"There is not much time left for new local brands." Some entrepreneurs and investors have predicted the line of life and death: the next three years will be the big test of the local new brands, and those who can not bear the big international brands swooping attack of the new brand, can only be a big wave of sand.

Three battles

The international brands are exerting pressure on the local new brands from three dimensions, the first and foremost is the brand mind.

An industry insider familiar with Huang Jinfeng, the founder of Perfect Diary, told HuffPost that Huang Jinfeng once told his own confusion: if a consumer breaks a YSL lipstick, the consumer's first reaction is often "Could it be that there is a problem with my usage"; but if a consumer breaks a Perfect Diary lipstick, the consumer's first reaction is often "Could it be that there is a problem with my usage". The first reaction of consumers is often "Murphy quality problems".

"This is not only the perfect diary encountered confusion, almost every new local brands are facing this problem, the international brands used decades or even more than a century to build the brand power and y affect the user's mind, while our new brands generally in the past 3 ~ 6 years just rise, there is not enough time to slowly build the brand mind. " U.S. stock analyst Liu Bin told Tiger Sense, hidden in the longer "mind building period" in the intergenerational dividend: when grandmothers, mothers are using a brand, the younger generation will naturally enter the brand's "potential user pool", "although there is intergenerational reversal of the brand power and y influence the user's mind, our new brands are generally just emerging in the past 3 to 6 years, there is not enough time to slowly build the brand. "There is a generational backlash, but this backlash can sometimes deepen awareness."

Sun Lai Chun felt this very y: "We spent 10 years in the mind level moat, but now it seems that this moat is not deep enough. I think for the brand, the biggest hurdle is not raw materials, not a super single product, but the brand in the consumer's mind in the end on behalf of what?" Sun Laichun told Tiger Sense, when Chanel high-profile entry into the red camellia series of products, he felt like a small actor with "millet plus rifles shivering" and the opposite side of the "like having cannons, aircraft carriers, nuclear weapons, with a hundred years of history, rich and powerful giants! "

This is the first time I've ever seen a man with a gun.

The details that impressed him is that in microblogging and other traffic platforms, Chanel has a huge number of fans, part of the Lin Ching-hsien users are also Chanel's depth of fans - when the release of a few and the "Chanel layout of the red camellia products," the relevant microblogging, some users even "water", take the initiative to side with Chanel. "Feel the back of the enemy, consumers are our baby, we can only hurry to appease."

2021, the international brands to further "brand mind advantage" to play to the fullest. A head of a head of e-commerce platform, who wished to remain anonymous, told Tiger Sense that some of the previous "big brands do not see the promotion, placement mode, began to be adopted by the senior management."

A typical case is Estee Lauder's budget for Taobao for the first time in its history in 2021. Previously, Estee Lauder and other headline brands almost "didn't touch Taobao" or even prepared for the expense, the source told HuffPost.

In addition to skincare and cosmetics, the same thing is happening in the field of coffee, shoes and clothing, pets, tide play and so on. Taking coffee as an example, an international head coffee brand not only increased its marketing budget in China in 2021, but also almost reorganized its marketing team. On Jittery Voice, Xiaohongshu and B Station, the brand has cooperated with daren and MCN organizations in large numbers and started to set up its own live broadcasting system. Only two years ago, the brand's senior management was "cautious and hesitant" about these new traffic investment models.

This change in the big brands is summarized by insiders as "grounded". And the grounded marketing model, so that their brand mind dividend multiplied. The head of a Beijing-based marketing agency specializing in consumer goods companies told HuffPost that MCNs, UP masters, and KOLs themselves want to be supported by big brands, and that "for the same price, we tend to prioritize cooperation with international brands because it will be advantageous to receive orders in the future. And the truer situation is: international big brands out of the money, generally slightly higher; as a party, generally more professional."

Outside of the mind, the channel has become another major battleground for local and international brands.

A local sparkling water brand encountered strong channel pressure in 2021. In the CS channel and KA channel, Coca-Cola and other big brands are almost "firing on all fronts". (CS channel: mainly convenience stores; KA channel: mainly hypermarkets)

Some industry insiders told Tiger Sense that these big brands have increased their layout in CS and other channels in 2021, and the CS channel is exactly the key port for the rise of new local beverage brands after 2018.

The same thing happened in the skincare and beauty sector. 2021 local beauty collection stores opened up a start-up boom, and brands such as Talking Plum, Black Hole, and Colorist have entered the expansion period. But it is interesting to note that the beauty collection store entrepreneurial tide, did not bring real dividends to the local brand, but instead is the international big brand, big brand incubation sub-brand, as well as foreign niche head brand tasted the dividends.

A beauty collection store brand founder who did not want to be named told Tiger Sense that in 2021, some of the big international brands have increased their "door-to-door sales" efforts, which makes her feel "unexpected". "In 2018~2019, you still have to find a way to contact these big brands to try to form a cooperation, and in the second half of 2020 to 2021, the big brands lowered their stance and opened up to these local channels like never before."

She once at 10 pm, received an unfamiliar phone call, claiming to be a second-tier European brand marketing head of the Chinese region, the other side said that they wanted to give away a portion of its sub-brand new products for free, to its stores "test sale". The founder said bluntly, her first reaction was "encountered a liar". I did not expect a few days later, the market leader through a friend to contact her again, the two sides eventually formed a cooperation.

"In 2021, why can't many new local brands find offline ports? Because big international brands are flooding the place with their products, and the big brands are not trying to hit anyone in a targeted way, but as an indirect result, it puts a huge channel pressure on local new products."

The battle for channels is also happening in the online world .In 2021, the pitches for quality live streaming became more scarce. A person familiar with Tmall told Tiger Sense, in the field of cosmetics, in 2021, the international brands have increased the investment in the online live broadcasting room, especially the middle waist anchor and head anchor (a few big super anchor outside the head anchor with strong goods), and these anchors in order to improve their own "sense of seniority and influence", often give priority to and international brands to cooperate, in the live season and even part of the live room 80% of the pit are international brands or brands under the sub-brand "seize". "Statistically speaking, the total number of online pitches obtained by new local brands in 2021 is relatively small in these years."

The "war" also extends to the level of raw materials and supply chain.

In the coffee track, due to high shipping prices and the impact of drought and frost in Brazil, high-quality coffee beans are starting to be scarce and prices continue to rise. And Nestle and other international brands with their own resource advantages, early completion of the coffee bean reserves.

A person familiar with Nestlé told Tiger Sense in 2021 that brands such as Nestlé have plenty of raw materials stocked in their warehouses in China and have long completed their orders for the coming year. "The uncertainty of upstream raw materials has a relatively small impact on Nestle, which is one of the few super-large brands, and a larger impact on some of the new local brands - especially those that are highly dependent on overseas coffee bean resources."

The source said, because Nestle has the world's top purchasing volume, when the global coffee beans into the scarcity cycle, suppliers will also prioritize Nestle's orders, and even take into account the future of long-term cooperation, and the appropriate "price maintenance" will not be excessive price increases.

But for local brands, the solution to the problem of coffee raw materials is not so easy. A dealer who wished to remain anonymous told Tiger Sense that, on the one hand, local brands need to increase the price of overseas high-quality coffee beans, which increases the cost pressure; on the other hand, due to the reduction in production of some coffee beans, some small and medium-sized local brands can not get beans can only be replaced by the second best varieties - this leads to changes in the taste of the brand to face more C-suite Uncertainty.

In cosmetics and toys, the pressure on the supply chain is most evident at the foundry end. Take toys as an example, Guangdong has the world's largest toy OEM base, in 2020 when the epidemic was at its worst, some of the overseas orders were put on hold, which allowed the local tide of toy brands to get a rare "OEM production capacity gap good opportunity". And in 2021, with some of the overseas orders restored and several major international toy giants to increase the penetration of the Asia-Pacific market, Guangdong production capacity began to tilt to the international brands.

Ma Ming has a medium-sized toy factory in Dongguan, he told the tiger smell 2021 part of the local tide of toy brands repeatedly appeared "out of stock" problem, it is because of "foundry capacity". "Because the toy OEM is a need for brand and OEM side of the long-term integration of things, so most of the OEM are happy and has been many years of cooperation with the international brands to continue the depth of binding, the local brand in the epidemic during the production capacity to get the phenomenon is accidental, but this accidental transformation into a sustained inevitable is very difficult."

In the face of international brands in the three dimensions of the challenge launched, many local brands have begun to think, we all want to understand the "big brand offensive tide" behind the underlying logic. There is no lack of foresight, they have expected this scene a few years ago, but the reality is more rapid.

The trace and the unexpected

Wu Jun, the founder of Three and a Half Men, told a friend in 2020 that the blockade of local brands by big brands was a matter of time. At the time, Wu Jun's judgment was that it would take about "2 years" for the big brands to "react".

Everything came earlier than expected.

In October 2021, Nestlé and Starbucks partnered to launch the first boutique instant coffee - the new Starbucks Starbucks Ultra Boutique Instant Coffee. It's an instant, outer recyclable, freeze-dried product made from Arabica coffee beans. (Tiger Note: In 2018, Nestle permanently bought out Starbucks' worldwide "rights to sell coffee and other food and beverage products outside of stores" for $715 million, and revenue from such products is included in Nestle's financial results.)

It is worth noting that in 2021 in the coffee "online world", Nestlé - Starbucks and three and a half of the competition has been "white hot". To e-commerce channel retail sales rankings, for example, although Nestle is sitting in the first place, but the second three and a half with the gap is gradually narrowing. In the double eleven period, three and a half and Nestle divided into Tmall platform first and second place.

The launch of boutique instant coffee products, was seen in the circle as "Nestle into the three half of the local new brand hinterland". A coffee industry analyst who wished to remain anonymous told Huffington Post that the three local brands, three and a half, Yong Pu, Sumida River, in recent years, from the hands of the international brands "eat" to a sizable share of the coffee market. "Their strategy is all about carving out a whole new category and becoming its head. And Nestlé and other big names now strategy is to enter the category directly, in other words: head-on war."

Feeling that the big names are coming early, there are also cosmetic circles.

Sun Lai-chun said, his earliest prediction is that in the past one or two years after the epidemic, the big brands completely recovered, before launching the "swooping offensive". As South Korea and Japan have camellia producing areas, Lin Qingxuan internal has been "worried" about Japan and South Korea will take the lead in the camellia category, but their investigators delayed to see Japan and South Korea's big names in the action, in the "slightly relieved" when, Chanel first came.

"During the epidemic, we have a great deal of energy, as if we had just finished a vicious battle, without a complete rest and recovery, ushered in a super rival."

Feng Li, founding partner of Peak Rui Capital, told HuffPost that the epidemic seriously affected the sales budgets and inventories of large global companies, and in order to clear inventory and solve the problem of high penetration of e-commerce in China, some of the big brands offered special "price lines" to the Chinese market from 2020 onwards. In the past, these brands are not allowed to "break the price of sales" under any circumstances, on the basis of breaking the price of these brands from 2020 double eleven sales surged, and the same thing continues to 2021.

An unnamed e-commerce platform head pointed out another reason for the big brands' "swooping offensive": in the Chinese market, some of the big international brands have already seen a weak growth rate in 2019. On the one hand, the rise of the local Z generation, began to have a stronger interest in new brands, on the other hand, the local new brands to "low price flat replacement" as a strong part of the market.

A key detail is that in 2020 and 2021, the growth rate of some coffee and cosmetics giants will barely remain at the same level as before 2018 after adopting a low-pricing strategy, in other words, without the dividend of price cuts, these brands are likely to continue to face "weak growth".

"2020 to 2021, a number of international brands replaced the executive team in the Chinese market, two factors are very critical, first of all, the Chinese market has been an indispensable big brands during the epidemic can be growth dynamic market, on the other hand, the headquarters of the brand for the last few years in the Chinese market growth trend is not satisfied." These people told Tiger Sense, because the epidemic in the global scope of the "normalization" trend, so the international big brands in advance to change the strategy, began from 2020 to boldly strengthen the Chinese market change - this led to local brands early to face strong competition.

The early emergence of strong competition, so that the local brand lost part of the market share: in the broken price strategy, the international brands from 2020 onwards in the e-commerce platform to show strong, to skin care products, for example, in the annual sales of the top ten list, 2020 ~ 2021 two-year period of an average of eight places per year by the international brands and their sub-brands occupy.

Hidden pressures cannot be ignored. Most brands are facing higher cost pressures in 2021 due to high shipping and oil prices - leading to a steady erosion of profit margins for local brands. The international brands with greater volume, historical advantages of the formation of the resource network has a stronger ability to resist pressure, which means that when the international brands to fight price cuts, giveaways, local brands can only maintain the original price of conservative defense .

"And local brands are worried that price cuts will affect brand power, 3~5 years of painstakingly formed brand image, may be due to price cuts and ashes."

Or from the history of the whole episode of the direction: according to Li Feng analysis, around 2000, China had a "big flat replacement" wave, but also the emergence of a number of local brands, these brands are distributed in the field of daily chemical and daily cleaning. But the good times did not last long, 2003~2004 daily chemical giant Procter & Gamble in the Chinese market began to reduce prices, price reduction strategy continued until 2006. As a result, in 2007, the market, many of the local brands that appeared around 2000 have disappeared. It is interesting to note that in these years, the price of petroleum has continued to rise, and even tripled, in which case the local brands encountered two major challenges affecting their lifeblood: the cost of raw materials continues to go up + the space for price cuts by the big brands to inhibit them.

The same thing is happening in the Japanese and Korean markets. Sun Laichun told Tiger Sense that in the 1970s, a number of local brands appeared in the Japanese and Korean markets, and they quickly emerged and stole a portion of the market from international brands at a higher cost. At that time, international brands also began to "swoop in and attack" in the Japanese and Korean markets, but brands like Snowflake Soo held out and eventually survived, gradually developing into a major local brand. "We are now facing almost the same story. If we local brands can't carry on, then this market will be reoccupied by big international brands, and if we can survive, then China will gradually give birth to a number of big international brands originating from the local area."

Three years of life and death?

An investor who focuses on investing in new consumer projects in 2017~2021 told Hufeng that 2022~2025 will be a "life and death test period" for local brands, but he is not optimistic, and believes that more than 80% of local brands born in the past few years will eventually die. more than 80% of the projects end up dead.

"brands that rely on marketing all the time will die quickly because the capital circle doesn't drop money anymore." The investor said that the heat of the capital circle on the new consumer FMCG projects has cooled down since 2021.2019~2020 consumer investment fever is a "short cycle" brought about by accidental factors: on the one hand, on the flow side, the reform of the Amoy system in 2018~2019 and the rise of Jitterbug have made the market a flow dividend; On the other hand, the epidemic factor, basic daily consumption has become a greater certainty in the uncertainty, attracting hot money.

"This boom has actually been cooling down in the second half of 2020, and the capital circle is returning to rationality." According to the investor, one of the key points of the return to rationality is that everyone realizes that this wave of investment "where the boundaries are" - you will not invest in the next L'Oréal, you can only find the head of a new category. " It's not just capital that makes L'Oreal, it's time."

"In the 19th to 20th centuries, there were several big cycles in consumer goods. There are some ****ty laws that new local brands should experience and learn from." According to Liu Bin, new local brands in 2022 should first stabilize the basics - hold on to their dominant position in the niche category and strengthen the category mind , "Whether it's Three and a Half Ton, Flower Xizi, or Bubble Mart, they all need to temporarily put down their bigger Diversification and expansion ambitions, down to earth back to the basics."

This is also the history of P&G, Nestle, L'Oreal's development law. Procter & Gamble, for example, since its founding in 1837, the company has been producing soap (and candles), and in nearly 100 years to make themselves the "King of Soap" - when people think of soap, the first thing that comes to mind is Procter & Gamble. From today's perspective, P&G has created and sustained its own category. It is worth noting that in the creation of nearly 120 years, P&G began to gradually diversify and expand, and in the process of expansion, P&G has been adhering to the basic plate almost did not leave the basic plate of the "proximity radius".

The same story can be seen in the history of the development of South Korea's snowflake show, and snowflake show on the local brand of the reference significance is perhaps even greater - in the history of the rise, it has also been encountered in the international brands of the submarine offensive. In the nearly 10 years since its founding, Snowflake Soo has been sticking to its basic "ginseng-based skincare" business, and in fact this strategy of sticking to a niche category has allowed it to survive in the face of fierce competition: by the time the international brands entered the Korean market and launched their own categories, Snowflake Soo was already in the "ginseng-based skincare" market, and it was already in the "ginseng-based skincare" market, which was the most popular category in the world. The "ginseng-based skincare" segment has formed a strong moat of users' minds.

" the next three years, is not a competition for expansion, but a competition to keep the success , in keeping the success at the same time can also grow steadily, is successful." The above investor said that the first problem encountered by many brands in 2022 will be a shortage of money.

An entrepreneur who started a capsule-based drink in 2019 told TigerSense that his project is already difficult to finance in 2021. "Investors ask to show the ability to realize cash first, and they are more willing to support projects with the ability to make blood."

The ability to make blood has become a "high-frequency word" in the consumer VC community since 2021. But making money is becoming more difficult, and someone mentioned to Tiger Sense that the key lifeline issue - 2021 so far, consumer spending power generally slowed down, and even some consumers appear to decline in spending power. Under such a premise, the international big brand's price-busting strategy quickly eats up the consumer's spending power, and from a fundamental point of view, in 2022, the local brands face the market, which is already a "limited spending power" market.

And in the past few years, many local brands have been highly homogenized -- which makes the competition for limited consumer power even more intense and brutal.

It's worth noting that the vast majority of new local brands have not yet recovered completely from the epidemic, which has continued to put new brands under pressure: Perfect Diary and Flower West, for example, have experienced a mask effect due to the epidemic - the entire beauty industry is in the depths of winter. The beauty industry is in the depths of winter, and in the short term, it is difficult for the beauty industry to fundamentally solve the "key pain points" brought about by the masks.

In the more intense jungle, talent has also become more scarce.

More than one founder of a local brand told HuffPost that his middle-ranking or backbone staff were extended by big international brands in 2021. "In cosmetics, beverages, shoes and apparel, international brands are expanding their recruitment of local Chinese talent in 2021."

A senior HR who did not want to be named told Tiger Sense that three factors led to this situation: first, the international brands are aware of the need to make more understanding of the Chinese market, to grasp the real power - this is why in 2021 a number of international brands of the Chinese region of the management of the Chinese local managers of the weight was increased, and the Chinese local managers of the weight. The ensuing change is that the proportion of local talent in mid-level positions and key positions continues to go up. Secondly, under the influence of the epidemic, international brands all regarded plowing into the Chinese market as the key to their own development, and as the Chinese market has been prioritized, talent expansion and training reserves have become a must. As well, international brands urgently need to recruit a number of young talents to facilitate themselves to better read and understand China's Generation Z and even post-00 consumers.

"For local brands, Generation Z and Post 00 is a silver lining, and for big international brands, it is a huge incremental market to be developed." Liu Bin analyzes that there is a clear consumption difference between Chinese Generation Z consumers and American young generation of the same age: Chinese Generation Z is starting to be more interested in national products and more willing to taste new brands; while the American young generation is becoming interested in overseas pop-ups, cross-cultural products, and big European light luxury brands.

Some entrepreneurs said that the next 3~5 years is also a contest between local brands and international big brands to compete for the Chinese young generation.

"The good news is that this generation of young people is more tolerant of local brands." Sun Laichun believes that ten years ago, when such competition occurred, local brands could hardly fight back, while today local brands at least did not "lose at the starting line".

But the younger generation is by no means an "easy to fool" generation.

In Jittery Voice and Xiaohongshu platform, a large number of post-95 consumers will be dissatisfied with the brand "straight talk", and the logic of circle socialization, they have a "qualitative" influence on the people around them, which means that those who want to survive the local brand can only

These are the first time I've ever seen a brand that has been in the marketplace for a long time.

"Every generation has its own mission. We have said so many years of craftsmanship, productism, the user first, and now it turns into a life and death line in front of the - to do people, life; play gimmicks, death. This may be the destiny of our generation of consumer entrepreneurs." A consumer track serial entrepreneur said so.

The people who are changing and want to change the world are all in the Huffington Post App