Millet Economy is Prosperous

Explore the commercial charm of ACG culture and reveal the booming phenomenon of "millet economy". This article deeply analyzes the new consumption trend dominated by young people of Generation Z, explains how brands such as Pop Mart have grown against the trend in the economic downturn, and the IP licensing and distribution model behind the millet economy. From market size to consumer portrait.

There is an old song that goes like this: Young people are great at everything, you are the master, you can get whatever you want... In today's market, the "millet economy" is great at everything.

The so-called "Gu Zi" is transliterated from "Goods", which means two-dimensional peripherals. Common ones include: "Baji" refers to badges; "Tou Ka" is a transparent card printed with cartoon characters; "Laser Ticket" is a small long card printed with PVC material; in addition, there are also quicksand mahjong, key chains, standees, etc.

Therefore, it is not difficult to understand that the millet economy represents a consumption paradigm dominated by young people of Generation Z in the future, and is a reflection of two-dimensional cultural products.

The current "millet benchmark" is none other than Pop Mart: Against the backdrop of the overall bleak Hong Kong stock market, Pop Mart quietly completed an astonishing wealth journey of 4 times the increase in 2024.

The dual growth attributes of "IP premium ability + overseas expansion ability" have made Pop Mart no longer a small company, but a wealth amplifier for a few far-sighted investors in the economic downturn: According to media reports, some IP dolls under Pop Mart have seen premiums of up to dozens of times in the secondary market. For example, a LABUBU co-branded model, which was officially priced at 599 yuan at the beginning of this year, is now resold at a price of more than 10,000 yuan among the player community. Compared with the vigorous shoe speculation movement back then, it is not much less.

Regarding millet economy, many reports and minutes of exchanges with industry insiders have appeared in the market in recent days. The following is a brief summary.

1. Only a few companies have large-scale income, and the secondary market is "all red" is essentially speculation expectations

Investors who have been tracking the two-dimensional derivative product market for a long time are well aware that the number of IPs that can generate large-scale consumption is limited over a long period of time, and most of them are scattered and have periodic popularity.

In the past period, phenomenal IPs mainly include Ultraman represented by Kayou, My Little Pony card series, NetEase Egg Party derivative peripherals, Pop Mart Molly, SKULLPANDA, LABUBU and other series of trendy toys, etc.

Under these large-scale grains, as some two-dimensional literature, film and television, and games gradually enter the mainstream vision of young people from the periphery, it seems that a new trend atmosphere is taking shape. For example, content IPs such as "Jujutsu Kaisen", "Bungo Stray Dogs", "Identity V", and "Arknights" have shown a wave of collective outbreaks in 2023-2024, which has gradually led to the market's expectation of a surge in IP commercialization.

However, overall, except for Pop Mart, Kayou, Huali Technology and other companies with long-term large-scale revenue and growing profit growth, the value of most industry companies on the financial side is not significant.

It can be said that there are only a few "millets" with large-scale income, and the current "boom" in the millet economy in the secondary market is essentially a hype expectation.

2. Trendy toys are a category of millet economy, and there are differences in the consumer portraits of the two

With the example of Pop Mart, it is easy for people to form a strong correspondence between the model of the millet economy and trendy toys.

In fact, at the current stage, there are certain differences in the consumer targets of the two: the consumers of millet economy are younger than the audience of trendy toys.

According to the definition of industry insiders: the consumer groups of toys have certain appreciation and purchasing power thresholds. For example, the main consumer groups of Pop Mart are concentrated between 22 and 30 years old, and more than 70% are women. This feature has not changed much. However, the consumer groups of Guzi are much younger, mainly concentrated under 22 years old, and the main consumer groups are concentrated between 12 and 20 years old. Middle school students are the main consumer group, which is relatively younger than the audience of trendy toys.

3. Cards and badges are the two main categories of millet

In the current market, the two categories with the largest sales share in Guzidian are undoubtedly badges and cards, which are also the products produced most by domestic companies after obtaining IP authorization.

The sales of badges account for about 40%, cards account for about 30% to 40%, and the remaining 20% ​​is made up of other products such as stacking toys, plush toys, capsule toys, figures, standees, etc.

The unit prices of these two categories are relatively low. The highest price of domestic badges will not exceed 20 yuan, while the price of the most popular cards is around 10 yuan.

Since the current millet economy consumers generally have relatively limited spending power, the average customer spending is not very high, so large-scale channel coverage is the core competitiveness dimension of the current industry enterprises. According to market feedback, the millet economy brand with the strongest channel is still Kayou, whether it is a provincial agent, including a municipal agent, etc., its entire dealer network is sound.

4. The current mainstream business model of the millet economy is IP distribution, with considerable profit margins

The commercial value of Guzi products is based on the influence of IP. The underlying logic of all highly influential IPs is the time effect. This means that as a Guzi product operator and seller, it is almost impossible to develop IP that caters to the market aesthetics in real time.

At the same time, most IP owners do not directly produce millet products, but make profits by collecting licensing fees. After obtaining the copyright, the authorized company designs and produces according to the official drawings, and then launches these products to the market.

Therefore, the first principle of this business model is: IP licensing and distribution.

According to industry insiders, based on the final retail price, IP licensing fees are around 30%; production costs do not exceed 10%. Provincial agents’ purchase costs are around 50% off the retail price; depending on the strength of the IP, channel distribution purchase costs are mostly around 55%-60% off.

In terms of specific licensing fees, the market base price for relatively unpopular IPs is 500,000 yuan, while for popular IPs it may reach 1.5 million to 2 million yuan.

In general, millet products have a large profit margin, with gross profit margins generally above 40%. Of course, once they are unsalable, that is another matter.

5. Optimistic estimates put the overall market size at around 100 billion

The millet economy is still a discrete market, and it is not easy to calculate the overall market size. According to the analysis of the financial report data disclosed by listed companies, the national market size is about 80 to 100 billion yuan.

Among the large-scale brands, in addition to Pop Mart and Kayou, Aiman ​​and GOODSLOVE are two other emerging forces worth paying attention to. Aiman’s channel terminals currently have about 50 stores across the country, and plan to open 100 stores next year; GOODSLOVE is invested by Tencent and also operates the entire industry chain, but has fewer stores.

What’s interesting is that in this wave of millet economy, Pop Mart has soared to the sky, while the real industry leader Tencent is still hesitating.

Finally, it is important to point out that the logic of the "millet benchmark" is not a completely new concept. It is just a sudden manifestation of trendy consumption in an economic sluggish cycle. Especially when it comes to investment, we need to be particularly wary of the motivations behind the rhetoric and remain rational enough.