How will the FMCG industry face 2024?

Editor's Recommendation: Do you regret not catching the last train of the old era, or are you glad to catch the first train of the new era?

Author丨Liu Chunxiong.

As I practice, I'm still only talking about FMCG.

If 2023 goes well, then, 2024 will continue without changing directions and methods. This is a common method for annual planning.

If 2023 doesn't go well, and similar companies are not bad, then, you have to think about what went wrong with the company. If there is a problem, solve it.

If most of your peers don't go well in 2023, then it's another question, not looking inward, but outward, to see if the general environment has changed.

Internal problems affect only one company, and only the general environment affects all enterprises.

There are also two types of environmental changes: one is short-term impact, such as the epidemic, which will be gone after the epidemic is over;The other type is trend impact, which affects the next five or ten years.

The impact can be rushed back in one year, and the impact in five or ten years is an era.

If you miss an era, you can't come back.

In 2024, we are facing the beginning of a new era.

Judgment of the times

How to face 2024?It depends on our judgment of the times, and what we should do, what we can do, and how we can do it.

How important is the judgment of the times?Let me give you two examples.

In the era of the New Democratic Revolution, ** put forward an era judgment that "China is a semi-colonial and semi-feudal society". At first, I thought it was just a slogan, but later I realized that this was an important judgment of the times, and the historical process of the Chinese revolution was related to this judgment of the times.

In the early days of reform and opening up, the judgment of the times of "the primary stage of socialism" was proposed. The historical process of reform and opening up is in line with the judgment of this era.

It is indeed difficult to sum up an era in one sentence. But if a sentence of judgment of the times can indeed unify ideas and summarize trends, then it is very important to extract a highly condensed sentence.

In 2023, hard discounts on casual snacks are very popular, what is the signal?

In my opinion,The hard discount of leisure snacks is just "the first shot of the ** chain revolution", and 2023 is not only the first year of China's hard discount, but also the first year of China's ** chain revolution.

If the hard discount of casual snacks only affects a small category, then the ** chain revolution affects all business links, and no company can escape it.

In the face of changes in the general environment and trends, all enterprises are passive. The initiative of the enterprise lies in whether it can quickly keep up with the trend and take the initiative to respond.

Chain Revolution

* What does the chain revolution mean?

Many people know the topic of "decoupling of the first chain" between China and the United States, which is an international chain issue, and it is a matter of life and death for China.

The first-chain revolution mentioned in this article is a domestic first-class chain problem, which is also vital to the life and death of enterprises.

In order to figure out the problem of the first-chain revolution, let's sort out the business changes since the reform and opening up, and I will briefly divide it into three eras.

1.The era of brand-led business

Before 2010, it could basically be regarded as an era dominated by brand owners. **topic, the cover characters are Zhang Ruimin, Liu Chuanzhi and other entrepreneurs from the brand, and the right to speak is also in their hands.

The result of the era of brand dominance is that through the dual-drive model of brand drive and channel driven, giants in various industries have been born, and these giants are also very important in the world, and the industry concentration has been greatly improved.

What affects the era of brand dominance is the channel revolution. Through dealer miniaturization and in-depth distribution, FMCG brands have established a channel system covering more than 6 million retail terminals and more than 8 million catering terminals across the country, and it is this channel system that connects China's vast and gaping market.

2.The era of business dominated by platform providers

Since the beginning of the platform, whether it is the topic or the cover character, it has changed to entrepreneurs from platform providers such as Ma Yun, Ma Huateng, and Zhang Yiming.

After 10 years of dominance by platform providers, traffic is concentrated on a limited number of large platforms, the growth of platform traffic is close to the limit, the share of online retail lacks increment, and even new platforms are only platform traffic redistribution. The revolutionary platform led by platform providers is coming to an end.

In the era of platform providers, a number of world-class Internet platforms have emerged, and the concentration is very high, and a few large platforms have achieved traffic monopoly.

When the total national time is divided by the platform, the era of platform providers will also end. At present, the change between platform providers is only the transfer of traffic, and the total traffic has not increased. At the same time, the boundary between online and offline has become relatively clear. In some categories, offline is growing faster than online.

3.The era of retailer-led commerce

In the first two eras, the end was the emergence of oligarchs, which was the inevitable result of this era.

After decades of reform and opening up, although there have been great discoveries in the field of retailers, butThe share of the top 100 retail industry has dropped from 12% in 2012 to 6% in 2022, a decline of half in 10 years.

Brands have established a set of channels that go directly to the terminal, and platform providers have built a set of Internet platforms that go directly to users, and retailers seem to have the right to speak in terminal negotiations, but only to negotiate with dealers.

So,The chain revolution is the complete opposite. Starting from retailers, establish a set of first-chain system that goes directly to the source.

Some people may say that going straight to the source is not just looking for the manufacturer?Definitely. Reaching the source is to replace many of the functions that were previously undertaken by brand owners.

That's where the real impact comes in.

Marketing theory has always taught us to have a user mindset and stand in the user's perspective. Actually,All user thinking is just the process of integrating channels (** chain) by the dominant party of which era wakes the banner of users.

The banner of the brand is consumer-oriented, and the banner of the platform is the user's thinking. Retailer integration ** chain should also play the user (consumer) flag.

So, is there a difference between a chain and a channel?This is the same thing, different versions of two positions.

Starting from the brand, the brand, the distributor, the retailer, this is the channel.

Starting from retailers, the production workshop of brand owners and retailers, this is the ** chain.

Redefining spheres of influence

Whoever dominates the business era is to achieve growth.

Growth, either quantitative growth, value growth (qualitative growth), or both.

It has been 10 years since the number of FMCG industries in China bid farewell to the growth of the number of farewells, except for drinking water, dairy products and other industries still have a lot of room for growth, other FMCG industries have basically no growth.

From a quantitative point of view, China has roughly gone through three stages:Incremental, excessive, shrinking.

In the incremental stage, the number of consumption increases due to the increase in spending power.

In the excess stage, the consumption power rises to a certain stage, and as compensation for the lack of consumption in the past, there will be overconsumption. For example, drinking liquor without regard to your health.

In the shrinkage stage, when the excess reaches a certain point, it will return to normal, which is called the shrinkage stage.

As a rigid demand for food, clothing, housing and transportation, FMCG consumption is limited and cannot grow indefinitely. The consumption limit is determined by the capacity of the person's body to bear it.

Don't think of the current shrinkage as abnormal, it's a return to normal. Even if the number of some categories rises temporarily, it is only sideways, it is **, not a reversal.

So, the future growth is in**?Be sure to grow in quality.

However, after the chain revolution, a new belt has emerged that is mastered by retailers, and the system belt of brand owners has to be redefined. Whoever occupies the new ** belt will occupy an era.

The following is a brief introduction to the full-band spectroscopy.

First, its own brand ** belt

1.Private label replaces cheap miscellaneous brands. This **band, which was occupied by low-end cheap brands in the past, will be the main **band of private label with hard discounts in the future. All brands that overlap with this ** belt should be withdrawn as soon as possible.

European private labels account for 38% of retail sales, while the United States has an 18% share. China currently has less than 5% of its own brands, and its retail share in the future may be between the United States and Europe. Hema currently owns 35% of the market.

3.Private label cannot simply be seen as an emergency response to consumption downgrade, but as a new lifestyle and identity, a business model that goes through the cycle.

"For millennials, shopping for value for money is part of their identity," said the president of Retail at Treehouse Foods. ”

4.Private label brands are also layered. A typical private label brand has a three-tier structure: good, better, and best. Although European private label brands now also have high added value, the proportion is still low.

5.Private label to completely transform the first chain.

In the book "Procurement Management and Operation Practice" prepared by the PSCC procurement and ** chain expert team, it is mentioned that under normal circumstances, negotiating price reduction with ** business can only bring 5%-10% of the cost reduction benefits, and reducing management costs through streamlining processes and transaction informatization is expected to bring 10%-20% of the cost optimization space, and 70%-85% of the cost optimization space is generated in the fields of technology research and development, marketing, and consumer services.

Particular attention is paid to technology research and development, marketing, and consumer services, which used to be functions undertaken by brand owners.

China's first-chain revolution will roughly go through three stages: the game between retailers and distributors, the direct game between retailers and brands, and the in-depth cooperation between retailers and foundries.

Some small and medium-sized enterprises believe that they can OEM for their own brands. To know,The more low-end, the more attention is paid to scale, and small and medium-sized enterprises have no scale advantage, so there is no cost advantage. In addition, at present, the production capacity of large brand factories is seriously surplus, and OEM's own brands have more cost advantages.

Can small and medium-sized enterprises survive differentially at the low end?Differentiation is more suitable for high-end.

7.Private label brands and hard discounts have just entered China, and they will also undergo localization transformation. We should not only learn from the experience of the development of private brands in Europe and the United States, but also pay attention to the fact that localization transformation may be unrecognizable and completely different.

Second, the public brand

What is a Volkswagen brand?

In the past, we used to regard Procter & Gamble and Coca-Cola as high-end brands, but now we know that they are just popular brands in developed countries, and they have also entered the ranks of popular business cards in ChinaThe popular brand is a brand consumed by ordinary consumers, and has nothing to do with high-end.

Even if hard discounts are popular, the popular brand is still a traffic product for retailers, a tool for retailers to optimize profit margins, and it is difficult for private brands to erode their space.

The key is whether your user stickiness is strong enough in the popular brand** belt. Generally speaking, first-tier brands are not a big problem, and second-tier brands are difficult to say.

3.On top of the Volkswagen brand, it is the mainstream gear shift. The mainstream, indicating that it is still the masses and has a large consumer base. Shifting gears means moving forward. For example, 10 years ago, the mainstream of mineral water was transferred from 1 yuan to the current 2 yuan, and now there is a trend of transferring to 3-4 yuan. In the process of mainstream shifting of mineral water, the brand of the 1 yuan ** belt was marginalized.

In the past, many companies adopted a massive SKU strategy in the mass brand** band. In the ** chain era, retailers will be popular to reduce the SKU strategy. Therefore, it will be very uncomfortable to have no super large items in the mass brand** belt.

3. High-end ** belt

Whether the industry can grow depends on whether it can open the high-end ceiling.

The shrinkage of the industry will continue. Baijiu is not bad in the environment of a 55% decline in sales, thanks to Moutai for opening the high-end ceiling and giving the industry unlimited room for growth.

In the case that the number cannot grow, the industry leader has only two choicesHigh-end, brand going overseas.

In addition to liquor and tobacco, which have domestic luxury goods, luxury goods as a whole are still the world of multinational brands.

Limited selection of chains

In the past, all the first belts were owned by the brand, and you can choose any of the first belts. Now, private brands occupy a considerable amount of space in the whole belt, and there are not many options left for the chain.

First, the choice of brand owners

From the era of brand owners to the era of platform business, entrepreneurs have been given more choices, which is conducive to small and medium-sized start-ups.

From the era of platform merchants to the era of retailer dominance, retailers have more choices and brands have fewer choices.

1.No matter how big the scale, it is necessary to gradually move away from the middle and low ** band. It's a world of private label and hard discounts.

The popular brand in China's FMCG industry has been basically stereotyped, that is, the super large single product at the head of the industry, and there are not many options except for making the super large single product bigger.

2.Various industries will usher in the second round of mainstream gear shifts. The classic case of 2023, Oriental Leaves, is a classic case of mainstream gear shifting. The window of opportunity has arrived, and it is better to do wrong than to miss it.

In 2023, "the collective disappearance of 3 yuan drinks" will become a hot search, which is a signal for the mainstream gear shift.

3.High-end ** belt, there are opportunities. However, since the high-end ** band is not suitable for deep distribution, it is more suitable for the penetration model. Therefore, there are opportunities for small and medium-sized enterprises here, and opportunities for large enterprises are in acquisitions.

The so-called differentiation isThere will be a small number of super dealers, and a large number of dealers will gradually withdraw.

1.Platform-based dealers are a necessity for the future. The emergence of platform dealers has changed the trend of long-term miniaturization of dealers in the past, and dealers will appear regional oligopoly. The so-called platform dealer, that is"One batch + B2B two batches" can achieve one-stop supply to the terminal. **The brand will quickly concentrate on the platform, because the platform can supply a large number of small terminals in one stop, and the second batch will gradually disappear.

Volkswagen brand-name dealers will exist for a long time, but it is a high probability event that the dealer function is decomposed into various large platforms.

With the emergence of platform dealers,A large number of BC community stores will be flop stores for platform dealers. This phenomenon has already appeared in Guangzhou and Changsha.

In this context, it is recommended that aspirants quickly keep up with the pace of platform dealers. Most dealers plan to retreat in an orderly manner.

3. Choice of retailer

* The protagonist of the chain revolution is retailers, and the era of retailers is coming, and a large number of business leaders who influence the world will emerge.

1.The era of pan-hard discounts is coming. Hard discounts spread from single product categories to comprehensive categories, and finally entered the era of pan-hard discounts.

2.Retailers have to pay a great price to penetrate the entire chain. The chain revolution means that retailers will assume some roles and functions that were previously assumed by brands and distributors. This is a huge test for retailers.

How to face 2024?

2023 is the first year of hard discounts, which has already sent a signal to all areas of business.

Is this a small wave, or is it a torrent?

Is this someone else's business, or is it a major event for everyone who is coerced by the times?

I think soThe turning point of the times, from the channel revolution led by brand owners to the Internet revolution led by platform providers, history has come to the threshold of the first-class chain revolution.

If the above judgment is admitted, then FMCG companies need to do two things in 2024.

First, we need to preserve our historical stock. After all, stock is a resource accumulated by history. Determines the initial position of the ** chain revolution. Perhaps, the traditional method should be used to the extreme.

Second, don't miss the first step at the starting line of the new era Don't lose at the new starting line. Find your place in the new full-band spectrum and embark on the rhythm of the chain revolution.

How to face 2024?There is no isolated 2024, only 2024 under new trends.

Find the right direction first, and then find the way.

This article is based on Mr. Liu Chunxiong's sharing in the "Bao Yuezhong New Retail Group", and there are increases and decreases. ）