---
title: "The End of the Road for China's FMCG Industry..."
description: "The glory days of China's FMCG industry are over, as the market has matured and consumers have become more discerning. Companies that once thrived on rapid growth and aggressive marketing now face declining sales and profits, struggling to adapt to a new reality where old strategies no longer work."
author: "老纳"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-08-07"
language: "en"
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---

# The End of the Road for China's FMCG Industry...

> The glory days of China's FMCG industry are over, as the market has matured and consumers have become more discerning. Companies that once thrived on rapid growth and aggressive marketing now face declining sales and profits, struggling to adapt to a new reality where old strategies no longer work.

Click on the image for details
The glory of China's FMCG industry will remain in books and investment brochures.
**Foreword**
The FMCG industry has a history of over a hundred years. Although it has entered a cold winter in the past two years, FMCG is an industry with a bottom line, because no matter how bad the economic environment is, people still need to eat and drink.
It's just that in the previous few years, the FMCG industry was like being on drugs; the exciting market performance masked market problems. Everyone felt their future was infinitely bright. In reality, it was just a castle in the air.
Now that wave has passed, the excitement has dissipated, and everyone realizes they were dancing naked all night. At this moment, looking at each other, they finally understand that those who once played the king were just the ones who took the most drugs. The fifty years of FMCG glory were not because the products were right or the teams were highly executable, but more because of the era of material scarcity and the backwardness of people's consumption awareness.
Now, we must go against the trend. Facing the fierce hostility of the public, we find it truly hard to survive.
**The End of FMCG**
Niu Gensheng has made a comeback. Although when Mengniu's top management changed a while ago, some people saw Niu Gensheng at Mengniu, and there were rumors that he might retake the helm of Mengniu. But in the end, the old Niu neither returned to Mengniu nor started a new business; instead, he became a strategic advisor at a water company called 5100.
Some say this is the old Niu's comeback move, but upon closer analysis, this strategic advisor role is more like consulting, similar to his position on the Strategic Development Committee at Mengniu. It might just be that Niu Gensheng is repaying a favor, not that he's really selling water.
In 2011, Niu Gensheng stepped down from Mengniu completely, and six years have passed since then. In 1999, Niu Gensheng left Yili in anger and founded Mengniu, and in just five years, he left the former dairy leader Yili behind. If not for the melamine incident in 2008, it's uncertain who would be the leader of China's dairy industry now.
I thought that after leaving Mengniu, the old Niu would continue working in the FMCG industry. After all, compared to the Niu Gensheng of 1999, the old Niu of 2011 was more mature in terms of fame, social experience, wealth, and connections. But over the years, although there were rumors that certain companies were operated behind the scenes by Niu Gensheng, none were confirmed. I thought the old Niu would establish a third company and split the market with Yili and Mengniu. But not only did he not split the market, he couldn't even keep his own territory, and he even hid his whereabouts.
The old Niu might have realized that in 2012, besides adding to his age, the market has become more demanding for latecomers. This harshness is not only due to competitors' tactics but also consumers' pickiness about products and market saturation.
The current market not only doesn't recognize Niu Gensheng's new brand, but it also doesn't accept new products from old brands. P&G is still P&G, and Coca-Cola is still Coca-Cola. Their glorious cases are still shining in marketing textbooks, still classics admired by countless newcomers. In reality, their sales are declining year by year, and their new products are all failing.
Clearly, market demand is increasing, consumer spending is increasing, and your investment is increasing; yet your distribution rate is decreasing, your revenue is decreasing, and your profits are decreasing.
**Accustomed to Drugs**
Recently, various self-media have been promoting Liu Qiangdong's famous quote: "I didn't invite you back to prove I'm wrong. I invited you to implement my decisions and execute them thoroughly!"
Such impressive words have been expressed by Zong Qinghou, Cai Yanming, and others who have been on the rich list. There are even more impressive theories.
Now, recalling their protagonist aura at the time, you feel it was truly impressive. Leaders' decisions are 100% or 1000% correct. This quote must give you a drug-induced excitement. This was certainly true during the best years of FMCG. Consumers were unsatisfied, the market wasn't saturated, and you could swing between being awesome and being mediocre.
But sorry, the drug effect has worn off, and this quote is useless now. Think about Wahaha's last successful product, Nutrition Express, launched in 2004; thirteen years have passed. What was Want Want's last successful product? How many people can remember? Besides water, what else does Nongfu have? Besides water, what else does C'estbon have? Why isn't Mizone selling well? Red Bull is impressive, but none of the brands it acquired have gained a firm foothold.
What's going on? Because we are used to the pleasure of being high, the rapid development speed masked all problems. It's like a Ponzi scheme; we know the data isn't real, but we always think it won't collapse in our hands, and someone will always take over.
An FMCG industry that can't even hear the truth—what future does it have?
A while ago, I had dinner with a friend from a certain company. After a few drinks, a friend asked the provincial manager: "What do you think Lao Na has that our company's employees don't?" The provincial manager answered evasively, talking about the benefits of the company behind me. The friend interrupted: "Lao Na's professionalism, imagination, and research on this industry are not possessed by our company's employees."
Actually, I understand the provincial manager's evasive answer. To use Kris Wu's words: "He's a veteran." He knows why the market is so fake.
Which company with over a decade of history doesn't have employees more professional than Lao Na? If Lao Na were that impressive, he wouldn't still be doing grassroots promotion. If Lao Na were that professional, he wouldn't rely on helping employees defend their rights to gain followers. It's just that at the time, I wasn't an employee of that company, and I said some truths.
Anyone with work experience knows that the fool who tells the truth doesn't survive two episodes on TV. Which frontline employee doesn't have some opinions about the company, understanding of products, or feelings about management? But when the company actually asks you to express them, would you? No. Everyone is on drugs; why shouldn't you be? Everyone says the company's direction is correct, the market share is high, the distribution rate is good, and consumers are stupid. Why would you say the company's strategy has problems or the market share is fabricated?
Senior management is used to telling you the route in advance when they visit the market. You prepare the route and inform competitors to keep their eyes open and not cause trouble. Senior management even thinks that visiting your market is giving you a chance for promotion, and you should kneel and thank them. Bosses are used to you paving the road with yellow earth and sprinkling water when they come. And you say you want to tell the truth. Are you stupid? Are you giving the company eye drops or giving yourself eye drops?
A friend once told Lao Na: "Can senior management solve the market problems you talk about? They still have to go back to their own market to solve them. What's the use of talking about that? It just makes the higher-ups unhappy and yourself unhappy. Others are faking data; why shouldn't you? Others are brown-nosing; why shouldn't you?
Come on, take some drugs. After all, this company isn't yours. The boss hasn't lost money. If it dies, it dies; it's not like there's a hereditary title. At worst, if this company fails, you switch to another.
We are used to lies; who the hell wants the truth? Our purpose in the market is not to please consumers but to please leaders. Why be so clear-headed?
**Existing Problems**
**Strategic Issues:** For a small fry like me to talk about strategy is laughable. But indeed, the FMCG industry's problems lie in strategy. In this cold winter of FMCG, companies are not uniting but thinking about stabbing each other in the back.
Master Kong thinks Uni-President is its rival, so Meituan steals its business; Coca-Cola thinks Pepsi is its enemy, so both companies are sold; functional beverage companies think Red Bull is the enemy, so the functional beverage market is shrinking.
What takes away your share is not the rival you've hated for decades, but the mutual mudslinging that makes consumers distrust you, and the price wars that make customers feel there's no profit in selling your products.
How many companies, at their founding, thought about their future? It seems they just live day by day. In the process of survival, we copy others' experiences. Today, we learn from Mengniu: "Our company's principle is: small victories rely on wisdom, big victories rely on virtue." Tomorrow, we learn from Wahaha: "Our company should establish a joint sales system." The day after, we learn from Uni-President: "Our products should be innovative and high-priced." The next day, we learn from JDB: "Our company should position accurately and do well with a single product." The day after that, we learn from Master Kong: "Our products should master the channels; whoever does well, we imitate."
Companies learn a lot but don't know what is their own.
**Product Issues:** For years, we've been used to the idea that if a single product is good, we must turn it from a regional market into a national market. How can only people in one region love this product? Everyone must love it.
So we spend a lot of money and invest a lot of personnel, but the result is that cities that didn't sell well still don't sell well, and the markets that were originally good find themselves flooded with goods from other markets because the company wants to support those markets that can't get off the ground and gives out a lot of subsidies.
Can we be normal? Tofu pudding has sweet and salty versions; scrambled eggs with tomatoes can be with or without sugar; zongzi can be meat or sweet. Why do you expect a drink or food to be loved by the whole nation? Do you think you're printing money?
Can you produce some distinctive products instead of having your products compete with each other and your products flood your own markets?
You say the production cost is too high. I think no matter how high, can it be higher than the money you waste?
**Personnel Issues:** The FMCG circle is small, and personnel turnover is high. But basically, those who switch jobs are those who were not successful in their original companies. They just think that trees die if they move, and people live if they move. How do we view those who switch jobs? Were they losers in their original companies? Especially some high-level executives who switch jobs are mostly those who lost in the original company's power struggles and didn't pick the right side. How does the new company view such people? Can it accommodate them and their teams, or does it guard against them like thieves?
Don't always look down on your own company's talent. Maybe the person you don't think highly of will achieve great things in another company. Is it your company's problem or theirs?
As for those in your company who like to pick sides, you should watch them closely. In the past, when everyone was on drugs, their abilities were masked by performance. At that time, you could put a hat on a dog, and the dog could lead the team forward. But now? In this era of real competition, those incompetent people have exposed their problems. They are not fit to lead teams; their performance relied on the drug era when everyone was nice to each other. Do you have the courage to fire them? They've latched onto someone and climbed ashore. Do you continue to support them or give up?
Anyway, it's not your company, so keep supporting them. And some capable people are forced out and go to other companies, only to find they are guarded against like thieves. That's also sad.
Boss, how do you discover and use talent? That's your vision. I won't say more here. Actually, the FMCG industry's current state is also due to inbreeding, which is a major problem.
Everyone thinks FMCG is the easiest to do, that anyone can do it. So FMCG has come to this.
Lao Na's Comment:
This is an article full of negative energy. The problems I've raised cannot be solved by any company, because solving them means the company has to negate everything about itself. I just want to say it out loud so everyone knows what FMCG is really like.
To comfort everyone's wounded hearts, you should still look at those FMCG investment ads that talk about windfalls, hundred-billion or trillion-yuan markets, and shocking changes. Reading such articles is like a comforting bowl of chicken soup.
**Source: FMCG Front Page**


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