In an era of rapidly changing consumer trends, everyone is calling for innovation, desperately speeding up product launches for fear of being eliminated by the market. According to Nielsen's long-term market monitoring, over 20,000 new products emerge annually in China's FMCG market, contributing RMB 17 billion in sales and accounting for 46% of FMCG growth. Image source: FBIF Among the thousands of new products, only a few survive. Nielsen data shows that over the past decade, new products have had increasingly shorter lifespans, averaging less than 18 months, and FMCG companies worldwide have wasted over $4 billion on unsuccessful new products. Even so, food and beverage companies are undeterred in their enthusiasm for innovation; they remove products quickly, but launch new ones even faster. Take Nestlé China as an example: in 2017, it launched 34 new products; in 2018, that number doubled to 68. At the FBIF 2019 Food & Beverage Innovation Forum, Nestlé announced plans to incubate 170 new products in the Chinese market in 2019. The logic is simple: launching a hundred new products increases the chances of survival compared to launching just ten. In the past, the market was about big fish eating small fish, where the victor prevailed; in the internet age, it's about fast fish eating slow fish, where the "survivor" prevails—whoever launches new products quickly and keeps more alive wins. Thus, food and beverage companies face two challenges: First, how to accelerate new product R&D? Second, how to increase the survival rate of new products, even turning them into bestsellers? -01- Why Speed Up Product Launches? Why accelerate product launches? Because demand exceeds supply. This imbalance is not just about market stock but also about the pace of change. Existing categories cannot fully satisfy consumers; while brands rush to fill gaps, consumer needs shift again. 1. Rich Demand vs. Monotonous Market Chinese consumers have more money, so naturally their needs multiply. Over the past five years, per capita disposable income in China has grown at about 9% annually, higher than the US's 5%. With rapid income growth, purchasing power rises, but existing market categories cannot meet their needs. Image source: China Statistics Bureau Take dairy products: per capita consumption in China is only one-third of the world average, half of developing countries, and one-seventh of developed dairy nations, leaving huge room for growth. However, over the past decade, annual dairy consumption growth averaged only 0.8 kg, far below the 2 kg average of the previous decade. Why? The market's category structure is not diverse enough. Liquid milk accounted for 63% in 2018, but Tetra Pak data shows that from 2018 to 2021, China's liquid dairy growth was 2.2%, roughly on par with the global rate (1.8%), indicating slow development. To further tap into Chinese consumer spending, the market needs to satisfy more diverse needs. First, for liquid milk, consumers have varied demands: new middle class prefers premium milk, singles seek convenient meal replacement milk, and the elderly and children need fortified formula milk. We see many domestic dairy brands have launched relevant products, such as Mengniu's Deluxe M-Plus pure milk, high in protein for sports; and Hi Milk pure milk, zero-fat and positioned as premium. Second, beyond conventional liquid milk, brands can explore solid dairy products. For example, Milkground, which focuses on cheese business alongside liquid milk, saw revenue grow 24.8% year-on-year in 2018, with cheese business up 135.9%, and won the top sales spot in both Tmall and JD.com categories during the 2019 Double 11. Image source: Milkground Tmall flagship store 2. Changing Demand vs. Slow-Heating Market The changing composition of consumers also accelerates product iteration. Now, the main consumer groups are shifting from the 60s, 70s, and 80s generations to the new generation of 90s and 00s young consumers, who have entirely different consumption views. According to the "2018 China Internet Consumption Ecology Big Data Report" by CBNData, contemporary young consumers are willing to try new things, pursue new experiences, and value personalization. They prioritize interest, experience, and rational consumption. They "love trying new things and pursue individuality," and no longer "blindly trust" brands. Past universal products struggle to attract young consumers. It's clear that the changing consumer composition and consumption concepts make it difficult for a single product to cover most consumers' needs over a long period. Under the trend of segmentation and personalization, companies must accelerate product launches. -02- The "Product Launch War" in the Food Industry As the saying goes, "In martial arts, speed is the ultimate; as long as you launch fast enough, elimination can't catch up." In the food and beverage industry over the past two years, both leading enterprises and emerging small companies have shown their prowess in product launches. In new product R&D, we summarize the following three characteristics: 1. Leading companies are intensifying R&D efforts to respond more flexibly to the ever-changing market. For example, Nestlé, a global FMCG giant, has set up an innovation incubation team in China, the second market after the US to have such an incubator. The team must complete prototype design, development, and consumer testing within 4 days, then launch within 6-8 months. Before the incubator, each new product took 18-24 months from concept to launch. Nestlé (China) established an innovation incubation team. Image source: Nestlé China's dairy giant Yili frequently launches new products in the dairy sector: Ambrosial launched premium drinkable series flavors like "orange pulp + pineapple" and "kiwi + green grape pulp," and premium particle series "green orange + grapefruit + highland barley," and also partnered with Luckin Coffee to launch coffee-flavored yogurt, further enriching its product line. Amid the "milk tea for life" craze among young consumers, Weikezi launched cold-brewed milk tea and white chocolate matcha new products... 2. Brands are no longer confined to existing positioning; they step out of their comfort zones to enter untapped potential markets. Brands use new launches to test waters and seize potential markets. For example, Yili, which is expanding into the big health industry, is also trying to step out of its comfort zone with cross-category new products. In non-dairy business, Yili is gradually achieving a multi-category layout including plant protein drinks, functional drinks, lactic acid bacteria drinks, flavored drinks, bottled water, and coffee. According to Yili's 2019 interim report, new product sales accounted for 17.4% of revenue, up 2.6% from 2018. Over the past year, Yili launched Yiran milk mineral light drink, Shengruisi coffee, Yike live spring natural mineral water, and upgraded its Zhixuan brand to a plant nutrition brand, launching high-protein plant milk and two plant protein-based new products, completing its plant-based product matrix. Yili Yiran milk mineral light drink 3. Small brands focusing on niche categories or niche markets are also becoming a force to be reckoned with. More and more small brands are active in the market, with new launches as their main competitive strategy. For example, Genki Forest, a new brand founded in 2016, has launched sugar-free oolong tea Rancha, sugar-free sparkling water, and 0-sugar low-fat milk tea, seizing the sugar-free trend in the beverage red ocean, attracting market and consumer attention. Many of its bestsellers appear in popular Xiaohongshu posts. In just three years, Genki Forest's valuation reached 4 billion. Last Double 11, Genki Forest achieved the top sales in the beverage category across all online platforms, surpassing predecessors like Coca-Cola, Pepsi, and Daliyuan. Genki Forest. Image source: Suning There's also the "dark horse" in coffee, Three Squirrels (actually Saturday), founded in 2015, offering instant specialty coffee, drip coffee, and coffee accessories. After launching instant specialty coffee, it quickly became a bestseller due to innovative packaging, preserved flavor and aroma, and excellent solubility. During 2018 Double 11, Three Squirrels ranked first in domestic coffee brand category, and on Double 12, it became second in the entire coffee category (first was Nestlé). Last Double 11, Three Squirrels' transaction volume was ten times that of 2018 Double 11, surpassing Nestlé to become the top coffee brand. These rising stars are small and agile, using "small cakes" in the big market as entry points, capturing young groups seeking freshness, individuality, and segmentation. They also challenge big brands, pushing them to increase innovation and accelerate launches. -03- How to Fight the Product Launch Speed War? 1. Product Upgrade and Segmentation Consumer composition and needs are diverse and ever-changing. Product upgrades and innovation must continuously refine, based on the needs of specific groups, to tap new consumption power in the saturated market and form strong brand recognition. New product R&D can find a blue ocean in the red ocean of large categories, capturing new consumer groups with new sub-categories and achieving curve overtaking. Segmentation methods include two paths: (1) Vertical expansion, referring to extending into other categories; (2) Horizontal extension, referring to the differentiation of existing categories. Take dairy as an example: vertical expansion from basic white milk to premium white milk, from cow's milk to mare's milk, goat's milk, camel's milk, etc.; horizontal extension can start from nutritional components, functions, scenarios, such as organic milk, A2 milk, eye-care milk, sleep milk, breakfast milk, post-meal milk, and other sub-categories. 2. Omnichannel Approach E-commerce and new retail are developing rapidly in China. Consumers expect more convenient shopping experiences, wanting to "buy wherever I want." The current consumption context is no longer consumers finding products, but products actively finding consumers. Brands and consumers need to intersect in more places to achieve omnichannel dialogue. Multi-channel provides more options for new product launches, with relatively controllable trial-and-error costs and more timely communication between consumers and producers. Reduced trial-and-error costs, increased new product numbers, shortened market feedback cycles, and faster launch speeds create a more agile model between launch and optimization. How can brands play omnichannel well? First, determine the main channel based on product positioning. For example, low-temperature pure milk, due to storage constraints, mainly uses offline retail stores, while room-temperature yogurt can focus on online efforts. The omnichannel we talk about is not a hodgepodge of online and offline, but "focus on developing A while enriching B, C, D." We once discussed this with Zeng Ruilu, co-founder of Single Grain. He said Single Grain also made the mistake of "no focus," launching new products across all channels at once. In fact, some products are more suitable for certain channels, requiring higher investment and operational capability. Blindly laying out channels can blur brand positioning, disperse energy, and reduce efficiency. Second, brands need to develop multi-stage channel strategies based on new product characteristics and development stages. Take Zhong Xue Gao as an example: a 66-yuan "Ecuador Pink Diamond" ice cream sold 40 million yuan in one day during 2018 Double 11 (transition from autumn to winter). Behind this excellent marketing case is a multi-stage channel plan. Zhong Xue Gao "Ecuador Pink Diamond" ice cream. Image source: Zhong Xue Gao First, they entered Xiaohongshu, which focuses on community life sharing, because the tile-shaped design and aesthetic of Zhong Xue Gao ice cream are suitable for photo sharing. Second, through pop-up stores in high-traffic city landmarks or shopping malls, they made the product accessible to more consumers. Third, they settled on Tmall and became famous overnight with new flavors during Double 11. Now, Zhong Xue Gao is exploring new growth in WeChat mini-programs. 3. Technology Empowers New Product Launches Whether it's category segmentation or omnichannel layout, the fundamental question is: "How to reach consumers more precisely." Traditional "new launches" can no longer satisfy consumers. Aligning with demand, pushing "product creation" in reverse, and using demand to drive supply production has become a practical issue brands must face. The key is: how to find consumer needs. In fact, with the development of big data and AI, consumer behavior can be converted into data, inferring demand tendencies, thus enabling targeted new launches. Tmall launched the "TMIC New Product Digital System" last year, integrating incubator, management console, and knowledge base, shortening new product R&D time from 2 years to an average of 6 months. During the R&D process, it helps merchants complete the online and digital transformation of four steps: "opportunity mining, idea generation, concept validation, and trial sales iteration." -04- Summary: How to Launch New Products Quickly and Keep Them Alive? So, how to increase the survival rate of new products during rapid launches? We observed some brand cases in the market and summarized the following three points: 1. Have the Courage to Launch Decisively Trends are often uncertain. Many brands prefer to stand on the sidelines and wait until the first mover says "it's safe," then they rush in, often missing the best timing. Therefore, whether a company has the courage to step out of its comfort zone, respond quickly to market changes, and launch new categories and products in a timely manner requires determination from top to bottom. Fortunately, we see this courage in some leading Chinese companies, such as Yili and Nongfu Spring. In 2019, Nongfu Spring targeted different groups in the existing drinking water market while accelerating layout in other areas: In January, its classic brand Scream launched two sports new products, including green mango and white peach flavors; in March, it announced new packaging for Tea π, following young people's fashion trends; in April, it entered the yogurt market for the first time, launching plant-based yogurt, also the first truly plant-based yogurt in China; in May, it entered the coffee market for the first time, announcing the launch of carbonated coffee new product "Tan Bing"; in June, it entered the middle-aged and elderly drinking water segment, launching lithium-containing natural mineral water; in July, it launched refrigerated NFC juices, including apple, orange, and mango mixed juice; in September, targeting the medium-concentration juice market, it launched a new series of 50% Nongfu Orchard, upgrading juice content from 30% to 50%; in October, it launched a new series of Tan Bing RTD coffee, focusing on sugar-free/low-sugar, no flavoring, no preservatives, and topped the beverage category pre-sale list for 2019 Double 11; at the end of October, its Oriental Leaf launched a mini version, Oriental Little Leaf, focusing on winter warm drink series. Nongfu Spring Tan Bing launched a new series of ready-to-drink coffee. Image source: Nongfu Spring 2. Have the Patience to Wait for the Right Timing In the new product market, few become overnight successes; many sink like stones. Many brands launch too early and too hastily into markets where consumer levels haven't matured. On one hand, brands need an accurate judgment of the situation: what stage the category is in, what consumer needs are, to find the positioning of new products and launch at the right time for twice the result with half the effort. On the other hand, we believe that if it's gold, it will shine one day; if it aligns with consumption trend changes, it will eventually see its heyday. Brands need enough patience to wait for the timing to mature. For example, Kunlun Mountain entered the bottled water market in 2010 with a 4-yuan glacier water. After ten years, Baishuishan, which entered at 3 yuan, has exceeded 10 billion, while Kunlun Mountain is still around 1 billion. The reason is that it entered the 4-yuan market too early—at that time, even 3-yuan water wasn't widely promoted, creating a price gap. As the bottled water market grows and 3-yuan water becomes established, consumers expect higher-end options, and water at 4 yuan and above begins to take off. Kunlun Mountain, which stuck to the high-end market, is now the leader in the domestic high-end water category. Last June, Kunlun Mountain's sales grew 37.5% month-on-month, and during the 618 e-commerce festival, it ranked first in sales in the domestic high-end water category. 3. Have the Persistence to Keep Launching Is it enough to launch new products when you see a trend? Innovation is actually a strategic long-term battle. Brands maintain innovation vitality through continuous launches, prompting themselves to grow with consumers and explore models and structures that suit them and align with consumption trends. Once the growth environment is tuned, the overall survival rate of new products naturally improves. Dali has implemented a multi-brand strategy for thirty years, successively launching Dandan Pie (2002), Capico (2003), Haochidian (2004), Heqizheng (2007), Peanut Year Milk (2011), Lehu (2013), Doudouben (2017), and Meibeichen (2018). Image source: Baicai Youxuan After launching several major brands, Dali Foods did not stop launching new products. Instead, it continued to innovate on the basis of one product, forming product groups and further enriching the product structure. A single Capico brand has nearly 30 products. Currently, Dali has six major product categories, covering pastries, potato puffed foods, biscuits, herbal tea, compound protein drinks, and functional drinks, with over 720 single products and 107 beverage single products. Its product chain is broad and deep, earning it the nickname "China's Nestlé." In summary, products are tools for brands to communicate with consumers. Facing consumer growth and changes, both parties need new topics to consolidate relationships and grow together. Launching new products is an important tool for brands to maintain freshness. Behind product launches is a deeper innovation philosophy. Perhaps we should all "reflect on ourselves daily"—Do we have the courage to innovate? Do we have the patience to wait? Do we have the persistence to persevere? Source: FBIF Food & Beverage Innovation (ID: FoodInnovation) Tips will be paid 400-2000 yuan upon adoption.