---
title: "Want Want Bids Farewell to the 'Blockbuster Era': Why the Decline and How to Break Through?"
description: "Want Want's star product, Want Want Milk, has suffered a setback amid market changes. With the market becoming increasingly competitive, how can Want Want Milk survive? Where is the next blockbuster opportunity for Want Want? The myth will eventually be broken, as China Want Want (00151.HK) has seen its blockbuster product Want Want Milk decline for two and a half consecutive years. According to China Want Want's 2016 interim report, revenue from dairy and beverages in the first half of 2016 was RMB 4.6763 billion, down 18.5% from the same period in 2015. The main product, Want Want Milk, which accounts for about 90% of dairy and beverage revenue, saw its revenue decline 17.4% year-on-year."
author: "无冕财经"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-01-22"
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# Want Want Bids Farewell to the 'Blockbuster Era': Why the Decline and How to Break Through?

> Want Want's star product, Want Want Milk, has suffered a setback amid market changes. With the market becoming increasingly competitive, how can Want Want Milk survive? Where is the next blockbuster opportunity for Want Want? The myth will eventually be broken, as China Want Want (00151.HK) has seen its blockbuster product Want Want Milk decline for two and a half consecutive years. According to China Want Want's 2016 interim report, revenue from dairy and beverages in the first half of 2016 was RMB 4.6763 billion, down 18.5% from the same period in 2015. The main product, Want Want Milk, which accounts for about 90% of dairy and beverage revenue, saw its revenue decline 17.4% year-on-year.

Want Want Milk, as the star product of Want Want, has encountered a "Waterloo" amid market changes. The market is turbulent; how can Want Want Milk survive? Where is the next blockbuster opportunity for Want Want?

The myth will eventually be broken: China Want Want (00151.HK) has seen its blockbuster product Want Want Milk decline for two and a half consecutive years.

According to China Want Want's 2016 interim report, in the first half of 2016, revenue from dairy and beverages was RMB 4.6763 billion, down 18.5% from the first half of 2015. The main product, Want Want Milk, which accounts for about 90% of dairy and beverage revenue, saw its revenue decline 17.4% year-on-year. A rough estimate puts Want Want Milk's revenue at RMB 4.3 billion in the first half of 2016.

▲ Revenue situation of dairy and beverages in "Want Want China 2016 Interim Report".

**Well-known marketing expert Lu Shengzhen told Wumian Finance: "The era of Want Want Milk's 'one standout' is gone forever. The concepts of one era differ greatly from another—consumer base and consumer psychology are completely different. Moreover, Want Want Milk is a substitutable product, falling into the category of 'common goods.' Consumers tend to be fickle with such products, so to capture the market, constant change is necessary. Want Want's development of new products to counter the decline of Want Want Milk shows a loss of confidence in it. However, if new products follow the old marketing model, failure is inevitable. In terms of marketing and product innovation, as it stands, this is the weakness of Want Want's management team."**

**Why has the blockbuster product declined for years?**

In the first half of 2016, China Want Want's total revenue was RMB 9.7095 billion, down 12.8% from the same period in 2015; gross profit was RMB 4.6405 billion, down 1.9% from the same period in 2015. In 2015, revenue was USD 1.544 billion; if the decline continues in 2016, it is highly likely to fall below RMB 10 billion.

▲ Main revenue items in "Want Want China 2016 Interim Report".

Business is like sailing against the current; if you don't advance, you retreat. If you keep retreating, other brands will quickly surpass you, such as Mengniu. Wumian Finance learned from official sources that in 2016, Telunsu broke the RMB 10 billion mark.

Among China Want Want's three main business segments, dairy and beverages accounted for 48.2%, with revenue of RMB 4.676 billion, down 18.5% from the first half of 2015; rice crackers saw slight growth, while leisure food declined 11.1%.

For the decline in dairy and beverages, the interim report explained that it was due to weak overall industry growth, leading to intensified competition. Additionally, emerging segments like ambient yogurt diverted some consumer demand from children's flavored milk. The main product, Want Want Milk, which accounts for about 90% of dairy and beverage revenue, saw its revenue decline 17.4% year-on-year, and this is not the first decline for Want Want Milk.

Want Want Milk is the largest-selling single product of China Want Want, with annual sales once exceeding RMB 10 billion, creating a myth of a single dairy product exceeding RMB 10 billion.

▲ Want Want Milk on supermarket shelves.

Regarding the reasons for the decline, China Want Want explained that due to the weak macro environment, the overall growth of China's dairy industry has been sluggish, and distributor inventory pressure has increased, accelerating promotional competition for inventory clearance. Although Want Want Milk has not lost market share in the children's flavored milk segment, consumers' attention has partially shifted to new segments like ambient yogurt, causing an overall significant decline in China's children's flavored milk revenue.

Since 2014, the decline of Want Want Milk has not been halted. In 2014, not only did overall performance decline, but Want Want Milk's revenue was USD 1.785 billion (approximately RMB 11 billion at the time), down 0.8% year-on-year—the first decline in 18 years. In 2015, Want Want Milk's revenue was USD 1.544 billion, down 13.5%, exceeding the rate of the company's overall revenue decline.

As a super blockbuster product, if Want Want Milk declines too rapidly, it will inevitably cause fluctuations in the company's stock price and other aspects.

**Competition leads to an increase in substitutes**

Lu Shengzhen believes that with the deep development of milk, the market has further segmented milk products, with more categories (including yogurt, fruit milk, and milk beverages), leading to a decline in sales of single milk products. **Now large dairy companies are extending across the board into ambient milk, low-temperature milk, and beverages. The overall market coverage of multi-line dairy brands has suppressed and divided Want Want Milk's market, which is the direct cause of the decline.**

In addition, Want Want Milk's packaging is aging, and its product image has not been continuously upgraded over the years. Want Want Milk is mostly reconstituted milk, which is out of step with the trend of people pursuing fresh milk products—now consumers are seeking freshness and nutrition, and reconstituted milk is labeled as safe but "not fresh," so more purchasing power is shifting to low-temperature pasteurized fresh milk. In this situation, Want Want Milk not only fails to attract new consumers but also loses old customers.

According to Wumian Finance, Want Want has long relied on its "old brand" reputation. Because people have a consistent impression and trust in Want Want products, for many years, whenever Want Want launched a new product, it didn't need much marketing; just placing it in supermarkets was enough to ensure sales.

Taiwanese entrepreneurs have rich experience in marketing and channel management, gaining an advantage before mainland companies grew. However, once their business concepts and methods were learned and surpassed by mainland companies, they faced siege from all sides and found it difficult to maintain their advantage.

▲ China's ambient yogurt market size (RMB 100 million) and growth rate statistics (source: China Industry Information Network).

**Hou Junwei, general manager of Shanghai Ruinong Enterprise Management Consulting Co., Ltd., believes that with the continuous launch of new products such as pasteurized fresh milk and low-temperature yogurt, the product range is extremely rich. Whether Want Want's concentrated launch of multiple products can develop depends on market development. If the market is growing rapidly and the pie is getting bigger, everyone develops together; if the total market shrinks and the pie shrinks, Want Want's new product strategy cannot reverse the decline.**

Regarding the diversification of new products, Want Want admitted that "the group currently has many product categories, and many past new products did not have the opportunity to develop well because of trying to attend to everything."

**Is launching new products a good remedy?**

To turn the situation around, Want Want set its transformation direction at the end of 2014 and vigorously promoted reforms in 2015. In addition to Want Want Milk, China Want Want has begun to enter the yogurt, lactic acid bacteria, and milk powder fields.

The 2016 interim report stated that for the dairy and beverage category, the group plans to successively launch lactic acid bacteria drinks, O-Pao and other milk beverages, as well as Youku milk suitable for children. Want Want hopes that through the launch and development of new products, it can improve the structure and price band of existing dairy and beverage products, driving the healthy development of the dairy and beverage category. However, this may further encroach on Want Want Milk's market.

▲ Want Want dairy and beverage series.

Not to mention that Want Want's new products may crowd out the blockbuster product, whether they can boost the company's performance is also a question.

Chen Yu, a dairy expert at the Ministry of Agriculture's Cadre Management College, told Wumian Finance: "A product's hot sales require marketing power and product power. For Want Want, promotion is its weakness. In recent years, its promotional efforts have been relatively weak. 'Good wine needs no bush' is outdated; in recent years, domestic FMCG marketing has seen various tactics, such as sponsoring shows like 'Dad, Where Are We Going?' and 'Super Boy.' Want Want still advertises mainly on traditional TV channels, which cannot keep up with the changing times. Even stable consumer products like cola are constantly updating their promotions, let alone Want Want.

Another important indicator is product power. For example, cola has always relied on its unique taste to gain market share; its irreplaceable taste is product power, but Want Want does not have corresponding product power. In this situation, promotion is indispensable. If marketing power cannot keep up, not only will sales decline, but it is also possible to completely lose the market."

China Want Want's 2015 interim report stated that quality and channels are fundamental, with little elaboration on promotion: "Want Want Milk has been the leader in the children's flavored milk segment for 18 years in mainland China." The company believes that only fresh shelf life, deep distribution channels, and flexible terminal displays can maintain a brand's growth healthily and long-term. **However, the industry believes that Want Want Milk's promotion is somewhat outdated, and compared with FMCG products like Mengniu, Yili, and even JDB, it is already old-fashioned.**

Mengniu and Yili are both growing rapidly, each with their own growing blockbuster products. According to expert analysis, product power and marketing power are key. Whether Want Want's new products have both capabilities and whether they can become blockbusters is also crucial.

Although Want Want is entering fields like ambient yogurt, these fields have already become red oceans. Chen Yu believes that where Want Want's next blockbuster opportunity lies is a problem that needs to be solved. With great difficulty in selling old products, developing new products is imperative. Only by developing a successful blockbuster product can Want Want possibly reverse its decline.

However, whether it can launch a product that replaces or partially replaces Want Want Milk, like WeChat did for QQ, involves many factors. Dairy products rely on visual appeal and constant changes in product flavor to cater to market changes. If there is no breakthrough in marketing power and product power, it can only achieve temporary success.

How Want Want Milk will proceed next, we will wait and see.

Source: Wumian Finance, Author: Li Zhiyuan @ Beijing

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