---
title: "The Aftershocks of the Pandemic: A Survival Story of Beverage Distributors"
description: "The sudden outbreak of the pandemic became a 'black swan' event at the start of 2020, disrupting the rhythm of many distributors. The beverage market was no exception and suffered a significant impact. However, every major upheaval eliminates a group of people, as history dictates. For distributors, this pandemic brought not only panic but also more thoughts about the future. Now that the pandemic has largely passed and distributors' businesses are getting back on track, in the face of the pandemic's 'aftershocks', distributors should focus on what changes have occurred in the market and how to adjust their business strategies."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-05-12"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/the-aftershocks-of-the-pandemic-a-survival-story-of-beverage-distributor-a1a889fb.md"
original_source: "https://mp.weixin.qq.com/s/mLf40tbNNeQSIqCSTcdB9Q"
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# The Aftershocks of the Pandemic: A Survival Story of Beverage Distributors

> The sudden outbreak of the pandemic became a 'black swan' event at the start of 2020, disrupting the rhythm of many distributors. The beverage market was no exception and suffered a significant impact. However, every major upheaval eliminates a group of people, as history dictates. For distributors, this pandemic brought not only panic but also more thoughts about the future. Now that the pandemic has largely passed and distributors' businesses are getting back on track, in the face of the pandemic's 'aftershocks', distributors should focus on what changes have occurred in the market and how to adjust their business strategies.

The sudden outbreak of the pandemic became a 'black swan' event at the start of 2020, disrupting the rhythm of many distributors. The beverage market was no exception and suffered a significant impact. However, every major upheaval eliminates a group of people, as history dictates. For distributors, this pandemic brought not only panic but also more thoughts about the future. Now that the pandemic has largely passed and distributors' businesses are getting back on track, in the face of the pandemic's 'aftershocks', distributors should focus on what changes have occurred in the market and how to adjust their business strategies. The author recently visited the beverage market and would like to share some insights.

**-01- Current State of the Beverage Market**
Just after finishing the morning meeting, I received a call from the manufacturer: "Old Zou, order two more truckloads of goods to help me meet this month's target. It's settled." Old Zou looked at the warehouse still full of inventory and sighed. Business is tough this year. Many distributors are now facing a similar situation: business is sluggish, but the manufacturer's targets haven't stopped, forcing distributors to make up for the losses of the first quarter. Initially, they thought that after the pandemic, consumers who hadn't consumed for so long would trigger a wave of revenge spending, but this hasn't happened in the market. The beverage market as a whole remains depressed, with water sales significantly lower than the same period last year. Moreover, some special channels that previously sold large volumes are still closed, such as campus channels, internet cafes, and driving schools. Especially the campus channel: students are a relatively concentrated consumer group with high purchasing power, making it one of the main battlefields for selling water.

However, due to the pandemic, schools have not reopened, leading to no business for school stores and even some stores around schools. A distributor for Nongfu Spring told the author that during the same period last year, the school channel would require two truckloads of goods per week; now schools are delayed in reopening, resulting in significant losses. The author visited some stores near schools and found that most stores dared not stock up, and some even put up 'For Sale' signs.

**-02- Business is Bad, Everyone is Struggling**
**1. Distributors are struggling**
The author accompanied a salesperson from Six Walnuts to visit the market and found a common problem in small terminal stores: the date issue. The Six Walnuts products placed before the Chinese New Year have hardly sold. Additionally, consumers now pay more attention to dates, making it difficult to sell products from the previous year.

As a result, many small store owners requested exchanges, but the distributor also had old stock, so almost no one dared to order Six Walnuts. Furthermore, due to the pandemic, the display fees agreed upon last year were delayed for too long, and with salesperson turnover, many displays were only verbally promised without signed agreements, so most were not honored, leading to a mess in account reconciliation.

Many distributors are now in a bind: they have excess inventory from last year, difficulty exchanging goods at terminals, and key sales channels are not opening up.

**2. Salespeople are struggling**
Bosses are suffering heavy losses and want to minimize them, so they give salespeople strict orders. Salespeople face high pressure with large sales targets, not only maintaining existing product sales but also launching new products. However, launching new products carries high risk and low sales, so most salespeople are reluctant. On the other hand, various beverage brands, to increase exposure and boost sales after the pandemic, are aggressively demanding that salespeople compete for market share by placing freezers, buying displays, and securing floor stacks. Salespeople spend a lot of time on these investments, especially since manufacturers have strict display requirements for KA stores, leaving them no time to distribute more goods—they can't manage both ends.

**3. Small store owners are struggling**
During the pandemic, stores were closed, and pre-Chinese New Year stock remained unsold, with distributors slow to exchange goods. Additionally, with the pandemic recurring, terminals dare not stock up in large quantities. They don't dare to order more of fast-moving water, and they don't dare to order slow-moving water. Due to the pandemic, they had no business for months, making them more cautious about stocking up. Water is not a necessity, and with the market depressed, they don't want to hold too much inventory or try new products; most small stores only stock bestsellers. Traditional small stores have suffered varying degrees of pressure, and their confidence in the future market is somewhat diminished. They need time to adjust and recover, and in the short term, they won't order large quantities.

**4. Consumers are struggling**
The pandemic hasn't been fully resolved, and many people have been out of work for months, making revenge spending unlikely. Moreover, with the pandemic not fully under control, people try to stay home, naturally reducing consumption of beverages. Secondly, the pandemic has changed consumer attitudes; the surge in bank deposits in the first quarter shows that consumers are consciously avoiding unnecessary spending. Normally, April and May should be the peak season for beverage sales, but the market is currently stagnant. Many consumers have lost income during this period, and even after the pandemic ends, most will still be cautious with spending, leading to a noticeable decline in consumption levels. For areas with high migrant populations, many will rush to work outside to make up for lost income, especially in rural areas, where small terminal stores will become even quieter, meaning less foot traffic for retail stores. Particularly for the drinking water industry, sales have clear peak and off-peak seasons. If the normal peak season is missed, the market will become even more depressed.

**-03- After the Pandemic's 'Aftershocks', How Should Beverage Distributors Respond?**
'Survival' is the most important thing for distributors after the pandemic. The current difficulties distributors face are not so much caused by the pandemic but rather something they would have had to face sooner or later; the pandemic just accelerated the process. In the face of the pandemic's 'aftershocks', traditional distributors need to re-examine their market and prepare for breakthroughs. Especially with the upcoming beverage peak season, they should minimize losses caused by the pandemic.

**1. Handle old-dated stock and reduce inventory**
**During the pandemic, sales almost stalled, and pre-Chinese New Year stock hasn't been digested. With warehouses still full of last year's goods, clearing pre-Spring Festival inventory is the primary task for distributors after the pandemic.** For old-dated stock, distributors cannot sell at predetermined profits; they should cooperate with manufacturers to scientifically plan promotional activities. They must be willing to take a loss and offer discounts to customers, such as a 15 yuan discount per case or buy 5 get 2, so customers can see the significant savings. Strengthen group-buying channels and promote low prices on group-buying platforms to clear warehouse inventory. As we can see, distributors who had integrated home-delivery e-commerce and group-buying channels suffered the least losses. **The core principle: rather than letting products expire in the warehouse and incur storage costs, it's better to clear inventory at cost price.** If distributors can clear all old-dated stock during the recovery period and travel light, that's a good start.

**2. Seize key customers, maintain network points, and reach more outlets**
The author found that after the pandemic, all leading beverage brands are competing for shelf space in KA stores and large outlets, buying displays and floor stacks. **In the upcoming peak season, distributors should conduct comprehensive analysis and organization of customer information, target analysis, and seize key customers and those with good sales.** **Secondly, maintain existing network points, and have salespeople actively handle after-sales issues and exchanges for near-expiry products.** Also, the fees promised before the Chinese New Year should be paid in full, fulfilling commitments to overcome difficulties together. Customers are also victims of the pandemic, so it's essential to give them confidence in the market. On the other hand, many distributors are unclear about the number of outlets in their coverage area. This is an opportunity to actively develop new outlets and reach more customers. **The beverage category has relatively low entry barriers, so distributors can take this opportunity to re-divide regions, incorporate outlets in the area into their system, and have salespeople actively develop undeveloped outlets.**

**3. Multi-channel development**
Although the pandemic was an unexpected event, it revealed that distributors with a single channel have poor risk resistance. Therefore, distributors must develop multiple channels; having more channels not only increases sales but also provides more security in emergencies. During the pandemic, many emerging channels performed outstandingly. These emerging channels may be an opportunity for distributors to transform their channels. For example, cooperating with home-delivery e-commerce platforms; during the pandemic, Yili and Mengniu achieved good sales through platforms like Xingsheng Youxuan. **During this special period, consumers' online consumption has grown rapidly, and online transactions have become a gradually accepted way for consumers. Distributors should keep up with the changes of the times.** Secondly, provinces have recently announced school reopening dates, which is an opportunity. The campus market is a main battlefield for beverage sales. Distributors should actively connect with these key special channels during this period and prepare plans in advance for school reopening. For the campus market, target consumers often make impulsive purchases of beverages, so distributors must be willing to invest.

> 1) Do vivid displays and place floor stacks in prominent positions. 2) Maximize display share to squeeze out competitors' displays. 3) Secure the first freezer position, closest to the cash register. 4) Set themes and hang banners if possible, e.g., 'Prevent the pandemic, XX is with you.'

**4. Product structure adjustment**
This pandemic has made many distributors realize their profitability is too singular and their ability to cope with risks is poor. When risk suddenly strikes and existing products cannot be sold, sales completely disappear. Most distributors' product structures are more or less unreasonable, some focusing on profit, others on sales volume, with poor complementarity between products. Especially the beverage category, although a mass category, is not a necessity. After this pandemic, consumers' spending awareness has changed, and they have begun to reduce spending on non-essential items. Therefore, distributors must have a leading product in their product configuration that has risk resistance. The leading product should have these characteristics: high brand awareness, so even if there is inventory due to special events, it can naturally sell after recovery; and high manufacturer cooperation, willing to invest and share difficulties with distributors. As the saying goes, 'Where there is greater danger, there is greater opportunity.' After the pandemic, distributors should build confidence, actively respond, quickly digest inventory, adapt to consumption trends, adjust product structure in a timely manner, systematically maintain customer relationships, and welcome new development after the dark clouds!


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