2024 New Consumption Battle Royale

What happened to the new consumption? Did it fail to continue after half of the re-implementation? Various situations have emerged one after another. From the end of 2023 to now, it has suddenly reached the "battle royale" stage; those who are interested can read this article.

If 2023 is the year of the "collective collapse" of new consumer brands, then in just three months into 2024, new consumer brands have already fast-forwarded to the "battle royale":

• Zhong Xue Gao reduced the price of ice cream from a sky-high price to 2.5 yuan per stick;
• Boutique coffee brand Seesaw was exposed to be in arrears of payment;
• The popular cake brand Panda Never Go has stopped production due to funding problems;
• The high-end yogurt brand Mo Yogurt was banned by the Shanghai Consumer Protection Committee;
• Just in the past 315, many brands such as Cha Baidao and Shuyi Herbal Jelly had negative news;
• …

On one hand, there are constant negative news, and on the other hand, new consumer brands are making big moves: Mixue Bingcheng, Shanghai Auntie, Cha Baidao, and Guming have all submitted listing applications and started to seek capital support from the secondary market. But the problem is that the capital market does not seem to be optimistic about new consumer brands. The stock prices of listed brands such as Baiguoyuan, Nayuki's Tea, Three Squirrels, and Yatsen E-Commerce (the parent company of Perfect Diary) have all broken through the issue price, and it is difficult to see improvement in the short term.

In addition to going public, there is also franchising. Snack shops, restaurants, and tea shops that originally franchised are still expanding their territory. Luckin Coffee, Nayuki, Heytea and other half-way brands have also increased their franchising efforts. Even Haidilao, which claims not to adopt the franchise model, has begun to plan for franchising business. But the so-called franchising, in a good way, is called profit sharing. Once the management is not good, it is a complete risk sharing. Kudi Coffee, which fought Luckin Coffee for 300 rounds last year, opened stores crazily in the first half of the year and closed a large number of stores in the second half of the year. According to reports, one out of every three chain brand stores that closed was Kudi.

What’s even more interesting is that those who do second-hand food recycling business for bankrupt restaurants, together with paid knowledge talk about how AI will change the world, have become the most popular professions in social media in 2023.

The slogan "all consumer products are worth redoing" is still lingering, and the chill of the entire industry has not only been passed on to every practitioner, but it is also chilling, biting, and heart-wrenching.

What happened to the new consumption? Did it fail to continue after it was halfway done?

1. “All consumer products are worth redoing”

All consumer products deserve a redo!

This loud slogan was put forward in 2019. At that time, it was said that with the support of three major waves of new media, new channels, and new products, coupled with the rise of a new generation of consumption upgrades in China, new consumption should be established!

After that, in 2020, the COVID-19 pandemic swept the world, and all walks of life were filled with uncertainty. Eating, drinking and having fun became the most certain area, and hot money poured into the consumer track. From 2020 to the first half of 2021, sugar-free sparkling water, new tea drinks, ramen, coffee, baking, plant-based and even spicy hot pot, fried skewers, condiments, underwear... As long as the banner of innovation is raised, capital will pay for it.

But Tesla is innovation, and the new Jetta is also innovation, can they be the same?

What is a new product?

It is to redo ice cream by adding additives to milk; a bag of milk with a retail price of 2 yuan has suddenly become 66 yuan. Of course, there is a reason for the 66 yuan per stick, after all, it contains rare powdered cocoa, called "Ecuadorian pink diamond", but do you know what 66 yuan means? Thanks to the efforts of the people of Henan, the price of an artificial diamond is almost 66 yuan. Even De Beers, which has been preparing to operate diamonds for hundreds of years, is busy reducing the price. Is it that the price they have set is being passed on to you?

The so-called tea and coffee redo now seems to be adding a lot of milk and sugar to tea and coffee to make coffee-flavored and tea-flavored liquid cakes; baking redo means changing the shape and price of the original bread and cake, and adding a national trend label; as for sugar-free sparkling water, I have discussed it with my friends for five years, but I still don’t know the difference between sugar-free sparkling water and sugar-free carbonated drinks, that is, sugar-free cola, Sprite, and Fanta. Why can sugar-free sparkling water be sold so expensively? Of course, this issue is not important now. Since last year, the leading brand of sugar-free sparkling water has begun to focus on sugary drinks and cola-flavored drinks.

As for the re-making of spicy hot pot, fried skewers, and noodles, the simpler understanding seems to be to set up a chain, raise the price, and add WeChat and Alipay to scan the code to order food. Is this the new consumption? Can the new generation of young consumers be willing to pay for it? Have they never drunk Coke or eaten ice cream? Have they never drunk coffee or tasted milk tea? Have they never eaten fried skewers, spicy hot pot, noodles...

This is not helping young people upgrade their consumption, it is simply treating young people as leeks for consumption.

Are young people leeks? Of course not. Curiosity kills the cat and it also empties young people's wallets.

Have you ever browsed Kuaishou? Have you ever browsed Zhihu? Have you ever browsed Xiaohongshu? Have you ever browsed Bilibili? Then you must have browsed Douyin!

What’s in Douyin? In addition to news, knowledge, jokes, beautiful women dancing, this woman is called Xiaomei, that man is called Xiaoshuai, what new beverage the anchor drank today, why the new floor scrubber that arrived yesterday is so useful, which store will you check in at tomorrow, which cosmetics can make your skin as good as your own, which clothes can make you as beautiful as yourself, which supplements you should take to be healthy, which books you should study to study well…

How can we not be curious? How can we not be interested? How can we not click on the yellow car? How can we not place an order?

Hundreds of millions of young people spend hundreds of millions of hours on these platforms every day, and this is when the demographic advantage comes into play. Do you remember the famous joke? If everyone gives me 100 yuan, my wealth will surpass that of Jack Ma, except that the "I" here has become a new consumer product, their investors, or platforms such as Douyin, Kuaishou, Xiaohongshu, Alibaba, and JD.com.

Then the classic scene appeared. In a high-end club, investors, platform owners, and brand owners gathered in a dim corner, tasting 1982 Lafite while conspiring to discuss how to change the formula, how to make packaging, how to distribute the goods, how to attract traffic, and how to stimulate the curiosity of young people. They even came up with a formula:

“5,000 Xiaohongshu and Zhihu posts + 200 KOL recommendations + a livestreamer’s broadcast room + a big promotion list = the birth of a new consumer brand.”

I think I have figured out that this formula has nothing to do with new products at all. All it takes is new media like Tik Tok, Xiaohongshu, and Zhihu to "remake all consumer products."

So can we say that new products, new humans, and consumption upgrades are all gimmicks, and that new media is really useful. As long as you know how to use new media, you can create a new brand?

So, selling consumer goods on new media is new consumption? Just like selling brands on Taobao Mall is called Taobao brands?

But the disappearance of Taobao brands today tells us that “new” is truly fleeting.

2. Fleeting dividends

"Han Du Yishe is not a clothing company, it has always been an Internet company, and it aims to be an ecological operator of Internet brands." This was said by Zhao Yingguang, the founder of Han Du Yishe, one of the many Taobao brands.

In 2009, in order to get rid of the label of "fake goods", Taobao established "Taobao Mall" to sell branded goods, but traditional offline brands did not buy it at that time. Since traditional brands were not working, they simply promoted a batch of brands themselves. The way to promote was also very simple, providing traffic. Later, the priceless traffic was provided to a batch of online-born and grown brands at a very low price, and Han Du Yishe, Three Squirrels, Maibaobao, Liebo, Inman, Afu, Yu Nifang, and Mofashijia emerged.

Then capital saw the opportunity. Maibaobao continued to receive three rounds of investment of US$80 million, and Han Du Yishe received tens of millions of dollars in investment. Taobao brands suddenly became popular, with the support of Taobao and the help of capital, and sales volume continued to break new records.

Taobao brands have also started telling stories about the post-90s young people, e-commerce dividends, and Internet changes. Does it feel familiar to you?

The end of the story is listing. Statistics show that in 2014 and 2015, nearly 100 Taobao brands or Taobao brand-related companies applied for listing, with a total market valuation of more than 100 billion yuan.

But at this time, traditional brands came to their senses and embraced Taobao. The intensified competition has already increased the traffic cost, coupled with the financial advantages of traditional brands and the high conversion rate brought by years of brand heritage, Taobao brands were immediately driven off the altar.

At this time, everyone realized that the Taobao brands that always claim to be the Internet are just a kind of stall business operated online. Those who have set up stalls know that the key to making money from stalls is the stall fee. No matter how bad the goods are, if there is no stall fee, you can still make money. No matter how good the goods are, if the stall fee is extremely high, you will still lose money.

Taobao brands have always taken advantage of the booth fees and reaped the benefits of Taobao. When traditional brands entered the market, the traffic costs soared, that is, after the booth fees returned to normal, a number of Taobao brands immediately began to fail, and the sales leader was handed over to traditional brands with deep heritage such as Nike, Uniqlo, Zara, L'Oreal, and Estee Lauder.

As the online business is no longer doing well, Taobao brands have started to play up their weaknesses and avoid their strengths, competing with traditional brands for business offline. The result is naturally predictable.

Of course, there is no shortage of dividends in the Chinese business sector, especially on the ever-changing Internet. Just as Han Du Yishe, Three Squirrels, Maibaobao, Liebo, Inman, Afu, and Yunifang were defeated online, Perfect Diary was born and found new dividends in the second year of its establishment: the rise of Xiaohongshu, Douyin, Kuaishou, and Zhihu.

So on the Double Eleven lists in 2018 and 2019, brands such as Winona, Perfect Diary, and HFP squeezed into the top ten. Then ice cream, clothing, and sparkling water began to follow the path of “5,000 Xiaohongshu and Zhihu posts + 200 KOL recommendations + a live broadcast room of a big anchor + a big promotion list”, and began to experience explosive sales, be selected by capital, and be supported by platforms, and were collectively referred to as new consumption.

The previous Taobao stores, e-commerce dividends, Internet changes, and post-90s needs have all become fleeting stories. What are the differences between today's new media, new channels, new products, and new humans?

Is there really a world of difference if we replace the portal websites, blogs and online advertisements of the past with Douyin, Kuaishou, Xiaohongshu and Zhihu? People born in the 1990s buy Nike, Uniqlo and L'Oreal, but when they grow up and become middle class, they like the more expensive Zhong Xue Gao? Or is there something magical about online shopping that even 70-year-olds can do, and Douyin and Kuaishou that even 80-year-olds can do?

In the final analysis, new consumption is also about setting up stalls online. Before, the things were new and interesting enough, and you could easily put up signs, hire models, and attract customers, instantly becoming a bright spot on the dark streets. Now, not only traditional brands have come back to their senses, but even big brothers in Japan have figured out the Internet celebrity economy, and have learned to use Douyin, Kuaishou, and Xiaohongshu, and understand that they need to put up signs and hire models. The originally dark streets are now like a car show. Who would still choose new consumption?

In addition, “new” is as short-lived as youth. The first time you buy something, it is new, but the second time, it starts to become old. Once the novelty has worn off, what is left of new consumption? What should be done with new consumption?

3. The life and death moment of new consumption in 2024

In 2023, the new consumption sector completed 657 public financings, with a total financing amount of 35.39 billion yuan, less than half of that in 2022. Compared with 2021, it is like heaven and hell. The new consumption brands are running out of money, the promotion costs are frighteningly high, and the customers' wallets are tightly closed. What can they do? So price reduction has become a magic weapon for survival.

Product prices need to be reduced. In the first half of 2020, the average price per order of Nayuki reached 43 yuan, which was reduced to 34.3 yuan in 2022. The average price of new products promoted in 2023 is mostly between 15 and 25 yuan. In 2024, coffee milk tea was directly launched at 9.9 yuan, aiming to compete with Luckin Coffee and Mixue Ice City for business.

Valuations will also fall. The amount of financing for emerging brands has decreased, as has large investments. In 2023, financing exceeding RMB 100 million will account for less than 10%, and financing between RMB 10 million and RMB 100 million will account for only 31%. Financing events that used to cost tens of millions of yuan can now be easily finalized at the negotiation table as long as the price is right.

The threshold for cooperation is also being discounted. The first franchise price in 2023 was 980,000 yuan. Last month, the franchise fee was reduced to 400,000 yuan. If the contract is signed in 2024, you can also enjoy a marketing subsidy of 60,000 yuan per store. It is estimated that it will not be long before 0 franchise fee will become the mainstream.

Why are they fighting so hard? New consumers are eager for help.

If you ask the AI ​​big model how consumer brands can continue to grow, in addition to product innovation, brand building, and multi-channel marketing, he also suggests that you can "find helpers." If you ask what specific methods are there to "find helpers," in his answer, franchise distribution, strategic cooperation, mergers and acquisitions, and the use of external funds are listed in the top four.

Looking at the trends of new consumption in recent years, one cannot help but suspect that the script of new consumption in the past two years was written by the AI ​​big model:

• Mixue Bingcheng, Cha Baidao, Guming, and Shanghai Auntie have all submitted prospectuses for listing in Hong Kong, preparing to list in Hong Kong;
• The two major mass-market snack brands, "Busy Snacks" and "Zhao Yiming Snacks", chose to merge strategically, and the number of stores suddenly became the first in the industry;
• The freshly made yogurt brand "Mo Yogurt" sold 30% of its shares to Junlebao Group;
• Lelecha was sold to Nayuki, and the yoga sports brand MAIA ACTIVE was sold to Anta;
• Yuanqi Forest held a dealer conference with great fanfare to build a distribution network;
• Almost all catering brands are trying to franchise and grow with the help of external forces.
• …

Without help from the primary market, new consumers can only beg for money everywhere. But can the solutions that all AI models know really save lives?

Although the key to competition among consumer brands is products, channels, marketing, prices, market recognition, and consumer spending, if you want to see tomorrow's sun, at least get through tonight, find a good helper, gain new volume, and survive to have a chance to see the future.

Among the many Taobao brands that year, Three Squirrels, which was successfully listed, and "Seven Princesses" which was sold to La Chapelle, although also had difficulties, were much better than the torment of Han Du Yishe, Mai Baobao, Liebo, Inman and the closure of MG Elephant.

But there are so many people trying to cross a single-plank bridge. There are many new consumers, but not so many who are able to get help. There are even fewer who are able to help new consumers, so new consumers don’t have many opportunities.

Three months have passed in 2024. How much new consumption will be able to survive the winter of 2024?

Author: Yang Yi; Editor: Hu Zhanjia

Source: WeChat public account: LingTai LT (ID: LingTai_LT)