Greetings, I am Yuan Lai from New Distribution. Recently, Nestlé Greater China released its H1 2025 financial report, showing an organic growth rate of 4.2%. In response to the performance decline in Greater China, management has engaged in deep reflection and stated that they are taking action to improve results. What are the specific reflections and actions?

  • First, Nestlé's past growth came from expanding distribution channels. The focus was on pushing products to channels and laying out distribution networks, which led to an accumulation of slightly higher inventory in the channels. However, with weakening consumer confidence and the impact of a deflationary environment, this model is now facing challenges.
  • Second, in response to the market environment and the challenges of the model, Nestlé will make changes, shifting from a push model (pushing products to channels) to a pull model (attracting consumers), reallocating resources, and putting more investment into the consumer demand side. At the same time, it will restore channel inventory to normal levels. After reading the above content expressed by Nestlé management, there is a strong feeling: the sales logic of FMCG is undergoing a complete transformation! Although in the past year or two, we have heard at many occasions industry viewpoints such as the end of the distribution dividend, the reconstruction of channel order, and the failure of the push model. But today, seeing the world's leading brands and industry top players reflect on and judge the Chinese consumer market, and overturn their past sales models, carries a completely different weight. Of course, the challenges FMCG faces today are not only environmental issues like the end of the distribution dividend and weakening consumer confidence. Behind the complete change in sales logic, there are three signals that any consumer goods company must pay attention to.

First, supermarkets are shifting from selling shelf space to selling products.

Second, the rise of retail private label products.

Third, the widening gap in market stratification. Supermarkets: From Selling Shelf Space to Selling Products The topic of supermarket remodeling has never stopped in the past year. From Pangdonglai remodeling Bubugao, to remodeling Yonghui Superstores, to Wumart's self-remodeling. From 2024 to this year, remodeling has become the most frequent term in supermarket operations. Supermarket systems across the country have also reached a basic consensus: the old way of charging barcode fees, display fees, stack fees, and collecting rent from shelf space has come to an end. Selling good products and selling the right products is the only correct solution. In the past, the logic of supermarket store operations was: based on geographic location, how many customers are within a 5-kilometer radius, what is their income level, what are the customer profile characteristics... Draw a circle, open a store, set up shelves, turn on the lights, run a special promotion, and business would come. But now, online e-commerce offers daily specials with next-day delivery; instant retail is rising, with consumers getting delivery within 30 minutes without leaving home. What is the advantage of offline stores? Offline stores must answer: With so many (purchase channel) options, why should I come to your store to buy? Do you have a reason that makes customers must come to your store? Selling good products and selling the right products is the core competitiveness for supermarkets to sustain operations. It is foreseeable that mastering the voice over products will be the core measure for supermarkets to improve. In the past, what products to sell, how to display them, what promotions to run, and what prices to set were all rules set by upstream brands. Going forward, these so-called "rules" will all be broken. Wide category, narrow product range, streamlined SKUs No guided sales or promotional interception Shelf placement not based on fees No floor stack fees Emphasize functional selling points over brand selling points Introduce differentiated internet-famous products Direct procurement at net prices ...... Facing a series of internal adjustment measures and back-and-forth policy changes in supermarkets, the past sales logic of brand owners in the supermarket channel is undergoing fundamental changes. The Rise of Retail Private Label Products Sam's Club, Aldi, Hema NB, including Pangdonglai's private label products, need no further introduction. Local retailers in Zhengzhou: Tao Xiaopang, Xianfeng Life, Huayu Baijia, have also been very successful in exploring categories such as alcoholic beverages, fruit juices, paper products, washing and cleaning, and grain, oil, and seasonings. There is also Hunan chain convenience brand Xinjiayi. With private label products like fresh milk, fresh beer, and freshly ground coffee, the store has 1000+ SKUs, with private label products accounting for only 2% (40+ SKUs), but sales exceeding 10%. In the past, local retailers lacked confidence in private label, thinking they couldn't do it. But now, as more and more excellent retailers succeed in private label exploration, it undoubtedly brings confidence to other supermarket peers. As long as they maintain their original intention, follow the concept of "good quality and low price," and keep trying and exploring, they will surely succeed. For retailers, private label is a required course. Facing the rise of retail private labels, coupled with the retail operation concept of wide category and narrow product range, In the past, brands entering retail stores would try to stuff all series SKUs onto the shelves, with 100 SKUs, leaving no display space for competitors. Obviously, that doesn't work now. Fees are gone, SKUs need to be streamlined, and the focus is on private label. The future category strategy of retailers is likely to strive along this ratio: 50% (private label) + 25% (differentiated products) + 25% (first-tier famous brands) = 100%. Facing the brand awakening of retailers, brand owners' resistance is useless; they can only co-build. Manufacturers and retailers join hands to jointly customize and develop, creating a flexible supply chain. On one hand, they serve customers (assisting retailers in private label and differentiated products), and on the other hand, they serve channels (sales channels, making common large single products in categories). The Widening Gap in Market Depth In the past, brand owners' sales management systems were divided by province and region. Dividing by geographic region was, on one hand, due to management radius and efficiency; on the other hand, because consumption characteristics were roughly similar. But now, with different city levels, different economic scales, and the varying penetration progress and stages of diverse retail formats, the channel complexity faced by brand owners is increasing sharply, and the difficulty of sales management is rising dramatically. In 1-2 tier cities, online e-commerce, convenience stores, community fresh food stores, membership supermarkets, instant retail O2O, etc., coexist as diversified channels. Unchanged consumer groups, ever-changing consumption scenarios, and fragmented shopping channels. Brands must provide differentiated products and sales strategies. But in 3-4 tier cities, although there are many shopping channels, local supermarkets still dominate retail business. With the remodeling topics raised by supermarkets across the country, for brand owners, the way of channel management and the structure of expense investment also need to be tailored to each store. In 5-6 tier cities, remodeling may not have started yet, and fees are still the mainstream. From 1-6 tier cities, different retail format combinations and different sales management logics. The widening gap in market depth further increases the management difficulty for brand owners. In the past, the dimension of sales management was divided by region; now it has evolved into a two-dimensional combination of "city level x channel type," and the sales organization structure and channel strategy of enterprises urgently need to be reconstructed. Final Thoughts Facing the changes in downstream retail, how should FMCG manufacturers respond? In the past, channel layouts were single-point and single-line, but now they are multi-point, and there are also e-commerce giants moving offline, with online-offline integrated instant retail. The more turbulent the channel era, the more necessary it is to re-understand channels. Listening to industry interpretations, looking at practical cases, and hearing firsthand accounts are the most effective. From August 19-21, the "2025 7th China FMCG Conference" will be grandly held in Shanghai. Over 3 days, 100+ distinguished guests will focus on the theme "New Demand, New Supply," presenting a feast of ideas for the industry! Supply-demand reform, retail innovation, distributor transformation, instant retail, emotional value and new consumption, scenario marketing, digital AI, FMCG going overseas... Operators in various sub-fields will bring the latest practical cases. Buying tickets now is your highest-return investment: ✅ Get the latest growth cases in turbulent times ✅ Listen to insights delivered by 100+ experts on site ✅ Connect with incremental channels and directly negotiate cooperation **********🔺