Original link: https://ljf.com/2023/04/20/1243/
Foreword Preface The death prophecy of the global consumer goods giant
In 2012, the Tiantu team made an in-depth review of the company’s historical projects at the annual meeting. After analyzing historical data and making rational judgments, Tiantu believes that investing in the field of consumer goods is its own strength, and is willing to continue to work hard in this direction, so it determines the direction of investment in the field of consumer goods
Tiantu defines a consumer product company as: a company that has a brand exposure at the C-end (end consumers) and is mainly driven by brand rather than technology.
“Positioning” is the core of Tiantu’s investment theory
We have also seen the rise of some niche brands that could hardly survive in the era of consumer goods giants, such as Lechun (later acquired by Coca-Cola) and Jane Eyre in the dairy industry, Jiangxiaobai in the liquor industry, and Second factory soda, etc.
In the field of consumer goods, if you can find a good product and manage it well, it is entirely possible for it to last for a hundred years.
All the global consumer goods giants have found a unique product to enter the market, and after slowly growing bigger, they began to expand through mergers and acquisitions, and used the same style of operation to operate multiple brands, thus growing into giants.
For the giants, as long as they find the “effective combat unit” of the new brand, they can become their own enterprises through mergers and acquisitions.
Throughout the growth process of consumer goods brands, you will be in awe of the power of time.
What will beat the consumer goods supermajor? In my opinion, it is likely to decline due to self-arrogance and excessive pursuit of short-term interests.
As long as a person’s physiological structure does not change, his consumption demand is continuous and stable. What consumer brands have to do is to try their best to capture these needs.
Through more than ten years of in-depth research in the field of consumer goods, I have come to several conclusions, which will run through the entire content of the book. First, from the industrial age to the information age and then to the mobile age, the social structure has changed from the family as the main body to the biological individual as the main body, and then to the label individual as the main body, and the decision-making body of consumption has undergone essential changes. Second, the driving reasons for consumer transactions are changing from channel sales to brand mentality sales, emotional identification sales, and then to label selection sales. Third, products are constantly evolving, but almost all of these are done by new entrants. Fourth, people, as the smallest social unit, are also evolving, including: self-awareness of the consumer price band to which they belong; self-awareness of personalized labels, etc.
Chapter 1 Lululemon: The Way to Breakthrough for a Niche Sports Brand
Before Lululemon became popular, no women would feel that wearing sportswear on the street was a very fashionable thing.
New sports categories have spawned new business opportunities. Unlike other ball sports, yoga requires brand new equipment
Women participate more in non-competitive sports and have higher requirements for clothing. In the process of fitness, they need to be able to better show their figures, and these needs are also difficult for the original giants to meet.
Higher pricing allows Lululemon to obtain higher gross profits when the market size is still small, thereby promoting the steady development of the business.
According to the “Analysis Report on the Consumption of Women’s Sports Goods in Department Stores”, there is currently an oversupply of men’s sports goods, and the needs of female consumers are largely ignored. According to the industry research data of Tiantu, the proportion of women’s market has increased from 25% to 40% in recent years, and the market size of women’s sportswear is between 30 billion and 40 billion yuan.
In the process of category differentiation into new categories, the earliest and fastest large-scale companies are the easiest to make their own brands as representatives of new categories, thereby occupying the minds of users
The differentiation of categories is regular, and the differentiated categories are often a subdivision of people in the original category, an extension of niche needs, or are caused by some major technological changes.
Chapter 2 Taoli Bread: The Invisible Bread “Big Guy” on the Shelves
In a similar industry background, China will definitely have its own “Yamazaki bread”, and Taoli is the most likely one in my opinion.
Taoli’s early entry into the short-term bread bread track coincided with the consumption trend and captured the industry’s dividends.
Holiland and other bread brands’ “central factory + self-built chain store” model pays more attention to brand and experience, while in the low-end market where Taoli is located, channels and prices are king.
Chapter 3 “Super Meat” Products: How the new market on the trendy market was torn apart
To understand why “super meat” appears, let’s first look at the industry of traditional meat products. A simple summary is: the scale of the industry is huge, the demand continues to grow, and the production efficiency cannot be further improved.
The absolute value of the market for meat products is as high as US$8.8 trillion, accounting for about 10% of global GDP in 2018.
Even at the trillion-dollar level, the global demand for meat products continues to grow. There are two main reasons: first, the global population continues to grow; second, with the continuous improvement of the economic level of countries, especially developing countries, the national consumption demand for meat products continues to increase, and the per capita consumption of meat products increases year by year .
At present, 37% of the world’s grains are directly eaten by humans to obtain energy, and a larger part is used to raise animals and produce meat products, but the loss in the middle is huge, providing only about 7% of the energy.
Chapter 4 Jinro: Sales Champion in the Global Spirits Market
According to the statistics of the World Health Organization (WHO), the per capita annual alcohol intake in South Korea exceeds 10L, that in China is less than 7L, and that in India is around 6L. However, since the populations of China and India far exceed that of South Korea, the overall alcohol consumption is larger.
Alcohol is an important consumer product for the Korean public. South Korea is a country with a prevalent wine culture. Whether it is a business banquet or a gathering of friends, wine is an essential social lubricant.
“High frequency + high consumption” has made South Korea the country with the second highest per capita alcohol consumption in the world (after Slovenia), with a per capita annual drinking volume of about 45L.
According to statistics, South Koreans drink about 70 bottles of soju per year.
Jinro’s products (keywords: quality, innovation)
Specifications of Jinro (keywords: small bottle, easy decision)
Pricing of Jinro (keyword: parity)
Chapter 5 Chaowan: A new category created out of nothing
More new consumption occurs in the incremental market.
The brand-new categories produced by technological progress, cultural progress, changes in lifestyle, and changes in social organization forms are also categories that are “made out of nothing”. For example, some “big V” reading products, paid variety shows, etc.
The brand-new consumer products that follow the new consumer groups have no brands before, and are actually new categories that have never existed before.
Kaws and Be@rbrick were born in 1999 and 2001, respectively, just when the per capita GDP of the United States and Japan exceeded the $35,000 mark.
During the two years from 2017 to 2018 when Bubble Mart rose rapidly, the per capita GDP of Beijing and Shanghai just exceeded 20,000 US dollars, and the overall per capita GDP of Jiangsu Province also exceeded 15,000 US dollars. Bubble Mart also followed the market and took the lead in choosing Beijing, Shanghai, and Jiangsu Province for urban layout, thereby achieving rapid growth
For companies that want to enter the trendy game industry, constantly relying on other people’s IP to achieve growth is an excellent way to quickly seize category dividends. But in the future, if you want to achieve greater value and higher profit margins, you need to spend some effort on creating your own IP (no matter what form, games, animation and other content forms can realize IP value).
Chapter 6 Kellogg’s: The Pioneer of the Cereal Breakfast Sub-category
In 1969, Kellogg’s provided Armstrong with breakfast. In the major event of the global live broadcast of the moon landing, Kellogg’s gained huge brand exposure and increased popularity. This is one of the most successful public relations events in the company’s history.
It was an accident that the Kellogg brothers invented corn crisps, but making it a category is the embodiment of the brothers’ commercial ability.
Chapter 7 Yakult: The King of Single Products in the Lactic Acid Beverage Beverage Market
According to the statistics of the fiscal year ending March 2019, Yakult has achieved sales of over 400 billion yen, with an average daily sales volume of over 40 million bottles, making it a well-deserved leading brand of lactic acid bacteria beverages.
Thinking from another angle, is there still a chance for the lactic acid bacteria beverage category? For other consumer brands, if the category market is occupied by giant companies, what should you do? The answer is to start from the user’s thinking and seek differentiation.
Chapter 12 HFP: The Dark Horse Road of Beauty Brands
In 2017, China’s per capita consumption of cosmetics was US$38, only 1/7 and 1/6 of that of the United States and the United Kingdom, and even only 1/2 of that of Thailand.
Chapter 13 Monster: Defeating Red Bull and Breaking Out in the Energy Drink Market
A rapidly rising category will definitely attract many competitors to enter the market, and there are already strong leading brands in the category at this time, how to stand out from the crowd of competitors? The answer is: brand differentiation.
Having a good name is the most important way to differentiate a brand. Judging from the brand name, the first impression of Red Bull is strength and courage; while Monster is obviously different, giving people the impression of being strong, wild, and full of unknowns, which can stimulate young people’s curiosity and enthusiasm for the brand. recognized.
Chapter 14 Suntory: The way to break the circle from the middle class to the young, from Japan to the world
Among the brand potential energy, the most difficult and powerful potential energy is the national potential energy, which is also applicable to consumer goods brands. Most national potential energy is a strong moat built over hundreds of years. For example, the liquor category belongs to China’s national potential energy. The inherent national potential of the category is difficult to be shaken by a company or a brand.
Japan’s drinking culture, perhaps the most well-known to the public is Asahi’s draft beer or Kirin’s Ichiban. But in fact, Suntory surpassed Kirin in 2014 to become Japan’s largest liquor company.
Whether it is “Akayu PortWine” or “Corner Bottle”, the success of both of them actually confirms the same principle – adapt measures to local conditions.
It was in 2008 that Suntory’s beer business sector truly turned losses into profits, and it can be said that it has been a full 45 years of losses.
The Suntory family has regarded it as a sentence of enterprise DNA for generations – “Try it, how will you know if you don’t try it”.
In Japan, Suntory is also often used as a research to prove that the governance level of family enterprises is not necessarily worse than that of non-family enterprises.
Chapter 15 LVMH: The world’s number one luxury brand “buy”
LVMH’s expansion is almost always done through mergers and acquisitions. Among the 75 brands it owns, only two brands, Fenty and LV, were created by LVMH itself.
Luxury goods are a magical existence among many consumer goods: without being limited by the price comparison effect, you can easily get dozens or even hundreds or thousands of times the gross profit
A brand can be called a luxury must be inseparable from the historical reputation and cultural value, the price is only its external manifestation.
The reason why LVMH “buy, buy, buy” is that if it wants to become an influential luxury goods group in a short period of time, mergers and acquisitions are the only way.
For LVMH, the most direct purpose of acquiring brands is naturally to help the group improve its performance, and the continuous growth of performance can be divided into: continuing the vitality of its own brand and finding new growth points for the group. Starting from the end, LVMH must serve this purpose in the acquisition of brands.
The acquisition of clothing and leather goods brands runs through the development history of LVMH.
For LVMH, the most important benefit of acquiring Loro Piana is equivalent to mastering these scarce means of production.
The two major mergers and acquisitions that LVMH has experienced in history both occurred during the economic downturn: the economic downturn has depressed the valuation of many luxury brands and greatly reduced the acquisition price of LVMH. When a company is relatively weak to carry out mergers and acquisitions, the possibility of successful mergers and acquisitions will be greater.
When the potential target brand is facing a “crisis”, it is a good acquisition window for LVMH
From a structural point of view, LVMH has established a parent-subsidiary model for its multi-brand management that focuses on investment and holding relationships, independent operations and tight financial control.
Chapter 16 7-11: The Retail Logic of the King of Convenience Stores
GDP per capita is closely related to the life cycle of convenience stores. When the per capita GDP reached 3,000 US dollars, it was the introduction period of convenience stores. In 1973, Japan’s per capita GDP exceeded 3,000 US dollars for the first time. 7-11 and Lawson entered Japan one after another. Family Mart and Mini Island were also established in Japan; When the per capita GDP reaches 10,000 US dollars, it will be a period of fierce competition; when the per capita GDP reaches 15,000 to 25,000 US dollars, the convenience store industry will continue to increase in sales while achieving an increase in concentration .
Chapter 17 NITORI: The ruthless character who defeated MUJI and IKEA
The growth of NITORI has gone through the economic cycle, and it has become the only company listed on the Japanese stock exchange that has achieved double growth in revenue and profit for 32 consecutive years (including 20 years when the Japanese economic bubble burst).
NITORI does not produce products of ultimate quality, but pursues the lowest price on the premise of satisfying product quality for users
NITORI’s products are neither as luxurious as high-end furniture, nor as design sense as MUJI, giving people the overall impression of simplicity and ease of use
Compared with general market channels, many of NITORI’s products sell at half the price of competitors, and are cheaper than IKEA and MUJI.
NITORI adopts the method of reverse pricing, and first sets a highly competitive retail price for the developed products, and then conducts reverse procurement, production, and controls logistics and transportation costs to ensure that the company still has a good business performance under such low prices. level of profit.
As a high-quality and affordable furniture and home furnishing channel, NITORI will not create the ultimate products comparable to luxury goods, but start from the needs of users to create low-priced products with excellent quality
Chapter 18 Brandless: A $3 store that can grow even without a brand
Brandless has captured a market of 300 million people in less than three years. Such rapid penetration proves that cost-effectiveness is one of the most important keywords in the contemporary consumer field, both at home and abroad.
The logic of retailing is to acquire customers with as little price as possible, and sell as many products with high unit price and high gross profit as possible in a single purchase behavior to make a profit. In the business logic of retailing, there is less emphasis on repurchase and Referral factors. The logic of members is to use products and services to attract customers to pay for a long-term expectation. In this process, the company needs to have confidence in the customer’s repurchase rate and renewal rate.
Do all commodities need a “brand” in the traditional sense? The answer is probably no. In fact, for products with high repurchase rate and high practicability, such as household items, sundries and snacks, it is not worth the effort in packaging and marketing for consumers.
On the road of pursuing cost performance, membership system may be a correct choice.
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