Dominated by Trends, where is the Way out for the F&B Industry？

网络转载 • 2019年6月30日 23:40 • 餐饮资讯 • 阅读 1

▲ Follow us and “Sticky On Top”

Author：Shushu

Fragmented – not only the word to describe consumers’ available time and attention, but also can describe the food and beverage industry over the past six months.

Speaking of the innovation of food and beverage in the first half of 2019, is there anything leaving you a deep impression? Honestly speaking, I can think of a bunch of trendy words and phrases as shown in the above. However, there is not any impressive innovation case coming up in my mind. And I cannot think of any product achieving huge success or winning consumers’ preference, either. It seems that everything is amazing and colorful, while nothing stands out particularly.

Data shows the same condition. According to Kantar Worldpanel, in China’s 2018 FMCG industry, packaged food sales grew by 4.7% and beverage sales grew by 1.5%. There is a wide gap between their growth and that of cosmetics industry whose growth rate is two digits. This rapid growth of non-food industries, especially personal care industry, continued in the first quarter of 2019. Rather, the year-on-year growth of food and beverage dropped 0.1%. Poor market performance during this period.

Are we going to face a downgrade in consumption? Not likely. Jason Yu, the general manager of Kantar Worldpanel in China, shares that although the quantity that consumers buy is not as large as before, what they buy usually is quite expensive, even far more expensive than CPI (Consumer Price Index). In China’s entire FMCG industry, non-food sales growth is much higher than the food sector, which has put great pressure on the F&B industry. Under such circumstance, what is the driving force for the continued innovation of food and beverage? Where is the growth point? Are consumers willing to pay even higher prices for products?

The newly released FBIF 2019-2020 Global Food & Beverage Innovation Report includes the lessons and experiences of the leading companies from their explorations in this industry in the following five aspects: corporate strategy, product R&D, marketing, packaging, and mergers and acquisitions. The article will extract core knowledge while for the full version of the report which contains a large number of cases and views, please scroll down to the end.

Three Key Elements of Product Innovation – Raw Materials, Flavors, and Functions.

Pic: 10 Trends in 2019 global F&B industries (cited from the presentation of DuPont Nutrition & Health in FBIF2019).

From the presentation of Dr. Susan Jin of DuPont Nutrition & Health, it is not difficult to extract the three key elements of 2019 Global food and beverage innovation, which are raw materials, flavors, and functions. All of them serve for bringing consumers’ pursuits for enjoyment and health into an equilibrium.

PwC’s US-based HRI once predicted at the end of 2016 that “The health and related industries in China are still in a blue ocean market. Chinese consumers are willing to pay a 30% or even more for healthier food products with higher-quality.” In the competition for sales, the specific strategies serving for raw materials, flavors, and functions that companies devote to are listed as bellows.

The absolute amount of plant-based new fermented products is small, but the growth rate is very fast with a compound growth rate of 50% in the past 7 years.
There are more claims concerning the health effects of functional dairy products and yogurt drinks, e.g. zero sugar & fat, meal replacement, immunity, promoting digestion and nutrient absorption, protecting the intestines, etc.
To make bold mix of new flavors, e.g. Oreos in flavor of hot chicken wing and Lay’s potato chips in flavors of white peach, plum, cherry blossom milk only for spring, etc. In this way, snacks are changed into free N+1 meal choice with enjoyment.

Market Differently Based on Technology and Traffic

At the beginning, we mentioned that “fragmented” is the word to well depict the situations of China’s recent F&B industry. Why? Because the era of the Great Single Product has ended.

In the past, one herbal tea product can reach more than 20 billion yuan sales and a milk product can be over 10 billion sales. But in the last five to six years, if a product can be sold to 1 billion, we will all take it as a big single product. Why should we be against big singles? To quote Frank Lin, a master of trendy product creation and the CEO of Chicecream, “Because big singles mean that you place consumers’ interests and hobbies on just one product. If their interests and hobbies change, there will be big problems.”

Pic: The rise of small, medium and new brands (Cited from the presentation of Li Jing, Investor, former VP of Baidu in FBIF2019)

This point echoes with the analysis of Li Jing, Investor, former VP of Baidu. The thickness of each layer in the picture above represents a change in the market share of a single brand over time. We can see that China has a mass of data indicating the growth from the lower left to the top right corner. Also, the inflection point range is larger than that of the United States, which means that in China’s FMCG market, there are a large number of small and medium-sized brands rising, and they occupy the market of large brands. It also shows that the scale effect is gradually disappearing.

In the past, one single product is meant to be sold continuously to new consumers. Back then, the landscape was quite stable regarding the marketing channels and the media environment so wining customers in low costs with high efficiency is a very dominating thought. Nowadays, since various social media and platforms have made traffic huge but segmented, the brand could only focus on a specific consumer group, for whom it continuously provides comprehensive plans combining services, products, and relationships. Only in this way, the brand will have the opportunity to be different and be lasting.

*There are a lot of cases in FBIF 2019-2020 Global Food & Beverage Innovation Report. Please go to the end of the article for the access

Pack the Products, Design the Future

If design is proved to have commercial values, how could brands, design agencies, packaging and technology providers maximize these values?

“Multisensory experiences are the cornerstone of creating and nurturing brand positioning.”– Ximena O’Reilly, Global Head of Visual Identity & Design, Nestlé

The unchangeable question for the team Ximena is leading is what consumers want to have as they see, hear, touch, smell, or taste Nestlé’s products? Ximena’s team not only designs the label and structure, but a multisensory, all-round brand experience.

The recent popular White Rabbit campaign in fact provides a model concerning how to create a multisensory, all-round brand experience accidentally. Call it “accidentally” is because the original intention of White Rabbit’s recent actions is to welcome its 60th anniversary. But there is no denying that the milk tea shop, the outcome of cooperation with Happy Lemons and the fragrance series for happy childhood (including the White Rabbit Creamy Candy perfume, shower gel, body lotion, hand cream and car fragrance), the outcome of cooperation with ScentLibrary, have added different sensory touchpoints to the White Rabbit.

Pic: White Rabbit 60th Anniversary Campaign

Before, White Rabbit was only a creamy candy with childhood memory. But now it provides you with drinks and perfumes. Perhaps you might even imagine that if you would like to lick yourself once sprayed the White Rabbit perfume. What is the effect of the whole campaign? The peak daily sales of the creamy candies in the gift box reached more than 60,000 RMB. In the past, the peak sales in Wanda or Bailian only reached 10,000 – 20,000 RMB. As China Business Network (CBN) reported, “Until the 60th year, White Rabbit finally became a brand instead of a milk candy.”

Undoubtedly in the future, there will be countless food and beverage brands entering into the lives of countless consumers. Product visual identity is always the first carrier and the new packaging materials and structures guarantee the user experience. On top of this, what extraordinary experiences and memory points that we can design will determine the soul of a brand.

Open Innovation Forwards the Diversification and Rapid Growth of Enterprises

For both giants and startups, it is a big challenge to do a good job in three aspects (products R & D, marketing, and packaging) simultaneously and to maintain the growing momentum in a weakly expanding market.

To meet this challenge, Nestlé has reduced its preparation time for new product launch from 18-24 months to 6-8 months. The two products, Muscle Hunt and Xingshan, which targeted China’s market, have been continuously improved along with their entrance into the market. For accelerating business transformation, incubators, merging and acquisitions have already been a proven model to help giants reach new business layouts as quickly as possible.

Another illustration of open innovation in the Chinese market is the popularity of cross-sectors collaboration and co-branded products. Food and beverage industry keeps finding cooperation chances with strong growing fields, e.g. cosmetics, personal care, fashion, street or traditional culture. With the help of powerful growth momentum in the field of cooperation, F&B companies can build and highlight their brand strength in a smart way.

Pic: Popular F&B innovation cases in China’s market

In the FBIF 2019-2020 Global Food & Beverage Innovation Report, a number of brand cases and corporate explorations have been presented. In summary, what the entire reports depicts is a general picture of the F&B industry, echoing with the point of Jeacy Yan, the partner of IDG Capital:

The F&B industry is large. Its growth rate is relatively flat, but it is never lack of new opportunities. There is only one phenomenon looking strange. In the F&B industry, on the one hand, the competitive dimensions, e.g. products, services, marketing, etc., have been highly homogenized, which leads to overcapacity and repeated construction. On the other hand, the consumer demand is rising, and their demand for better products with higher quality is increasing. Finally a great imbalance between supply and demand can be seen.

To solve this problem, what is essential is that the F&B industry should sense the “fear” of being dominated by so many colorful looking-good trends. Actions, like blindly following the trends of cross-sector collaborations without considering the true brand essence or pursuing to be an online famous brand without learning the inner logic, etc., represent misunderstandings of the true meanings of this era. To make a comparison, it is easy to say, “We would sponsor any Online Show if it has been sponsored by Nongfu Spring”. However, you will never know why it is Nongfu Spring who can always be able to hit the right programs, all the way through THE RAP OF CHINA, Idol Producer, to I’m CZR.

Let’s stop here and please refer to the full version of the report for deeper insights and profound cases. As the F&B industry promoter, we at FBIF truly wishes that being famous online is only the first step of China’s brands. It would be super if it can be long and lasting in the future, without given up by consumers’ mind.

Tips:

*Havebrilliantideasorarticlestocontribute?FeelfreetocontactWilburZhu(WeChatID:aotokuer)

/ Read More/

/WeChat Groups /

Long Press this QR Code to follow“FBIF“.Reply number“3” in the main menuto join the largest F&B WeChat Group in the world (more than 40,000+ members). WeChat Groups includeCEO,Dairy,Yogurt,Snacks,coffee,FSMP, Condiments,Beverage,Marketing,Retail,R&D,Packaging,OEMand etc. Follow us and reply “3” in the menu to get more information.