2020 is a highly challenging year for the food industry, as the pandemic has swept the globe and the international situation is complex and ever-changing. Global enterprises are facing numerous uncertainties. How can the retail industry respond to challenges by restructuring consumption scenarios, customer relationships, and customer value in the face of new retail environments, new consumer changes, and new competitive environments? Recently, the China Food Expo Global New Retail Summit was held in Shanghai, where guests discussed new strategies, ideas, and methods to open up new perspectives for the development of food retail, while also bringing innovative solutions at the practical level。
Post epidemic recovery
Stable performance of the food industry
Li Yue, the managing director of Beijing Albotcia Exhibition Co., Ltd., said in his speech that the outbreak of the COVID-19 has brought severe challenges to the food industry. The complex and volatile international environment and the development of the epidemic have also blocked many foreign trade exchanges. Although the domestic economy has gradually recovered, the development of the food industry still faces many uncertainties。
Regarding this uncertainty, Lei Yang, Executive Vice General Manager of Beijing Hengkang Tiancheng Trading Co., Ltd., candidly stated that as a supplier focused on imported food supply chain, he feels the tremendous changes brought about by the epidemic. In terms of categories, the sales of rice, flour, grain, oil, and instant food products have significantly increased compared to before; The B-end customers have also undergone significant changes, with some traditional offline customers being impacted, resulting in a decline in sales or even being eliminated. At the same time, a large number of popular online food products have emerged in the self media market; And the reduction in the number of imported new products, supply problems, and increased costs have become a real pain for Lei Yang。
Despite a minor earthquake in Lei Yangs imported food supply chain, from a consumer perspective, the enthusiasm for imported food consumption remains high. According to Xi Shan, the general manager of Tmall Globals food industry, the growth of online imported food exceeded 40% in 2020, and the market size is expected to exceed 3 trillion yuan in 2021. The food category will be the main star driven category for the growth of the imported consumer goods market in the next 2-3 years. As an important category of livelihood needs, the food industry has strong anti cyclical capabilities and continues to grow rapidly under the impact of the epidemic environment。
The changes in population structure have brought about systematic changes in consumption structure, and people of different ages have different concerns about food. "Fang Fang, Managing Director of iResearch Capital, said that young people are more concerned about the" other economy "that is novel, attractive, weight loss, and dominated by women; Middle aged people pay attention to high-quality products, health, and wellness; In addition to health and wellness, elderly people also have specific needs. In the coming year, the keywords in the online platform food industry will be focused on being authentic, healthy, and novel, "said Xi Shan
According to the statistics of the National Bureau of Statistics, the impact of the COVID-19 on Chinas economy is mainly the sharp decline of GDP and consumer market in the first quarter; Starting from the second quarter, the entire economy began to rebound. Nielsen China predicts that in the absence of repeated outbreaks in the future, after 3-4 quarters, the Chinese economy, including the consumer market, will return to its normal pre pandemic state。
Zheng Ye, Director of Fast Moving Consumer Goods Research at Nielsen China, said at the summit that in terms of the retail industry, the recovery is still ongoing. Nielsen research shows that online channel sales of fast-moving consumer goods increased by 6% year-on-year in July, and the growth rate in June was 32%; As of July this year, the year-on-year growth rate was 32%. In July, offline channel sales decreased by 4%, which is narrower than the 5% decrease in June; As of July this year, it has decreased by 5% year-on-year. Affected by the slowdown in online channel growth, the full channel sales of fast-moving consumer goods decreased by 2% in July; 4% year-on-year growth as of July this year。
The transformation of consumer behavior and shopping patterns during the epidemic is also driving brand innovation to meet new consumer needs and create new consumption scenarios. The Nielsen Innovation Tracking Project research shows that although the number of new products from January to July this year decreased by 20% compared to the same period last year, the production capacity growth rate of new products has significantly increased compared to last year; Local brands remain the main force of innovation, with 8 out of every 10 new products coming from local Chinese companies。
The biggest impact of the epidemic is not on domestic products, but on imported food. This is the most intuitive feeling of Yu Miao, the head of the daily Youxian fast moving consumer goods business, on China Food Exhibition. There are relatively few new imported food products, but the emerging domestic brands and categories, as well as some "small and lucky" products, have deeply touched me. Daily Fresh Future will pay more attention to these new domestic products and provide users with more products with selling points
In terms of channels, the growth of e-commerce channels continues. At the same time, buyers of traditional channels are gradually shifting towards small modern channels and convenience stores. Offline, store capacity continues to shift, and the concentration ratio of large and small supermarkets is improving。
In terms of cities, the growth rate of online cities is still declining, except for rural areas. 68% of rural sales occur in offline cities and are showing a growth trend. The growth in rural areas has to some extent slowed down the decline in the growth rate of offline cities, and e-commerce has promoted the growth of online cities and the stability of offline cities。
Meanwhile, during the epidemic period, O2O achieved breakthrough growth, with the growth rate of O2O orders nationwide reaching 20% in the first quarter. As of the end of June, the growth rate of O2O orders nationwide was 14%. Research shows that O2O is still continuously growing, but this growth is mainly driven by offline cities, and the growth momentum is very different in different regions. And community stores, due to their inherent proximity advantages, undoubtedly become a place for retailers and brand merchants to compete for layout. Research has found that consumers prefer to purchase specific products through near field consumption, and overall, community stores perform better than non community stores。
Zheng Ye also mentioned that basic categories such as liquid milk and packaged water tend to be consumed at low end prices, but in the category of hygiene products, consumption tends to focus on high-efficiency/high priced products, showing a trend of consumption upgrading. In terms of food, especially staple foods, based on the increasing economic pressure on consumers, there is a trend of consumption grading。
Segmented track
New Retail Seizes the Opportunity to Break the Circle
According to data from the National Bureau of Statistics, in 2019, the operating revenue of enterprises above designated size in Chinas food industry reached 8.1 trillion yuan, a year-on-year increase of 4.2%; The total profit achieved was 577.5 billion yuan, a year-on-year increase of 7.8%. Even though the first half of the year was affected by the epidemic, from January to July 2020, enterprises above designated size in the national food industry achieved a total profit of 320.39 billion yuan, a year-on-year increase of 7.5%, significantly better than the average decline of 8.1% in the national industry. In terms of residents consumption structure, the food and beverage industry accounts for about 30% of the consumption industry。
In the past two years, with the changes in residents income and supply channels, as well as the iteration of end consumer user groups, the food industry has also undergone significant changes and upgrades, giving birth to many opportunities, The food industry has always been a track that capital is very concerned about. From the perspective of investors, better companies can be caught in places with large water and fish, and deep water markets. Moving towards a more diverse, healthy, and convenient direction is our summary of the food industry. "Huang Bo, Executive General Manager of CICC Capital, said that from the perspective of investors, they are optimistic about the three segmented tracks of new tea drinks, food supply chain, and pet food。
At present, the "new generation" population composed of the post-80s, post-90s, and post-2000s is approximately 550 million, accounting for about 40% of the national population. According to statistics, over half of the end demand in the domestic food industry in the future will come from this population. On the demand side, Huang Bo believes that the iteration of consumer groups brought by the new generation has become a new engine driving changes in the catering consumption industry. The epidemic has also brought changes to the supply side. Firstly, the popularization and online use of mobile internet have driven changes in consumption frequency and habits; Secondly, technological innovation is transforming both online and offline stores, making them more focused on experiential and scenario based sales。
In terms of new tea drinks, their characteristics lie in the improvement of craftsmanship and quality, shifting from traditional industrial modulation to specialized current modulation, maintaining an annual growth rate of over 30%. In terms of market structure, the competition pattern in first and second tier cities is relatively fierce, with both Xicha and Lele Tea concentrated in first and second tier cities. However, there are great opportunities in third and fourth tier cities, such as Honey Snow Ice City, which has over 10000 chain stores nationwide. More than 75% of Chinas population is located in third and fourth tier cities, and the growth rate of new tea drinks is very fast. There is real space for entrepreneurship and investment, and in the future, it will focus on third and fourth tier cities, "Huang Bo said。
And the food supply chain is the future battleground of the catering industry. Huang Bo mentioned that the proportion of raw material procurement in the overall market of the food and beverage industry is between 30% and 40%. The entire food supply chain of raw materials in China is lengthy, and most of it goes through wholesale at the first, second, and even third levels from the place of origin to the place of sale. Logistics efficiency and markup rate will also affect the efficiency of the industry。
As expected, if efficiency can be improved in the above links, the procurement costs of the entire catering, food and beverage enterprise are expected to decrease by 10-15%, corresponding to a purchase of two trillion yuan, which will generate a market space of 200-300 billion yuan. The tax reform of replacing business tax with value-added tax in China will also benefit supply chain enterprises. "Huang Bo admitted that small and medium-sized chain enterprises have more demand for using food supply chain service platforms for services。
At the same time, the development of the food industry is forcing the transformation of source enterprises. Since 2010, Haidilao has been continuously transforming the supply chain of its affiliated enterprises, aiming to achieve centralized procurement, cost reduction and efficiency increase, and bulk transportation, in order to reduce logistics costs and empower small and medium-sized enterprises with flexibility。
Huang Bo revealed that leading domestic funds have already started to expand in this field for a long time. "If we refer to the situation abroad, there is still a lot of room for growth in domestic supply chain finance. Moreover, the complexity of Chinese food ingredient supply is not the same as that of Western food. Once we can establish domain barriers in China, these barriers will be higher than the competition barriers for similar enterprises in the United States。
Yu Miao has a deep understanding of establishing his own supply chain. After the outbreak of the epidemic, the main channels for consumers to purchase fresh food shifted from offline vegetable markets and supermarkets to online fresh food channels. The daily sales of Youxian increased by four times in February compared to January, and the sales of categories such as rice, flour, grain and oil, frozen food, semi-finished products, and convenient self heating food increased by more than ten times or even more. The epidemic has played a significant role in promoting the entire fresh food retail platform. Even so, Daily Fresh still faces great difficulties, including during the most difficult lockdown period of the epidemic, when goods are stuck in the manufacturers warehouse and cannot be pulled out, resulting in users not being able to purchase goods on the platform. Yu Miao revealed that in the coming years, the Daily Fresh Supply Chain will extend upstream, including directly customizing products to factories, opening vegetable processing plants, and placing more upstream resources in his own hands. In the next five years, fresh e-commerce will become the mainstream purchasing channel for the mainstream population
In 2020, the transformation of digital intelligence has become a consensus for the development of retail enterprises, and the promotion of the "dual circulation" economic model will unleash Chinas huge consumption potential. Fang Fang believes that in the new consumer environment, traditional retail models will undergo a large-scale transformation, and the retail industry should seize new channels, new demands, and new brands to break through the cycle. In the future, online focus will be on short videos+live streaming, while offline focus will be on new retail/unmanned retail. Fang Fang Fang introduced that live streaming e-commerce has been in a period of rapid growth from its inception to its outbreak for three years. During the epidemic period, the activity of live streaming platforms has increased, and after the epidemic, investment in live streaming marketing will also be increased. It is expected that the scale of live streaming e-commerce transactions will exceed 1.9 trillion yuan in 2021. There are still opportunities offline, because offline models are being reshaped. "She believes that convenience stores are a new trend offline and can spawn many new brands. In fact, the convenience store industry still maintains rapid growth, leading the physical retail industry in terms of growth rate. In addition, the technological innovation of high-speed trains has brought new traffic and consumption scenarios, and their spatial value will be revitalized。
What exactly does new retail mean? Zhao Hanli, Vice President of Lai Yifen Snack Chain, admitted that the high cost of new retail technology is a big threshold. Tang Rongqiu, Deputy General Manager of Lanhe (Suzhou) Food Co., Ltd., believes that the most important aspect of new retail is the integration of online and offline. Wherever the consumer group is, the channel is where the convenience of new retail lies. Shenyang, the brand management director of Shanghai Golden Monkey Food Co., Ltd., also said that the so-called new retail is just a noun, and online e-commerce and offline physical stores can never be cut and separated. Yang Dongyue, the general manager of e-commerce at Qiaqia Food Co., Ltd., added that by integrating new retail as a channel, mastering C-end data, analyzing consumer needs and insights, and extending online theories to offline ones to empower the brand, the value of new retail will be higher from this perspective.
Source: China Food News Network
