Which brands will still be growing in 2024? We listed 4

This article deeply analyzes four brands that will grow against the trend in the consumer brand field in 2024, explores their successful strategies and market performance, and hopes to help you gain insight into current market trends.

2024 is not even halfway through, and several leading players in new consumer brands have been forced to withdraw. At the beginning of the year, the editorial department of Daofa wrote an article titled "The first generation of new consumer brands collectively encountered "growing pains", which reviewed the "growing pains" of the first batch of new consumer brands in the past few years. The typical problems include: loss of original customer base and weakening market demand; financing ceiling and blurred user portraits; unstable brand potential, active or passive involution, including price wars, franchise store expansion, and excessive joint ventures.

The impact of these on the brand can lead to stagnant growth at best, or even bankruptcy at worst. Undoubtedly, the current market environment and user needs have undergone earth-shaking changes from the 2019 that everyone misses. So, under the current circumstances, what kind of brand strategy can achieve results?

The Knife Skills editorial department has counted down 4 brands that are still growing against the trend, hoping to inspire everyone.

1. Youxiang Valley: By developing distribution channels in Zhejiang, it has sold nearly 1.1 billion in two years
2. Manner: Three tips for maintaining growth without engaging in price wars
3. Hesuo: With the differentiation of 0 sucrose baking, the annual GMV of suburban stores exceeds 10 million
4. The unicorn with huge muscle: Hitting the category and channel bonus, selling 1 billion in a year

1. By developing distribution channels in Zhejiang, Youxiang Valley has sold nearly 1.1 billion in two years

Channel veterans often say that the offline beverage market is often more volatile than the online market, and being able to leverage offline distribution channels is a testament to the strength of a beverage brand.

Daofa observed that during the Spring Festival last year, the local Zhejiang internet celebrity "Youxianggu" Songyou juice drink had already put its advertisements on the big screens in Shanghai subways in January this year.

Youxiang Valley was founded in Changshan County, Quzhou, Zhejiang. The brand’s official website shows that after its popular product Song Youjuice (formerly known as Double Youjuice) was launched on the market, its sales reached 395 million yuan in 2022, and 600 million yuan the following year. In October of the same year, it officially announced that it would enter the national market from Zhejiang.

After reviewing the strategic play of Youxiang Valley, the following three key points were extracted from the swordplay:

1. In terms of core products, Youxianggu emphasizes the scarcity of raw materials and origins, and focuses on the "Changshan Huyou + YUZU Xiangyou" double grapefruit juice category. By building its own planting and processing base, it has created the "Changshan Huyou + YUZU Xiangyou" double grapefruit juice category, making product raw materials the biggest competitive entry barrier at present.
2. In terms of channel entry, we first target the core channels with the highest overlap with the category consumer portrait, use hot pot, barbecue, crayfish and other restaurants as breakthroughs, establish Youxiang Valley as a local beverage to accompany meals in Zhejiang, and gradually attract more distributors to inquire.
3. In terms of brand positioning, the plate is laid out very large, and ecological complementarity is achieved across categories. Centered on the "YUZU fragrant pomelo" raw material mastered by Yuxiang Valley, the experience of Songyou Juice, a large single product, is replicated in multiple fields such as food and beverage, beauty and personal care, to create a multi-category industry covering the food, drink, and entertainment of all people.

While Youxiang Valley is accelerating its market expansion, there are also different voices among its peers.

When some practitioners were communicating with Dao Fa, they mentioned that the top three ingredients of the core product Songyou juice are: water, fructose syrup, and white sugar, followed by "YUZU Fragrant Pomelo". They believed that: since there is still room for adjustment in the taste of this type of product, is it possible that the market's current recognition of "YUZU Fragrant Pomelo" is overrated?

Overall, it reminds me of the classic line in the movie "Dune": He who has the spice, has the world. When dealers and consumers from all over the world recognize YUZU fragrant pomelo, YUZU fragrant pomelo is Song Wei's "spice".

If "YUZU" fails one day, traders who have had such successful experience will have relatively stronger capabilities to concoct the next "spice".

2. Not Being Affected by the Coffee Price War: Manner’s Three Secrets to Growth

Manner is the most rapidly developing local specialty coffee brand. It started in Shanghai in 2015, emphasizing quality but relatively affordable. It received five rounds of financing from 2018 to 2021, and its brand valuation once reached US$2.8 billion. In November 2023, Manner completed its national store expansion target ahead of schedule, with the number of stores exceeding 1,200.

By the end of 2023, Manner's store density in downtown Shanghai will be on par with Luckin Coffee. Open the map software and search for "Manner", there are at least 10 stores within a kilometer, while Luckin Coffee has only about 15 stores.

Objectively speaking, Manner's development can be divided into two major stages: increasing brand potential in Shanghai and releasing momentum outside Shanghai. It has found a path suitable for itself in terms of products, pricing and store expansion.

Originated in Jing'an, Shanghai, Manner focuses on the palatability of innovative products while ensuring caffeine intake. More than 90% of its products are priced between 10 and 25 yuan. This not only takes into account the price sensitivity of local consumers when trying out boutique coffee, but also meets the demand for consumption downgrade among coffee lovers in recent years, and quickly gains recognition among white-collar workers in high-tier cities.

Manner has evolved from focusing on sales per square meter under the initial single-store model to expanding beyond Shanghai and accelerating store expansion. During the epidemic, it also improved digital operational efficiency and aggregated user assets, creating good conditions for the brand's large-scale expansion.

After this brand observation article was published, Daofa further learned from insiders close to the brand that Manner’s founder Han Yulong has now retired behind the scenes, and the brand’s daily operations are now being managed by professional managers with many years of experience in the consumer industry.

Compared with the leading stages of different teams, the current brand team has further improved the strategic position of cost reduction and efficiency improvement in store affairs.

In many Manner stores, users can see that there is only one barista who is responsible for reception, introduction, ordering, making and some latte art needs, etc. He needs to deal with consumers queuing in the store during peak hours such as 8 am and lunch break, including some third-party takeaway orders. Occasionally, when new products are sold out or during holidays, they will temporarily add staff to assist.

Daofa believes that baristas have to perform multiple duties, and while labor costs have to be taken into consideration, baristas are also the ones who represent the brand image and have direct contact with users. They constitute the smallest unit of the entire organization and have a long-term impact on the operating efficiency of Manner's single stores, so they must be taken seriously.

3. The countryside surrounds the city, Hesuo’s “slow” business philosophy

In 2022, when the epidemic was rampant, Hesuo opened its first store in Wanda, Tongzhou, a suburb of Beijing, and its GMV exceeded 10 million in the first year. The four stores that have been put into operation are all profitable, and the store repurchase rate exceeds 60%. Why did Hesuo choose to start low-key? How can it achieve stable profits?

In this article, we analyze the business ideas of Hesuo in detail from three aspects: product polishing, store model, and brand marketing.

In terms of products, Hesuo thought about a question: Does the product meet the differentiated needs of customers?

In 2022, the baking market has a serious homogeneity problem, especially since most emerging brands share several factories as supply chains. Therefore, differentiation has become the key to whether a brand can go global. At the same time, the education of the beverage market over the past few years has gradually made low sugar popular, and at that time, 0 sucrose baking was in a relatively blue ocean with high demand and low supply.

After a feasibility study for half a year, Hesuo's differentiation was defined as "0 sucrose". After the positioning was clear, the next step was to find a product and pricing combination that met the needs. Hesuo's strategy was to use the most simple arithmetic logic: first determine the average customer price, and then formulate a product combination based on the average customer price.

In terms of average order value, He chose the most widely accepted mainstream price range of around 40 yuan. In terms of product mix, one main product is used to generate profits, brand and sales, and then other cost-effective items in multiple price ranges are added as supplements.

Opening a store is the landing of brands and products. What He is thinking about here is not only exposure and traffic, but more importantly: Is the financial model of the business healthy?

Profit = Sales - Cost. The best location is one that can generate high sales and low rent. Another is business, that is, the sustainability of the flow of people. There are many people living near Tongzhou Wanda, and the flow of customers is large, the competition is small, and the rent is lower than that in the urban area. This location also established the store location model of "regional business + supermarket" for Hesuo.

So far, He has tested three single-store models in the five stores it has opened.

In terms of brand marketing, the strategy of Hesuo is to "save as much as possible - maximize the reuse of incurred costs". Since the product is the most important part, all of Hesuo's brand promotion is closely centered around the product. Specifically, it falls into three aspects:

First, trace the origin of healthy ingredients and use the process of "finding ingredients" as brand promotion material;

Second, create a 360-degree transparent kitchen to show the process of "product production";

Third, use the materials in the store to expand the scope of dissemination to the best of your ability.

Looking back at the development history of Hesuo, it can be seen that compared with grand narratives, Hesuo cares more about whether each step is solid. "There is no conspiracy in the catering industry, only open conspiracy" , whenever someone asks about Hesuo's successful experience, the founder Bao Rujiang will describe it this way. "Rural entrepreneur" is also the most common evaluation Bao Rujiang received from investors.

4. There is no sexy story, but the muscular unicorn sold 1 billion in one year

Founded in 2016, the unicorn sold 1 billion GMV last year and received strategic investment in January this year. Why can it maintain growth in the 8 years of ups and downs in the consumer industry? If you can't change the environment, how can you become the fittest to survive? The unicorn may be a good example.

Taking stock of the historical data of the muscle-boosting unicorns, we found two unusual points: First, the core categories have changed dramatically. Black coffee, which accounted for the largest proportion of Douyin sales in the past year, was not its main product before 2021;

Second, the brand impression is different for different people. The category distribution of the muscle-boosting unicorns in various channels is very different.

For most brands, maintaining the consistency of major products is very important for shaping the brand imprint. But the unicorn of explosive muscle doesn't seem to care. So what is their brand strategy? What is the main line logic behind it?

Taking this as a starting point, we analyzed the products and channel strategies of the muscle-boosting unicorn.

In terms of categories, we divide the development of the muscle-boosting unicorn into three stages: the chicken breast start-up stage, the multi-SPU risk sharing stage, and the coffee "rise" stage.

After a detailed analysis of each stage, we found that although the strategies of the three stages are different, they all have similarities in the investment logic, that is, using cognitive differences and first-mover advantages to complete the "original accumulation" of the first pot of gold, and use this to establish supply chain barriers, and then constantly look for blue ocean opportunities in the market and iterate experiments.

Invest when the market supply is less than the demand, and withdraw when the market is rolling up. Enter the blue ocean and exit the red ocean. Quick action is the key to making a profit. This is also the answer to the first change.

The explanation for the second phenomenon, “Thousands of Brand Imprints for Thousands of People”, lies in the channel strategy of the muscle-boosting unicorn.

For emerging channels in the market, Baoji Unicorn will have a team to make advance arrangements. As early as 2019, Baoji Unicorn entered Douyin, Kuaishou, Pinduoduo, Xiaohongshu, etc., completing the layout of all platforms. In the next two or three years, during the rapid development period of several platforms, Baoji Unicorn participated in the whole process.

For channels with greater potential, Baoji Unicorn will also set up professional teams or even set up independent subsidiaries to operate them. We have also made detailed analysis in the article on how to screen potential channels and examples of differentiated operations.

Although the layout and strategy of categories and channels are full of changes, there is an unchanging logic behind them - using positive profits to maintain the long-term operation of the enterprise. This is also reflected in the fact that the unicorn built its own factory to improve the supply chain and develop offline channels.

If you can’t change the environment, how can you survive? Constantly familiarizing yourself with the laws of the jungle and using the compound interest of time to live longer is the solution that the current unicorns can provide.

5. Analyst Comments

In the past few years, the Internet has magnified the influence of a brand, and fast-moving consumer goods have created a sense of scarcity. We have heard too many similar paths of "small wins big", and these batch SOPs have also created many wealth-making myths in the hot spots.

When almost all new consumer brands on the market realize the power of the Internet, online is no longer the only option. Returning to offline traditional channels and taking one step at a time has become a key strategy for many new generation brands to take root in the market.

Especially in the past two years, the consumer circle no longer blindly pursues sales stimulation, but pays more attention to profitability and cash liquidity, which has also allowed some brands that have been dormant for many years to consolidate the foundation of their business models to seize development opportunities in the new cycle.

Regardless of whether it is the trend energy route or the kinetic energy route, the first thing to do when building a brand is to survive. In the business level, there will be a path that leads to the same destination.

I hope that no matter which path the practitioners take, they will have the energy and willingness to enjoy paying attention to the growth process of a brand.

Author: Chu Qing Li Zi WeChat public account: Knife Skills Research Institute