Hebei Yangyuan Zhihui, a beverage company on the verge of bankruptcy in the 1990s, turned its fortunes around after 2003 with a plant-based protein drink called "Six Walnuts." Sales skyrocketed from 3 million yuan before 2003 to around 3 billion yuan today, a nearly thousand-fold increase in a decade.
The miraculous rise of Six Walnuts has left the industry with many hot topics, leading experts to derive marketing subjects that combine empirical evidence and theory, such as "the importance of product naming," "breaking into third- and fourth-tier markets holds great potential," "how to achieve category success," and "the advantages of product focus strategy."
These highly theoretical marketing topics have begun using Six Walnuts as a model for marketing interpretation. If we can acknowledge that a regional enterprise promoting a mass-market product achieved nearly a thousand-fold marketing growth in a decade, then every aspect of this product's execution—from positioning, market strategy, channel construction, terminal control, to concept communication—appears flawless.
But the facts tell us that the Six Walnuts marketing model is difficult to clone. Established plant-based protein beverage companies like Lulu and Dazhai can only follow Six Walnuts' lead in the walnut beverage market, while the "N Walnuts" imitators, despite having a successful model to back them, only grasp the surface and lag several levels behind Six Walnuts in market performance.
Why is this? We should perhaps return to the most fundamental theory of FMCG marketing: any strategy, planning, or tactic is just a theoretical weapon; persistent and effective market execution is the guarantee of FMCG success.
I. Interpretation: Six Moves of Six Walnuts
Interpreting the development history of Six Walnuts is essentially interpreting the development history of the beverage market over the past decade. In a highly open beverage market, the success of any product cannot be separated from the support of "timing, location, and harmony." Besides following the "4P" principle in market promotion, products must also match the market atmosphere and marketing environment of the time. In other words, behind any successful product, there are both inevitable and accidental factors.
Move 1: Product Naming – Winning at the Starting Line
Lin Yutang, a master of Chinese studies, once proposed in his book "The Wisdom of China" that compared to Westerners, "Chinese people are full of ordinary sensibility." From the differences in traditional culture—Western medicine emphasizes practical diagnosis, Chinese medicine emphasizes dialectical thinking, Chinese painting emphasizes freehand brushwork, and Western oil painting emphasizes realism—we can perceive the cultural characteristics of the nation. Therefore, it is not difficult to see that Chinese consumer psychology is often more sensitive to some emotional appeals of products.
Returning to the consumer market, a good product name is undoubtedly more easily recognized by Chinese consumers. Six Walnuts, in the adoption of its name, maximally catered to the emotional appeals of Chinese consumer psychology: it allows consumers to clearly understand the literal value brought by six walnuts, while also reserving rich marketing resources for the company's subsequent product promotion. Marketing experts analyze that plant-based protein drinks are marketing-driven products; their product concepts and value propositions need a carrier and channel for release. The name "Six Walnuts" itself implies the product's value: a can contains the nutritional components of six walnuts. We do not need to explore its rational connotation; at least from the literal meaning of the name, it allows its target consumer group—those in third- and fourth-tier markets—to quickly recognize and accept the spread of this product concept.
On the other hand, the "walnut milk" (核桃乳) marked on the packaging of Six Walnuts also achieves a certain degree of differentiation from its competitors and provides the most effective and vivid positive suggestion to emotional consumer psychology. "Lulu and Dazhai produce 'walnut dew' (核桃露), while Six Walnuts produces 'walnut milk' (核桃乳). Don't underestimate this one-character difference. In fact, the characters 'dew' (露) and 'milk' (乳) are most commonly used in the daily chemical industry, such as 'shampoo milk' and 'shampoo dew.' Many consumers have feelings about these two characters. 'Dew' easily reminds people of 'dew water,' appearing to have more water content; 'milk' easily reminds people of 'milk juice,' as white and rich as milk, appearing to have less water content." Compared to competitors, Six Walnuts' appeal advantage lies not only in the "more" quantity but also in allowing consumers to associate with higher concentration, richer taste, and whiter color, laying the foundation for occupying consumer minds.
Move 2: Product Differentiation – Subtraction for Focus
Before Six Walnuts was launched, Hebei Yangyuan had a dazzling array of products. "I remember at that time, Yangyuan was making soda, juice, and everything else; it was messy and chaotic. At that time, Yangyuan was just an ordinary one among thousands of small and medium-sized enterprises in Hebei, with extremely low sales per product, relying on many single products to achieve annual sales of two to three million yuan."
The turning point came from the "subtraction" approach proposed by Yangyuan's marketing team: although Yangyuan had the very good implication of "nourishing the foundation," and had accumulated brand value through years of marketing operations, it also had insurmountable drawbacks: brand aging, difficulty in achieving more efficient connection with target consumer groups in brand communication and appeal, and using limited resources to do too many items not only failed to achieve marketing synergy but also made it difficult to achieve sales breakthroughs. Therefore, they proposed a product line reduction strategy, with walnut milk as the leading product, significantly reducing the product line to no more than 10 main items, and concentrating all marketing resources on the advantageous leading products. Yangyuan Six Walnuts mainly promotes walnut protein drinks, with walnut milk as the core product, based on differentiation, to build a strong walnut milk brand with distinct personality.
With the intensification of industry competition, more and more enterprises realize the importance of brand building. In the face of tight budgets, an overly long product line consumes a lot of marketing resources, and in the red ocean market, the marginal benefit of these market investments is very low, often wasting a lot of manpower and materials, missing market opportunities, affecting product sales, and being no different from burning money.
In the era of highly segmented food and beverage markets, focus is a feasible way to open market gaps at low cost; otherwise, new products will find it difficult to find a market entry point. For example, Yangyuan early on reduced its product line, launched Six Walnuts to innovate the walnut drink category, focused on the market to find a blue ocean, focused on third- and fourth-tier markets to refine the brand's core value of "brain health," and through channel focus formed the current sales of 3 billion yuan in target markets. This shows that for small and medium-sized enterprises, sometimes product focus strategy is more suitable than multi-item operations.
It is worth noting that focused promotion must conform to product characteristics and meet sales needs; one cannot blindly pursue focus and market segmentation while ignoring market capacity. As a plant-based protein drink, walnut drinks have always been one of the mainstream beverage categories in China, especially after the 2008 dairy crisis, when market capacity increased significantly, becoming one of the important factors for Six Walnuts' continued market success.
Move 3: Category Victory – Leveraging Innovation
The dairy crisis of that year gave plant-based protein drinks an excellent development opportunity. The long-standing stagnation of plant-based protein drinks can largely be attributed to manufacturers' positioning issues. From a nutritional value perspective, plant protein is indeed slightly inferior to animal protein. Obviously, manufacturers are well aware of this, so they have all avoided the word "nutrition" in positioning to prevent direct confrontation with milk. Therefore, Lulu and Yeshu both chose the functional positioning of "beauty and skincare," but taking a different path can easily lead astray. After 2008, when consumers' demand for plant protein nutrition suddenly increased, a huge gap formed between the already solidified brand image and consumer expectations. Coupled with their failure to adjust product positioning in time, they inevitably missed the "ticket" to this season's industry feast. Six Walnuts, however, seized the opportunity in this market upgrade.
On the other hand, Six Walnuts' brand and market positioning at the time of launch was also well considered. The foundation of category victory must be based on concrete indicators such as precise market space research, product R&D strength, commercial innovation thinking, and accurate control of consumer market trends, not just a hollow slogan.
According to the law of mind accepting new categories, occupying the first attribute of a category is the best way to position a new beverage category. For example, walnuts have many recognized functions in daily life—brain health, stomach health, blood enrichment, lung moistening, and spirit nourishment. Research found that "brain health" is the most broad-spectrum and deep-rooted, so Six Walnuts defined "brain health" as the first attribute of walnut milk.
Six Walnuts' "walnut milk" belongs to the plant-based protein drink category, but in the broader customer mind, there is a recognition of the first attribute of "walnuts for brain health." A walnut milk drink made from walnuts naturally inherits the functional recognition of walnuts. And because the raw material is walnuts, there is an implicit association with brain health benefits, but no brand had clearly and explicitly articulated this. Previously, walnut milk was always a plant-based protein flavored drink with insufficient reasons for choice, and there were many substitutable drinks, such as other plant-based protein drinks: almond dew, coconut juice, and peanut dew. When positioned as a brain health drink, Six Walnuts successfully jumped out of the plant protein mold, occupied the first attribute of walnut milk, and approached the beverage category with unique brain health functional associations.
Move 4: Third- and Fourth-Tier Market Fine-Tuned Co-Selling – Gift Positioning
As a strong product with billions in sales, Six Walnuts' largest sales do not come from first- and second-tier markets but from third- and fourth-tier markets. "Six Walnuts' sales model in county-level and below markets provides many insights for similar enterprises and is worth learning from."
Third- and fourth-tier markets are not key markets for many large-scale beverage companies. On one hand, product positioning needs to match the market environment; on the other hand, companies need to persistently invest manpower and materials to cultivate this market. Yangyuan has done well in both aspects. On one hand, Six Walnuts' "gift" positioning suits the consumption trend in rural markets. In Henan and Hebei, it is customary for relatives and friends to bring gifts when visiting. In the past, it was instant noodles; now that living conditions have improved, gifts have upgraded, and giving nutritious, higher-priced Six Walnuts is more dignified. In a county in Hebei, the annual sales of Six Walnuts in that county alone exceed 10 million yuan...
Yangyuan's base is Hengshui, with Hebei Province as its home base, rolling out to surrounding provinces within 500 kilometers step by step. It maximizes penetration of surrounding markets, builds a base for survival, then implements rolling replication of the marketing model, steadily and meticulously cultivating, ultimately forming a large-scale market advantage. In 2011, Six Walnuts' total sales in Hebei were around 1 billion yuan, mostly from county-level markets.
To maximize the market effectiveness of limited marketing resources, it is necessary to select the most active key markets for focused investment. The most valuable prefecture, county, and township markets are selected as strategic markets for meticulous cultivation, aiming to create a batch of model markets, then use points to drive the whole area, seeking regional strength. "If you go to Six Walnuts' key markets, you will find that small shops there often recommend Six Walnuts first, and the product displays are well done. This shows that Six Walnuts' channel profit margins are relatively high, which can boost the sales enthusiasm of terminal small shops, and Six Walnuts' co-selling management in the market is very good."
In market strategy, Six Walnuts adopts a "surround the point and hit the circle" approach. First, define a center: a region starts with the urban area, a county market starts with the county seat, and a township market starts with the township streets. Then, first capture the leader consumer group. It first carries out community promotion and campus promotion. After the promotion, consumers have awareness, and then it starts distribution. Its distribution is basically explosive; once the "point" is established, it starts "smashing" with great force. Generally, enterprises do market "top-down," distributing from wholesale departments to retail shops, but it is like "flooding," with high density and deep penetration done very well.
In rural markets, it mainly focuses on campus promotion at the township level. "Township focuses on campuses, county focuses on communities." Its rural promotion completely uses the way to move parents. During the 2011 Spring Festival, it promoted the gift channel; its marketing strategy is very flexible. In summary, it is the two-area promotion model: "campus as the guide, community as the foundation." In schools, it does tasting; children go home and tell parents, and parents buy.
Move 5: Reverse Pricing – Channel Profit Margins
Pricing for FMCG is an eternal topic. The price system of hot-selling products includes factors such as product value, positioning orientation, market acceptability, consumer psychological sensitivity, differentiated competition, primary and secondary product segmentation, and matching with the consumption environment. A one-sided low-price strategy is not the decisive factor in winning the market; the product price strategy is not about high or low but about precision. From a marketing perspective, if a follow-up pricing strategy is adopted, using the same price strategy as competitors will cause direct market conflict, easily alerting competitors and triggering strong counterattacks, creating many obstacles and resistance for marketing. If you can successfully avoid direct conflict with competitors through pricing strategy, you may catch opponents off guard and successfully occupy the market high ground.
Because walnuts are more expensive than almonds, and as a brain health drink, logically it should be priced higher than other plant-based protein drinks. Therefore, Six Walnuts' pricing is higher than typical protein drinks. The retail price of a whole box of Six Walnuts is more than 5 yuan higher than the market leader brand. Such a high price is not only a guarantee of product quality and efficacy but also a direct marketing weapon for brand grade association. Of course, this high pricing strategy also leaves sufficient operational space for the channel. "Currently, Lulu's distributor profit is one or two yuan per box, and terminal profit is two or three yuan; Six Walnuts' distributor profit is five or six yuan per box, and terminal profit can reach seven or eight yuan. Which product do you think channel merchants and sales points are more enthusiastic about operating?"
Currently, the whole box price of Six Walnuts is more than 5 yuan higher than Lulu. From the market reaction since its launch, this high-price strategy has not only not affected market promotion but has further shaped the brand's high-quality image and established the product's market position.
Unlike bottled water, plant-based protein drinks have high virtual value and are marketing-driven products, so a parity pricing strategy may not be suitable for such products. In mature markets with high brand concentration, once new product prices and concept appeals approach or exceed those of strong brands, they often face strong suppression and terminal interception from competitors in overlapping markets. For plant-based protein drinks, competition is relatively insufficient, and new products have some premium pricing space. Six Walnuts chose a "high-price strategy," which not only matches its "gift product" positioning, giving consumers a full sense of product value, but also allows it to invest in the market with higher channel profits than competitors, supplemented by market co-selling, thereby smoothly controlling the terminal network.
Move 6: Channel Management – Execution is Competitiveness
At the beginning of Six Walnuts' launch, its main channels were not traditional circulation channels but catering channels such as hotels and restaurants. This was not Six Walnuts' ideal operating channel; to some extent, it was "forced." At that time in Hebei, Lulu was the undisputed industry leader, with an unshakable say in traditional channels like supermarkets and wholesale departments. As a rising star, Six Walnuts found it difficult to break through on Lulu's turf. Coincidentally, most of Six Walnuts' sales team came from Hengshui Laobaigan, with rich experience in catering channel operations. Six Walnuts began to use hotel sales channels for distribution, focusing on catering channels for promotion and guiding consumers. As a result, restaurants sold very well, and consumers went to wholesale departments and supermarkets to buy, thereby driving channel merchants to stock up. Meticulously cultivating and patiently nurturing non-traditional channels like restaurants and hotels, and reversely driving the sales enthusiasm of traditional channel distributors, is a sales model commonly used by many small and medium-sized enterprises, with both successful and failed cases. In the end, Six Walnuts' success also had some "luck" factor."
But marketing experts believe that "luck" in the marketing field is closely related to how enterprises "act" in sales management. The good manufacturer-dealer relationship formed between Six Walnuts and its distributors ensures the product's sales heat. Six Walnuts proposed a "star-assisted sales" service model, assisting distributors in distribution, customer maintenance, terminal visualization construction, and other work. At the same time, the company regularly trains distributors, guiding them in internal management such as personnel, warehousing, and store operations, improving distributors' business level from both concept and method. Coupled with high rebate rates, it greatly stimulated distributors' enthusiasm.
Football star Beckenbauer once said: "Luck is also part of strength." This is the same as the common saying "Opportunity only favors those who are prepared." Many people say Six Walnuts' marketing routine is very conventional; whether it is product concept, market strategy, network construction, or promotional methods, it is all standard, with no major differentiation compared to current marketing routines. But what is valuable is the diligent performance of the company's sales team in the front-line market. Returning to the essence of marketing, execution is the most important link. No matter how good the strategy, planning, or means, without the guarantee of execution, it is all castles in the air. Therefore, Six Walnuts' success is not just due to luck but is a reward for its meticulous market cultivation.
II. Six Walnuts in the Eyes of Distributors
"Star-Assisted Sales Model" Helps Distributors
In terms of manufacturer-dealer relations, Six Walnuts proposed a "star-assisted sales" service model, playing the role of a meticulous "nanny," assisting distributors in distribution, customer maintenance, terminal visualization construction, and other work. The company regularly trains distributors, guiding them in internal management such as personnel, warehousing, and store operations, improving distributors' business level from both concept and method. Six Walnuts also proposed a "zero-risk operation" commitment. Through team assistance, it ensures effective distribution of goods, reduces distributor inventory pressure, and eliminates distributors' concerns about "goods not selling after stocking." In addition, it established a strict return and exchange guarantee mechanism, proposing "unconditional" return and exchange operations. These measures greatly stimulated distributors' enthusiasm, and distributors' loyalty to Six Walnuts has grown deeper.
Product Appeal Catering to Consumer Needs
As the "king of dried fruits," walnuts have long been recognized for their nutritional and brain health value. With a universal consumption base, there is basically no need for consumer awareness cultivation. The brain health function of walnuts cannot be replaced by milk, and its acceptance is clearly higher than other plant proteins like almonds and coconuts. As for Six Walnuts, the product has a wide range of applicability and is a neutral product. Its taste has no audience restrictions; men, women, old, and young can all drink it. Currently, a box of ordinary Six Walnuts on the market costs around 60 yuan, which is within the acceptable range for consumers. Because of its wide audience, Six Walnuts is also consumed as a family product in a large proportion; many citizens buy it by the box. At the same time, the advertising slogan "Use your brain often, drink more Six Walnuts" hits the mark for parents, students, and urban white-collar workers, driving the enduring gift craze for Six Walnuts.
Channel Control Implemented
The market boom of Six Walnuts is inseparable from Yangyuan's market protection. It is reported that Yangyuan has a strict fine system, resolutely prohibiting cross-region sales among distributors. Once discovered, goods are confiscated and fines are imposed as a warning. At the same time, if a distributor has serious cross-region sales, Yangyuan will immediately revoke the distributor's agency qualification. Moreover, Six Walnuts has a complete price system, including guide price, shipment price, and retail price; distributors cannot change product prices at will. Otherwise, they will also be severely punished. Strict market protection and an orderly price system ensure that distributors seriously work their own regions without chaos. Furthermore, Six Walnuts provides relatively large profit margins for distributors at all levels; the profit per box is usually between 8 and 9 yuan, which greatly stimulates distributors' enthusiasm.
Reversely Driving Channel Enthusiasm
Yangyuan's unique marketing also opened the way for Six Walnuts' rapid rise. Initially, Yangyuan did not sell beverages through circulation channels. Instead, leveraging the hotel channel sales experience of Hengshui Laobaigan, Six Walnuts meticulously cultivated and patiently nurtured non-traditional channels like restaurants and hotels, reversely driving the sales enthusiasm of traditional channel distributors. At the same time, Six Walnuts put great effort into advertising planning and product promotion. In August 2010, Yangyuan made a heavy move, spending tens of millions of yuan to sign with CCTV, and together with Phoenix TV host Chen Luyu, launched a new advertisement, starting Six Walnuts' advertising campaign on CCTV, sounding the general call to march from regional to national markets, and sales began to grow day by day. According to statistics, in 2011, Six Walnuts' sales growth rate exceeded 100%, becoming the industry leader with over 70% market share in walnut-type beverages.
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