Text | Chen Xi
Source | Mantis Finance (ID: TanglangFin)
1. International team VS local team, close combat in the milk powder market
Who would have thought that it has been 12 years since the melamine incident in 2008, and China's local milk powder industry has not yet fully relieved.
Before the outbreak of the melamine incident, in the milk powder industry, the local team accounted for about 60%, of which Sanlu was the only one. According to news reports, in 2007, Sanlu had sales of about 10 billion.
At that time, in the perception of most people, the milk powder of foreign brands still belonged to Diorama, which was a rarity.
However, after the melamine incident, the reputation of the local team plummeted, the Chinese were extremely distrustful of the local milk powder, and the market share of the local team once fell to about 30%.
The trade-offs, the international teams with five major brands including Wyeth, Danone, Abbott, Mead Johnson, and Mesoo, quickly filled the gap, climbing from 40% in 2007 to 58% in 2016. Fall back.
Some people said that the past decade was a "lost decade" for the local team. During the critical period when the price and price of the milk powder industry rose, the international team harvested the industry dividend and the local team was absent. "Mantis Finance" saw that this also led to a different market route for the local team and the international team, but at the same pace: at the beginning, they occupied almost non-overlapping markets, and then wanted to go back and occupy each other's positions.
In the first step, the international team attacked the first and second tier cities, and the local team sank into the third and fourth tier cities.
(Source: China Merchants Securities)
In the ten years when the local team was absent, the international team firmly occupied the ultra-high-end market in the first- and second-tier cities. A large number of loyal consumers in the high-end market, such as Mei Su Jiaer, Wyeth Qifu, Abbott Jingzhi, Mead Johnson Lan Zhen, etc., have been recognized by a large number of consumers.
The local team's market has sunk to third- and fourth-tier cities, taking a low-price strategy and occupying the low-end market. Feihe, for example, made its fortune in the low-end market, focusing on the most populous provinces such as Henan and Shandong; and Junlebao, for example, launched an ultra-low price of 130 yuan per can (800g) in 2014.
As can be seen from the milk powder price trend chart below, the price of the local team is much lower than that of the international team.
The second step is to penetrate into each other's territory.
After the domestic team and the international team grew weak in their respective camps, the two sides began to covet each other's main market.
In the local team, after the melamine incident, Beinmei took the lead and was expected to become the leader, leading the local team to regain market share. However, Beinmei had a sharp price reduction in 2013, which led to serious channel channeling and internal competition to throw away goods. Later, there was constant friction with Fonterra, one of the shareholders, causing Fonterra to take off Beinmei's shares.
Under internal and external problems, Beinmei's net profit fell again and again, falling from the leading position of the local team. In the capital market, Beinmei was once ST. When the stock price was the lowest, only one-tenth of the highest price remained.
After Beinmei, Feihe, another brand of the local team, performed better. In recent years, Feihe aimed at the high-end market and launched a series of high-end products. The sales of high-end and low-end infant milk powder gradually changed from 1 to 1 to 3 to 1. In 2018, Feihe infant milk powder sales exceeded 9 billion yuan, of which the high-end infant milk powder series reached 6.7 billion yuan.
The international team is relying on good consumer education and an increasingly developed e-commerce network to gradually sink to the third and fourth lines.
It can be clearly seen in the "Insight Report on Online Maternal and Child Consumption Trends 2019" released by the First Financial and Commercial Data Center and Tmall Maternal and Infant. The unit price of consumer goods for mothers and infants increased.
Xiaocheng ’s parents have increased their willingness to consume, so that ultra-high-end and high-end milk powder are no longer exclusive to large and medium-sized urban families, and international team brands are gradually appearing in small-town families.
In general, the current pattern of the international team and the local team is: the international team occupies the high-end market, and because the e-commerce is increasingly developed, it gradually sinks. The local team is based on third- and fourth-tier cities and gradually develops the high-end market, but the local team does not have a unique brand in the high-end market.
2. The uncertain environment, the risks faced by the international team and the local team
The international team and the local team are not in a good relationship, but "Mantis Finance" believes that there are still two major risks of uncertainty, making it more difficult to break through.
The first major risk of uncertainty is that the population continues to reduce the impact on the milk powder industry , which is a risk point that major research institutions must mention every time.
The newborn population in China is in a period of rapid decline. In the "China Population Report: 2020" recently released by Evergrande Research Institute, the figures mentioned are shocking. After a decline of 2 million births in China in 2018, the birth population in 2019 fell by another 580,000 to 14.65 million. The child population is only 11 million.
As the population of newborns decreases, no milk powder is produced, and the entire milk powder market lacks growth momentum.
According to the forecast of China Merchants Securities Research, by 2023, China's milk powder market will reach 160 billion. As can be seen from the chart below, the growth curve of the milk powder market size will be flat in the next three years.
(Data source: China Merchants Securities)
Whether it is an international team or a local team, if you want to increase the market share of your own brand, it means grabbing food from other brands.
Judging from the actions of the local team, the main technology brand, trying to squeeze into the high-end and ultra-high-end market has become the first choice of major brands, through higher profits to make up for the shrinking market.
In addition, organic milk powder and goat milk powder have become the new favorites of major brands. Major brands are trying to create growth points by creating new market segments to cope with the sluggish market growth caused by the decline in population.
The second biggest risk of uncertainty is the popularization of parenting knowledge. This unseen force is stirring up secretly, further squeezing the existing market space.
Generally speaking, the milk powder industry divides infant milk powder according to the age of babies: the first paragraph is milk powder for infants aged 0-6 months, the second paragraph is for infants aged 6-12 months, and the third paragraph is 12-36 For infants of 4 months, the fourth paragraph is for more than 36 months.
The existing distribution ratio is that the first three stages of milk powder are relatively average, and the fourth stage is maintained at about 10%.
However, the current situation is that the popularization of parenting knowledge hits the first to fourth stages of milk powder before and after, there are wolves in front and tigers in the back.
There was a wolf before. The state vigorously promoted infant breastfeeding within 6 months, which affected the first stage of milk powder.
The benefits of breastfeeding are obvious:
For babies, babies can take nutrients from breast milk and increase their resistance. Research data shows that improving breastfeeding behavior can save 820,000 lives each year, 87% of which are babies under 6 months old. In addition, breastfeeding can help babies and mothers build a sense of intimacy and a sense of security.
For mothers, breastfeeding can reduce the mother ’s risk of breast cancer, ovarian cancer and certain cardiovascular diseases, and is conducive to uterine recovery.
As early as 2002, the World Health Organization and UNICEF jointly issued a "Global Strategy for Infant and Young Child Feeding", which recommended that infants should be exclusively breastfed and continue breastfeeding during the first 6 months of life. To 2 years old or above.
China has also vigorously responded to the breastfeeding policy and plans to "achieve an exclusive breastfeeding rate of 50% for infants within 6 months in 2020."
In fact, the proportion of breastfeeding in China has always been very low, only 30% of children within 6 months have achieved exclusive breastfeeding. This is the report data obtained by China Development Research Foundation after using a multi-stage stratified cluster random sampling method to investigate the breastfeeding status of 10223 families.
As an auxiliary policy, the government issued in the "Domestic Infant Formula Milk Powder Promotion Action Plan", "It is not allowed to advertise infant formula products consumed by babies 0-12 months old."
Nielsen's advertising monitoring data shows that from 2012 to 2016, in China's TV, newspapers, magazines and radio stations, infant milk powder advertising accounted for the highest proportion of all infant product advertising, reaching more than 40%, followed by infant medicine And diapers.
This ban will inevitably limit the development of the milk powder market to a large extent, and it will also increase the difficulty of selling the milk powder in the second stage, because the consumption of milk powder is continuous, unless there are obvious safety issues, parents rarely change midway Milk powder brand.
At the same time, a large number of childcare bloggers such as WeChat public account and Weibo, as well as a large number of childcare books on the market, are also actively promoting the benefits of exclusive breastfeeding. Breastfeeding.
Many young mothers who are willing to actively search for parenting knowledge, especially intellectual women in big cities, are more inclined to exclusive breastfeeding and extend breastfeeding time. This is also reflected in the China Development Research Foundation ’s survey. The exclusive breastfeeding rate of infants within 6 months varies from region to region, with the highest rate of exclusive breastfeeding in large cities, reaching 35.6%.
Both the international team and the local team must accept this change: 0-6 months of infant formula should be returned to the "support" and "assisted" exclusive breastfeeding positions. "Mantis Finance" has noticed that major brands have actively popped up "promoting breastfeeding" on the official website.
There is a tiger later, which refers to the richness of alternative foods, affecting the third and fourth stages of infant milk powder.
The third and fourth stages of infant formula are for children 1 year old and above. At this age, there are many foods that can replace infant formula, such as yogurt and pure milk.
It is mentioned in the authoritative parenting book "Children Encyclopedia of the American Academy of Pediatrics (Sixth Edition)": "After the child reaches the age of 1, you can start drinking pure milk or low-fat milk with only 2% fat, but you must Ensure a balanced diet (cereals, vegetables, fruits and meat). "
DHA, ARA and other nutrients that parents have always admired can also be supplemented by abundant other foods, such as deep-sea fish. Under the trend of sinking fresh e-commerce, even in third- and fourth-tier cities, it is not difficult to buy such food.
Without much loss in nutrition, the price comparison is very obvious.
The price of 1L * 12 boxes of imported pure milk is generally around 120 yuan. The child spends only 200 yuan a month according to the amount of 400ml a day.
But if according to canned 800g milk powder, four cans a month, even Junlebao taking the low-end route will cost about 750 yuan. If it is high-end or even ultra-high-end milk powder, the monthly cost ranges from 1,000 to 2,000 yuan.
The major milk powder companies focus on the concept of "tailor-made", trying to guide consumers to continue to buy from the lack of pure milk, for example, pure milk does not contain vitamin C, does not contain resistance factors. But from the perspective of the price of the third and fourth stage milk powder compared to the first and second stage of the same series, the effect is not too good.
to sum up
In June 2019, the six national ministries and commissions jointly issued a document to recapture the market share of domestic milk powder to reach 60% before the melamine incident.
How to achieve such a goal, there are still many things for the local team to do. How to rebuild consumer confidence? How to cultivate consumer loyalty? These are things worth pondering.
For consumers, the use of foreign brands and domestic brands is still very subtle. For example, if a child eats diarrhea from a foreign brand, parents may think that the child's gastrointestinal disorder is not suitable, and then change the brand, the choice is still a foreign brand. But if the domestic brand makes the child diarrhea, then the first reaction of the parents is probably that the quality of the domestic brand is not good.
This subtle psychology reflects the lack of confidence of Chinese people in domestic brands.
And the international team will not sit still, it will inevitably make a fuss on the brand barriers, build a long moat, prevent the invasion of the local team, and take the initiative to attack and launch counterattacks.
Seen in this way, every point of market share change will be a real killer.
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