---
title: "Want Want's Performance Slips: Revenue and Profit Both Decline in H1 2017, Brand Aging Cited as a Serious Issue"
description: "On August 22, China Want Want released its H1 2017 report, showing revenue of RMB 9.347 billion, down 3.7% year-on-year, and operating profit of RMB 2.054 billion, down 13.5%. The company attributed the decline to an earlier Chinese New Year and rising raw material costs, while facing challenges from brand aging and changing consumer preferences."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-08-22"
language: "en"
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# Want Want's Performance Slips: Revenue and Profit Both Decline in H1 2017, Brand Aging Cited as a Serious Issue

> On August 22, China Want Want released its H1 2017 report, showing revenue of RMB 9.347 billion, down 3.7% year-on-year, and operating profit of RMB 2.054 billion, down 13.5%. The company attributed the decline to an earlier Chinese New Year and rising raw material costs, while facing challenges from brand aging and changing consumer preferences.

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On August 22 at noon, China Want Want released its H1 2017 report. The report showed that in the first half of 2017, the group achieved revenue of RMB 9.347 billion (RMB, same below), a year-on-year decrease of 3.7%; gross profit of RMB 4.163 billion, a year-on-year decrease of 10.3%; and operating profit of RMB 2.054 billion, a year-on-year decrease of 13.5%.
Report Summary
 **Earlier Chinese New Year led to Q1 performance decline**
Regarding the decline in performance, the group stated that **the 2017 Chinese New Year was 11 days earlier than in 2016, causing a larger proportion of some Chinese New Year product-related performance to be recognized at the end of 2016 compared to the previous year, leading to a decline in Q1 performance compared to the same period last year** , but normal sales met management expectations.
 **Rising raw material prices led to a decline in gross margin**
Due to a significant increase in the prices of some bulk raw materials, the group's gross margin fell 3.3 percentage points from the same period in 2016, reaching 44.5%. Due to the decline in gross margin, the gross profit amount in H1 2017 decreased by 10.3% compared to the same period in 2016. However, prices of some raw materials and packaging materials have gradually fallen in Q1 2017. Management expects that if bulk raw material prices do not fluctuate sharply in H2, the gross margin is expected to remain stable.
 **Continuing the 2016 "Brand + Channel" marketing model**
During the reporting period, the group continued its 2016 channel differentiation strategy, creating a "Brand + Channel" marketing model, launching customized and differentiated products for different channels to closely meet the needs of consumers in different channels, while effectively avoiding potential conflicts between channels.
 **Multi-brand strategy to meet different consumer needs**
In response to increasingly distinct demand differences among consumer groups due to region, age, and consumption habits, the group strengthened its multi-brand strategy. Brands such as "Hot Kid", "Want Want", "Happy", "Black Skin", and "Baby Mama" developed targeted marketing strategies and interactive activities with consumers based on the characteristics of their target customer groups.
Category Performance
In H1 2017, Want Want's snack food revenue was RMB 2.84 billion, down 3.5% from the same period last year, and gross margin also fell 4.2 percentage points to 44%. Among them, ice products, jelly, and candy remained the main categories.
Want Want's dairy and beverage revenue was RMB 4.531 billion, down 3.1% from the same period last year, with gross margin also falling 3.1 percentage points to 47.3%. Among them, the star product Want Want Milk performed relatively steadily, with Q1 revenue significantly higher than the same period last year, but it still faces competitive risks from market upgrades and the presence of ambient yogurt.
Rice cracker products' overall revenue was RMB 1.954 billion, down 5.7% from the same period last year. Among them, gift pack products saw a sharp decline of nearly 30%. The aging of gift pack products is evident, becoming a "hot potato" that troubles Want Want's distributors.
It is worth noting that Want Want's rice cracker sales fell 5.7%, and management has a negative outlook for H2 because the 2018 Lunar New Year is later.
Revenue and Profit Continue to Decline
In fact, China Want Want has fallen into a three-year consecutive decline in performance. If calculated from 2013, China Want Want's revenue has cumulatively decreased by about 16.6%, and its market value has shrunk by over HK$100 billion. The H1 2017 report shows no turning point yet. Fortunately, Want Want's cost control is ideal, with the sales and administrative expense ratio only slightly increasing by 0.4 percentage points, and 20% of its market value is cash flow, so brokers have rated it as "performance in line with expectations".
Why is this happening? If interpreted from marketing and product perspectives, Want Want's problems are common to many companies, and the underlying development trends require our thought and attention.
## **Would you still buy Want Want snacks now?**
If financial reports and revenue seem far from consumers, then let's ask a few simple questions:
  *  _How long has it been since you drank Want Want Milk or ate Want Want Snow Rice Crackers?_
  *  _Would you buy Want Want snacks for your children now?_
For people born in the 80s and 90s, Want Want should be a childhood memory for many.
China Want Want originated in Yilan, Taiwan, and is one of the earliest Taiwanese companies to register a trademark in mainland China. As a household food brand, Want Want once created countless market miracles and enjoyed a period of great success.
Traditionally, Want Want Group has three main product lines:
The first is rice crackers, such as Want Want Snow Rice Crackers and Want Want Fresh Scallops;
The second is dairy and beverages, such as Want Want Milk and O-Pao;
The third is snack foods, such as Hot Kid Little Mantou, QQ Candy, Crushed Ice, and Lang Xian Wei.
Relevant data shows that in 2006, rice crackers, puffed food, and potato chips accounted for 21.5%, 37.2%, and 41.3% of total sales in China's snack food market, respectively, while China Want Want's rice cracker products once held a 68.6% market share.
By 2013, according to Want Want's annual report, China Want Want achieved revenue of $3.817 billion, a year-on-year increase of 13.7%; profit attributable to equity holders was $687 million, a year-on-year increase of 24.1%. This was also the peak of China Want Want's performance in recent years.
However, after the peak, it gradually declined. When the generation that grew up eating Want Want truly grew up, the new generation of consumers had too many choices and were less enthusiastic about Want Want.
## **All old brands, but strategies not updated**
As mentioned earlier, Want Want is not the only FMCG brand with declining performance. Companies like Uni-President, Master Kong, and Wahaha are also in the same boat, and even FMCG giants like Procter & Gamble face challenges.
These brands have long histories, most over 20 years, some even over 100 years, but their brand marketing positioning and strategies have remained almost unchanged for 10 years.
Ten years ago, people could only obtain information through TV ads, newspapers, magazines, and portals. Whoever mastered these channels' advertising resources and capabilities could dominate the market. FMCG brands were naturally among the biggest advertisers in these media.
Like Want Want, we inadvertently recall its catchy ads from those days. The repetitive, simple, and exaggerated ads seemed silly and cringe-worthy, but they were very effective in making their audience—children and mothers—remember them, so their influence was strong.
▲ Once "If you look again, I'll drink you" attracted countless fans
But now, how many children are glued to TV? In the mobile era, attention has been fragmented across various screens. Brands facing a mid-life crisis need to do three things in marketing:
**Brand rejuvenation; Product IP-ification; Mobile promotion.**
Unfortunately, Want Want has not achieved this. Although it actively promotes on e-commerce platforms like Tmall and Suning, this is only the initial stage.
In mobile marketing, the best similar brand is "Weilong", and we have previously analyzed the success of Weilong's marketing.
## **Tasty but unhealthy no longer keeps up with the times**
Besides marketing, Want Want has also "aged" in terms of products. From a product structure perspective, it fails to keep up with changes in consumer demand.
As mentioned earlier, Want Want's products mainly consist of three categories. If we objectively evaluate whether Want Want's food tastes good, as a childhood memory for many born in the 80s and 90s, honestly, it's quite tasty; but if we evaluate whether it's healthy and nutritious, I believe everyone would shake their heads.
This is also an important reason why Want Want's products are not selling well now. Young parents nowadays rarely buy such snacks for their children, as consumer demand has risen to levels of organic, fresh, nutritious, and healthy.
This is precisely the product philosophy that Want Want lacks. More critically, Want Want lacks product innovation and seems not to truly recognize this consumption upgrade.
## **New products are just old wine in new bottles**
Why do I say that? Want Want has actually launched many new products:
>  _·For example, the rice cracker series added new categories like "Black Skin", "Aiyo", "Nadoli", and "Spicy Man";_
>
>  _·Snack foods added Heiniu, fried beans, spicy peanuts, etc.;_
>
>  _·It also made some bold attempts, launching plum wine, oatmeal porridge, and instant noodles._
We can see that Want Want's product structure is just old wine in new bottles. The products it develops are mainly puffed food and candy, which cannot cater to consumers' changing health needs.
Of course, Want Want has also tried to enter the yogurt, lactic acid bacteria, and milk powder fields, but because it entered too late, it cannot compete with professional dairy companies.
▲ Source: Pinstu.com "New Quality Life · Quality Era" 2016 Consumption Upgrade White Paper丨People's needs for "food" in 2006 and 2016 are vastly different
Undoubtedly, a healthy lifestyle is increasingly popular. **When per capita GDP exceeds $5,000, it triggers a big health demand, and naturally also triggers the big health industry. Smart companies will strive to keep up with such trends.**
  * For example, in the beverage industry, carbonated and fruit-flavored drinks are sluggish, but lactic acid, herbal, low-sugar, and functional drinks are rising.
  * In the catering industry, fast-food giants like McDonald's and KFC are troubled, but niche light-food brands like "Haose Salon" are popular among young consumers.
  * In the baijiu industry, the concept of "healthy baijiu" has emerged, with products like Hongmao medicinal liquor, Moutai health liquor, and Maopu tartary buckwheat wine, dazzling consumers.
In short, consumer preferences are changing, and the information channels they follow are also changing. We might ask ourselves: Can our companies predict, identify, or keep up with these changes? What can we do to remain standing amid change?
**This article is compiled and edited by New Distribution**
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