---
title: "One Brand Dead Per Year: What Should Distributors Do?"
description: "Since 2013, the economic downturn has crushed traditional FMCG companies, with new products dying quickly and distributors struggling. This article offers three key suggestions for distributors when selecting new brands: assess product lifecycle, profit margins, and strategic logic."
author: "邹文武"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-09-26"
categories: "Brand Marketing, Dealer Operations"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/GQdXb1BU6INuFcLE9WRRWA"
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citation: "邹文武. “One Brand Dead Per Year: What Should Distributors Do?.” New Distribution, 2016-09-26. https://xinjignxiao.com/en/articles/one-brand-dead-per-year-what-should-distributors-do-93270680/"
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---

# One Brand Dead Per Year: What Should Distributors Do?

> Since 2013, the economic downturn has crushed traditional FMCG companies, with new products dying quickly and distributors struggling. This article offers three key suggestions for distributors when selecting new brands: assess product lifecycle, profit margins, and strategic logic.

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Since 2013, the economic environment entering a deep adjustment period has become the last straw for traditional FMCG companies. Amid the rapid rise and fall of new products in the market, distributors are at a loss. The pace of killing one brand per year has brought huge hidden dangers to traditional FMCG distributors.
Looking back at the brands that have been killed in the FMCG market over the years, the product life cycle is getting shorter and shorter in the internet age; it can be said that the market enters a decline phase just after introduction.
> In 2013, the booming functional drink Wahaha Qili died; at the beginning of 2014, Wahaha Xiao Chenchen died; in 2015, Wahaha's C-drive lemon drink died...
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> In 2014, Maca products were hot for a year, but by 2015 they began to fade; in 2014, the booming lactic acid bacteria drinks also failed in 2015; in the second half of 2015, black water just emerged, but by 2016 it was completely ruined; at the beginning of 2016, lactic acid bacteria water just rose, but by autumn 2016 it showed signs of early death...
Whether it's a big brand or a small enterprise, whether it's a so-called trend or a red ocean, the probability of new product success is getting smaller and smaller. The growth cycle of new products is being artificially accelerated in the internet age. Many categories are pushed to the brink of death by followers and the market before they can be cultivated. This greatly increases the difficulty of new product development for companies and also increases the risk for distributors in taking on new product agencies.
> **Under the market pace of killing one brand per year, what should distributors do?**
The author gives the following three suggestions. Distributors must remember these when choosing new products!
> **How long is the product life cycle? Don't touch new products without technical content!**
First, distributors must clearly recognize that the fast pace and transparency of information in the internet age are no longer suitable for relying on the original profit distribution model based on opaque channel levels. The convenience of logistics has intensified the impact on channels. Once there is a sign in the market, it will soon be defeated by the internet and logistics. Companies find it hard to establish their own barriers and market rules.
Product barriers will soon be broken by competitors. In the past, a new product had at least a one-year cycle for competitors to follow, but now competitors can copy your new product within three months. So once a distinctive product appears, imitators follow quickly.
In this fast-paced environment, distributors must play a long game and choose a new product with a long life cycle. Only with sufficient vitality can the product ensure sustainable development and stable market growth. The life cycle of a product is determined by market demand and product technology. Therefore, when choosing a new product, distributors should first evaluate the market demand and the company's technical content, not blindly follow trends. For example, black water, which became popular only last year, quickly became a negative example this year because the real black water never entered China; Chinese black water is technically just black sugar water with a very short life cycle. Some distributors with special channels made quick money, but the Chinese black water brand was not cultivated, and the life cycle of the black water category was quickly pushed to decline by various small beverage factories copying it.
Sharing the same fate as black water are the previous Maca products, and possibly lactic acid bacteria water drinks next.
> **How big is the product profit? A new product that doesn't make money is definitely not a good new product!**
Second, distributors must clarify their position. Manufacturers are always manufacturers; you can never be one. You should choose a brand you can control, not one that needs to become one with you. Those so-called manufacturer-distributor integration are just "city play" routines. The relationship between manufacturers and distributors should always be based on interests, not emotions.
When facing a brand-new product, distributors must not be blinded by trends, nor confused by the manufacturer's fancy rhetoric, nor troubled by the salesperson's personal feelings. They should clearly analyze the profit space they can obtain from agency. How much profit can be gained from the expected annual sales? How much sales can the existing channels complete, and how much incremental space can newly developed channels bring? In short, comprehensively evaluate the benefits of a new product. No matter how good the product is, distributors cannot cultivate new products for manufacturers. Taking on a new product can earn less money, but it cannot lose money. A new product that doesn't make money is definitely not a good new product.
Therefore, when choosing a new product, distributors must not choose products priced lower than the current mainstream price. For example, Nongfu Spring is 1.5 yuan per bottle. If a distributor wants to take on a water brand, it should be more expensive than Nongfu to have operational space. Otherwise, acting as an agent for a cheaper price than a mature brand makes you just a porter, and you won't enjoy the huge market value brought by new product cultivation. Mr. Lin, the largest distributor of Baishishan in Jinjiang, Nan'an County, Fujian, started acting as an agent for 2-yuan water when Baishishan just expanded from Guangdong to other provinces. It took eight years to achieve sales of over 40 million in a county. Without enough space, he might not have survived the three-year market cultivation period, let alone reaching the largest sales volume among national distributors.
> **Is the product's strategic logic correct? If the logic is wrong, everything is in vain!**
Finally, distributors must clearly understand whether the company's new product strategy logic is reasonable. The reason why products change every year is largely because the product strategy logic itself is unreasonable. It seems to face a large market demand, and the product seems to have technological innovation, but the strategy cannot withstand scrutiny. From the 4P analysis of product, price, place, and promotion, either they are fragmented or they contradict each other, failing to reach a consistent product development principle.
The most typical example is Wahaha's lemon drink C-drive. The product and price are fine, but it is not suitable for Wahaha's second- and third-tier channels, especially starting advertising from the Beijing subway, which wastes resources. The product positioning is inaccurate. So when a distributor asked me if this product was worth doing, after seeing its ads in Beijing, I replied: Given your market and channels in a county-level city in Guangxi, this is not a suitable product.
Speaking of product strategy logic, this is the key to product success or failure, and it is also a rule that distributors must understand when selecting products. A friend of mine who is a liquor distributor—a post-80s distributor from Xianning, Hubei—compared to many older distributors, his experience and level are certainly not comparable, but in 2013 when Jingjiu launched Maopu Kuqiao, he borrowed 300,000 to do it, and in one year he earned over 1 million. Another friend of mine, a distributor from Wenzhou, originally wanted to do it, but after research, he found that the awareness of Kuqiao locally was not high, so when I recommended Maopu Kuqiao to him, he didn't take it. I have to admire the courage of the Hubei distributor friend, and also admire the sophistication of the Wenzhou distributor friend. Although Wenzhou is the best place for developing new health products, the awareness of Kuqiao is not as good as in Hubei. In addition, there is no mainstream product in the 100-yuan price range for liquor in Hubei, which gave Maopu Kuqiao a good entry opportunity. Therefore, from the product perspective, Hubei has awareness; from the price perspective, there is a market; from the channel perspective, there are opportunities; from the promotion perspective, it is easier to be accepted in Hubei. So Maopu Kuqiao became the largest market in Hubei, while other regions are still being cultivated.
> Facing the ever-changing market environment, distributors have more and more choices, and market development will also accelerate. The life and death of products is a market law. What we can do is continuously choose more powerful new products to ensure our own transformation and growth in the market.
**Source: Jinxiaoshang**
New Food Era · New Distribution
—— 2016 China "FMCG + Internet" Summit Forum ——
**This is a grand event focused on how the FMCG industry channels will transform under the trend of internet+**
**Agenda**
09:00-09:30 Registration
09:30-09:35 Host opening
09:35-10:05 2016 China FMCG Industry Trend Analysis Report - Zhao Bo
10:05-10:25 FMCG Enterprise Transformation Strategy and Path - Liu Chunxiong
10:25-10:45 Opportunities and Challenges Brought by FMCG Channel Reform - Liu Zhao, CEO of Waiqin 365
10:45-11:25 Alibaba Retail Link Full Empowerment - Guo Kunkun, Alibaba Retail Link
11:25-12:00 Roundtable Forum - Brand Transformation: Improvement vs. Reconstruction? (Guests TBD)
12:00-13:30 Lunch
13:30-14:00 Distributor Transformation: City Distribution Trends - Wang Qi, CEO of Weijie City Distribution
14:00-14:30 Roundtable Forum - Why Should Distributors Do Logistics in Transformation?
14:30-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy - Su Xiaoxin, VP of Zhongshang Huimin
15:00-15:30 Detailed Explanation of Zhanghe Cloud Factory Strategy - Yang Lixiang, Zhanghe Tianxia (Content TBD)
15:30-16:00 Supply Chain Finance as Lubricant for B2B Driving Traditional Business - Chen Xian, CEO of 51 Order
16:00-16:30 Principles and Thoughts on 2B Investment - Xu Xiaoping, Founder of ZhenFund (Guest TBD)
16:30-17:00 Small Retail, Big Business Opportunities: China Retail Transformation and Upgrade - Wang Jianfeng, GM of E-commerce Department, Yurun Group
17:00-17:30 Roundtable Forum - Who is the King of FMCG B2B Models? (Guests TBD)
18:00-20:00 Dinner
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**Registration: Long press the QR code below or click "Read Original"**
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## Citation metadata

- Publisher: New Distribution
- Author: 邹文武
- Published: 2016-09-26
- Canonical: https://xinjignxiao.com/en/articles/one-brand-dead-per-year-what-should-distributors-do-93270680/
- Original source: https://mp.weixin.qq.com/s/GQdXb1BU6INuFcLE9WRRWA

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