Tide Business Review/Article

In a maternal and infant store in a small northern county, the owner Ms. Wang clearly felt that the number of consumers who came to the store to choose domestic brands exceeded the number of imported brands. user.

This was something that would have been unthinkable ten years ago.

Ten years ago, Sanlu single-handedly discredited domestically produced milk powder and became a "street rat" that everyone wanted to beat up.

The market share of domestic milk powder brands has dropped from the original 65% to less than 30%, and it has dropped to 15% in first-tier cities. Since then, consumers' trust in domestic milk powder has completely collapsed, and the market has been almost monopolized by imported products.

However, ten years later, the market has undergone earth-shaking changes. As of 2020, the share of domestically produced milk powder has reached 53%, twice as much as ten years ago.

Picture/Feihe Official Weibo

Among them, domestic brands have overcome the siege of foreign investment. Feihe’s market share has reached 19%, surpassing the oldest imported milk powder brand in the country. Wyeth became the number one in the industry. Not only that, this brand, which was previously only active in the second-tier areas of China's milk powder market, soon surpassed Mengniu in market value after entering the capital market, and is known as the "flag-bearer" of domestic milk powder products.

With capital supporters, Feihe is in the limelight for a while. No matter which search engine or social platform you check for inquiries about Feihe, they are almost all positive praise: "High-end, innovative, the light of domestic products..."

There are occasionally a few "disharmonious" "The voices claimed that Feihe was too expensive and had high substandard goods; or they accused Feihe of excessive marketing and neglect of research and development; they even pointed out that Feihe milk powder was an "IQ tax" and often resorted to mental arbitrage.

So, what is Feihe’s true face?

In 2010, Feihe launched its first ultra-high-end milk powder "Xingfeifan", which was priced at more than 200 yuan per can at that time. Today, a 700g can of Xingfeifan milk powder sells for 324 yuan. Assuming that 4 cans of milk powder are consumed a month, the monthly cost of milk powder is nearly 1,500 yuan.

Picture/Network

For ordinary families, this is not a small amount of money.

But as Liu Senmiao, vice president of Junlebao Dairy Group, mentioned in his speech at the 2020 Maternity, Infant and Child Industry Summit: "The price of milk powder in China is not reasonable. The cost is dozens of yuan. , no one will buy it until it sells for four to five hundred. Everyone is in this industry and they all know it."

What do you understand?

Perhaps a set of data can help us better understand Liu Miaosen’s hidden meaning. According to Node Finance, a can of milk powder sells for about 300 yuan. Based on environmental accounting such as cost, procurement, processing, element addition, publicity, and logistics, the cost of a can of milk powder is about 60 yuan.

The cost is 60 yuan, but it must be "sold" for four to five hundred yuan before anyone is willing to buy it. Why?

Picture/Network

At present, it seems that Feihe has an unparalleled control over this issue: consumers’ perception of milk powder is that the more expensive the better.

For most mothers and fathers, they have little understanding of the complex ingredient list. But everyone wants to give their children the "best" care within their capabilities, and this is especially true when it comes to the choice of milk powder.

Parents with insufficient knowledge can only follow an obvious formula: high price = high-end = safety.

Therefore, Feihe milk powder’s main strategy of “selling it in kilograms, the most expensive in the world” can be said to be a great success. It is often difficult for consumers to tell specifically which product is better, but psychologically they always feel that higher-priced products are safer and more nutritious.

The mentality of "no more savings can save children" has helped Feihe secure half of its high-end infant formula revenue accounting for 64.1%.

It is understood that Feihe Xing Feifan is priced at 480 yuan/kg against Wyeth Qifu, Yili Gold Crown and Biostime Gold series; Feihe Zhenzhi Organic is priced at 545 yuan/kg against Wyeth Of empowering organic and specially formulated with Mead Johnson.

The two flagship products of Xingfeifan and Zhenzhi Organic account for nearly 60% of Feihe’s revenue. These two products have set a military order to hit tens of billions of sales in 2021.

There is no brand that has not dreamed of entering the high-end market, but not all of them succeed. The secret of Feihe's success lies not only in its high-end positioning, but also in its precise Internet celebrity-style strategy: using pervasive marketing to achieve brand communication in currently popular content communities, the publicity effect is very significant.

Feihe's choice of spokespersons is also remarkable: Zhang Ziyi and Wu Jing both have "parent status" and high nationality. To a certain extent, their positioning in the entertainment and film and television circles Also quite "high-end".

Picture/Feihe official Weibo

Choosing these two spokespersons shows Feihe’s consideration of brand identity.

Feihe's marketing strategy is fast, ruthless and accurate, like a "vital forest" in the milk powder industry. Therefore, it is easy for people to forget that it was actually one of the earliest milk powder companies in China, started in 1962.

Since 2008, domestic milk powder has been struggling to survive under the squeeze of the huge army of imported milk powder, and Feihe is no exception. Even compared to its competitors today, Feihe The starting point is even lower - a regional second-tier milk powder brand.

This situation lasted until the country began to implement the milk powder formula registration management system in 2016, which truly saved the life of domestic milk powder. To a certain extent, the epidemic has also fueled the popularity of domestic milk powder. Chinese babies who have been cut off from channels and have difficulty drinking imported milk powder naturally turn to Chinese milk powder.

Feihe followed the trend and relied on its "hard-core" bombing marketing strategy to carve out a bloody path in the milk powder industry, which is full of opponents.

In addition to the combination of Zhang Ziyi + CCTV + Focus, Feihe has invested in popular dramas and variety shows that young consumers like, such as Hunan Satellite TV and iQiyi, targeting the tastes of new young mothers.

In addition, there are many pediatrician/science popularization accounts on Weibo, which are highly professional and have gained high recognition among the mother-and-baby crowd.

Picture/pexels

These are also Feihe’s main online brand promotion positions.

However, such a bold style of play comes with a high cost. From 2016 to 2019, Feihe's sales and distribution expenses increased from 1.360 billion yuan to 3.848 billion yuan. In 2020, Feihe's sales cost reached 5.263 billion yuan, a year-on-year increase of 36.8%. It’s hard to imagine what would happen to Feihe without marketing support.

In the days when foreign-funded milk powder dominated the Chinese market, Feihe rose to prominence as a "domestic product." However, in this milk powder industry, where competition is still fierce, it is like sailing against the current if it does not advance or retreat. Even though Feihe currently seems to be firmly holding the top spot in domestic milk powder, it is not without criticism.

Feihe has always been criticized for "emphasis on marketing and light on R&D". In 2020, Feihe's R&D expenses were 265 million yuan, accounting for only 1% of sales, which is nothing compared to marketing expenses.

Among peers, Yili’s R&D expenses are 487 million yuan, while Mengniu’s is 318 million yuan.

It is true that Feihe has been working in the dairy industry chain for decades and has the capital to position itself at the high end. However, the premium caused by excessive marketing is also an obvious fact, and it is very likely to become a hidden worry for Feihe in the future.

Feihe’s main battlefield is in third- and fourth-tier cities, while the main consumers in first- and second-tier cities still prefer imported products when it comes to milk powder, especially when the prices are comparable or even slightly better than Feihe’s. case.

They have a strong "anti-marketing awareness" and are relatively more rational. They will not be easily impressed by advertisements or harvested at high prices.

Picture/pexels

Feihe’s wealth code failed to work for them, and it may also fail for today’s fans in the future - when information gradually becomes public, when consumption Not only Feihe, but also the dairy industry entrants with fierce marketing, what should they do next?

China may not be the place with the best quality milk powder in the world, but it has become the most expensive place in the world. Behind this sentence is the price that consumers have been forced to pay after Chinese dairy industry players collectively launched a marketing spree. As the industry leader, Feihe has an unshirkable responsibility.

When focusing on marketing and neglecting R&D becomes the industry benchmark, and "bad money drives out good money" becomes the norm, it is often the parents who grit their teeth and resist who pay for the high premium.

Who will understand them?

Capital does not care about their feelings. Maybe only people who are also parents can understand each other.

Just like Ms. Wang, whenever parents of babies look embarrassed when faced with the expensive Feihe, she will immediately change the subject in good faith: "If you consider the cost-effectiveness, Junlebao Lebo, Aitamei and Jinling Guanjinghu are also good choices. ”