Sudden change in consumption trend: Why are leading new consumer brands such as Yuanqi Forest, Zhong Xuegao, and Huaxizi beginning to lose their luster?

This article takes leading new consumer brands such as Yuanqi Forest, Zhong Xuegao, and Huaxizi as examples, and specifically analyzes the reasons why consumption downgrades have led to sudden changes in consumption trends. Let’s take a look.

Market changes are always unpredictable. It seems that yesterday everyone was still talking about consumption upgrades, and regarded buying high-quality, beautifully packaged, and eye-catching brands as a symbol of status. Today, people have suddenly begun to adapt to consumption downgrades and advocate reverse consumption. Brands are not important, and cost-effectiveness is king. The foundation that costs 5.9 yuan is the most fragrant.

In this change, the ups and downs experienced by the leading brands of new consumption must be the most impressive. Here are some data to illustrate:

In 2021, Yuanqi Forest's revenue soared to 7 billion yuan. During the Double 11 event in 2020, Yuanqi Forest surpassed international brands such as Coca-Cola and won the championship in water beverage sales on Tmall and JD.

In 2021, Zhong Xuegao's sales exceeded 1 billion, and 20,000 ice creams were sold out in just 15 hours.

After completing a new round of financing in July 2021, Heytea broke the financing record in the Chinese tea beverage industry with a valuation of up to 60 billion yuan.

Huaxizi's annual sales in 2021 reached 5.4 billion, ranking first among domestic brands in Tmall's 2021-2022 TOP Brand Power List of Beauty and Cosmetics.

When new consumer brands were at their peak, someone said that all consumer brands were worth doing again.

Just as these leading new consumer brands were preparing to make a big move and subvert the existing consumer market, an unexpected consumption downgrade arrived.

Recently, it was revealed that Zhong Xue Gao was in arrears of wages, which caused a lot of concern. Last year, the title of "Ice Cream Assassin" had already affected its brand and sales.

Consumers say that Heytea and Nayuki are no longer popular because Mixue Bingcheng’s drinks are more cost-effective.

Netizens complained that Huaxizi's 79 yuan eyebrow pencil was too expensive, so they flocked to the live broadcast room of old domestic brands. They said that 79 yuan could buy 5.5 kilograms of Fenghua hair conditioner; 4 bottles of Yumeijing children's cream...

Yuanqi Forest's voice and praise this year are not as high as in previous years. The latest news is about internal leadership changes and structural changes.

I thought the new consumer brands would reshuffle the existing market, but in the end I found that the old ones are still the best. Even the leading new consumer brands did not gain any advantage when facing the old consumer brands.

In 2023, old consumer brands taught new consumer brands a lesson, and this lesson is worth learning.

01 Yuanqi Forest vs. Nongfu Spring: The lower the desire, the lighter the taste

The rapid popularity of Yuanqi Forest once posed a threat to Coca-Cola and Pepsi. Last year, there was news that Coca-Cola and Pepsi had decided internally to eliminate Yuanqi Forest's sparkling water. Yuanqi Forest's rapid growth also seemed to be a sign of its intention to break into the two companies' territories.

But it is now discovered that Yuanqi Forest’s biggest rival is actually Nongfu Spring.

Oriental Leaves, which also focuses on sugar-free tea, has seen rapid sales growth in recent years. In the first half of 2023, Nongfu Spring's tea beverage segment (Oriental Leaves, Tea Pi) had revenue of 5.286 billion yuan, a year-on-year increase of 59.8%. According to Nielsen data, Oriental Leaves' annual retail sales may reach 10 billion.

Some people say that the sugar-free beverages that Yuanqi Forest has worked so hard to cultivate were harvested by Oriental Leaves, but the fact is just the opposite.

In 2011, Oriental Leaves made its debut on the market with "sugar-free, no additives" as its selling point, and created a new standard of "0 sugar, 0 fat, 0 calories, 0 flavors, 0 preservatives" (these five zeros were many years earlier than the three zeros of Yuanqi Forest).

However, in the market at that time, consumers did not have enough demand for sugar-free tea, and sales were not high.

However, Nongfu Spring did not give up on Oriental Leaves. After studying the data from Japan, they believed that sugar-free tea drinks would definitely be a trend.

In 2019, a milestone data was that China's per capita GDP reached 10,000 US dollars. After years of economic boom, many young and middle-aged people with rising incomes and better conditions have changed from not being able to eat well and lacking nutrition to eating too well and becoming increasingly obese.

It was from this year that Oriental Leaves began to experience explosive growth in sales.

Oriental Leaves has been sticking to the sugar-free tea market for nearly 10 years and finally achieved success. Its comeback caught Yuanqi Forest off guard.

So what does consumption downgrade have to do with this? Aren’t Yuanqi Forest and Oriental Leaves both sugar-free beverages?

Consumption upgrading corresponds to high-desire consumption, while consumption downgrading corresponds to low-desire consumption.

When people have a high desire to consume, their taste buds will prefer stimulating foods, such as sweet and spicy. When people have a low desire to consume, they not only spend less money, but more importantly, they are no longer interested in stimulating foods. They don't like sweeteners or fried foods. They just like pure, simple and healthy foods.

Although Yuanqi Forest does not contain sugar, it is sweet. In addition to sugar, it also contains many additives, such as citric acid, edible flavors, etc., which are not liked by many people who pursue health. The ingredients of Oriental Leaves, except water, tea, vitamin C and sodium bicarbonate, are nothing else.

At first I thought that only middle-aged people drank Oriental Leaves, but when I published the article "Middle-aged men's consumption concept: drink Oriental Leaves, wear Uniqlo, read Zeng Guofan" last week, many young people and even students left messages saying that they drink Oriental Leaves. I realized that the current low-desire consumption is the low desire of the entire society.

For beverages, the three stages from high desire consumption to low desire consumption are: drinking high sugar content, sweet drinks - drinking sugar-free, sweet drinks - drinking sugar-free, non-sweet drinks. Obviously, the market has entered the third stage, which is why Oriental Leaves has been selling well in recent years.

When people enter the stage of low-desire consumption, Yuanqi Forest has no advantage over Nongfu Spring.

02 Huaxizi vs. old domestic products: high quality and low price are the king

In September this year, Li Jiaqi caused disgust and ridicule among netizens because of his words "79 yuan is not expensive" in the live broadcast room. The thing he meant by 79 yuan is not expensive is the eyebrow pencil of the new domestic brand Huaxizi. This sentence inadvertently touched the feelings of many people for old domestic products.

Fenghua, Yumeijing, and Huoli 28, these old domestic brands took the opportunity to launch live broadcast marketing on platforms such as Douyin. These old domestic brands used high cost performance and domestic conscience as selling points, attracting a large number of consumers' attention and purchases, creating amazing traffic and sales.

It is of course accidental that this wave of old domestic products has become popular on the entire Internet with the help of Li Jiaqi's traffic, but the relationship behind it is actually closely related to people's current consumption mentality.

When Li Jiaqi said that Huaxizi eyebrow pencil is not expensive at 79 yuan, and that people should think about whether they have worked hard and whether their salary has increased, this sentence touched the pain points of many people. Because nowadays, it is not the era where hard work can increase wages. Many people work very hard, but not only do they not get a salary increase, but their wages may even decrease.

In this context, people are beginning to care less about the added value of brands, and they no longer believe that the more expensive the goods, the better. Instead, they want to buy brands that are more suitable for them, have high cost-effectiveness, strong practicality, and reliable quality.

Old domestic brands such as Fenghua, Huoli 28, and Yumeijing have a certain quality assurance. After years of R&D investment, market testing and consumer recognition, these old domestic brands can make consumers buy with confidence.

And these domestic brands have high cost-performance as their selling point. For example, you can buy 5.5 kilograms of Fenghua hair conditioner for 79 yuan; you can buy 4 bottles of Yumeijing children's cream...

The prices of these old domestic products are much lower than the so-called new domestic products, and the quality is not bad either. These products are concentrated on consumers who are pursuing cost-effectiveness.

The 5.9 yuan liquid foundation has been trending these days. A blogger reviewed a liquid foundation that was only 5.9 yuan on sale, and the ingredients were safe and skin-friendly. This makes people sigh at the huge profits of cosmetics.

In fact, the cost of cosmetics is not high, and more money is spent on packaging and marketing.

For example, the same is true for new product launches.

In 2021, new shampoo and conditioner products were launched on Fenghua, but there was not much packaging and marketing.

In the official Douyin account of Fenghua, many netizens commented that "the packaging is cheap", "it looks very simple", "why not participate in the College Cup Advertising Competition to collect plans". The account of Fenghua replied in a funny tone, "it costs money" and "we are cheap to begin with", which made people laugh and cry.

Hua Xizi launched a Chinese carved lipstick in 2019, with monthly sales of 100,000 pieces in its Tmall flagship store in September, becoming one of the hot products that helped Hua Xizi break out of its circle.

Hua Xizi uses traditional Chinese micro-relief technology in its product packaging, carving animals and plants with oriental imagery such as cuckoos, cranes, koi, and phoenixes on the lipsticks, forming a unique and differentiated positioning for its national style products.

In terms of marketing, it tied up with Li Jiaqi's live broadcast and became one of the first brands to enjoy the benefits of live broadcast when Taobao live broadcast exploded in 2019. Of course, its numerous KOL and KOC marketing on Xiaohongshu also made its information receive great attention.

Huaxizi, which has spent a lot of money on marketing, of course needs to make money by raising sales prices.

Compared with Huaxizi, the old domestic products may not have an advantage in the future market due to the problem of brand power. But Li Jiaqi's case has made consumers realize that they can have better cosmetics choices. In the future, they will increasingly choose cost-effective cosmetics. For example, for the same eyebrow pencil, some people choose to buy 7 for more than 6 yuan.

03 Zhong Xue Gao vs. Yili Chocolatier: Tasty and inexpensive, winning the market

Zhong Xue Gao is a typical brand that has risen by riding the trend of consumption upgrading.

Zhong Xue Gao is positioned as a healthy ice cream, with low sugar and low fat as its characteristics, which is similar to the sugar-free product of Genki Forest. Buying low-sugar or sugar-free products at a high price reduces consumers' sense of guilt and caters to consumers' demand for not gaining weight to the greatest extent.

Zhong Xue Gao's design style is original. The tile-shaped design represents the classical Chinese aesthetic. It is said that the tile-shaped mold costs hundreds of thousands of yuan. They have applied for a patent for their unique design. The three words Zhong Xue Gao are also the homonyms of "Chinese ice cream".

At the same time, its series of names such as Family Portrait, I Like You, and Not One Less, have created consumer demands in different scenarios, such as buying for couples, buying for oneself, buying for family, and further subdividing the emotional resonance with consumers.

From positioning to appearance to emotion, Zhong Xue Gao has given the market something beyond functional value, and is also very adaptable to the market demand for consumption upgrades.

In the summer of 2022, "Ice Cream Assassin" became a hot search topic. A consumer took a Zhong Xue Gao from an offline freezer and found it was very expensive when checking out. After opening the packaging, he found that there was not much left after removing the tray. This in itself shows that consumers have begun to reflect on the value of this high-priced ice cream.

When consumption downgrade comes, the so-called packaging, appearance, and emotional experience do not solve the essential problem. They are things that are better to have, but don’t matter if you don’t have them. Therefore, Zhong Xue Gao, which is 5-6 times more expensive than ordinary ice cream, will be unpopular at this time.

For example, when someone asked about cost-effective ice cream, the small pudding that costs less than 1 yuan is still very popular.

According to data from iMedia Consulting, in 2021, the four major brands of Yili, Wall's, Mengniu and Nestlé accounted for more than half of the offline ice cream market. Even though it was popular that year, Zhong Xue Gao's sales did not account for 1% of the market.

According to the data from iiMedia Research, 70% of consumers generally accept the price of ice cream between 3 and 10 yuan, of which 37% accept the price below 3.5 yuan. For example, chocolate ice cream that costs 3 or 4 yuan per stick and tastes good is quite popular.

Zhong Xue Gao and Chocolatier represent the two ends of the ice cream market. One end is high-end, tasteful, and emotional value, and the other end is taste and cost-effectiveness. Compared with Yili, Zhong Xue Gao still has a long way to go.

04 Heytea vs. Mixue Ice City: Freshness and social interaction are not a must

One of the hot searches this year was "HEYTEA and NAYUXE are not popular anymore", and the word "again" reflects the changes in the market.

Heytea was once a representative of consumption upgrading. It positioned itself as "tea of ​​inspiration" and created a fashionable, high-end and innovative tea brand. Heytea once triggered a queuing craze, and consumers were willing to spend time and money to taste a cup of Heytea.

There are several reasons why Heytea can attract consumers:

First of all, HEYTEA's product quality is indeed high. HEYTEA uses fresh fruits, milk and tea leaves to make tea drinks of various colors, layers and tastes.

Secondly, Heytea has a strong brand image and strong sense of design, which meets consumers' demand for high appearance and aesthetics. Heytea's stores, cups, packaging, etc. all have unique design styles, giving consumers a better experience.

Finally, Heytea’s marketing strategy is new and has strong social attributes, satisfying consumers’ needs for freshness and a sense of belonging. I remember when Heytea opened a store in Beijing Joy City, consumers lined up in long queues waiting to buy. Many people took photos after buying and posted them on WeChat Moments, which was very impressive.

But in the era of consumption downgrade, spending twenty or thirty yuan to buy a cup of milk tea is indeed a bit of a luxury. Now Luckin Coffee can be purchased for 9.9 yuan, and Mixue Bingcheng can buy a large cup for just a few yuan, and the taste is not much worse than Heytea. Why spend money in vain?

At the same time, with the expansion of Heytea stores and years of marketing, the social attributes and freshness of Heytea have gradually weakened. Consumers have become aesthetically fatigued and numb to them, and no longer think they are so special and worth showing off.

If you post a picture of Heytea on your Moments today, others may think you are unsophisticated. But if you post a picture of a cup of Snowman, others may think you are good at saving money.

Sina Hotspot launched a poll, and many users believed that Heytea and Nayuki were becoming more and more expensive and no longer fresh.

Therefore, from price to the desire to share, Heytea today does not have a very strong driving force for consumers to continue to buy its milk tea.

With the rapid expansion of Mixue Bingcheng's stores and the gradual increase in marketing investment, Mixue Bingcheng is widening the gap with Heytea.

According to media reports, as of February 2022, the number of Mixue Bingcheng stores has exceeded 25,000, while the number of Heytea stores nationwide has just exceeded 900. With consumption downgrade, the gap between the two will probably become larger and larger.

05 Conclusion: New consumer brands still have a future

The purpose of this article is to observe the current situation of those new consumer leading brands that have emerged on the trend of consumption upgrading in an environment of consumption downgrade. If the leading brands are not doing well, let alone the long-tail brands.

In recent years, the leading new consumer brands have indeed encountered difficulties, but I think most of them are not due to major problems with their branding, but rather bad luck in catching up with consumption downgrade.

But the economy will always get better one day. If you are determined to build a brand in the long term, you should not care about the gains and losses of one city or one place. Instead, you should work hard to improve product strength, manage brand image and consumer relationships. Then, when the market recovers, new consumer brands will still have a broad market.

Author: Xunkong, Source: WeChat public account “Xunkong’s Marketing Revelation”.