Click to read the original article for details. Total sales of CHF 43.9 billion (approximately RMB 299.925 billion), up 2.3% year-on-year, were the results Nestlé Group delivered in the first half of the year. In its 2018 half-year report released recently, Nestlé Group specifically mentioned that "driven by growth momentum in the US and China, as well as the infant nutrition business, it is expected to achieve its full-year guidance." "In particular, the US and Chinese markets have shown effective growth." In the view of Nestlé Group CEO Mark Schneider, the importance of the Chinese market is self-evident. According to Nestlé Group's financial report, the Chinese market achieved mid-single-digit growth compared with last year. Both real internal growth and pricing contribution were positive. For many foreign food companies, China is indeed a market with great potential. China is currently Nestlé's second-largest market. How will Nestlé maintain effective growth in the Chinese market in the future? In a recent interview with Economic Observer Online, Rashid Aleem Qureshi, Chairman and CEO of Nestlé Greater China, highlighted product innovation and channel expansion in the Chinese market, which may become a catalyst for the sustainable development of the Chinese market. Unexpected product innovation by the end of the year On August 16, Nestlé launched a brand-new project. Unlike previous simple new products, this time Nestlé aims to innovate at the product terminal. The project, named "15 Minutes, Quality Food for a Better Life," attracted the support of Rashid Aleem Qureshi, Chairman and CEO of Nestlé Greater China, and Nini Jiang, Chief Marketing Officer of Nestlé Greater China. In simple terms, Nestlé's new project is to provide consumers with practical breakfast suggestions. According to the "Survey Report on Breakfast Eating Habits of Chinese Residents" by the Chinese Nutrition Society, 35% of respondents cannot eat breakfast every day, with time constraints being the main factor; in addition, breakfast food types are monotonous, mainly concentrated in cereals and tubers; more than half of respondents consume fewer than three types of food at breakfast, and the consumption rate of dairy products and fruits and vegetables is relatively low... Jiang Nini concluded that there is a significant gap between Chinese consumers' eating habits and dietary guidelines. Therefore, Nestlé designed 154 healthy breakfast recipes for different groups. In the future, Nestlé will first distribute 60,000 Nestlé nutritional breakfast products for free in offices and university cafeterias in 37 cities. Secondly, it will cooperate with multiple platforms such as JD.com, Meituan, and Dianping to promote healthy breakfast solutions. Unlike simple products like coffee and condiments that drive performance through sales, how will the promotion of breakfast recipes generate profit? This is the focus of market attention. In Qureshi's view, the significance of this project may lie more in building a platform for promoting its own products. "We will also help consumers use Nestlé products at home to prepare healthy breakfasts, including Nespresso coffee and Yinlu porridge series, and ultimately achieve commercial returns in the long run." In fact, regional weakness in the consumer goods market is unfolding. Taking Nestlé as an example, Nestlé Group CEO Mark Schneider previously stated regarding 2017 global performance that last year's organic sales growth was below the company's expectations, mainly due to weak sales in some markets, such as challenges in the US and Brazil, but relatively "encouraging" in Europe and Asia. Regarding the Chinese market, Nestlé previously explained that its growth in China in 2017 benefited from the stability of the Yinlu business, as well as steady contributions from coffee, ice cream, and culinary products. Therefore, industry insiders believe that in the Chinese market, especially in businesses like coffee and Yinlu, continuing to stimulate consumption is a key consideration for Nestlé China, and breakfast may be a clever breakthrough. Nestlé has multiple brands and products in China, including dairy products and nutrition, foods for special medical purposes, drinking water, culinary products, cereal foods, coffee, beverages, chocolate wafers and candies, ice cream, pet food, food industry ingredients, professional catering, and skin health. Regarding product and project innovation in the Chinese market, Jiang Nini also believes that the pace of innovation is still insufficient. "So Nestlé now has an innovation incubation team that will enter areas we haven't been in before. By the end of the year, there will be some unexpected product innovations, and another part is non-product technological innovation." In terms of products, Nestlé has also made many moves in the Chinese market this year. In the areas of foods for special medical purposes and skin health products, the new factory in Taizhou, Jiangsu, which was officially completed in late April this year, is used for this purpose. The first phase of the project has an investment of over 1 billion yuan, and the new factory covers a total area of over 200 mu. In addition, regarding the market's concern about acquiring new product categories through mergers and acquisitions, Qureshi stated that Nestlé has always been looking for strategic cooperation in China. If it aligns with Nestlé's commercial goals and strategic direction, although there is no evaluation at present, it will consider and seek such opportunities. Channel expansion Yinlu is a key acquisition asset for Nestlé in the Chinese market. In November 2011, after nearly two years of negotiation and communication, Nestlé formally completed the acquisition of 60% of Yinlu's shares. Judging from Nestlé's statements regarding its 2017 performance, Yinlu already plays an important role in the Chinese market, and its stable performance has also driven Nestlé's growth in China. Next, Yinlu's role will be even greater. Qureshi introduced: "Our distribution in China is carried out through the Yinlu channel for downward expansion. We can basically cover the township level, with about 1.6 million retail stores and outlets." Qureshi said that currently, the products for channel expansion are more concentrated in peanut milk, instant porridge, etc. In the future, Nestlé will do better channel expansion for milk-based ready-to-drink products. "We hope to strengthen the nutrients that consumers lack in our products in the future, especially in the vast rural areas of China. This is also our long-term development vision." In terms of channel expansion, Nestlé will also cooperate with other companies, with e-commerce platforms being an important part. For example, on May 23 this year, Nestlé cooperated with Alibaba's Retail Link for the "Nestlé Super Brand Day," and on the launch day, sales exceeded 10 times the historical single-day peak on the Retail Link platform. "What Nestlé needs to do now is to ensure that we also fully utilize such e-commerce platforms. Otherwise, if consumers cannot see our products on e-commerce platforms, we miss an opportunity." Qureshi believes that the rapid development of online and offline in China is something he has not seen in other regions globally, so he will also strengthen the layout in this area. In addition to e-commerce, Nestlé will also use other mature channels to penetrate third- and fourth-tier cities. Taking infant nutrition as an example, Qureshi said that in the future, he hopes to increase the coverage of mother-and-baby stores. "I hope to carry out more cooperation with other companies based on the good reputation of existing brands. I understand that there are currently 250,000 mother-and-baby stores in China, and this number is not small." This article is sourced from Economic Observer. -END-