---
title: "Year-End Review | Top 10 Hot Events in the FMCG Industry in 2018"
description: "This article reviews the top 10 hot events in China's FMCG industry in 2018, including collective beer price hikes, the rumor crisis surrounding Yili's chairman, brands entering wechat business, major acquisitions in the coffee sector, strategic alliances, and industry layoffs."
author: "New Distribution"
publisher: "New Distribution"
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published: "2018-12-23"
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# Year-End Review | Top 10 Hot Events in the FMCG Industry in 2018

> This article reviews the top 10 hot events in China's FMCG industry in 2018, including collective beer price hikes, the rumor crisis surrounding Yili's chairman, brands entering wechat business, major acquisitions in the coffee sector, strategic alliances, and industry layoffs.

01 Collective Beer Price Hikes
In early January, Yanjing Beer, China Resources Snow Breweries, and Tsingtao Beer successively raised prices by 10%-20%. The price increases started in regions with concentrated sales and competitive advantages, or with advantageous products.
According to official price hike notices from major manufacturers, the increases were largely driven by rising raw material costs, labor costs, transportation expenses, and environmental taxes. However, according to New Distribution, behind the price hikes lies consumption upgrade, which is largely guided or even "ignited" by such moves.
**Commentary by Mr. Fang Gang, renowned beer marketing expert:**
1. What impact will this price hike have on terminals and distributors? Will it fundamentally affect market stability and structure?
Fang Gang: This price hike is not an action by a single company. Based on information received gradually, Snow, Tsingtao, Budweiser, Yanjing, etc., have all started raising prices. This is a collective action, even an industry-wide action, so the impact on terminals, distributors, and market stability should not be too significant.
2. Could this price hike lead to changes in the pattern of the five major beer companies?
Fang Gang: It is unlikely to change within 1-2 years, but the pattern after 3-5 years is hard to determine now. It is possible that the "Big Five" becomes the "Big Four," or the "Big Four" becomes the "Big Three." Regardless, industry concentration will further increase.
3. After the price hike, do small and medium-sized enterprises have a chance to stand out with differentiated, personalized beers?
Fang Gang: On one side are the large, strong companies; on the other are the small but beautiful ones. This market ecology will always exist. With the upgrading of consumer trends, personalized consumption is becoming more obvious. In the long run, niche beers that pursue individuality have great development opportunities.
02 Yili Chairman Pan Gang's "Disappearance Scandal"
> Timeline:
>
> On March 26, numerous online rumors spread articles claiming that "Yili Group's chairman was under investigation or had lost contact."
>
> On the evening of March 26, the Hohhot public security organ received reports from Yili and its chairman Pan Gang. In his written report, Pan Gang stated: "The false articles claiming I was taken away for investigation and 'lost contact' are pure fabrication and malicious defamation."
>
> On March 27, Yili issued its first announcement responding to the rumors, stating that six suspects had been controlled by police for suspected defamation.
>
> On the evening of April 9, Yili shares issued an announcement reiterating that Pan Gang was receiving treatment abroad for "congenital aortic coarctation." During treatment and recovery, Chairman Pan Gang continued to preside over the company's related work and fulfill his duties. The company's production and operations were normal.
>
> On April 30, a reporter connected with Pan Gang via video, and he said, 'During treatment, normal document approvals are done online, and important meetings are participated in via phone or video.'
>
> In early May, the Hohhot police stated that four suspects in the rumor incident, Guo, Su, Shi, and Hou, were arrested on suspicion of extortion.
>
> On May 31, Yili's 2017 annual shareholders' meeting was held in Hohhot. According to online videos, Pan Gang, who had been absent for a long time, appeared at the meeting. This was his formal appearance a month after his video "appearance" on April 30, and the "disappearance" rumor was thus debunked.
>
> On October 24, 2018, at 9:30 AM, the case of Zou Guangxiang and Liu Chengkun, suspected of picking quarrels and provoking trouble, was publicly sentenced in the First Court of the Huimin District People's Court in Hohhot, Inner Mongolia. The court sentenced Zou Guangxiang to one year in prison, suspended for one year and six months, and Liu Chengkun to eight months in prison. Both appealed in court.
>
> On the same day, Yili's official website published a long article publicly reporting former chairman Zheng Junhuai and his protectors.
**New Distribution Commentary:**
Since March this year, during the period when Chairman Pan Gang was "missing," Yili suffered greatly in the capital market, and the entire company was under pressure from public opinion. It wasn't until May 31, 2018, when Pan Gang returned to the public eye, that doubts dissipated.
As the saying goes, "tall trees catch much wind." Although rumors stop at the wise, for a company of Yili's magnitude, even a hint of rumor can be severely punished by the capital market, resulting in heavy losses. Now, the storm caused by the Yili rumor case has temporarily subsided. As for the case of former chairman Zheng Junhuai, Yili has published an open letter and submitted multiple materials to the central inspection team. We look forward to the day when the truth comes to light.
03 Major Brands Enter WeChat Business
On January 24, Mengniu's official WeChat announced the launch of the new product "Manran" fiber milkshake milk, targeting new retail and sold via WeChat business, marking Mengniu's official entry into WeChat business!
On April 27, domestic beverage giant Wahaha announced its entry into WeChat business and held a new product launch in Hangzhou. The product sold through WeChat channels is named "Tianyan Jingqing," a fermented milk beverage主打"缓解视疲劳" (relieving visual fatigue) effects.
On August 13, Dali Group's WeChat business project "Frota" entered platform internal testing. "Frota" is a fresh life project under Dali Group, and its first product, "Fuxiao Fresh Cake," was officially launched online on August 18. The product is priced at 59 yuan per box, with 30 small cakes per box and a shelf life of 30 days.
In September, Yili launched a new solid beverage, Xinshiji, entering the WeChat channel and the beauty and health industry. Currently, "Xinshiji" has two products: "Collagen Peptide" and "Yeast Beta-Glucan," targeting anti-aging and beauty, and immunity enhancement, respectively.
In the same month, Mengniu launched its second new retail product, Ningchun Collagen Peptide Crystal Extract, targeting beauty snacks! The product enhances immunity, beautifies, and anti-ages. It also brought in celebrity Ma Sichun as spokesperson and partner for comprehensive advertising.
In the same month, Haoxiangni launched a new product, Xindong Freeze-Dried Fancy Bird's Nest, entering WeChat business and laying out new retail!
......
**Appendix: A table of food companies entering WeChat business this year**
**Food companies entering WeChat business in 2018**
Company | Product | Category | Function
Mengniu | Manran | Milkshake drink | Weight loss
Mengniu | Collagen Peptide Crystal Extract | Drinkable beverage | Beauty and skincare
Yili | Xinshiji | Solid beverage | Beauty, anti-aging, immunity enhancement
Wahaha | Tianyan Jingqing | Beverage | Eye care
Wahaha | Xianxi Jiaren | Milkshake drink | Weight loss
Dali | Frota | Leisure bakery | Satiety
Panpan | Panpan Food | Leisure bakery | Satiety
Haoxiangni | Dongdong Freeze-Dried Fancy Bird's Nest | Red dates | Health
Junlebao | N1115 Probiotic Powder | Solid beverage | Health, wellness
New Hope | Kuairan | Beverage | Satiety, meal replacement, weight management
Wandashan | Fiber Milk | Beverage | Satiety, meal replacement
**New Distribution Commentary:**
With many food companies flocking to WeChat business, many industry insiders believe that WeChat business is definitely not the main channel for commerce, but it is more active in certain categories. High-coverage social e-commerce can generate huge sales, but the average sales per individual are not large. This is because the probability of direct monetization through communities is not high.
It is undeniable that some WeChat business products have achieved unexpected results, but major food companies should also pay attention to the problems behind them and think about how to solve these pain points, so that WeChat channels can truly become a supplement to traditional channels and achieve more benign development!
04 Nestlé Acquires Starbucks for $7.15 Billion, Coca-Cola Acquires Costa for $5.1 Billion
On Tuesday, August 28, US time, coffee giant Nestlé and Starbucks issued a joint statement on their official websites, stating that Nestlé would acquire Starbucks' retail coffee business for $7.15 billion. Nestlé would obtain permanent global marketing rights and be able to sell packaged consumer goods and other Starbucks products outside Starbucks stores.
On August 31, global beverage giant Coca-Cola Company announced a final agreement with UK coffee chain Costa to acquire Costa from its parent company Whitbread PLC for $5.1 billion.
**New Distribution Commentary:**
Coffee is an important and growing part of the global beverage business, but it is also a very fragmented business.
Some industry insiders say that Nestlé initiated the first wave of coffee, the second wave was Starbucks emphasizing offline experience, and now we are in the third wave. It hasn't reached its peak, and there is no absolute leader yet, but the trend is towards a more premium and segmented coffee market.
FMCG giants, on one hand, place great importance on using new retail for consumer operations, increasing customer acquisition and retention capabilities; on the other hand, they upgrade their existing product lines, attempting to enter full-category operations and have coverage in every market.
05 China Resources and Heineken Join Forces for Global Layout
On August 3, China Resources Beer announced that its controlling shareholder, China Resources Enterprise (Beer) Co., Ltd., would place 40% of its shares to Heineken Group for approximately HK$24.35 billion, while China Resources Enterprise, holding 60% of China Resources Beer, would purchase 0.9% of Heineken's equity for a total cash consideration of approximately EUR 463 million. After the transaction, Heineken Group would effectively obtain a 20.67% equity interest in China Resources Beer (Holdings) Co., Ltd. The two companies would form a strategic cooperation through share exchange.
On the morning of November 5, China Resources Beer announced that it had signed a share purchase master agreement with Heineken Group. According to the agreement, China Resources Beer (through its wholly-owned subsidiary, China Resources Snow Breweries) agreed to purchase, and Heineken International agreed to sell:
1. All equity of six companies established in China (collectively, the Heineken China Mainland Target Companies);
2. All issued share capital of Heineken Hong Kong Limited.
**Commentary by Mr. Fang Gang, renowned beer expert:**
Whether it is Heineken or Snow, from a competitive perspective, in the global market, the competitor is AB InBev. The enemy of my enemy is my friend. Moreover, China Resources Beer does not have ultra-premium brands, while Heineken does, but Heineken lacks scale in China. Therefore, their cooperation is complementary to a certain extent. It is natural for the two brands to come together.
From an industry perspective: As China's largest beer company by volume, China Resources Beer must lay out high-end products and optimize its product line. From the consumer side: Chinese consumers, especially young people, are very receptive to high-quality, high-priced products.
So this is a highly complementary cooperation. For China Resources Beer, it solves the problems of weak high-end offerings, lack of support in the double-digit price band, and internationalization (the last battle). For Snow, this is not just a domestic acquisition but an opportunity to potentially lay out globally. For Heineken, its long-term non-mainstream position in China may be reversed, and cooperation with China Resources Beer is a wise move. Heineken strategically gives up the Chinese market and forms a global layout through strategic alliance with Snow Beer!
06 Alibaba Invests RMB 1.2 Billion in Uboss, the First Unmanned Retail Stock
On November 19, Uboss Online, a NEEQ-listed company, announced that it had signed an investment intention agreement with Shanghai Yunxin Venture Capital. Shanghai Yunxin would invest a total of RMB 1.2 billion in the company through capital increase, with an investment price of RMB 9.5 per share. The investment was planned to be implemented after Uboss Online completed its delisting procedures from the NEEQ. If the capital increase succeeds, Shanghai Yunxin would become the company's second largest shareholder.
Shanghai Yunxin is a wholly-owned subsidiary of Alibaba's Ant Financial, established in 2014. The planned RMB 1.2 billion investment in Uboss Online is orchestrated by Alibaba. This shows that despite the cliff-like winter in the unmanned shelf industry, Alibaba, after investing in Xianbianli in June, has now invested in Uboss Online, the first stock in China's vending machine sector, fully demonstrating Alibaba's continued optimism about the new retail market.
**Commentary by Mr. Wang Jun, new retail industry expert:**
Alibaba's logic for heavily investing in Uboss is clear:
First, choose vertical leading companies, so Uboss, the first NEEQ-listed company in unmanned retail, announced the investment.
Second, meet retail scenario layout: We see that whether it is volume, scenario, or scale, the layout is sequential, simple, and clear.
Alibaba's layout for unmanned retail is not limited to this. Alibaba has incubated and invested in nearly a dozen unmanned retail projects internally, including those with underlying visual technology and operational types. Similarly, Tencent has also incubated and invested in a considerable number of projects in this field. Those with impressive data have not yet emerged. This is about track layout and competition in underlying retail new technologies.
This time, Alibaba successfully acquired Uboss to lay out unmanned retail, which will not only bring strong endorsement and digital empowerment to Uboss but also provide sufficient ammunition to help Uboss move towards its previous business plan dreams.
07 Community Group Buying Explodes, Raising RMB 4.5 Billion in 4 Months
"Taking real residential communities in second- and third-tier cities as units, establishing WeChat groups online, recruiting community moms, convenience store owners, and courier station managers as group leaders, publishing product pre-sale and group purchase information in WeChat groups. After users place orders, goods are delivered to the community, and users pick them up at offline pickup points, completing the entire transaction." The community group buying model exploded this year.
Community group buying has low customer acquisition costs and high repurchase rates, attracting many internet companies optimistic about its prospects. Since August, at least 15 community group buying companies have completed financing, with total financing of at least RMB 4.5 billion, more than the RMB 2.8 billion raised by unmanned shelves.
More and more traditional companies are also starting to sell products through group buying models.
**Commentary by Mr. Wang Jun, new retail industry expert:**
What capital sees is essentially a short-term traffic monetization routine, which fits the internet thinking of first staking out territory, then slowly making money. If you enter this track, you must have sufficient ammunition, sustain rapid development, and survive to the end.
Optimists believe this track is not only a viable path for fresh e-commerce but also has the opportunity to produce new large traffic e-commerce entrances.
From a supply chain perspective, combining stores to deeply cultivate regional markets and make profitable business seems more practical. After all, winter is coming, and cash flow is king.
Conservatives believe that stores combined with community group buying and self-pickup models more effectively implement the O2O home delivery concept.
Community e-commerce seems to be able to go well in both directions.
Because of its strong offline integration attributes and reliance on WeChat's decentralized platform, entrepreneurs in every city have the opportunity to participate. So a thousand-group war is inevitable and has already begun. Consumers, as always, are glued to their phones, but with more information in WeChat groups and another shopping option.
08 JDB's Second Entrepreneurship Amidst Turmoil
More than a year ago, JDB was plagued by troubles, causing this once legendary herbal tea leader in the FMCG market to lose its luster: Since 2017, factory shutdowns and layoffs have been reported, especially after suppliers CPMC and ORG Technology disclosed friction with JDB in listed company announcements, making JDB's predicament impossible to hide.
Facing the troubled JDB, newly appointed president Li Chunlin talked about many old matters without hesitation. On November 27, Li Chunlin admitted in an interview that JDB's second entrepreneurship goal is to promote the company's listing. Li Chunlin took over during the turmoil. Shortly after taking office in March, he proposed JDB's second entrepreneurship, increasing revenue and reducing expenditure, integrating advantageous resources, and successfully listing within three years.
On December 21, JDB officially announced that starting January 1, 2019, Mr. Wang Jinchang would be appointed chairman of JDB (China) Beverage Co., Ltd. and Kunlun Mountain Mineral Water Co., Ltd. Due to Wang Jinchang's COFCO background, this appointment is particularly meaningful. Whether Wang Jinchang can use his intelligence, experience, and connections to inject new momentum into JDB and accelerate the listing process is truly exciting!
**New Distribution Commentary:**
During the three-year "red can dispute," JDB briefly abandoned the red can packaging and switched to gold cans. In June 2018, JDB announced the restart of the red can and prepared for listing. However, due to trademark registration issues, it had disputes with CPMC and its can supplier ORG Technology. With lawsuits and frozen relations with all parties, whether JDB can successfully list within three years may still be questionable.
Returning to an entrepreneurial mindset, JDB may face more severe challenges than before.
09 Master Kong Founder Completes Second-Generation Handover
Wei Ying-chou's eldest son, Wei Hong-ming
On the evening of December 20, Master Kong Holdings announced that starting January 1, 2019: Founder Wei Ying-chou would resign as executive director and chairman of the board; "taking over" as chairman of Master Kong Holdings would be Wei Ying-chou's eldest son, Wei Hong-ming, who would also serve as a committee member. In addition, Wei Ying-chou's third son, Wei Hong-cheng, was appointed as an executive director.
**Commentary by Mr. Zhu Danpeng, Chinese food industry commentator:**
Wei Ying-chou did not announce his retirement on a whim; he had been planning for a long time. Looking at Master Kong's 10-year handover process, Wei Ying-chou's approach can be said to set a model for many Chinese private enterprises facing second-generation succession issues.
"Second-generation succession is definitely an important part of the development strategy of many private enterprises." From Master Kong's founder handover, Wei Ying-chou is very visionary and his forward-thinking is meticulous. In terms of corporate governance structure and top-level design, on one hand, he chose excellent professional managers as CEOs; on the other hand, he cultivated his children as internationally-minded composite talents, sending his sons abroad for further study and having them undergo training at the grassroots level within the company early on. Until today, ten years later, the handover was smooth and seamless, achieving the most ideal, healthiest, and lowest-risk transition for the company, which is the most ideal situation for consumers, shareholders, employees, and partners.
10 FMCG Industry Layoffs
Recently, an industry insider revealed to New Distribution that a well-known domestic FMCG company is about to implement a new round of layoffs, cutting half of its staff, amounting to tens of thousands of people. This surprised the author, who asked several former colleagues who had joined different FMCG companies, and they all said that companies in the industry have basically been trying various forms of staff reduction plans in the past two years.
In terms of form, mainstream companies have basically stopped recruiting new frontline employees and have adopted a natural attrition strategy, where vacant positions are not filled after employees leave voluntarily. Companies are gradually reducing costs through active or passive layoffs.
**New Distribution Commentary:**
Although we have trained for many years and developed deep distribution skills, the rules of this era have indeed changed. You can look down on WeChat business, not recognize B2B, and think these are not the "right way" for product distribution, but you cannot refuse to learn and understand them. Although terms like IP, scenario, community, traffic conversion, etc., are far from our work, you cannot ignore the first principles behind them.
In addition to learning, New Distribution suggests paying close attention to industry changes and actively participating in internal innovation projects, such as the new retail departments that companies have added in recent years.
Many bosses say that the only constant in their company is change. In fact, in this era, the only constant is change. For those of us in this era, if we don't want to be left behind, we should accept and participate in the changes of this era.
Source: This article is compiled and edited by New Distribution.
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