Hidden anxiety behind the intensified competition

According to data from A. C. Nielsen, Red Bull's market share was 68% in January-August 2016. In other words, Red Bull's current variables are causing all parties to fight for their share of the pie. However, for some brands, how to deal with the aging brand and the problem of homogenization of competition may already be an unavoidable problem.

Take “Mai Dong” for example. French food giant Danone’s earnings report shows that in China, “Mai Dong” sales in the fourth quarter achieved year-on-year growth, but due to the impact of inventory in the market restructuring, the yearly sales decreased. Danone also said that this transformation will continue in 2017 and Danone will continue to make targeted investments, commit to protecting market share and ensure future growth while protecting the profitability of “Mai Dong.”

Mead Johnson Greater China coaching change

Four months after being acquired by ReckittBenckiser, Mead Johnson Greater China welcomed a new president. On October 10, Mead Johnson announced the appointment of Enda Ryan. Ryan disclosed that after the launching of the new policy of milk powder, Mead Johnson will sink products to more third- and fourth-tier cities.

Ryan said in an interview that, at present, China has become one of Mead Johnson’s most important markets. In China, the second child policy, the arrival of the milk-powder registration system, and the promotion of consuming upgrades are providing new market opportunities for dairy companies. Relevant industry data analysis shows that the annual newborn population from 2017 to 2020 will reach 20 million. In the next five years infant formula milk powder enterprises, including Mead Johnson, will reach an annual growth rate of 7% to 10%. China has become the most dynamic and competitive market in the world.

The implementation of the new milk powder policy, regarded as the strictest ever, not only means that the China infant formula milk powder industry has stepped into a new era, but also means that enterprises will enter a more brutal shuffling period. By October 8, 2017, 378 formulas of 128 series of 46 enterprises were registered, and nine of the three brands of Mead Johnson were approved. Ryan said that after the launch of these new policies, half of the more than 2,000 existing infant formulas will disappear because they will fail to meet market requirements, and the third- and fourth-tier markets will draw "staking" of big brands.

Insiders believe that Mead Johnson should seize this market opportunity to improve performance. In the past two years, Mead Johnson’s performance continued to decline in its major areas. Even the important Chinese market’s performance is not satisfactory, endangering its market position. Financial reports show that in 2015, the company net income was 2.039 billion US dollars, down by 7.6%, and Asia net income fell by 11%; the 2016 net income is $1,856 billion US, down by 3%, and Asia fell by 9%.

In June of this year, when British FMCG giant ReckittBenckiser completed the acquisition of Mead Johnson, Mead Johnson started its operation as an independent business unit of ReckittBenckiser. Enda Ryan said that at present the merger of the two sides is proceeding smoothly, and Mead Johnson’s operations have not been affected.

Reckitt hopes to expand the market scale in China through Mead Johnson, while Mead Johnson will also expand the market with the help of Reckitt’s resource system and online marketing capabilities. "In the future, Mead Johnson’s performance growth will exceed the industry average growth," Ryan said.

Enda specially introduced his business strategy after he took office. The strategies will be based on the changing needs of Chinese consumers and preferences for innovation, providing different services for e-commerce, maternal and child stores, supermarkets and other channels, and continuous launching of new products. In addition, providing tailor-made services for "80s" and "90s," the new-mothers market has also become a major direction for Mead Johnson.

"Rebuild a Wahaha:" Zong Qinghou returns to health care products business

Zong Qinghou, who has been looking for opportunities to "rebuild a Wahaha," favors health nutrition products, which helped him make his fortune.

According to Economic Daily, Wahaha intends to develop TCM therapeutic products and health food products according to the requirements of the National Nutrition Plan (2017-2030). Wahaha also plans to complete development and launch of a series of product in 3-5 years, including categories such as enhancing immunity, improving cardiovascular and cerebrovascular health, nutrients supplementation, improving sleep quality, and bone health. 

Wahaha's first pot of gold came from the health care products industry. At that time, Zong Qinghou, a Zhejiang-based school factory manager, happened to get a formula for children's nutrition and digestion. He came up with the slogan, "Drink Wahaha, good appetite," for the product Wahaha nutritional drink. Three years later, sales of this children's nutrition liquid topped 100 million.

Now, healthy nutrition products once again become the market Zong want to explore. He believes that consumer demand for food is shifting to health and wellness.

32  Zong qinghou photo

According to the China Industry Information Report, vitamins, minerals and dietary supplements are the top three health products categories in China's total consumer spending. In 2014, the scale of the health products industry in China was 161 billion and is expected to exceed 500 billion in 2020. The growth rate of China's health products market is also accelerating, with a compound annual growth rate of 15% in 2012-2014, almost doubling the previous three years.

On the other hand, the health products industry itself is chaotic. Some companies do not attach importance to product quality, and sales largely depend on high-intensity and false advertising. But for Wahaha, China's health product industry is not yet a monopoly, which presents an opportunity.

Moreover, Wahaha also urgently need to launch powerful new products to improve performance. In November last year, Wahaha launched 18 new products in seven series during its sales conference, such as "Jiao Su"Enzyme drink, MIAO yogurt, Wahaha fruit and vegetable yogurt, Wahaha healthy porridge, and so on. Products such as AD calcium milk, nutrition fast line, and Wahaha mineral water are only childhood memories.

“In the recent a few years, over-centralization, inflexible marketing, lagging behind of product development and swinging of channel construction strategy had caused a series of negative state of team and brain drain, causing shaken confidence or leaving of dealers, and collapse of first and second line market,” Dou Xiaoqiang, CEO of Zhice Fangyuan Consultancy told Interface News.

Wahaha’s performance fell in recent years, and once fell below 60 billion yuan, the annual sales red line. Zong has been looking for new opportunities to recreate a Wahaha. Broad prospects of the health care products market have given Wahaha those new opportunities. However, at present, the top 10 Chinese health products companies have taken 50% of the share, including Amway, BY-HEALTH, Dong-E-E-Jiao and so on. Compared with the majority of these companies that rely on the direct-sales model, it is hard to say if Wahaha can squeeze into such a relatively established market by using the traditional sales channel network.

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At present, the top 10 Chinese health products companies have taken 50% of the share.