As 2017 draws to a close, we are about to welcome the new year of 2018. In the FMCG industry, what impressive events occurred in 2017? Today, we have compiled the top ten "mosts" in China's FMCG industry for 2017 to share with our readers.

Most Daring

Uni-President Pushes Zero-Inventory Strategy, No Shipment Growth Required in 2017

Zero inventory generally refers to two situations: first, trying to place inventory with distributors and terminals as much as possible, so that Uni-President itself does not accumulate inventory, achieving zero inventory for itself. Second, reducing inventory at the manufacturer, distributor, and terminal levels, reducing inventory in the circulation chain, thereby improving inventory turnover.

In the view of analysts, Uni-President's "zero inventory" strategy may reduce circulation inventory, but it cannot achieve true zero inventory, "because the result of completely zero inventory is that terminals have no products to sell."

In fact, contradictions have already emerged.

A business staff member of Uni-President said: "The company shouts about clearing inventory, but at the same time requires sales growth. At the end of each month, when business staff see that sales targets are not met, they can't get performance bonuses, and they still have to push inventory, which is basically a vicious cycle."

"Nonsense," said a professional manager in the food and beverage industry. A small distributor in his region (a regional agent in the city) even asked him to help dispose of more than 10,000 cases of Xiao Ming Tong Xue inventory (with a market value of 500,000 yuan). "To achieve zero inventory?" he retorted.

In July this year, two production suspension notices related to Uni-President China Holdings Ltd. (hereinafter referred to as: Uni-President) circulated in the industry.

On June 29, Shijiazhuang Uni-President Co., Ltd. (hereinafter referred to as: Shijiazhuang Uni-President) welcomed another round of "holiday." The document showed that due to the company's strategic adjustment, Shijiazhuang Uni-President had been suspended from production since April 2017, and would continue its "holiday" from July 1 to August 31.

Another "holiday notice" issued on June 1 came from Xuzhou Uni-President Co., Ltd. (hereinafter referred to as: Xuzhou Uni-President). The document showed that from January 2017, the company had been suspended from production until May 31.

"Both holiday notices are reasonable arrangements made according to market demand and the need for product structure optimization, and they were legally issued and are authentic and effective, and have been filed with government departments." In response to these two "holiday notices," a relevant person in charge of Uni-President made such a response.

However, the person in charge did not respond to questions about the recent situation of Xuzhou Uni-President, whether other factories had suspended production, or whether the suspension was related to the "zero inventory" strategy.

Uni-President is clearly unwilling to dwell on the "zero inventory" issue, whether it is the brief mention in its annual report or the aforementioned person in charge's reluctance to discuss "zero inventory." Even whether the strategy is still being implemented this year has not been answered.

Comment:

Facing the complex and ever-changing market conditions, sticking to old rules is naturally not feasible. From this perspective, Uni-President can be considered a brave player. The "three new policies" Uni-President introduced in 2017 are "zero-based budgeting," "channel reform," and "merger of food and beverage." From a policy perspective, the core idea is to reduce costs, including operating costs and channel costs.

However, these seemingly all "positive" strategies, after being amplified layer by layer, have brought Uni-President not very favorable results. Some even consider them "just a beautiful vision."

It seems that the road to corporate reform is still long and arduous.

Most Failed

Zong Fuli's Attempt to Take Over China CANDY Ends in Failure

On March 31, news broke that Zong Fuli intended to buy China CANDY.

Regarding Zong Fuli's attempt to acquire China CANDY, external speculation mainly fell into two categories: preparing for Wahaha's listing and striking out on her own. However, regarding the first speculation, Wahaha Group had previously told the media that Zong Fuli's acquisition of China CANDY was her personal act and had nothing to do with the group company.

The second speculation is mainly because Zong Fuli has the ability to establish her own business.

According to data, Zong Fuli has more than ten years of experience in the food and beverage business. After returning from university, she began serving as deputy director of the management committee of Wahaha Xiaoshan No. 2 Base within less than a year, and four months later concurrently served as general manager of Hangzhou Wahaha Children's Clothing Co., Ltd. and Hangzhou Wahaha Kaqianna Daily Chemical Co., Ltd.

In 2010, Zong Fuli became president of Hangzhou Hongsheng Beverage Group Co., Ltd. Hangzhou Hongsheng Beverage Group undertakes one-third of Wahaha Group's product OEM processing business, and also focuses on food flavors, machinery molds, printing and packaging, and beverage production, with an annual turnover of about 5 billion yuan.

In 2016, Zong Fuli launched a new brand named after her English name Kelly—"Kellyone" personalized custom fruit and vegetable juice, and registered Ningbo Hongsheng Youpin E-commerce Co., Ltd. to operate it.

If the acquisition had been completed, whether injecting assets related to Wahaha or Zong Fuli's own business, China CANDY might have achieved a qualitative transformation.

Unexpectedly, on the evening of July 13, China CANDY, which had been the target of Zong Fuli's proposed takeover, announced the termination of the acquisition in a notice.

In the end, Zong Fuli could only post these words on her Weibo:

"Throughout the process, our company has strictly adhered to the responsibilities and obligations of the offeror, and fulfilled all acquisition matters with the utmost sincerity. For the company, this is a positive and constructive exploration, providing valuable experience for the company's future layout in related fields."

This may be the meaning of "a fall into a pit, a gain in your wit."

Comment:

Industry insiders believe that Zong Fuli may have been used in this backdoor listing attempt.

"The shareholders of China CANDY are suspected of being the main beneficiaries, laying out a plan through a series of capital operations, then introducing Zong Fuli as a concept to hype up and cash out at high prices. After cashing out, retail investors who took over at high prices were not very interested in the offer price, which was significantly discounted compared to the current price, leading to the failure of Zong Fuli's acquisition," revealed a relevant capital professional. "Zong Fuli intended to use China CANDY to establish her own business, but this mentality may have been exploited."

Compared with her previous "smooth sailing," this acquisition failure cost Zong Fuli dearly. Data shows that as of the close on July 13, Zong Fuli had only acquired 418 million shares of China CANDY, accounting for 26.03% of the company's issued shares. Since the 50% acquisition target was not reached, the transaction was declared invalid. In this acquisition, Zong Fuli's loss was not disclosed, and the outside world has no way of knowing. If we only look at the difference between the offer price of HK$0.3565 per share and the closing price of HK$0.165 on July 18, the loss is not small.

Whether this post-80s girl can break free from her labels and forge a new path still requires time and the market to provide answers.

Most Dominant

Mengniu Increases Stake in China Modern Dairy by 16.7% for HK$1.9 Billion

On January 5, Mengniu Dairy (02319.HK) and China Modern Dairy (01117.HK) jointly announced on the Stock Exchange that Mengniu Dairy planned to acquire 16.7% of China Modern Dairy's shares at HK$1.94 per share.

According to the announcement, Mengniu would acquire a 16.7% stake in China Modern Dairy from Success Dairy II (the seller) at HK$1.94 per share, with a total transaction amount of approximately HK$1.873 billion. After the transaction, Mengniu's stake would increase to 39.9% (37.7% on a fully diluted basis), and it would remain the largest single shareholder of China Modern Dairy.

Mengniu stated that the purpose of this acquisition was to strengthen Mengniu's positioning in the high-end dairy market and support the development of low-temperature dairy products.

In the view of dairy expert Song Liang, Mengniu's increased stake in China Modern Dairy is unrelated to the "milk shortage." He gave three reasons: first, to build a large-scale raw material base within the COFCO system, and what COFCO lacks most is dairy farming; second, Mengniu will focus on developing low-temperature dairy products represented by pasteurized milk, and China Modern Dairy is its best choice; third, with future milk prices rising, it is expected that China Modern Dairy's performance will improve, helping to boost stock market confidence.

Comment:

It is worth noting that after the transaction, Mengniu will help China Modern Dairy escape from the "betting agreement" with Success Dairy II.

On July 6, 2015, China Modern Dairy issued approximately 477 million shares to Success Dairy at HK$4 per share, acquiring an 82% stake in two joint venture pastures for a total of HK$1.91 billion. After the three-year lock-up period expires, if the value of Success Dairy's shares in China Modern Dairy is less than US$308 million, China Modern Dairy will pay the difference. The actual controller behind Success Dairy is KKR and CDH Investments.

In its first-half profit warning issued on July 13, 2016, China Modern Dairy stated that due to the decline in share price in the first half caused by market factors, it expected to pay 400 million yuan to Success Dairy. After this acquisition, Success Dairy II's stake in China Modern Dairy would drop to zero, and the "betting agreement" would also be terminated.

Most Patriotic

Lotte's Support for THAAD Deployment in South Korea Sparks Public Anger

On February 27, South Korea's Lotte Group held a board meeting and decided to transfer the land of the Seongju golf course to the South Korean Ministry of National Defense for the THAAD anti-missile system.

Since Lotte entered the Chinese market in 1994, its business scope has covered many fields such as food, retail, tourism, petrochemicals, construction, manufacturing, finance, and services. In April 2012, the group also established Lotte (China) Enterprise Management Co., Ltd. in Shanghai. As of December 2015, Lotte Group's various departments had conducted business in 24 provinces and municipalities directly under the central government in China.

Lotte has more than 100 supermarkets and 5 department stores in China, and is currently building factories and the Lotte World large shopping mall. The group's Lotte Duty Free store in Seoul is mainly aimed at Chinese tourists, with 70% of its sales coming from Chinese tourists.

Since the signing of the land swap agreement, some Chinese consumers and netizens initiated a boycott against South Korea's Lotte Group.

On September 14, affected by the deployment of the THAAD anti-missile system in South Korea, Lotte Mart's performance in China was dismal and unbearable, and it finally decided to sell its supermarkets in China and exit the Chinese market.

Comment:

National security is everyone's responsibility.

Since South Korea's Lotte has chosen to be an enemy of the Chinese people, we—all Chinese people—will also make our own choices.

From every move, from clothing, food, housing, and transportation, we will eliminate all traces of Lotte Group in our lives until the enemy cries and surrenders!

We will use actions to tell South Korea that on issues involving national security, we are by no means inferior to South Koreans, and our will is more resolute than Lotte's!

Most Technological

Food Giants Race to Deploy Unmanned Convenience Stores

On June 25, Wahaha, the leader in the beverage industry, signed an agreement with Shenlan Technology, a leading enterprise in the field of artificial intelligence in retail, for 100,000 TakeGo unmanned stores in 3 years and 1 million in 10 years.

The cooperation with Wahaha includes two aspects:

First, the "Kuaimei Payment System" will be fully integrated into Wahaha's existing and future planned vending machine systems. According to data, Wahaha will deploy vending machines at a pace of "100,000 in 3 years, 1 million in 10 years," with a total investment of 2 billion yuan.

Second, Wahaha will test the Take Go Wahaha customized version of unmanned smart convenience stores supported by the Kuaimei system. It is reported that Wahaha is currently selecting five locations in Hangzhou (a total of 5 stores) for pilot placement, with each store area ranging from 30 to 40 square meters. This is also one of Wahaha's key tasks for the second half of 2017.

Not only Wahaha, the big brother of the beverage circle, is interested in unmanned convenience stores, but dairy giant Yili is equally "ambitious."

It is understood that Yili plans to promote unmanned convenience micro-stores launched in cooperation with Shenlan Technology in more than 2,000 communities, directly bringing its own products into the community consumption circle closest to consumers (under high-rise residential buildings and within residential areas). According to demand, there are two sizes: large ones of several dozen square meters, and small ones that can only accommodate a family of three. Currently, Yili is piloting in three communities in Shanghai.

Comment:

Unmanned convenience stores should have broad development space. Although the process may be full of various factors and problems, they do solve two fatal problems of convenience stores: one is rent, and the other is labor. If these two problems are improved, it is a good and worthwhile new thing to develop! Of course, we should not rush in all at once. After all, the big brother—the vending machine—has developed in China for so many years, and it has only recently started to improve.

As for issues such as restocking, damage and theft, and the need for emotional interaction to trigger purchases, these should be gradually solved through technology and management, and should not become reasons to hinder the development of unmanned convenience stores.

Wahaha's philosophy is "channel is king," so promoting vending machines and unmanned convenience stores is reasonable. Its advantage is the accumulation of channel concepts with distributors over many years, and it is now seeking channel breakthroughs, sales growth points, and further transformation and upgrading to mobile internet; its disadvantage is that traditional industries and traditional people doing mobile internet have no experience to draw on, and lack talent, which can easily lead to poor actual results or even failure. As for the goal, it is still to occupy channels, just like what we now commonly call seizing traffic.

Most Innocent

Wahaha Being Written Off

In an era when "channel is king" has shifted to "content is king," almost all traditional enterprises have suffered setbacks. As an extreme success case of the channel-is-king era, Wahaha has faced greater impacts than others. Therefore, it has been periodically pushed to the forefront by the media.

Although 72-year-old Zong Qinghou still travels more than 200 days a year, takes second-class seats on high-speed trains, and personally manages the entire business empire, it is difficult to reverse the declining performance trend. But Wahaha's annual volume of 60 billion yuan still exists, and Wahaha has actually been seeking innovation all these years. If you look at the path of Wahaha's intelligent manufacturing development, you will know how hard Zong Qinghou has worked!

In 2000, it established a mold factory to produce new bottle and cap molds for bottle-making and cap-making machines.

In 2003, it began to introduce ERP systems and implement enterprise information management.

In 2008, it participated in the National 863 Program project "Key Technologies and Demonstration Applications of Robot High-Speed Packaging Workstations."

In 2011, it undertook the research of the Ministry of Industry and Information Technology's "12th Five-Year" major science and technology special project "Key Technologies and Demonstration Applications of High-Speed Handling Robots and Their Logistics Production Lines."

In 2012, it participated in the National 863 project "Development of High-Precision and High-Efficiency Industrial Robot Reducers."

In 2015, it completed the development of series robots, parallel robots, and planar robots, and used them in the group's beverage production lines for product boxing, palletizing, production material placement, and boxing.

Comment:

Reality is cruel, and the market is always unpredictable. Wahaha may face even greater challenges in the future.

For this reason, we should give Zong Qinghou more understanding and not let the "botulinum toxin" rumor incident happen again. For the revival of China's real economy and Wahaha, we need some time.

2017 is the 30th anniversary of Wahaha. As a leading enterprise in the beverage industry, Wahaha is also the time to make new explorations and set an example for the upgrade and leap of Chinese brands. Today, Wahaha is still one of the overlords in China's FMCG industry, and its operational level and strength are still at the forefront of the industry. Let us all look forward to this giant that moves forward with small steps.

Most Cross-Industry

Nongfu Spring Sells Face Masks

On the evening of November 26, Nongfu Spring held the Yangshengtang YOSEIDO cosmetics new product launch at the Yangshengtang Longwu Park in Hangzhou. It invited international partners related to the Yangshengtang cosmetics project and major media across the country to witness Nongfu Spring's cross-industry innovation in the cosmetics field.

Zhong Shanshan, chairman of Yangshengtang and chairman and general manager of Nongfu Spring, gave a speech at the launch, introducing the entire innovative R&D process of Yangshengtang's natural birch sap hydration series products, from raw material discovery, formula research, collection quality control, to production and manufacturing. The launch showcased multiple videos, telling stories of pursuing disruptive products, and also demonstrated the cross-industry and innovation of a traditional enterprise.

This time, Yangshengtang launched three hydration skincare products made from birch sap, including face masks, refreshing toner, and nourishing toner.

This is not a simple trial of Nongfu Spring's cross-industry skincare products. In 2018, Nongfu Spring will successively launch product lines such as serums and creams. In addition to the Chinese market, it will also enter Japan for sales in the future. Zhong Shanshan, chairman and general manager of Nongfu Spring, said today that the company's goal is to rank among the top five cosmetics brands in scale within 5 years, and to challenge for the first place in quality.

Comment:

What defeated Master Kong instant noodles is not Uni-President and Jinmailang, but food delivery, KFC, and high-speed rail; what defeated Wahaha is not only C'estbon and Nongfu Spring, but also the milk tea shops next door. If you stay in the original track, you can only wait to be eliminated, after all, this is an era of cross-industry disruption!

Most Enduring

Red Bull Trademark Dispute

Red Bull was originally a functional beverage developed by the Thai Xu family in 1975. It entered China in the 1990s and later came into the hands of Thai-Chinese businessman Yan Bin, and then developed into the leader of China's functional beverage market.

1 is Austrian Red Bull, 2 and 3 are Chinese Red Bull

Until October 2016, when the Red Bull trademark license agreement between Thai Tiansi and Red Bull Vitamin was due and not renewed, a lawsuit war lasting more than a year and involving more than 10 lawsuits began. Those paying attention to this "trademark war" include industry observers and competing companies, but the most anxious are upstream suppliers and downstream distributors.

Comment:

Brand trademark licensing has always been a controversial topic, especially in recent years as the licensing periods of famous brands have come due, staging a contest between the "biological father" and "adoptive father" of brand trademarks. From the perspective of public opinion, most people tend to sympathize with the "adoptive father" of the brand trademark. JDB has often gained more support from the masses, while the "biological father" of the brand, Wang Laoji, has been more passive in public opinion, but often wins in lawsuits.

Most Unexpected

Alibaba Buys Theland

On December 26, Hunan Dakang International Agriculture and Food Co., Ltd. temporarily suspended trading and announced that Alibaba and Shanghai Yunfeng Xinxing Investment Center would inject 330 million yuan into Theland. After the capital increase, Alibaba would hold 40% of Theland Xinyun's equity, and Yunfeng would hold 17% of Theland. After resuming trading on the 23rd, Dakang Agriculture hit the daily limit for two consecutive days.

Theland is an e-commerce subsidiary established by Dakang Agriculture in 2015, mainly committed to bringing global high-quality products to the market through industry chain brand services, and selling dairy products originally from New Zealand in the Chinese market. In just two years since its establishment, Theland has entered the first tier of imported dairy products. In the first 11 months of 2017, its revenue reached 500 million yuan, with a sales growth rate of 365%, and it ranked among the top 6 in the imported milk category during the 2017 Double 11 shopping festival.

Comment:

Alibaba's purchase of Theland is nothing more than to do three things: First, incorporate Theland into its "offline retail" layout, such as Hema Fresh, Tmall Xiaodian, RT-Mart, Feiniu Convenience... Second, Alibaba's unique big data on consumer transactions has previously been used to serve brand owners. Now, Alibaba will use these consumer resources to fully meet the diversified, personalized, and quality consumption needs of online and offline consumers. Third, through category pilots, Alibaba's "cold" data will become more active, providing more high-quality brand owners with replicable and standardized brand optimization solutions. This is in line with Alibaba's big data strategy.

Most Modern

Wang Laoji Opens Offline Stores

In early July, Wang Laoji opened a herbal tea physical store "1828 Wang Laoji" at 891 Street, Huacheng Hui North District, Guangzhou, officially announcing its entry into the "new-style tea drink" market, and launched the slogan "Wang Laoji's first national freshly brewed herbal tea concept store," aiming to let consumers taste the most natural and healthy flavor in every sip.

It is reported that Wang Laoji herbal tea plans to open 3,000 to 5,000 stores nationwide within 4 years. The Wang Laoji 1828 freshly brewed herbal tea concept store has a "modern" style. In addition to traditional ancient method freshly brewed herbal tea, fruit tea and cheese tea also appear in the recommended product catalog, and the packaging is very similar to "Heytea."

Guangzhou Pharmaceutical Group is already planning to create another Wang Laoji in the ready-to-drink tea market.

Comment:

Wang Laoji's offline store opening is due to three reasons: First, the "heat" of the herbal tea category has passed, and the category's scale growth has reached its limit, with no more room for exploration; second, diversified development may be the most appropriate way for state-owned enterprises; third, at the market level, the tea drink store paths of Heytea, Yinwei Tea, and 1点点 have been going well. In addition, with the improvement of consumer awareness, it is indeed a good path.

Welcome to leave a message below to discuss and tell us which "most" you have in mind.

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