Click to read the original article for details The Mid-Autumn Festival is almost here, and COVID-19 cases are flaring up again. Some manufacturers have asked me for my views on operating during this year's Mid-Autumn Festival, which is usually a peak profit period. My personal view is: Looking at the pandemic situation abroad, in today's globalized world, small-scale outbreaks like this will not stop and will persist for a considerable time. All FMCG manufacturers should learn to operate under pandemic conditions, including during traditional festivals like the Mid-Autumn Festival and Chinese New Year. Here is my analysis. Overall, the control of this outbreak is optimistic Two charts from CCTV News suffice to illustrate this With nearly 30 days until the Mid-Autumn Festival, What if the outbreak continues to recur? First, according to CCTV News, the outbreak should be basically under control by early September. Except for specific regions, normal movement of people should not be restricted, meaning that business activities can likely proceed normally just before the Mid-Autumn Festival. But what if the outbreak continues to recur? 1. Economic Impact China's economic resilience is very strong. A pandemic can only slow things down, but its macro-level impact on China's economy is not too significant. The fundamentals will undoubtedly remain largely unaffected. Moreover, after the baptism of 2020, epidemic prevention and treatment methods have greatly improved, and lockdown periods are relatively short. Take Zhengzhou, for example (some areas are medium- or high-risk). Business venues related to people's livelihoods (supermarkets, convenience stores, vegetable markets, etc.) can still operate normally during lockdowns. For distributors, except for channels like restaurants, cinemas, and entertainment/social venues, everything else can function normally. Of course, due to restricted movement, sales in outdoor venues like those for ready-to-drink and ready-to-eat products will decline, but only for a short time. 2. Supply and Demand Impact The fundamentals of market supply and demand remain unchanged. From a macro perspective: FMCG products are inherently tied to people's livelihoods. In other words, eating and drinking are the first priority for survival. As long as population size and economic conditions do not change significantly, demand remains stable, and if demand is stable, production is fine. As long as the fundamentals remain unchanged, the pandemic's impact on the industry is only temporary. From a micro perspective: a. As pandemic prevention awareness becomes more ingrained, population mobility will gradually decrease, and product category demand will shift. For example, previously people might stroll around the streets, leading to higher demand for ice cream, cold drinks, mineral water, and other outdoor channel products. Now, with more time at home, demand for large bottles of water, tea, and other household consumer goods will increase. Overall, demand for grains, oils, rice, flour, fresh milk, condiments, and fruits and vegetables remains high; when going out is restricted, rigid demand for frozen foods (dumplings, tangyuan), convenience foods (instant noodles, ready-to-eat noodles), puffed snacks, fast-food meats, and packaged water is prominent. b. Gift demand for the Mid-Autumn Festival will decline. Previously, people visited a wide circle of friends and relatives; now they only visit close relatives, skipping more distant ones (and even if you visit, the other party may worry you're a source of infection). c. Demand for household cleaning products will increase. The awareness of disinfection and hygiene brought by the pandemic will persist. Household cleaning products with "disinfecting" and "antibacterial" functions will be the biggest growth point in the household cleaning market going forward. d. Demand for health products will increase. The pandemic has made people realize that a strong immune system is crucial for fighting viruses. Nutritional and health products will see counter-trend growth in 2020. 3. Channel Impact a. Hypermarkets and Supermarkets: From my experience, Zhengzhou was one of the hardest-hit areas in this outbreak. Communities were sealed off, with each household allowed one person to go out for two hours a day to buy groceries, and all online channels were shut down (logistics suspended). The local Dennis and Yonghui supermarkets remained open, and I clearly noticed an increase in customer numbers. Additionally, after last year's experience, hypermarkets have mature home delivery operations; some supermarkets stopped taking orders due to too many orders. b. Community Convenience Stores: Fresh produce is essential for daily life. Community convenience stores quickly adjusted their product mix, increasing fresh produce supply, highlighting their efficient operations and role as community hubs. Consumers' habit of shopping at neighborhood convenience stores will persist. The emotional bonds and community groups formed during special times will continue. Convenience stores will further enrich their category structure, increasing the proportion of fresh produce, vegetables, and ready-to-eat foods, driving sustained growth in this format. c. E-commerce Platforms: Last year's pandemic further boosted e-commerce, prompting more consumers to shift from offline to online shopping, especially increasing e-commerce penetration in lower-tier cities and strengthening online consumption habits. Now, with the continuous spread of the internet, e-commerce is already an important shopping channel for consumers. All manufacturers should accept it, or at least not reject it, and seek cooperation opportunities. d. Dining & Social Channels: Key epidemic prevention measures include reducing gatherings and parties, so dining and social channels (chess rooms, tea houses, cinemas/KTV) become very vulnerable. At the first sign of an outbreak, these channels are the first to be closed and the last to reopen. Summary: How should FMCG manufacturers operate for this year's Mid-Autumn Festival? First, I want to say: adjust your mindset. The old approach of relying on major holidays for gift sales must change. The days of "no business for a year, but one sale feeds you for a year" are gone. Treat FMCG business with a normal mindset and make comprehensive channel arrangements based on the above analysis, the sooner the better. Second, for Mid-Autumn Festival gifts, follow the 16-character policy: Produce according to demand, integrate production and sales, ship in batches, and treat rationally. Produce according to demand: Distributors are the first touchpoint of the market; they can understand local outbreak conditions and consumption potential. Distributors should submit their demand plans in stages, without coercion or overstocking, ensuring emergency preparedness. Integrate production and sales: Many companies have digital management tools. Stay informed of terminal sell-through in real time. Do not ship based solely on distributor requests; within the demand range, let sell-through determine production. Ship in batches: Demand reporting is the first step in production. Shipments should be made in batches to prevent product stagnation if there is a sudden outbreak in the distributor's operating area. Treat rationally: Do not blindly rush in with excitement, nor give up in despair. Follow the trend, leverage advantages, and avoid disadvantages. After this wave of the pandemic, what should FMCG manufacturers learn? 1. Re-emphasize the importance of hypermarkets Kantar Worldpanel has a specific metric called Shopper Reach Points (SRP), which measures a retailer's influence by multiplying the number of shoppers entering the store by their purchase frequency. According to Kantar Worldpanel data, the five largest FMCG retailers in China—RT-Mart, Yonghui, Walmart, China Resources Vanguard, and Carrefour—account for one-third of total shopper reach in the market. The data shows that these five retailers have far more purchase occasions than other retailers. Of course, these five physical retailers have faced significant competitive pressure in the past year, but for brand business, they remain crucial retail partners. 2. Accelerate the integration of online and offline From a development perspective, the retail market has evolved from pure e-commerce to community e-commerce, O2O models, B2B models, and now DTC (direct-to-consumer) models. These different models not only coexist but also develop well. For traditional manufacturers, especially those successful in traditional channels, embracing online layouts still carries some baggage. But the retail market has moved from the "era of independent online and offline development" to the "era of intense online-offline competition" and now to the "era of comprehensive online-offline integration." Coupled with the pandemic's impact and the penetration of internet thinking, consumer habits are changing. Manufacturers must quickly and inevitably learn to adapt and integrate into this transformation. 3. Value the O2O home delivery business The pandemic's catalytic effect on direct-to-home delivery is evident. Consumers' O2O shopping behavior will become more mature, and the categories they purchase will expand further. Look at two sets of data: a. From 2016 to 2020, the O2O home delivery market achieved a compound annual growth rate of 64%. The overall O2O market reached 2.6 trillion yuan in 2020, with home delivery accounting for 56%, or 1.4 trillion yuan. b. The target consumer profile: 70% female, 80% married, 53% with a bachelor's degree, 59% white-collar workers. These profiles clearly indicate high-net-worth individuals with absolute household purchasing decision power. These two sets of data fully demonstrate that the main consumer group is continuously driving the development of the home delivery format, and its influence will become more profound. For example, consider product experience. In the traditional model, experience requires manufacturers to purchase display positions (floor stacks, end caps, etc.), hire promoters, and conduct product trials within space constraints. With O2O home delivery, the intermediate steps can be saved, allowing brands to connect directly with consumers more efficiently. Final Thoughts: Returning to the main topic: How should FMCG manufacturers spend this year's Mid-Autumn Festival amid the pandemic? I think it's not just about this year's festival, but about how to face the normalized epidemic prevention and control in the future. How we avoid losses caused by the pandemic, and how we identify our shortcomings and improve our abilities to adapt to new things—that's what matters most. The strong never pity themselves; they empower themselves, and progress never stops. PS: From September 23-25, 2021, the 2021 (4th) China FMCG Conference, organized by New Distribution, will be held in Shanghai. Focusing on industry trends, practical cases, and growth connections, 3,000 FMCG practitioners will gather. The 11 thematic forums cover new consumption topics like Snack Era·Light Wellness, Small Categories·Big Bang, Gen Z·New Wine and Tea; new retail topics like Community E-commerce: Midfield? Endgame? Interpretation, Heavy Investment in Same-City Retail (O2O), Short Video and Livestream Selling; and new marketing topics like Digitalization, BC Integration, Martech, DTC and Private Traffic, Distribution B2B, and Big Distributors and Digital Distribution. Operators from various niche fields will bring the latest case studies. Confirmed heavyweight guests so far include: 1. Tao Shiquan, Founder of Jiangxiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company and former Vice President of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior Vice President of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, Vice President of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, E-commerce General Manager of Gold Hong Ye Paper Group... A grand gathering for FMCG professionals—you must be there! Are you "watching" me?