Author | Cheng Liang
Editor | Yang Jie
Source | City Boundary
Near the end of the year, a ticket made Want Want “active” again in the public eye.
Recently, Want Want High Calcium Milk, a product of Shanghai Want Want Network Technology Co., Ltd., was fined 15,300 yuan by Shanghai Jing’an District Market Supervision Bureau and ordered to stop publishing it because the actual protein content did not match the propaganda. As early as February 2021, the company had been fined for false propaganda. At that time, it declared that the product of Wangzai Langwei Xianli Rice Tiao was “sugar-free”, but white sugar was included in the ingredient list of the product.
According to Tianyancha data, Shanghai Want Want Network Technology Co., Ltd. was established in 2010. The major shareholder behind it is Zhejiang Mingwang Dairy Co., Ltd., invested and established by Want Want Holdings Co., Ltd. (Want Want Group). It mainly produces sterilized milk, dairy products, milk containing drinks etc.
15,000 yuan is just a drop in the bucket for Want Want Group. But this also means that Want Want Group wants to break its dependence on the large item of Wangzai denim, and the road to deploy high-end milk is not easy.
Not long ago, Want Want Group disclosed its interim performance report as of September 30, 2022. In the first half of fiscal year 2022, Want Want achieved revenue of 10.833 billion yuan, a year-on-year decrease of 4.83%; realized a net profit of 1.569 billion yuan, a year-on-year decrease of 23.64%. In this regard, the group explained that it was mainly due to the fact that dairy products and beverages were heavily affected by the epidemic and weak consumption, coupled with the pressure of raw material costs, resulting in pressure on revenue and gross profit in the first half of fiscal year 2022.
Wangzai Milk’s “fundamentals” are no longer easy to chew, and the popular slogans and popular products of Want Want have gradually become a thing of the past.
Song Liang, a senior dairy industry analyst, told the market circles that as consumers’ awareness of healthy eating increases, Want Want’s main reconstituted milk is no longer “fragrant”, and its channels and marketing methods are also aging. “Although Want Want is constantly trying new products, overall, it’s a bit like a cat’s drawing a tiger, and the appearance is not the same.”
The big single product “Wangzai Milk” loses its momentum
With the help of “Li Ziming, Class Six of Three Years”, Wangzai Milk once became a popular dairy product in the north and south. Among Want Want’s many “brainwashing” advertisements, the Wangzai milk series can be regarded as one of the main childhood memories of the post-80s and post-90s.
In 2017, Want Want once again updated the story of “Li Ziming” in the advertisement. The former “Li Ziming classmate” became “Li Ziming teacher”, and the small can of Wangzai milk has also become an 8-liter super large cup. But unfortunately, it seems that the original advertising audience failed to become the people who have been paying for Wangzai Milk.
Want Want Group was established in 1962, formerly known as Yilan Foods. In the early days, it was mainly engaged in the OEM and export of canned food. Until 1983, the first rice cracker product Want Want Xianbei was launched. But later it was the dairy drink Wangzai Milk that really drove the revenue of Want Want Group.
However, judging from the financial report data, the Wangzai milk business, which supports nearly half of the group’s total revenue, has also begun to “exhaust”.
From 2017 to 2021, Wangzai milk’s revenue accounted for 47.5%, 47%, 48.8%, 50.1% and 48.31% of Wangwang’s total revenue respectively. In the interim report as of September 30, 2022, Want Want’s dairy and beverage revenue was 5.693 billion yuan, accounting for 52.55% of the total revenue, a year-on-year decrease of 13.2%. Among them, the revenue of Wangzai Milk, which accounts for more than 90% of the revenue of dairy products and beverages, fell by 13.9% year-on-year.
(Photo source/Visual China)
In contrast, Want Want’s rice cracker products, snack foods and other products (mainly wine and other foods) increased by 5.1%, 7.1% and 23.94% respectively compared with the same period last year.
In this regard, Want Want said that this is due to the impact of the epidemic on the supply chain and the slowdown in terminal sales, and some channels for end consumers are also deeply affected; the group will continue to pay attention to channel inventory levels, increase terminal display and consumption. interaction with readers.
Behind the decline in Wangzai Milk’s revenue, the dairy track is changing.
Wangzai milk is a kind of reconstituted milk, which is processed by adding condensed milk, sugar, water and other food additives after fresh milk is concentrated and dried. “The nutritional value of reconstituted milk itself is not very high. As the Chinese people’s awareness of general health continues to deepen, products like this are easily abandoned.” said Zhu Danpeng, an analyst in the Chinese food industry.
According to Euromonitor data, the size of China’s flavored milk market has dropped from 103.6 billion yuan in 2014 to 60.4 billion yuan in 2020. Reconstituted milk and modified milk have begun to give way to fresh and original milk products such as normal temperature milk and low temperature milk. The attractiveness of Wangzai Milk also began to decrease. “In the past ten years, Want Want has gone from selling well across the board to gradually withdrawing from the first- and second-tier markets, and even some low-tier markets.” Zhu Danpeng said. “Its chances of reaping its laurels are getting smaller and smaller.”
Want Want is not without crisis awareness, but has started a diversified layout many years ago.
The Wangwang “high-calcium pure milk” that was fined this time is Wangwang’s high-end pure milk product, which was launched in 2019. It is produced by Shandong Wangwang Food Co., Ltd. and belongs to full-fat sterilized milk. The current terminal retail price of this product is 55 yuan/box, with an average of 4.6 yuan/box, and the net content of each box is only 190ml. However, in the company’s publicity, the milk protein content of this product has reached 3.6g/100ml, and its nutritional value is comparable to pure milk such as Deluxe and Jindian.
Want Want wanted to create the next “Extra Lunsu”, but this attempt did not become a new growth point for Want Want. Some people in the industry have pointed out that many manufacturers only sell Want Want pure milk directly on the e-commerce platform instead of selling it to offline dealers. Among them, its major single product is reconstituted milk, not fresh milk; on the other hand, Want Want’s pure milk products have no obvious differentiation, and it is difficult to stand out among many dairy brands. In addition, the packaging appearance is still Want Want’s “rustic” style. Therefore, it is difficult to compete with festival “hard currencies” such as Deluxe and Jindian in the market.
It is reported that in the past three years, Want Want has launched hundreds of new brands. In the latest financial report, Want Want also “named” some new brands, such as the infant food supplement brand “Babe Mama”, the young and innovative beverage brand “Bond”, the healthy nutrition brand “Fix x Body” and spicy lovers Personality brand “Mr Hot” and so on. But in the financial report, their splashes are still not big.
“Although Want Want has launched new products quickly and in large quantity in recent years, the quality is not good,” Zhu Danpeng said.
Traditional channels are outdated
Want Want Group has gone through 60 years of history. Among them, the ten years from 2004 to 2013 was a stage of rapid development of Want Want, with a compound growth rate of total revenue of 21%. In April 2014, its stock price also hit a historical peak of 11.392 Hong Kong dollars per share, and its total market value once exceeded 160 billion Hong Kong dollars.
Looking back on the ten years of high light, Want Want can run at the forefront of the industry, mainly relying on not only popular items, strong advertising and marketing, but also sinking channels. The initial hot sales of products such as Want Want Senbei, Want Want Snow Cake, Want Want Milk, Want Want Crushed Ice, and Want Want QQ Candy are inseparable from wholesale markets across the country.
But after 2000, the transformation of the snack industry channel began. The full-category chain stores of casual snacks represented by Yifen and BESTORE have developed an “asset-light operation” model that is completely different from traditional snack food companies’ big single product, big production, big channel and big retail models. Under this model, the original self-produced and self-sold mode of the snack industry is gradually transitioning to product OEM and franchised chain stores.
In 2010, as e-commerce entered a period of rapid development, the “three giants of e-commerce snacks”, the three squirrels, Bestore and Baicaowei also became “Internet celebrity” brands at this time.
Facing the new situation, Want Want Group has also made many new moves on its channels. Since 2016, Want Want has started to expand its channels, and has worked hard to promote new products on multiple e-commerce platforms such as Tmall and Suning.com; in 2017, one-third of the revenue of Want Want milk drink products came from e-commerce channels; in 2018 In 2019, Want Want launched the “New Retail Strategy” and opened 45 directly-operated Wangzai Club themed stores by the end of that year.
(Taobao screenshot)
The latest financial report shows that Want Want’s newly developed content e-commerce and social e-commerce have become new growth drivers. Products such as rice crackers and snack foods have benefited from the promotion of new product combinations and the expansion of new platforms, and have achieved rapid growth. In the future, Want Want will also actively expand new e-commerce models, such as content e-commerce, social e-commerce, fresh food e-commerce, etc., and continue to explore overseas markets.
But at present, Want Want’s revenue from traditional channels still accounts for as high as 80%. In August this year, Want Want was still recruiting offline partners. The specific form of cooperation is to become a partner of Want Want, distribute Want Want products, and Want Want Company assists in logistics distribution; the partners set their own prices and distribute them in their own area. Want Want will distribute financial support every month to support partners to become future distributors.
Previously, there were media reports that the overall inventory pressure of Want Want dealers this year was relatively high, and some dealers even reached 3 to 5 times the inventory. And this partnership plan is also regarded by the industry as Want Want’s urgent demand for the second batch of merchants and new distributors.
It is reported that Want Want’s inventory turnover days in fiscal year 2021 and the first half of fiscal year 2022 are 95 days and 79 days respectively, which is much higher than the industry average of 60 days. As of June 2022, the inventory turnover days of the snack brand Dali Foods in the first half of the year were only 27.6 days.
Dairy analyst Song Liang said that in the snack food industry, the previous high-input, high-output approach is no longer feasible. Now it is necessary not only to see accurately, but also to act quickly. “In the current situation of sluggish consumption and serious market involution, Want Want should focus on high-quality single products instead of blindly launching new ones; in addition, it should strengthen its marketing level with the help of digital technology, adjust the original channel structure in a timely manner, and cut off decisively.” Channels that are inefficient and costly.”
It is worth mentioning that Want Want no longer spends crazy money on advertising and marketing, but begins to emphasize the importance of talents. In the first half of fiscal year 2022, Want Want’s distribution costs were 1.464 billion yuan, a year-on-year increase of 2.6%, accounting for 13.5% of total revenue, of which, employment expenses accounted for 5.1%, and advertising expenses accounted for 2.7%, a year-on-year increase of 0.4% respectively. % and 0.3%. During the same period, employee salaries reached 2.239 billion yuan, accounting for 20.67% of total revenue.
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