The FMCG2019 China FMCG Conference, hosted by New Distribution, was grandly held from August 20-23 at Shanghai Fuyue Hotel! The event attracted 3,000 industry professionals including distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the speech content delivered by Wang Bin, Vice President of Qiaqia Food, at the FMCG2019 China FMCG Conference, organized and published for our readers. Enterprise growth must cross the non-continuity gap Many people know that Qiaqia started with sunflower seeds. From 1999 to this year, a total of 20 years, Qiaqia has focused on the sunflower seed business. It wasn't until 2017 that we started our second business line, which is the nuts segment. This has developed very rapidly in the past two years, and I'll share what we've done in this area later. Twenty years ago, we created a product, the red bag fragrant sunflower seeds, which is also Qiaqia's biggest single product. At that time, it led the entire sunflower seed industry and made significant contributions to the commercialization and packaging of sunflower seeds. Over the past 20 years, Qiaqia's growth has included three category innovations, which have brought three major leaps. The first innovation was the red bag fragrant sunflower seeds, which innovated the sunflower seed process, changing from roasting to boiling. Now it has gone global and become an international product. The second was pecan-flavored and caramel sunflower seeds, which quickly became Qiaqia's second largest single product within two years. In the past, many in the industry said, "Has sunflower seeds hit the ceiling?" But in fact, that's not the case; there are many innovative things we can still do. Similarly, like the red bag fragrant sunflower seeds, it has gone global. The third is our small yellow bag daily nuts category. During trial sales in some cities last year, it sold 600 million yuan, with very positive feedback, and this year it's developing extremely rapidly. Currently, Qiaqia nuts have become Qiaqia's third largest single product, and in the future, it might reverse to become the first. Therefore, we believe that from product innovation to category innovation, you must create a new category, not just a new product, so that you can create a hit product. Why do we constantly innovate? An enterprise must continuously innovate to achieve longevity, while maintaining an empty cup mentality to develop new businesses. But developing new businesses cannot be blind or without method; you must achieve a leading position in one business before developing a second. For example, after we deeply cultivated sunflower seeds and became the industry leader, we then developed nuts. Moreover, developing nuts doesn't mean developing all nuts; you can only develop a single product within nuts. Our choice was daily nuts, and then we developed other nut categories. This way, the likelihood of success is greater. Many enterprises fail to launch new products because there is a non-continuity gap in the middle; we must cross this non-continuity. Qiaqia's non-continuity innovation: the first line was Qiaqia sunflower seeds, and now there's a second business line, Qiaqia nuts. From resources to overall configuration, we separate them; otherwise, the two businesses would conflict. Why did Qiaqia choose to do nuts? But why did we choose to do nuts? People often say the economy is not good these two years, but nuts is currently a very hot category, meeting the current health consumption demand, with great potential and rapid growth. When developing new products and selecting categories, we must seize the "ten times better" trend. For example, nuts compared to sunflower seeds is a "ten times better" trend. In the past, you might not finish a pack of sunflower seeds in a week, but nuts are different, especially daily nuts, which require you to eat them every day, with "ten times better" frequency. Price is also like that: in the past, a pack of sunflower seeds cost a few yuan; now how much do nuts cost? Many are sold by box, and selling a box of nuts is equivalent to selling a case of sunflower seeds. Including future consumption, nuts are very good. But this doesn't mean we're not doing the main business or not focusing; the sunflower seed main business still has great potential. During innovation, the main business should be faster, higher, and stronger. We need to pull through the entire industry chain, especially for agricultural products. For example, in sunflower seeds, Qiaqia starts from seed research, then contract farming, planting, processing, distribution, branding, and marketing, making it deep and thorough. The nut market is larger with more consumption scenarios. Starting this year, the next decade is the golden decade for China's nut market. Why do I say that? It's related to our per capita income; our GDP has reached $10,000, so we've reached an inflection point. Let me draw a picture: 40 years ago, the country talked about poverty alleviation and getting rich; we needed to eat enough, so many grain and oil enterprises rose. 20 years ago, we were striving for a moderately prosperous society; we needed to eat meat, so many meat enterprises rose. More than ten years ago, we were building a comprehensively well-off society; we needed to eat more nutritiously; a glass of milk should strengthen a nation, so many dairy enterprises rose. Now we talk about the people's aspiration for a better life as our goal. What is a better life? In the past, you might only eat nuts and sunflower seeds during festivals; now you eat them regularly. So now we eat healthier; nuts are a healthy food, and it's also a self-reward for the middle class. Why is the next decade China's golden decade for nuts? Comparing per capita nut consumption between China and the US, China's annual per capita is only 221 grams, while the US is about 6.6 kilograms, only 3.1% of the US. Multiply that by 10, and even if you double the current market capacity tenfold, it's only one-third of the US. Currently, most of our nuts are imported from abroad. So China should also grow nuts, and China needs its own nut expert brand. For example, Qiaqia has tens of thousands of acres of pecan farms in Anhui and also grows macadamia nuts in Guangxi. So in the future, capital is also laying out in the nut sector. There is huge potential in this area because eating nuts is related to our cognitive upgrade. How does Qiaqia break through the second curve of nuts? With such great potential in nuts, how do we open up the second curve of nuts? Quality is a core issue in the nut field. Every year, 600 million people worldwide get sick due to food insecurity, and countless consumers pay the price for unsafe food with their health. So, in the nut field, how raw materials are sourced, produced, processed, stored, and whether you are safe is very important. Therefore, Qiaqia puts "freshness" first when making nuts. It has three levels of demand: one is the government's demand; national standards are the most basic and bottom-level demand. The second is enterprise demand; what is the enterprise's demand? It's stability; the product I produce today should taste the same as the one I produced three months ago. But what is the consumer's demand? The customer's demand is freshness. So "freshness" is the highest requirement at the top of the pyramid. If you have the chance to buy foreign sunflower seeds, overseas also eat sunflower seeds, especially in the Middle East and Southeast Asia, but they don't have the peroxide value indicator, so we must achieve freshness. To achieve good quality and fresher products: first, full industry chain capability; second, rely on technology. Qiaqia nuts are transported from around the world; we only source 100% first-grade nuts from the current season. For almonds, we buy American almonds in the second half of the year and Australian almonds in the first half. Cashews and walnuts are shelled and used fresh to ensure health and freshness. Maybe in the short term, your price might be higher and sales volume lower; I think that's not a problem. How to ensure freshness? Our packaging is called "mastering key freshness preservation technology." Qiaqia's small yellow bag contains desiccant, oxygen absorber, and nitrogen-filled packaging, triple freshness preservation. Why? The purpose is freshness. Because of freshness preservation technology, Qiaqia was selected as a national intelligent manufacturing demonstration enterprise, is a professional R&D center for national nut processing technology, and also won the second prize of the National Science and Technology Progress Award. This award is quite rare. In summary, how does Qiaqia think about breaking through the second curve? We first find the underlying logic of this matter, which is that consumers' demand for delicious and fresh is always the primary demand. Therefore, we place the key to breaking through on the product direction. Actually, I come from a marketing background, but I deeply know that only with a good product as the fulcrum and channels as the lever can we truly pry open the nut market. Today's conference has many channel partners: B2B, new retail, community group buying, all of which are tenfold changes. With good products, we must rely on these changing channels to seize opportunities. Rapidly changing channels also need traffic monetization; they need good products, and I have good products. But even with good products, prying open the market is not easy? **The most critical is organizational mindset; it's not that once a product is developed it can be sold. To break through the second curve, the organizational mindset must be aligned. Organization is the first factor for your success. In the past, we learned 4P; now it's 5P, adding the concept of people. We must open up the organization, and after opening, position and match, focus resources, so that we can pry open the key point of this category. This is the core experience of Qiaqia nuts over the past two years.