---
title: "The Rise of New Consumer Brands and Opportunities in the Offline Market"
description: "In recent years, new consumer brands have risen rapidly online, but as online traffic costs increase, they must explore offline channels. Success hinges on creating strong associations between products, scenarios, and target audiences, and establishing a stable value chain to ensure distribution and repurchase."
author: "赵波"
publisher: "New Distribution"
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published: "2022-08-16"
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# The Rise of New Consumer Brands and Opportunities in the Offline Market

> In recent years, new consumer brands have risen rapidly online, but as online traffic costs increase, they must explore offline channels. Success hinges on creating strong associations between products, scenarios, and target audiences, and establishing a stable value chain to ensure distribution and repurchase.

**Editor's Note:** In the past two years, how new consumer brands can succeed offline has been a common challenge. Why go offline? How to create strong associations between products, scenarios, and people? A successful product must address three questions: consumption scenarios, communication scenarios, and transaction scenarios. The era of mass communication is over; how to generate sales momentum is a critical issue for all new consumer brands.

Click to read the original article for details.

In recent years, a batch of new consumer brands in China have risen rapidly, attracting significant attention. They typically originate online, excel in e-commerce operations and social media, and achieve rapid sales growth.

However, as online traffic becomes increasingly expensive, many new consumer brands are re-evaluating offline channels. For these brands, facing traditional channels dominated by giants, achieving structural breakthroughs in offline channels is the core challenge for their success.

**01 How Did Big Brands Succeed?**

How did big brands succeed? In summary, there are four dimensions: large demand, large single product, large communication, and large distribution.

Based on these four dimensions, one sentence summarizes: **Big brands are the inevitable result of specific historical conditions.**

Why? Let's look at the first dimension: large demand.

**I. Large Demand**

First, let's define market demand. It's not just what consumers want; it's what they need and can afford. That's market demand.

What is large demand? Here, "large" doesn't mean broad in quantity, but **a demand of a certain magnitude on a single level.**

For example, in the early 1990s, after solving basic needs, people gradually had disposable income. From a survival perspective, the first need was drinking water. Many companies saw this huge market demand and launched purified water.

At that time, there were many purified water brands with severe homogenization. Most manufacturers sought differentiation to survive.

Robust (Lebaishi) was the first to introduce the concept of "27-layer purification." This gave consumers an impression of "very pure and trustworthy."

But in reality, what is "27-layer purification"? Is it a process other manufacturers couldn't achieve? Certainly not; it's just a marketing concept.

This marketing slogan happened to align with Maslow's most basic physiological needs. In Maslow's hierarchy, the first level is physiological needs, a crucial foundation.

Robust used a very explicit keyword—"27-layer purification"—to tell consumers that their needs could be met. But what need? The need of 1.4 billion people for clean, safe water—a very fundamental need.

Robust and Wahaha, one based on channels, the other on brand advertising, quickly captured the Chinese people's need for clean water. But for later entrants, it was hard to surpass these two brands with the purified water concept. So many brands began to explore higher-level needs.

What's the next level for water? For example, those with better material conditions wanted better, healthier water. Then the market introduced a second category: mineral water.

Purified water is clean but soft; mineral water has added minerals. Obviously, mineral water can supplement minerals in the body.

Brands like Master Kong, Ice Dew, and Jinmailang seized this concept and carved out a big slice of the saturated water market.

When purified water upgraded to mineral water, how did new entrants cut into the market?

Let's see how Nongfu Spring did it.

Nongfu Spring proposed the concept of "natural water," positioning itself as "Nongfu Spring is a little sweet." Today, Nongfu Spring sells 13 million tons a year. Clearly, Nongfu won.

Later, Nongfu upgraded itself, saying, "We don't produce water; we are just nature's porters."

Then came Uni-President's Aqua, Ganten, Kunlun Mountain, and 5100, etc., with different price points but higher-end mineral water and rare water source concepts to meet various consumer needs.

China's 1.4 billion people share a common basic need. Only based on such market demand can a national big brand emerge. Later entrants continuously segment niche markets at higher levels of Maslow's hierarchy, which become smaller. Conversely, the more a brand satisfies Maslow's basic needs, the larger the market demand.

**II. Large Single Product**

When there's huge market demand, brands must meet the second condition for real market demand: consumers must be able to afford it.

But in the early 1990s, the market was emerging from nothing; disposable income was low, so product costs had to be low enough.

What kind of product can achieve sufficiently low production costs?

It must be mass-produced. Large-scale procurement, production, and distribution squeeze production costs to the extreme.

For example, Snow Beer expanded from Northeast to the whole country in a very short time through large-scale mergers and acquisitions, transforming acquired factories, replacing small brewing equipment with large equipment, and producing the same product nationwide. This drastically reduced costs, allowing a low-price strategy to crush smaller competitors and quickly capture the national market.

Snow's strategy was to produce a sufficiently low-priced product through mass production to meet the needs of 1.4 billion consumers. Based on large demand, they created a large single product with low enough costs.

**III. Large Communication**

When a company can produce products that meet consumer needs at low cost, the next step is to advertise nationwide.

In that era, the time slot after the news and before the weather forecast was fiercely contested by major brands. Whoever got it became the CCTV bid champion, and many national brands rose to prominence in that slot.

Why? Because centralized media had a huge reach, enabling one-time education of consumers.

Although the bid price was expensive, often hundreds of millions, the cost per consumer was extremely low.

So large single products depend on large communication, and under large communication, large single products inevitably emerge.

Under the logic of large communication and large single products complementing each other, large distribution emerges.

**IV. Large Distribution**

In the past, the market had only offline channels: KA channels, restaurants, convenience stores, mom-and-pop shops, special channels, etc. Different categories had different channel focuses.

For planned consumption categories like shampoo and toilet paper, which are stock-up items, the main battlefield was hypermarkets. But for immediate consumption categories like Coca-Cola, where consumers have physiological needs and want to drink it immediately, brands must ensure consumers can get it instantly.

Coca-Cola had an early marketing theory called the 3A strategy: Available, Affordable, Acceptable.

The core action was to make the product available. Later, Coca-Cola upgraded 3A to 3P: Pervasiveness, Price to value, Preference.

But no matter how it changes, whether it's "available" or "pervasive," it all comes down to one action: channel distribution.

This is under specific historical conditions: large demand, large single product, large communication, and large distribution form a closed nested system. Even if the product isn't great, low prices can achieve market monopoly; even if prices aren't low, strong channels (like beer brands occupying prime shelf space) can maximize market share.

Under the premise of single models, single products, and single channel types, what's the core of doing offline?

Discover sufficiently large niche demands, produce sufficiently low-priced products, and occupy and monopolize these scarce resources through communication and distribution, ultimately forming super-large brands.

Given such intense offline competition, big brands do well. But why do they often fail online?

**02 Why Do Big Brands Fail Online?**

From an internal logic perspective, many traditional big brands with deep distribution don't fail online; they simply can't grow big online.

Coca-Cola is arguably the most widely distributed brand in China, covering at least 6 million outlets. Yet, Coca-Cola has only about 11,000 sales representatives nationwide.

Let's do the math: if a rep visits 30-40 outlets a day, that's 150-200 a week. 11,000 reps can directly cover at most 1.6 to 2.2 million outlets, not counting repeat visits. So the total outlets Coca-Cola can directly cover is limited. Who helps distribute to the rest?

China has nearly 22,000 hypermarkets, nearly 200,000 convenience stores, and over 6 million mom-and-pop shops. It's impossible for brands to distribute to all these outlets themselves; they must rely on external distributors and wholesalers.

Each Coca-Cola bottling plant has 20-30 offices, each managing dozens of 101 customers (key distributors), divided by route or region, each facing hundreds of retail terminals. If there are more retail terminals in an area, the number of 101 customers increases.

Not just Coca-Cola, almost all brands have their own distribution mechanisms. Master Kong calls it "channel intensive cultivation," Tsingtao Beer calls it "micro operations," and Jinmailang calls it the "four-in-one model." But no matter the model, these models are essentially a value chain. What sustains this value chain? It relies on layer-by-layer price increases. What supports these increases? Price stability.

**So, stable pricing is their lifeline.**

Therefore, offline brands are extremely sensitive to price. If distributors don't make money or profits are unstable, they won't sell the product well.

But selling online involves creating shopping festivals and special promotions to attract consumers. This price volatility greatly impacts offline. If a brand's prices are unstable and online prices collapse, offline distributors' interests are not guaranteed, and they won't sell for these big brands.

So, this is why big brands are wary of online and why they struggle online: they must maintain stable prices in the offline value chain.

**03 The Logic Behind the Proliferation of Innovative Brands**

I've summarized several reasons for the current surge of innovative brands.

First, infinite shelves. Infinite shelves refer to e-commerce platforms like Tmall and Taobao. Since the cost of listing products is zero, products can be listed without limit.

What are finite shelves? They are physical shelves in convenience stores, KA hypermarkets, and supermarkets. The total number of shelf positions is limited, so not everything can be listed. Merchants only choose the best-selling, most profitable products.

The biggest difference between finite and infinite shelves is that to get more traffic, infinite shelves require purchasing, while finite shelves require door-to-door distribution, negotiation, and placing physical products on shelves.

Infinite shelves have no listing cost, and e-commerce algorithms allocate some traffic to merchants. So for new brands, listing online is the first choice: low barriers, fast consumer reach, and data feedback.

Moreover, the massive online traffic allows new brands to tap into more niche consumer needs. These needs were previously unmet offline by retailers, but online, aggregating niche demands can create significant sales. With increased disposable income, people pursue higher-level Maslow needs: emotional consumption, addictive consumption, social consumption, and health consumption.

This emergence of diverse, intersecting needs naturally leads to a proliferation of new consumer brands online.

**04 Limitations of Innovative Brands**

While new consumer brands emerge online, they also face many limitations.

**First, over-segmentation of target audiences.** Online, because listing costs are low, competition is fierce, and categories are often over-segmented. These categories have small offline application scenarios and small audiences, so when going offline, they face issues like insufficient sales per square meter and retailers' reluctance to stock them.

In physical stores, rent, utilities, labor, and shelf space all cost money. Every product must generate enough turnover per square meter to be profitable; otherwise, it loses money.

So, terminals prioritize big brands, bestsellers, well-known brands, and high-margin brands.

**The second issue is insufficient profit margins.** Most new consumer brands use OEM manufacturing, leading to relatively high costs. Originating online, they never considered reserving profits for intermediaries. Once offline, they find channel margins are insufficient. If they leave enough margin, the retail price becomes too high.

In terms of capabilities, new consumer brands are e-commerce-oriented, developing e-commerce skills. Their marketing activities are wave-based, like influencer live streams, Double 11, 618, or direct traffic campaigns. These waves of promotions cause price fluctuations, which cannot build a stable value chain. Without a value chain, offline is impossible.

Conversely, offline requires stable prices, not dancing up and down. Offline distributors, who see price as their lifeblood, cannot tolerate volatility.

**05 Does Online Grass-roots Marketing Work Offline?**

The selling logic for all offline brands is memory-based. What does that mean? You advertise on TV, consumers remember, and then buy offline.

Today's shopping behavior has shifted from memory to a hybrid model of memory, search, recommendation, and algorithms.

For example, on JD.com, search accounts for about 65% of behavior; users directly search product names. Tmall and Taobao recommend based on user preferences, using algorithms to tag and recommend.

Offline, if users haven't remembered a product, it's nearly impossible to get them to buy an unfamiliar one.

So new consumer brands must make users remember their products to succeed offline.

The question is: does online grass-roots marketing, like having Li Jiaqi live-stream, leading to purchases and experiences, work offline?

Frankly, I'm skeptical.

Purchases driven by influencer recommendations are emotional consumption. For example, you see a snack on Douyin, the host tries it enthusiastically, you impulsively buy a box, but after eating it once or twice, you set it aside until it expires and throw it away. I'm sure many are familiar with this scenario.

Online impulsive purchases don't necessarily lead to consumption. For consumers, there must be a specific scenario with strong demand, where our product happens to be present, and consumers engage multiple senses to experience it, leaving a deep, positive impression.

For example, where did we first encounter Wanglaoji? Wasn't it in hotpot restaurants?

Why hotpot? **Because the scenario, product, and audience needs are strongly correlated. Only through such an experience can consumers remember.**

So, can online grass-roots marketing generate offline consumption value? It remains to be seen.

**06 How Should New Consumer Brands Go Offline?**

So how should new consumer brands go offline?

Products must have consumption scenarios: a group of people consuming in a common specific time and space. With that scenario, find the sales momentum logic.

In that scenario, why would consumers buy our product?

Find the sales momentum logic, then build the value chain system. Don't just find distributors immediately; if you do, they won't know how to sell, and the product will die quickly.

Today, large-scale media education is difficult. We must create strong consumer experiences and strong word-of-mouth to accumulate users. Don't aim for instant nationwide coverage; instead, focus on accumulation, repurchase, and retention, and deepen community operations. That's the true core capability.

Examples include Taishan Beer, Hubang Chili Sauce, and Pop Mart.

When Hubang Chili Sauce founder Lu Wenjin started making chili sauce, he realized the market was tough. Laoganma, as the mainstream brand, had already captured 90% of the market share in traditional outlets. Anything more expensive than Laoganma wouldn't sell; anything cheaper wouldn't make money. Laoganma's offline barriers were unshakable. How could a new entrant break in?

Lu Wenjin thought long and hard and finally found a breakthrough in scenarios: the "food delivery scenario."

In the food delivery scenario, there was no Laoganma, nor any national chili sauce brand. Many delivery meals needed flavor stimulation. Lu Wenjin strongly associated his product with delivery, making small packages and adjusting flavors to match.

Clearly, with product, scenario, and audience aligned, Hubang successfully shifted the battlefield to the delivery channel, achieving over 300 million yuan in sales there. Today, Hubang Chili Sauce is an indispensable partner for delivery merchants, with an unassailable position.

This is how strong associations between product, scenario, and audience create a strong consumption experience. Only in such a closed loop can a brand be formed. This is what new consumer brands need to seriously consider.

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