2017 has passed halfway, and during this half year, many major events have occurred in the FMCG industry. Today, the editor will review the top 10 industry events of this half year:
- Wahaha and Yili Race to Deploy Unmanned Convenience Stores On June 25, Wahaha, the leader in the beverage industry, signed a 3-year 100,000 units, 10-year 1 million units TakeGo unmanned store agreement with Shenlan Technology, a leading enterprise in AI retail. The cooperation with Wahaha includes two aspects: First, the full integration of the "Kuaimao Payment System" into Wahaha's existing and future self-service vending machine systems. According to data, Wahaha will deploy self-service vending machines at a pace of "100,000 units in 3 years, 1 million units in 10 years," with a total investment of 2 billion yuan. Second, Wahaha will pilot the Take Go unmanned smart convenience store customized version based on the Kuaimao system. It is reported that Wahaha is currently selecting five locations (a total of 5 stores) in Hangzhou for pilot placement, each with an area of 30-40 square meters. This is also one of Wahaha's key tasks for the second half of 2017. Not only Wahaha, the big brother of the beverage circle, is interested in unmanned convenience stores, but dairy giant Yili is equally "ambitious." It is understood that Yili plans to promote unmanned convenience micro-stores launched in cooperation with Shenlan Technology in more than 2,000 communities, directly entering the community consumption circle closest to consumers (at the bottom of high-rise residential buildings and within residential areas). There are two sizes according to demand: the large one is dozens of square meters, and the small one can only accommodate a family of three. Currently, Yili has piloted in three communities in Shanghai.
Comment: Famous marketing expert Tan Changchun: Unmanned convenience stores should have broad development space. Although the process may be fraught with various factors and problems, they indeed solve two fatal problems of convenience stores: one is rent, and the other is labor. If these two problems are improved, it is a good and worthwhile new thing to develop! Of course, we should not rush in all at once, because the big brother - vending machines - has developed in China for so many years, and it has only recently started to improve. As for issues such as restocking, damage and theft, and the need for emotional interaction to trigger purchases, these should be gradually solved through technology and management and cannot become reasons to hinder the development of unmanned convenience stores. Wahaha's philosophy is "channel is king," so promoting vending machines and unmanned convenience stores is reasonable. The advantage is its years of channel experience accumulation with distributors; it is now also looking for channel breakthroughs, sales growth points, and further mobile internet transformation and upgrading. The disadvantage is that traditional industries and traditional people doing mobile internet have no experience to draw on and lack talent, which can easily lead to poor actual results or even failure. As for the goal, it is still to occupy channels, just like the popular saying of seizing traffic.
- Master Kong Sells Factories Following Coca-Cola's sale of its bottling business to Swire and COFCO, Master Kong is also following suit... The Ministry of Commerce document shows: Zhangzhou Yilaifu Food Co., Ltd. acquired five Master Kong factories including Jiangmen Dingjin under Master Kong. Master Kong responded that this move is to activate company assets and improve return on assets. However, industry insiders analyze that the moves by Coca-Cola and Master Kong are related to beverage trends and boosting performance. The tea, juice, and carbonated beverage factories that Master Kong intends to sell, like the bottling businesses previously sold by Coca-Cola, are being affected by consumers' health needs. The China Quality Association previously released the "2016 Beverage Industry Satisfaction Survey," showing that health, personalization, and functionality are the mainstream demands of consumers for beverages.
Comment: FMCG industry expert Song Liang: First, the entire food and FMCG industry is facing operational performance issues. In this situation, selling assets to reduce investment risks is becoming a choice for some companies. At the same time, regulatory thresholds have been rising in recent years, and some companies are also starting to reduce investment amounts to cope with policy risks. From the perspective of the entire beverage market, the market is becoming saturated, which is also affecting corporate strategies. Some companies are beginning to consider selling some fixed assets to accelerate product upgrades and adjustments. In short, the industry is currently facing two challenges: one is overcapacity, and the other is insufficient supply of new products. In this situation, the industry is providing more professional products in line with the direction of great health. In addition, the rapid development of cross-border e-commerce is also a factor prompting these companies to shrink their production bases in China. With the rapid development of cross-border e-commerce, many products produced overseas can quickly enter the Chinese market through cross-border e-commerce.
Dali Foods Suffers Short Selling On June 7, Dan David, founder of short-selling institution F.G. Alpha Management (hereinafter referred to as F.G. Alpha), stated that he would short Dali Foods on the Hong Kong stock market. After the news spread, Dali Foods' stock price plunged, closing at HK$4.3 on the same day, a drop of 6.52%. In response to the short-selling incident, Dali Foods issued a clarification announcement on June 8, responding to each accusation from FG Alpha Management and stating that it may take legal measures to protect its rights. Currently, Daliyuan's net profit margin can reach over 15%, compared to Uni-President and Master Kong, whose net profit margins are only 5%-6%, a difference of 10% from Daliyuan. The unusually high net profit margin has also raised market doubts: why is Daliyuan's net profit margin much higher than competitors when they all make snacks and beverages? This is also the point questioned by the short-selling institution above.
Salt Reform Half-Year Assessment
The "Salt Industry System Reform Plan" announced by the State Council was officially implemented on January 1 this year. The salt reform has been in place for half a year. What changes have occurred in the salt market, known as "the first taste on the tip of the tongue"? On January 1 this year, the "Salt Industry System Reform Plan" announced by the State Council was officially implemented, and the "Measures for the Administration of Salt Prices" was abolished. Before the reform, salt production enterprises could only sell salt to salt wholesale enterprises. After the reform, production enterprises, as true market entities, can establish their own brands and prices. Provincial-level salt wholesale enterprises can operate across provinces, and sub-provincial salt wholesale enterprises can operate within their own provinces. A salt salesperson expressed firm support for the reform in an interview. According to him, the average price for salt companies to purchase salt is 400-500 yuan per ton, and the cost of iodization is only 20-25 yuan per ton, but the average wholesale price for salt companies is 1500-2000 yuan per ton, with a price difference of up to 4 times in the entire wholesale and sales process. "Why is there such a big difference between production costs and terminal sales prices? Because they are the only ones who decide." The significance of the reform is actually to moderately open up competition, encourage salt enterprises to become better and stronger, provide higher-quality salt for the people, and facilitate the "going out" of China's salt. In the future, China's salt reform still has a long way to go. According to a survey report released by the China Salt Industry Association, as of June 25, 2014, among the salt regulatory agencies in 31 provinces, autonomous regions, and municipalities across the country, 9 had separated government functions from enterprise management, accounting for 29%; 22 had integrated government and enterprise functions, accounting for 71%. This model of being both referee and athlete, on the one hand, makes the regulatory nature of the Salt Bureau unclear, and the fairness and independence of supervision are also affected; on the other hand, it makes the development of salt companies as enterprises face conflicting goals, making it difficult to improve efficiency. Even after the reform, it is necessary to prevent salt companies from "changing signs" and directly merging into new regulatory agencies. Therefore, government-enterprise reform and improving the salt regulatory mechanism are very necessary.
Three Squirrels Rushes to IPO Financial data shows that Three Squirrels achieved revenue of 4.423 billion yuan in 2016, a year-on-year increase of 116.47%, and net profit of 237 million yuan, a year-on-year surge of 2535%. Such a report card is enough to astonish many peers in the industry, but behind it also hides many risks. With "impressive" results, Three Squirrels released its initial public offering (IPO) prospectus application draft on the Shenzhen Stock Exchange on April 21, planning to issue no less than 40 million shares on the ChiNext board, accounting for 10% of the total share capital after issuance. Analyzing Three Squirrels' strategies:
Integrate the supply chain. Use the internet to improve process efficiency. Its gross margin is much lower than offline supermarkets, but product freshness is higher while ensuring profitability.
Mine data value. Build a cloud production line and cloud central evaluation system to solve food industry pain points using data, including developing spicy strip hit products based on Taobao consumer data.
IP-ization. Not only make Three Squirrels a brand, but also create brand culture. From the Tmall flagship store page experience, the box opener in the express package, to calling consumers "master," it pays great attention to consumers' emotional needs and shopping experience.
Deep understanding of Alibaba's ecosystem. In using Taobao traffic to quickly scale up, it is more ruthless, accurate, and stable than many entrepreneurs.
Online and offline imagination. Three Squirrels originally planned to play with experience and interaction in offline stores, but because of the brand and 38 million online user data, a 300-square-meter store in Wuhu reportedly has a monthly sales per square meter of 8,000 yuan, which is fully profitable. This gave Zhang Liaoyuan the idea to open more offline stores.
Wahaha "Falls from Grace" In 2017, information about the decline of the Wahaha empire is everywhere, and the spit from various "heroes" is enough to drown Grandpa Zong, but upon closer inspection, most of the spit is about problems found, with few solutions offered. Unlike the media collectively singing the blues about Wahaha, Zong Qinghou seems not too anxious. Not long ago, Zong Qinghou said in an interview with the Economic Daily, "2016 was not too good, but it was passable. Last year our profit was about 5 billion yuan, which is still okay compared to other companies." However, in recent years, Wahaha has indeed encountered transformation bottlenecks: an objective fact is that after years of development in the beverage industry, the top five beverage companies occupy 60% of the national market share, making it difficult for any company to achieve rapid development. As for the issue of consumption upgrading, Zong Qinghou also has a clear understanding and is making improvements. In addition, the negative impact of online rumors has not only adversely affected the entire industry but also caused incalculable losses to Wahaha. Under consumption upgrading, consumer concepts have changed dramatically, the main consumer group is changing, and packaging and brands are being tested by the market. However, Zong Qinghou has also optimistically stated that although performance has declined, there is no major problem in rebounding again. "I have a good mentality. When encountering difficulties and setbacks, I just get through them." Recently, Zong Qinghou secretly met with Liu Qiangdong and signed an unmanned store plan, showing his determination to catch up. The low-key old entrepreneur may not care about external rumors. Reality is cruel, and the market is always unpredictable. Wahaha may face even greater challenges in the future. For this reason, we should give Zong Qinghou more understanding and not let the "botulinum toxin" rumor incident happen again. For the revival of China's real economy and Wahaha, we need some time. 2017 is the 30th anniversary of Wahaha. As a leading enterprise in the beverage industry, Wahaha is also time to make new explorations and set an example for the upgrading and leapfrogging of Chinese brands. Today, Wahaha is still one of the overlords in China's FMCG industry, and its operational level and strength are still at the forefront of the industry. Let us look forward to this giant taking small steps and running fast.
Red Bull Trademark Dispute Resurfaces China Red Bull's 20-year trademark authorization from Thailand's TCP Group expired at the end of 2016. Whether it can be renewed is unknown. Although Huabin Group has launched a series of "de-Red Bull" measures such as increasing the promotion of Warrior and Capri-Sun, the market performance of these products is not satisfactory. At present, Huabin Group cares most about the renewal of the Red Bull trademark authorization. After obtaining the trademark authorization from Thai Red Bull, Huabin Group spent 20 years turning the short, fat, gold-can Red Bull into a super single product with annual sales of 20 billion yuan and occupying more than 70% of the domestic functional beverage market. However, with the expiration of the trademark authorization, competitors have come one after another. The biggest threat is Austrian Red Bull, which also obtained Thai Red Bull authorization. This company contributed most of Red Bull's classic advertisements in the extreme sports field, but in the Chinese market, it has been suppressed by gold-can Red Bull and cannot turn over. Currently, China Red Bull officials are unwilling to comment on the progress of trademark authorization. Industry insiders point out that the negotiation between Huabin and Thai Red Bull will have a result by July at the latest. This also means that the life-and-death crisis of China Red Bull's trademark will be resolved in July. During the turbulent period, China Red Bull has lowered its sales target, adjusting the total sales target for 2017 to strive for 20 billion yuan. This figure is 2 billion yuan less than China Red Bull's 2016 sales performance of 22.18 billion yuan.
Sparkling Water Becomes Popular Sparkling water has been in China for more than 20 years. This niche category, which originally only existed among high-end consumers, has gradually entered the mass consumption field with the wave of consumption upgrading in China. Since 2013, sales of sparkling water have almost doubled. According to Euromonitor data, from 2010 to 2012, sparkling water sales in the Chinese market remained at about 100,000 liters, while from 2013 to 2015, the figures were 200,000, 500,000, and 800,000 liters respectively. Euromonitor predicts that by 2020, sparkling water sales in China are expected to reach 2.1 million liters, with an average annual compound growth rate of over 20%. After more than 20 years of accumulation in the Chinese market, sparkling water has finally ushered in its explosive day. In 2014, the market size of China's sparkling water industry was 1.42 billion yuan, and in 2016, it reached 2.64 billion yuan, with rapid growth. ACNielsen retail data shows that in 2015 and 2016, China's sparkling water market maintained a growth rate of over 20% per year despite the overall consumer goods growth downturn. In the coming years, the market size of China's sparkling water industry will continue to maintain rapid growth. Data shows that by 2022, the market size of China's sparkling water industry will reach 17.45 billion yuan, with broad development prospects. Although sparkling water has begun to become popular, we must admit that Chinese ordinary consumers still have limited awareness of categories such as natural sparkling water and artificial soda water. As a category within high-end water, sparkling water still has a lot of room for growth. Chinese consumers have already accepted many things that did not exist in their lives before, such as coffee and red wine, so for sparkling water, we also have enough patience and confidence.
Uni-President Reduces Inventory Uni-President Chairman Lo Chih-hsien announced at the beginning of 2017 that Uni-President will boldly implement a zero-inventory strategy, not requiring shipment growth in 2017, with the key being to reduce inventory and increase profits. Zero inventory generally has two situations: one is to put as much inventory as possible into distributors and terminals, so that Uni-President itself does not accumulate inventory and achieves zero inventory. The second is to reduce inventory at the manufacturer, distributor, and terminal levels, reducing inventory in the circulation process, thereby improving inventory turnover. If Uni-President wants to promote zero inventory, it must first face the problem of coordination between production and sales. The so-called supply chain is the entire process from raw materials to production, production to circulation, and circulation to terminals. If any link in the middle has problems, other links will be affected. In the circulation link, because terminal demand is difficult to accurately predict, production and circulation must have safety stock; otherwise, terminals are prone to stockouts, and the damage to shopping experience caused by stockouts of best-selling products is difficult to compensate. In addition to possible production and stockout issues, it must also face distributor training and team collaboration issues, especially in the Uni-President Group, where both mainland and Taiwan have changed leadership at the same time, and with major adjustments in teams and distributors, the specific implementation will be more complex.
Comment: Teacher Liu Chunxiong: If "zero inventory" can really be achieved, it means sales are very healthy. It has three effects: first, the funds occupied by channels are greatly reduced; second, the freshness of goods is greatly increased, which is in line with our concept of freshness marketing and indirectly reduces the return and exchange rate. It should be noted that in recent years, the return and exchange rate has squeezed profits very prominently, accounting for several percentage points; third, channel profits will greatly increase, indirectly enhancing channel confidence. "Zero inventory" is a goal to pursue, not necessarily true zero inventory, but the "channel process reengineering" carried out around the pursuit of "zero inventory" is the real essence of changing corporate marketing. If "zero inventory" increases channel profits, it will undoubtedly play a strong role in promoting Uni-President's product structure adjustment.
- FMCG Companies Selling Off in Droves On January 11, 2017, Tibet Water Resources issued an announcement on the Hong Kong Stock Exchange, disclosing that the controlling shareholder Tibet Water Resources Co., Ltd. signed an agreement with Horgos Tianshan No.1 Industrial Investment Fund Partnership (Limited Partnership) on the same day. Horgos Tianshan No.1, which holds 18% of Tibet Water Resources' shares, will become the single largest shareholder of the company. On January 11, 2017, Heiniu Food issued an announcement stating that all food business assets had been transferred, with the acquirer being Shenzhen Heiniu Capital Management Co., Ltd. (hereinafter referred to as Heiniu Capital). According to the asset sale plan disclosed by Heiniu Food in July 2016, it sold 100% equity of Shantou Heiniu, 100% equity of Jieyang Heiniu, 100% equity of Anhui Heiniu, 100% equity of Guangzhou Heiniu, and 100% equity of Heiniu Marketing to Heiniu Capital, with a transaction price of 513 million yuan. On January 11, 2017, COFCO Wudao Food Co., Ltd. again listed for sale at a clearly marked price on the Beijing Equity Exchange with 100% equity and 53.67 million yuan of claims, with a transfer bottom price of 71.18 million yuan. On June 9, listed noodle company Keming Noodle Industry issued an announcement, confirming that it won the bid for 100% equity and 53.67947822 million yuan of claims of COFCO Natural Wudao Food Investment Co., Ltd. held by COFCO Wudao Food Co., Ltd. at a price of 52.28 million yuan, and the two parties signed the "Property Rights Transaction Contract." This price was also the listing bottom price for this round. According to this transaction, Keming Noodle Industry's acquisition of Wudao Food requires payment of nearly 106 million yuan including auction payment and debt. This price is almost the same as the price COFCO paid 8 years ago - in 2009, COFCO Group entered Wudao Food as a restructuring investor, acquiring 100% equity for 109 million yuan.
This article is compiled and edited by New Distribution**** -END-