui Yatai Trading Co., Ltd., told the editor: "When a small amount of old-date products appear in inventory, we usually communicate and negotiate with the manufacturer, and each side gives up some costs to put the products on promotion in the catering channel." The catering channel is less sensitive to product dates. When old-date products appear, Zhang Zhongchi usually concentrates them in well-located restaurants to quickly dispose of them. In addition to the catering channel, closed channels are also suitable for handling inventory. The proportion of those choosing to adjust assessment targets and stimulate employee enthusiasm reached 12.8%. Whether it is communicating with manufacturers or choosing promotions to drive sales and alleviate inventory pressure, these are all "external factors." The current inventory problems for distributors, besides being caused by company pressure to stock up, are mostly due to poor market digestion. Therefore, how to make the market more refined, detailed, and thorough is also a key focus for distributors. This not only alleviates short-term inventory pressure but also brings long-term benefits to the business. Anhui distributor Sun Changmao primarily represents nearly 40 products, including beverages and leisure foods. Due to the large number of products, slow-moving products often accumulate in inventory. Therefore, he selects two flexible key products each month. Sun Changmao said that when a product is about to exceed safety stock, he initiates policy support within the company, usually by giving salespeople additional expense rewards for each case of that product placed. In addition, 50 distributors chose other methods, such as giving up agency rights for "severely affected products," especially major brand manufacturers. As mentioned earlier, in the current sluggish market environment, first-tier brands no longer bring dividends in terms of prestige, status, or channel network. With difficult sell-through, the capital occupation of major brands makes them a chicken rib, and this situation is not temporary. As a result, some distributors began to sort through their products and give up agency rights for first-tier brands, such as Rio, which rose quickly in 2015 but has now been abandoned by a large number of distributors. This phenomenon of abandoning major brands is becoming increasingly common. This survey questionnaire covered distributors with annual sales ranging from several million yuan to over 100 million yuan, operating categories covering all major FMCG food categories, channels including KA, BC, circulation, special channels, and other mainstream channels, and regions including East China, North China, Southwest, and other areas, making the survey scope relatively comprehensive. From the feedback of distributors, reasonable inventory reserves are recognized as the norm in business operations. As one WeChat follower said: "Having more inventory also has its benefits; pressure brings motivation." However, finding a way to "transform excess inventory pressure into a foundation for performance growth" and adapting to the current market volatility represents the voice of more surveyed distributors. Source: Food Board (ID: tyjspb) -END- The best FMCG distributor learning platform in China Dedicated to providing professional, practical, and actionable tutorials for companies 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 Improvement 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 Eighteen Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brand | 016 Distributor B2B Transformation | [Long press QR code to follow]