Click the image for details On February 20, 2019, the 10 billionth can of Red Bull rolled off the production line at Red Bull's Beijing production base, marking a high point for every Red Bull employee. What Red Bull employees celebrate is not just the 10 billion cans, but more importantly, the fact that they still achieved growth despite trademark disputes and a host of domestic functional beverage brands blocking their path. According to relevant insiders, Red Bull's performance in 2018 was impressive, returning to the 20 billion yuan revenue throne. AC Nielsen data shows that in 2016 and 2017, China Red Bull's revenue continued to decline, with decreases of 7% and 19% respectively. But in 2018, Red Bull surged unexpectedly. Not only did it stop the decline, but it also achieved counter-trend growth. It's important to note that 2018 was not an easy year for Red Bull. In addition to facing competitors and trademark lawsuits, internally, Huabin, to control risks, invested more resources and energy into Zhanma. It was against this backdrop that Red Bull miraculously showed growth. Behind this growth, besides the brand and channel momentum Red Bull has accumulated over the years, there is also a "divine teammate" silently supporting and boosting Red Bull's "deep distribution." "While the manufacturer prohibits us from cooperating with B2B platforms, they also increase our task volume every month. There's no way around it; B2B platforms are the fastest channel to move Red Bull. I don't care who I sell to! If they can help me complete tasks and get rebates, we supply them! Do you think Red Bull doesn't know? City managers have performance requirements and turn a blind eye." A Red Bull distributor in the South told New Distribution. Although Huabin Group's Guangzhou branch issued a notice in April last year to maintain market price stability and protect the interests of distributors and channel customers, strictly prohibiting Red Bull distributors from cooperating with B2B platforms, this did not affect distributors' cooperation with B2B platforms. After all, for distributors, B2B platforms provide subsidies, allowing them to complete manufacturer tasks and earn additional platform rewards. Why Red Bull? FMCG B2B platforms are a product of the Internet era, naturally following the strategy of burning money through subsidies to quickly acquire customers and seize the market, racing against time. Perhaps Red Bull unintentionally helped B2B platforms complete an "upgrade" of deep distribution in this subsidy battle. Red Bull is one of the few 20 billion-yuan super single products in the FMCG beverage category. It is small in size, light in weight, has a long shelf life, high unit price, and long-term price stability. These characteristics make Red Bull as liquid as currency in the circulation channel. In the early stages of FMCG B2B development, what is needed is data, and the most direct assessment is sales volume (GMV), with fee subsidies also based on this standard (5%). "Ten boxes of mineral water cost only two to three hundred yuan, with a 5% discount per box, saving just over one yuan, and taking up a large space. Red Bull can directly save over five yuan per box, which is higher than the profit from second-tier distributors," a regional Red Bull distributor told New Distribution. Considering the above factors, in the channel transformation, Red Bull was chosen by the times and became the best subsidy target. There is even a rumor that a platform ground promoter who cannot sell Red Bull is not a qualified ground promoter. The A-side and B-side of subsidies In this subsidy game led by FMCG B2B, with Red Bull playing a role, who are the beneficiaries and who are the victims? In short, there are four types of beneficiaries:
Mom-and-pop stores: Red Bull sells well, and compared to before, it's cheaper and earns more;
Distributors: Using platform rules, they complete tasks assigned by the manufacturer and also receive additional rewards from the platform;
B2B branch companies: Platforms need data, and branches bear the KPI. Once KPIs are completed, income naturally follows;
Red Bull local offices: Similarly, they complete KPI tasks. As for victims, there are three types:
The existing market is limited. Distributors who don't understand the rules see sales decline, fail to complete tasks, and profits drop; distributors who use B2B platforms to complete sales tasks meet the manufacturer's performance requirements, but some B2B platforms' cross-regional sales and price chaos disrupt the market price system, ultimately damaging their own market;
Red Bull as a company: Although it returned to 20 billion yuan, it also led to a large amount of nationwide cross-regional sales, causing market chaos. Behind the 20 billion yuan seems not so healthy.
B2B platforms seem to establish connections with stores through Red Bull, a hard currency brand, but it is easy to create a "low price" impression in the latter's perception. Once the price advantage disappears, store stickiness is easily lost. The beneficiaries and victims are like the A-side and B-side of things. From a dialectical perspective, B2B has problems for deep distribution brands in the FMCG industry, conflicting with existing channels because subsidies break the original stable traditional distribution chain. But at the same time, we can also see the advantages of B2B: 24-hour real-time online, various tools, and flexible and precise promotional activities. Red Bull's return to 20 billion yuan at least positively verifies that even for deep distribution brands, B2B can help achieve sales growth, increase store coverage, and channel penetration. Frankly speaking, in the conflict between pros and cons, at least the author sees more pros than cons. From disruptor to enabler It is undeniable that at the current stage, B2B has indeed encountered various problems in its development. Especially in the early stages of B2B development, cross-regional sales and price chaos were common. But as the industry gradually moves toward deeper development, B2B has increasingly transformed from a disruptor to an enabler in the entire FMCG circulation supply chain. Especially after the rise of new retail formats such as unmanned retail and unmanned convenience stores, B2B's nationwide collective procurement capabilities, digital capabilities, and unified warehousing and distribution are unmatched by most traditional distributors. From extensive management's land grabbing to refined operation's data empowerment, more and more B2B platforms are beginning to recognize the position of brand owners in the entire circulation chain and increasingly see their own position in the channel digitalization process. From this perspective, New Distribution firmly believes that the FMCG circulation link will definitely achieve channel digitalization, and B2B, in whatever form it exists, will play an increasingly important role in the future development of the FMCG industry. New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 15 to March 18. This conference will focus on the topic of "Breaking the Game" and engage in in-depth discussions with numerous brand owners, supply chain service providers, distributors, retailers, and others. Compared to previous conferences, this summit will be fully upgraded. In addition to original topics such as channel innovation, city distribution logistics, and distributor transformation, it will also add multiple parallel forums on new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing and exchanges, we believe every brand owner and distributor can learn the latest business models, expert opinions, and implementation methods, finding new tools and methods to break the game in 2019 and return to the track of high-speed growth. Review of previous conferences -END-