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1. Large and Medium-Sized Food Enterprises Hit Growth Ceilings

China's sustained economic growth has provided Chinese companies with a golden opportunity to scale up rapidly, and the food and beverage industry is no exception. Driven by strong demand, continuous consumption upgrades, and massive capital inflows, a number of large food and beverage companies have emerged, such as Dali, Panpan, Yake, Xiaoyangren, Lulu, Yinlu, Liugehetao, and Hsu Fu Chi.

However, almost all large food companies encounter growth ceilings. Once they reach a certain scale, sales growth drops significantly. Even Wahaha is no exception; in recent years, its sales have hovered around 60 billion yuan, and in 2014 it experienced its first-ever negative growth.

The main reason for the growth ceiling is weak new product sales. Large food companies have strong distribution channels, ample funds, and massive advertising spending, yet their new products fail to break into the top tier of their categories. So where exactly is the problem?

2. Root Cause: Failure to Upgrade the Parent Brand from Shallow to Deep

In reality, the growth challenges faced by these large food companies may seem different, but the core reason behind them is very similar: they have not upgraded their parent brands from shallow to deep brands—that is, brands with clear connotations and associations. Their current parent brands merely have high awareness and have become synonymous with their founding products, such as Panpan equating to French-style mini bread, or Yinlu being synonymous with peanut milk.

When a brand only has high awareness and is synonymous with a specific category, it becomes difficult for it to lead when extending into new categories. Imagine Panpan: in consumers' minds, it is the epitome of French-style mini bread, and even Panpan's own advertising repeatedly emphasizes "French-style mini bread, Panpan is still the best." When consumers' perceived value is confined to the mini bread category, other products will inevitably struggle to achieve good sales.

Professionally, brands that have high awareness but lack emotional and cultural connotations—being merely synonymous with a category—are called shallow brands. Until such brands are upgraded to deep brands, they lack the capability for brand extension and expansion. For food companies, a brand can only be upgraded to a deep brand asset (referred to as a deep brand) when it is endowed with emotional and cultural values such as "fun, love and care, romance, fashion, and responsibility." Only deep brands possess strong brand extension and expansion capabilities, which can both consolidate sales of old products and rapidly drive new products to achieve scale sales.

3. Emotional Identification is the Main Driver for Upgrading a Parent Brand to a Deep Brand

A parent brand with strong extension capabilities typically features emotional benefits that resonate with consumers. In the food industry, the emotional benefits of a brand mainly fall into four dimensions: love and care, responsibility, fun, and values and lifestyle.

First, love and care are enduring and beautiful emotions that touch hearts and warm souls. Orion's brand positioning is to share the culture of "affection" with consumers, acting as a messenger of "affection." Under the banner of "affection," its slogan "Orion, good friends" is full of human warmth and widely recited. In public relations and promotions, it focuses on experiencing the "affection" culture, instantly drawing closer to consumers' hearts and shortening the distance between the brand and consumers. Its products currently span three major categories: pie products, cake products, and gum series. Each product has been well received by consumers upon launch.

Second, developing brand connotations from the dimension of responsibility builds a brand's prestige. In consumers' minds, Nestlé is closely linked to coffee; when mentioned, coffee comes to mind first—one of Nestlé's brand associations. However, Nestlé adheres to the brand proposition of "Good Food, Good Life," which further implies "an international leader in the food industry, focusing on nutrition and quality." These are the core values of the brand. Therefore, Nestlé is a high-prestige deep brand whose brand equity can encompass coffee, milk powder, ice cream, condensed milk, cereal, lemon tea, and many other products. Almost every category under Nestlé has become one of the top three in its industry.

Third, in today's stressful and monotonous world, humorous, surprising, and delightful expressions easily gain strong emotional identification from consumers. Fun things always attract attention and are welcomed by people. Kraft has the brand vision of "making global food and life more exciting," continuously using unique creativity to meet consumer needs, adding more fun to people's lives while enjoying delicious food. For example, Chips Ahoy! cookies have different funny faces and expressions—delicious and fun, loved by children. Chips Ahoy! personifies cookies, becoming the most popular cookie. And Oreo's world-famous slogan "Twist, Lick, Dunk" is particularly ingenious, creating an interesting and unique way to eat. When consumers think of the Oreo brand, they smile knowingly and can't help but develop strong emotional identification with the brand.

Fourth, values and lifestyle. Want Want from Taiwan is deeply versed in traditional culture. "Wang" symbolizes harvest and wealth, conveying a sense of thriving hope. Leveraging this auspicious meaning and homophone, Want Want always has a place in the gift market during festivals. Through extension, Want Want has entered different product areas and achieved significant success in most, becoming a strong brand in the food industry.

4. Reasons for the Lack of Deep Brands: Empiricism and Path Dependence

Most Chinese food companies, in their early days, only needed brand awareness and quick category positioning to win. Empiricism and path dependence have led Wahaha and many other large and medium-sized food companies to continue following early brand tactics—"celebrity + memorable slogans + satellite TV joint broadcasts"—even after becoming large. Huge marketing and advertising expenses only slightly increase awareness, continuing to maintain familiarity. To this day, Wahaha's brand equity consists only of shallow assets like "high awareness" and "trustworthiness." Advanced brand associations and assets such as "emotion, symbolism, and humanity" are almost nonexistent, and the brand's temperament tends to be mid-to-low-end.

However, once a company grows large, the competitive landscape has fundamentally changed. It must build deep brand assets such as brand associations (core values, personality, associations), brand loyalty, and brand premium capability. If deep brand assets are not cultivated...

Source: Weng Zaixiang Business Wisdom