Click 'Read Original' for details. Why has Bright Dairy's ice cream nearly vanished from Shanghai this summer? And why is it still available at Hema? Source: Retail Boss Insider (ID: lslb168) Core Guide:

  1. What ups and downs have Chinese national brands experienced over the past 70 years?
  2. Why has Shanghai Bright Cold Drinks retreated on a large scale from the market?
  3. What is the relationship between Hema bringing vitality to Bright and new retail? Hema has grown big. Sometimes the convenience it brings to consumers is something even it didn't anticipate. Just like an offhand word of encouragement from you might suddenly enlighten a friend who has been puzzled for a long time. You might think you've done a trivial thing, but to others, it's like the clouds parting to reveal the sun. The greater the capability, the greater the responsibility. Individuals and companies with similar values won't hesitate to spread positive energy to those around them. Hema is no exception. This summer, Hema also provided an unexpected solution to a puzzle for Shanghai's time-honored food enterprise (Shanghai Yimin No.1 Food Factory Co., Ltd.) and its Bright cold drinks, as well as for Shanghai residents. While giants like Yili, Mengniu, and Walls monopolized the packaged ice cream channels, Shanghai residents found it hard to buy the city's iconic old-flavor ice cream—Bright brand cold drinks. Then Bright issued a notice telling everyone that Hema has always had them in stock. Why has Bright ice cream nearly disappeared from Shanghai this summer? And why is it specifically available at Hema? This is the "unintentional" result of Hema's buyer model, and the "natural" advantage of Hema's integrated online-offline operations. - 1 - The Commercial History Behind Shanghai Bright Shanghai Bright is a national brand, no doubt. You can also call it a Shanghai time-honored brand, a new national brand. This Shanghai-based food enterprise, with distinct Chinese development characteristics, once served as the nation's first brand for daily food supply over nearly 70 years. Especially in the late 1970s, in the two categories of milk and beer, Bright was known as the nation's first food brand, with slogans like "Drink milk, find Bright; drink beer, find Bright." Countless people's childhood memories: Shanghai Bright Pai ice brick In the era of the planned economy, the food industry was one of the representative industries that the central government designated for Shanghai as the leading light industry city. As a representative national brand, Bright experienced several major macro-environment changes in its first 50 years, including planned allocation, supply and marketing system reforms, and fiscal separation between central and local governments. Like many local brands in China, Shanghai Bright faced highly competitive markets after reform and opening up, with market-oriented enterprises and foreign companies. Under the leadership of its former chairman Wang Jiafen, Shanghai Bright persistently tried to maintain its competitive edge. However, given its ownership background and the highly market-oriented environment, coupled with the power of capital and brands, Shanghai Bright faced pressure from both Danone of France and the dairy advantages of Inner Mongolia. Over the past 20 years, Bright's market share gradually fell behind other brands. Bright Dairy & Food Co., Ltd. has strived to maintain its position as the third-largest dairy company nationwide, after the two Inner Mongolian brands. But Bright's cold drinks (ice cream) product line hasn't had it so easy. Although dairy and cold drinks are both part of the broader dairy industry, they differ essentially in product characteristics and channel management. Retail Boss Insider found that dairy products have more product tiers, huge consumption volumes, and more diverse consumption scenarios, with main channels covering large, medium, and small retail formats. Especially in large formats like Auchan and Carrefour hypermarkets, there are good retail price advantages. Within Bright, dairy remains the group's primary industry. Cold drinks are different. They are highly seasonal products, with sales channels biased toward convenience stores, mom-and-pop shops, and other small community formats. Stores require high storage conditions, needing year-round freezing. Walls and the two Inner Mongolian brands, leveraging capital advantages and the flexibility of market-oriented enterprises, exploited two characteristics of mom-and-pop shops—they can't afford freezers due to small capital, and their small spaces can't accommodate freezers—by offering freezers and umbrellas with ice cream purchases, an exclusive channel penetration that carved up the entire cold drink market. This is a common business strategy for FMCG companies and a common channel management strategy in the FMCG industry. Just look at JDB and GPHL in the herbal tea market; Wahaha and Nongfu Spring in the purified water market; Coca-Cola and Pepsi in the beverage market; P&G and Unilever in the personal care market... This is a reasonable result of free market competition. Such stories have played out countless times across various industries in China's 30-year commercial history. The most common channel for ice cream sales in China: community mom-and-pop shops However, people, and their desires and needs, are constantly changing. The post-80s generation is the first social group in China's 5,000-year history to be given a complete generational label. The completeness and scale of this generational label far exceed that of the "Lao San Jie" (the older generation who went to the countryside) who share the same age as the Republic, and the "92 faction" private entrepreneurs (like Ren Zhengfei, Liu Chuanzhi, Chen Dongsheng, Wang Shi) who went into business on a large scale. The post-80s were born and spent their childhood almost in sync with reform and opening up; their youth witnessed China's full transition to a market economy; their adulthood coincided with the global internet wave; their careers and marriages aligned with China's real estate boom, accelerated globalization, and consumption upgrade trends. The consumption upgrade wave that began in 2015 and continues today is essentially driven by the post-80s taking over household spending decisions and becoming the backbone of social consumption. In a sense, the post-80s have a significant and important influence on today's and future consumption trends, including cold drinks and ice cream, Shanghai Bright Dairy, and Hema Fresh. Because the post-80s are also the first generation in China to collectively taste and buy ice cream during childhood. - 2 - Why Did Hema and Bright Come Together? Ice cream has a devilish allure for children. Ice cream (including sugary foods), tobacco and alcohol, bags, and health supplements are the four divine items for Chinese people of all ages and genders, serving as the light of life and fire of life for many. If any new divine item joins, it must be mobile phones and shopping via mobile phones. This is related to Hema, and I'll elaborate later. Children love sweets. Ice cream, with its sweet, creamy, and icy texture, is simply the only spiritual sustenance for children on summer vacation, waiting by the fridge every day. Food has a lifelong memory effect on people. Many people's adolescent memories include not only visual and auditory but also strong gustatory and olfactory memories. According to Chen Danqing, people's stomachs have memories. Many Chinese people face two major inconveniences abroad: language and food. Retail Boss Insider believes that cold drinks and ice cream, like beer and soda, have distinct brand-added effects. Just like Shanghai Bright, even during the peak of the central planned economy, brands were a basic component of China's national light industry. The Bright brand was born in 1950, in the early days of the Republic. As mentioned above, the ice cream brand was entirely a product of local brands during the era of supply and marketing reforms and fiscal responsibility. Therefore, the post-80s, who now fully control social production and consumption, bring childhood stomach memories to brand memories of ice cream; and the local brand industry behind these brand memories connects the post-80s' memories of local brands with local culture. Simply put, Shanghainese regard Shanghai Bright ice cream as part of Shanghai's local cultural symbols. This organic relationship—from a food item, a lifestyle habit, to brand loyalty, and then to the defense and persistence of local culture—has frequently occurred in multiple fields across various regions in China. For example, the post-80s in Beijing are fervent supporters of Beibingyang soda, Yanjing Beer, Beijing Guo'an, and Beijing Shougang. Brands that form local cultural labels, for locals, rise to the level of "light of life, fire of life," and they persist in supporting brands from their childhood memories. Because of this, many local FMCG brands have enjoyed the dividends of changing times over the past decade, leveraging the commercial convenience of "new national brands" to revitalize their brand vitality. Shanghai Guanshengyuan's White Rabbit candy found new market growth opportunities, also due to these reasons. But ice cream is different. As mentioned above, its channel expansion in small shops, manufacturer subsidies for storage equipment (freezers), short-radius delivery (cold chain logistics limitations), and seasonal demand characteristics mean that local brands in this market don't have as much living space as one might imagine. Gradually disappearing from public view is likely the ultimate fate for many brands. Miraculously, Hema appeared. The geographical coincidence of Hema and Bright both being in Shanghai, combined with Hema's buyer model (no slotting fees for manufacturers) and its integrated online-offline business model, brought Bright and Hema together in a remarkable way. In fact, Bright has been in Hema for several years. Shanghai locals didn't notice before, but this year they paid special attention because Bright's presence in small shops outside Hema has been dwindling. So much so that locals had to ask Bright a "shocking" question through various channels: Where can we buy Bright ice bricks? Bright was also anxious! It quickly told everyone that Hema still has them. The image shows Bright's statement on July 21 about "unavailable products" Only then did Hema realize that its unintentional business approach had provided such an emergency convenience to a city's consumers, a city's brand, and local culture. The reason isn't surprising. The answer lies in Hema's buyer model and its integrated online-offline, nearby instant delivery. Ice cream as a food has strong randomness and urgency in purchase decisions and consumption requirements. In plain words, when you suddenly crave it, you want it immediately. This is why mom-and-pop shops, scattered in every corner of society, still hold the absolute share of the cold drink and ice cream market. Bright's appearance and popularity at Hema are due to: first, Hema doesn't charge Bright slotting fees (like small shops giving free freezers), giving Bright a chance to survive in channel expansion. And Hema's integrated online-offline short-radius instant delivery provides a channel transfer capability that even e-commerce channels (like Bright's Tmall flagship store) lack. Of course, Tmall Supermarket's one-hour delivery can now also take instant orders in Shanghai. From this perspective, today's Hema is increasingly like a local life services version of "omnipotent Taobao." Because this summer of 2018, the convenience story of Bright cold drinks at Hema in Shanghai can happen in any Chinese city—as long as Hema opens a store there. Many local brands and local manufacturers that cannot be easily e-commercialized and find it hard to survive in the context of consumption upgrades and intense competition may find a new lease on life in Hema, this new species. In this sense, behind the consumption upgrade driven by the post-80s, their preference for differentiated and personalized consumption will bring Hema and many brands like Bright repeated opportunities for cooperation in local lifestyles, local culture, and local economies. -END-