Click to read the original text for details 2020 is over, and 2021 has officially begun! While we cannot yet predict the specifics of the FMCG industry in 2021, we can make bold predictions about the overall trends and directions.

-01- Macroeconomic Direction From the perspective of the global economy, there is no doubt that China's prospects will continue to improve. Both domestic demand and foreign trade are expected to see significant growth.

Due to the impact of the pandemic, the global economy is expected to decline in 2020-2021. The assessment and response methods are the same worldwide: "flooding with liquidity and lowering interest rates," which will exacerbate inflation and further stimulate consumer goods consumption.

Fortunately, on December 31, the State Council's Joint Prevention and Control Mechanism announced that China's COVID-19 vaccine was officially approved for market. The pandemic will be controlled to a certain extent, and global trade will gradually recover. Of course, this recovery will not be unimpeded; trade protectionism and nationalism between countries will intensify. The process of internet-accelerated globalization will eventually come to an end. Due to various interests, it is only a matter of time before it ends.

-02- Micro Consumer Goods Industry Direction The overall trend for the consumer goods industry in 2021 will not change: consumption upgrading.

Frankly, this is not simply due to rising economic levels, but is driven by the demands of mainstream consumer groups, combined with the upgrading and optimization of the supply chain behind the industry, technological changes and application popularization, retail scene experiences, and the user-centric brand upgrading strategies of innovators and entrepreneurs. All these point to consumption upgrading.

1. Consumer Side in 2021: Consumption upgrading is the general direction, but we should also rationally and objectively see that the median per capita income of Chinese people is still not high, and there is still significant room for growth in the "volume" of consumer goods. Focusing on the sinking market is the key to achieving a "volume" breakthrough.

From a segmented population perspective, in 2020, as the millennial generation entered their 20s, the fourth consumer sovereignty era officially began. A new blue ocean market has emerged, with a greater focus on emotional consumption rather than mere material consumption.

Typical event: In December, Pop Mart went public. Don't look down on it; study it as a consumption case to see the changes in new consumption from Pop Mart.

As mentioned, emotional consumption also has a price. In the past, the price of consumer goods was based on satisfying material needs alone. In the future, the price will include not only material but also emotional consumption. Therefore, the polarization of prices will become increasingly severe.

Returning to the persistent impact of the pandemic on demand, it will continue to affect Chinese people's confidence and consumption behavior. Industry practitioners must continuously monitor structural changes based on confidence and consumption behavior. From demand insight to demand triggering, adaptive strategy adjustments are needed.

2. Channel Side in 2021: Undoubtedly, traditional offline channels are the basic foundation and cannot change. However, the diversification of distribution models based on small stores is an indisputable fact.

Reaching small stores has not changed, but the paths to reach them have increased. Some brands have achieved curve overtaking, while others will see their share in small stores eroded.

The emergence of community group buying has accelerated the third type of channel retail scale based on social relationships, and it will see even greater growth in 2021. It is believed that before long, it will surpass the second type of online e-commerce platform consumption channels.

Overall, with the intensification of channel fragmentation, the increase in horizontal types and vertical quantities will emerge in large numbers. In this context, channel hegemony will directly lead to the weakening of brand owners' voice.

3. Brand Side in 2021: A large number of innovative consumer brands will further emerge. Product brands based on user co-creation and emotional identification will gradually replace the brand model that grows on e-commerce platforms and is recommended by KOLs.

Big brands have a variety of IP or co-branded products, but they still appear on e-commerce platforms. In 2021, innovative models based on online-offline integration, product and channel linkage will emerge, which will also be an important lever for big brands to continue innovating.

4. Distribution Side in 2021: Distributors were severely hit in 2020, especially at the end of the year, due to community group buying. Whether due to the rapid evolution of the retail end or overall business progress, the market will further eliminate the older generation of distributors who started their businesses in the 1990s.

Post-80s distributors, because of their different era environment, are willing to accept new technologies and try new methods, so their businesses will get better and better. On the one hand, they have kept up with market changes and enjoyed short-term dividends; on the other hand, the elimination of 1990s distributors has released some business.

Overall, in the field of commercial circulation, "big merchants" will rise, "small merchants" will be gradually eliminated, and polarization will be severe. Big merchants with management, technology, capital, and talent will accelerate development and grow bigger.

-03- Ten Tips for 2021 from "New Distribution"

Five Tips for Brand Owners

1. Digitalization remains the main theme In the past two years, brand owners have more or less been doing digitalization. However, from the digitalization practices observed by "New Distribution," the results are mostly not obvious. You cannot do less or stop just because there is no effect.

In the past, it may have been digitalization practice in one link. In 2021, digitalization practice should be carried out in all links. Up and down, internal and external, internal and internal, front and back, digitalization is not just an upgrade but a solution to the entire business operation logic.

2. Organizational restructuring is not limited to internal The core purpose of organizational restructuring is to quickly respond to external market changes. The sudden rise of community group buying at the end of 2020 gives us a good inspiration. Market changes can almost be described as changing every day. Therefore, restructuring the organizational form is a topic that every brand owner must deeply consider.

3. Channel reform is not just about changing the model E-commerce traffic costs are high, and private domain business models are emerging. Private domain carriers represented by WeChat mini-programs shone brightly in 2020. Observing the rise of innovative consumer brands, none of them did not apply private domain traffic. Innovative consumer brands have taken the lead, which is worth learning from traditional FMCG giants.

In 2021, the exploration and application of private domain will be a business model that many brand owners need to invest heavily in building. Of course, it is not just about developing a channel. It is about gaining insight into the consumption needs behind different channels, then designing differentiated products for different consumption scenarios and building a new channel value chain.

4. Brand communication is not limited to a single form The image of old brands needs to be recreated and upgraded. Changes in demand mean that the exploration of material-level appeals alone is very limited. It is urgent to use IP-based emotional appeals to co-create, share, and empathize with young consumer groups.

In terms of publicity and communication forms, multiple play methods should be boldly tried. Consumer groups are increasingly segmented; one expression, one communication, one publicity cannot cover diverse groups.

In 2020, Budweiser launched the "Budweiser Blind Box" and Six Walnut used a one-item-one-code community store interaction, both achieving different ways of brand communication. Budweiser used new carriers, while Six Walnut achieved a shorter communication path under the original carrier.

Finally, in brand communication, through private domain traffic, word-of-mouth and recommendation based on user relationships will be the lowest cost and most efficient way. This also poses higher challenges to brand owners' product innovation and creativity.

5. Reduce capacity and improve efficiency In the FMCG industry, the sovereignty of transactions has been constantly changing. From the earliest factory sovereignty to brand sovereignty, then channel sovereignty, it was essentially in the hands of brand owners. But now, the fourth consumer sovereignty is coming.

With changes in supply and demand, the core capability that brand owners should focus on is not factory capacity or frontline execution, but whether they can move consumers.

Closing factories and laying off employees will also be common practices for traditional FMCG giants in 2021. Let go of burdens, travel light, be user-demand-oriented, focus on products, scenarios, and social interaction. These will be the key tasks for brand owners in 2021.

Five Tips for Distributors

1. See the trend clearly and choose wisely Distributors themselves do not create value; they only transmit value. There are two key points: What to transmit? To whom to transmit?

What to transmit is choosing which category track to take: snacks, condiments, beverages, etc. Once the category track is determined, it is the brand under the category.

To whom to transmit is choosing which downstream channel: traditional circulation, modern channels, or new retail channels. The combination of the chosen category and channel determines the logic of your trading business.

In 2021, downstream channel changes will accelerate. Do not do zero-based business like before, where you represent a brand, build channels, and if the business fails, switch to another brand and start over. Distributors should fully measure their own advantages, anchor a track, and do sustainable business.

2. Seize the dividends of regional markets Distributors' businesses generally focus on regions, doing well in their own territory. Therefore, the core dividends come from market differentials and differences in category models, mainly reflected in three aspects:

1) New retail: new channels, new platforms; 2) New play methods: new marketing, new promotions; 3) New brands: cast a wide net, small cooperation.

Observe changes in higher-level markets and apply them to your own market. When community group buying hasn't arrived yet, find relevant contacts in the surrounding area to understand market development trends; can the social marketing model of baijiu be applied to your daily chemical category; innovative consumer brands are selling well in provincial capitals, so representing them in your region should not be too bad.

3. Segment scenarios and precise channel distribution The demand for personalization and diversification extends to offline distribution. What is pursued is no longer the breadth of offline channel distribution, but the precision of offline channels. Channels are scenarios. In the future, when every new product is laid out offline, the consideration is where the segmented scenarios are.

According to the popular saying "people, goods, scenes," it is about delivering the right product to the right consumer in the right scenario. The superposition of these three elements places higher requirements and challenges on distributors in the delivery process.

What kind of product is distributed to what kind of channel, and in what form or means to attract or present it to the corresponding consumer, is very important. The offline business logic for new products in the future is segmented scenarios and precise channels.

4. Multiple retail, infinite shelf challenges The diversity of retail scenarios, especially the emergence of platform-based retail with internet genes, has increased the share of channels, posing higher challenges to distributors' business front-end, distribution, and sales promotion.

In the past, distributors relied on visits and customer relationships to seize display shelves. In 2021, in addition to doing these well, they may also need to operate mobile phone screens. In a beverage category on one screen, how to make consumers choose your brand? Compared with traditional shelf display, online infinite shelf exposure makes past skills and expertise seem less useful. Distributors must learn new skills, not only to handle the retail end but also to study target consumer groups.

5. Refined accounting and real-time feedback on operations Distributors face a new, internet-based market environment. Internetization means that things that could not be done before can now be realized. Through the use of digital tools, every link of the distribution business can be made efficient, data-driven, and quantifiable.

1) Accounting for cash flow, accounts receivable, profit margins, and return on investment; 2) Accounting for individual people, vehicles, products, channels, and stores.

Through the application of digital tools, financial, sales, management, and reports can be provided in real-time. My suggestion is that distributors should not be afraid to spend money on technology. At the same time, they should clearly know that tools themselves cannot solve problems; tools can only help distributors define problems faster, find problems, and assist in decision-making.

The above are "New Distribution's" predictions for 2021 and ten business tips. We hope every FMCG practitioner has a smooth new year and earns a lot of money. "New Distribution" will continue to create more and better content for friends, staying true to our original aspiration and forging ahead.

Important Conference Announcement!

January 19-20, Jiangsu · Wuxi

New Distribution will join hands with 500+ FMCG distributors from five provinces in East China to gather in Wuxi, Jiangsu, to provide brand owners and distributors with a conference aimed at product selection, cooperation, and exchange.

Make arrangements before the new year, and start working after the new year! Don't wait until after the Spring Festival to make arrangements!

Interested brand owners or distributors are welcome to contact us. Please scan the WeChat QR code below to register for the conference or exhibition.

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Tips will be paid 400-2000 yuan once adopted.