Condiment Wars: Product Innovation and Model Upgrades

The Chinese cuisine culture that is in full swing contains the flavors of seasoning products. With the influx of multinational companies and the expansion of well-known companies, the Chinese condiment industry is in a period of large growth and major adjustments, and the industry is shuffling. In the future, where is the space for the upgrading of condiments in China? How do companies develop strategic and innovative products? How to optimize the product structure and take the initiative and opportunity in the competition?

The “2010----2015 China Condiment Market Investment Analysis and Prospect Forecast Report” released recently by the China Investment Advisor shows that in recent years, the condiment industry in China has developed rapidly, with an annual growth rate of 20% to 35%. With only one category of chili sauce, the Chinese consumer population exceeds 500 million, and the consumption amount is increasing at a high rate of 16% per year. With the continuous escalation of consumption and the increasing competition in the market, together with the internationalization and professionalization of mergers and acquisitions, the concentrating degree of the condiment industry will gradually increase, and the survival of the inferior and the inferior of the small and medium-sized enterprises will also accelerate. The product warfare, brand warfare, talent warfare, pattern warfare and capital warfare in the condiment industry are being quietly staged.

Market shuffling, instant

The Chinese condiment industry is currently in a period of adjustment and differentiation. On the one hand, it faces the international merger of domestic and foreign capital specialized in mergers and acquisitions. On the other hand, the self-regulation of the development of the industry will promote polarization within the industry. These signs all point to a new round of reshuffle in the condiment industry.

Industry standards have been introduced to accelerate the market reshuffle. There are thousands of chili sauce manufacturers in the country, but many of them are small workshop-style production plants. As there has been no establishment of relevant national standards, the quality of chili sauce products has been uneven. In 2005, the Sudanese incident was exposed. In October 2009, the National Standards Commission issued a notice requesting the China Condiment Association to proceed with the drafting of national standards for chili sauce. The National Standard for Chili Sauce has been finalized on June 18, 2010, and submitted to the National Condiment Association and the National Standards Commission for review. It is expected to be introduced within half a year. According to industry analysts, after the introduction of the new national standards for chili sauce, a group of companies will face rectification, and at least 20% of workshop-type small factories will be eliminated. After the “Food Safety Law” was formally implemented, relevant national departments will integrate relevant food safety standards. The formulation of industry standards organized by the National Condiment Standardization Professional Committee has officially started. This standard is aimed at pickles, salad dressing, mayonnaise, and beef. Five kinds of condiments such as juice and mustard are standardized. The introduction of various standards for condiments is bound to eliminate some condiment companies with poor equipment, low technological content, and poor management.

The low market concentration has increased the chance of shuffling. Market concentration refers to the degree of concentration of major brands in the market, and generally refers to the ratio of the cumulative sales of the top brands in a given industry. Industry experts and research experts usually use CR4 to calculate the degree of market concentration. The degree of market concentration reflects the monopoly and competition in the industry and is an important indicator for analyzing the environment and development stage of the competitive industry. For the condiment industry, CR4> 60% can be regarded as a high market concentration industry, 30% <CR4 <60% for the medium market concentration industry, and CR4 <30% for a low market concentration industry. According to Euromonitor, the total retail sales of the Chinese condiment market in 2009 was 47.3 billion yuan. The top three market shares were Haitian, Lee Kum Kee and Lotus, accounting for 9%, 4.4% and 2.8% respectively. The market for the top three of the condiment industry is less than 20%. The above data shows that the condiment industry belongs to the low market concentration industry. In the low market concentration industry, large, medium, and small enterprises face relatively more opportunities, and the success rate of shuffling at this time is relatively high.

Rapid market growth is a direct cause of reshuffle. The growth rate of the Chinese condiment industry has exceeded 10% for ten consecutive years. For the “small-product, large-market” condiment industry, it has the characteristics of rapid development, large output, multiple varieties, wide sales, and good economic benefits. The temptation of interest directly leads to enterprises that want to form a monopoly profit by controlling market share and will initiate a reshuffle battle. The shampoo sponsors of the Chinese condiment market may be the following interest groups: The first is foreign seasoning tycoons. They have the advantages of brand, capital, talent, and management. The probability of launching reshuffles is the greatest, and the probability of success is also high. Relatively high; second is the capital market. Those venture capital companies and funds are most sensitive to the smell of the market. They may integrate the condiment industry through capital measures such as acquisitions, mergers, and packaging and listing. Third, domestic well-known condiment manufacturers. The most knowledgeable to consumers, there are certain advantages such as a certain channel; Fourth, some powerful distributors, although they are not mainstream in the Chinese condiment industry, but they are the most market-conscious and network advantages and understand the needs of consumers. The most profound.

The development of low-carbon and environmental protection has pushed the industry to reshuffle. Due to the low barriers to entry into the domestic condiment industry, the phenomena of looseness, disorder, and poorness are very serious. Some small condiment companies are unwilling to invest in pollution control in order to reduce production costs, but if the country strictly implements environmental protection standards, many domestic condiments Will be forced to close. It can be expected that with the emergence of environmental protection pressures, vigorously promoting environmental protection measures and technological transformation will become the main route for the future development of the domestic condiment industry. After China's "Circular Economy Promotion Law" is promulgated, it will directly guide related industries to increase efforts in clean production, energy conservation and emission reduction, and new energy development. Therefore, those condiment manufacturers that have taken the lead in vigorously developing the environmental protection industry and recycling economy will be supported by the government and will have more opportunities to become the new leader in the condiment industry.

Product competition, how to innovate

The competition in the condiment market lies in the competition of products. Product innovation is the source and cornerstone of a company's competitiveness and the driving force for the sustainable development of the company. The basic measures for condiment companies to enhance product innovation are to fully tap and grasp the real needs and potential needs of customers, and to increase the cost-effectiveness of products and the added value of products.

Demand innovation. With the continuous improvement of national living standards, there will be greater demand for the convenience, nutrition, and health of condiments. This will stimulate more condiment companies to upgrade their products. In the future, seasonings will be upgraded both in the form of products and the content of products, and the segmentation will be carried out in the end. A change will be made from the satisfaction of consumer demands to the development of consumer demands, which is also an increase in the added value of products. Lay the foundation. For example, the soy sauce industry from soy sauce to soy sauce, from the old to the straw mushroom several times the evolution, but also shows that the future of spices will be more subdivided, the subdivided trend will be along different consumer groups, Different functions and different demands are subdivided. In the past, soy sauce was called soy sauce. Later, from Guangdong and Hong Kong, it was called soy sauce, soy sauce, and then into umami soy sauce. There were also various functional soy sauces, such as steamed fish soy sauce, teriyaki soy sauce, and soy sauce. The same is true for sauces and seasoning powders, as well as soups for convenience. They are all prepared for a specific cooking function or a specific dish. The improvement of consumer brand awareness has also led to a more and more specialized division of labor within the industry. If dark sauce is mentioned, consumers will think of Haitian; when it comes to umami soy sauce, consumers think of espresso; when it comes to oyster sauce, consumers think of Lee Kum Kee; when it comes to compound seasonings, consumers think of Wang Shouyi's 13 fragrances. This is both the result of product refinement and the result of brand operation.

Combined innovation. Through the organic combination of product internal functions or performance, to meet the comprehensive or potential needs of the target customers to achieve the purpose of improving product innovation, which is the combination of new concepts and new elements of innovation. Some condiment companies have already begun such attempts, such as the combination of vintage vinegar produced during the wine year concept and iron sauce produced in combination with the food functionalization concept. These are all from the price war to the value warfare of condiment companies. The 100-year-old Jialiang Mushu series is a category formed by combining the functions of sauces, and then combined hot pot series of condiments, such as centennial Jialiang sesame oil, Jialiang fans, rot marinade, hot pot base materials and so on. Packaging innovation is also a way to quickly differentiate the condiment companies. Condiment companies can learn from the innovative experience of alcohol packaging. For example, the safflower oil produced by the Tianjin Safflower Oil Company is used for packaging of high-grade wine plexiglass bottles. Improve the quality of the product. The rhythm of modern people's life speeds up and the frequency of cooking at home decreases. Disposable condiments have also become a necessity. Small packages of vinegar, soy sauce, chili sauce, baking powder, etc. are used up once, which is neither wasteful nor convenient. The complex seasoning “Treasure Po” is such a combination of innovations. The desire to make a pot of bone soup with a strong taste in a few minutes has quickly opened the market. Enterprises can develop some functional and innovative condiments, such as hypolipidemic, diet soy sauce, organic vinegar, and blood pressure vinegar. The use of these elements to create new types of innovation, not only can tap new consumer demand, but also conducive to the brand's dissemination and promotion.

Decompose innovation. Separate the integrated functions of the product, corresponding to the local or individual needs of the customer. As a sub-category of seasonings, chicken is growing at a rate of 50% per year. However, the dominant player in the chicken market is a foreign-funded company. The sudden emergence of the food-gobit osteoscenic hormone is eye-catching. The food-god bone marrow bypasses the Red Sea where chicken meat is flesh and blood, and it uses innovative and innovative methods to innovate from the chicken sub-category. Opened the blue sea of ​​boney meat seasoning. The food deity osteosperm separated the chicken essence and monosodium glutamate with meat bones. With the calcium-supplying characteristics of the meat bone, it has ingeniously created a new category by emphasizing its own unique technical differences and selling points. Soy sauce and vinegar are the most original and most traditional condiments. If some innovative elements are added, the products will become more competitive. For example, Cantonese soy sauce is subdivided into soy sauce, soy sauce, and so on. The use of soy sauce and soy sauce was divided into uses such as dumpling soy sauce, iron soy sauce, straw mushroom soy sauce, seafood soy sauce, steamed fish soy sauce, and soy sauce containing scallop sauce. Manufacturers attack from various aspects such as the use of products, nutrition, etc., so that consumers can greatly increase the chances of buying soy sauce, and allow manufacturers to lock in a part of loyal consumers in their respective market segments. Vinegar In addition to traditional rice vinegar, vinegar, balsamic vinegar and white vinegar, vinegar products broken down by function and taste are also enriched, such as dumpling vinegar, ginger vinegar, crab vinegar, and vinegar for the elderly. Garlic vinegar and so on. The variety of seasonings introduced for different dishes has enriched the food culture and consumer choices of consumers. At the same time, they have also encouraged condiment companies to continuously develop high-end new products and solve the profit-making model and economic benefits of the company. problem.

Grafting innovation. The word grafting comes from the field of biology, meaning that two plants of different varieties are linked together by buds or branches to achieve wonderful results such as improved results, enhanced resistance, and improved quality of the varieties. Today, the “grafting” in the biological field has been applied to various fields by some pioneering people and has achieved surprising results, especially for product innovation. The product's grafting innovation is to combine two or more functional products to form a new variety, which is to put together several uses of condiments to create a new variety, that is, compound seasoning. Composite seasoning refers to seasonings prepared by using two or more condiments and specially processed, including solid compound seasonings such as chicken essence, chicken powder, beef powder, ribs powder, seafood powder, etc. Seasonings such as chicken sauce, bad brine, and other liquid compound seasonings. Composite condiments can be divided into a lot of products: First, compound cooking condiments. These products are formulated according to the recipes used, such as fish-flavored seasonings, spicy fish seasonings, perfumed fish seasonings, Mapo bean curd seasonings, etc. Such seasonings are seasonings that will be used to make certain kinds of dishes. Soy sauce and other necessary seasonings are compounded in a certain proportion to form a composite seasoning. When such a dish is cooked, only one seasoning is needed to solve the problem. Second, convenient soup. This kind of product concentrates the nutrition soup and compresses it into pieces through the process of concentration. When you use it, you only need to add a certain amount of water. Through microwave heating, you can get a delicious soup, such as the popular soup treasure, hot and sour soup in the market. , Spicy hot soup, black pepper hot and sour soup, fish and vegetable soup, seafood soup, mushrooms, chicken and quail, etc., it completely omitted the process of stew, while retaining the nutritional and delicious elements. Third, the flavor base material. This type of product will be processed, standardized production of flavor foods, so that these products directly into the family, such as the hot pot in Chongqing, Hunan fish, as well as Sichuan Lu Cai and so on. The perfume fish sauce seasoned by Chongqing Zhou Junji was sold for 15 million yuan a year in Chengdu; Sichuan Jingong Flavour Industry also proposed the goal of “Chuanwei compound seasoning expert”. Based on popular Sichuan cuisine, a lot of research and development has been developed. Personalized products are welcomed by the market.

Analogy transplant innovation. Inspired by certain characteristics of related, similar, or similar things, it is a good creative method to transform the knowledge and experience that are applicable to other things. This is analogy transplantation. The most critical point of analogy transplantation is the concept of transplantation. Concept transplantation is to try to transplant the theory, methods, and strategies of a certain area to another area. Condiment companies use analog implant innovations to transplant successful methods from other industries to the condiment industry. For example, Bao Ning in Sichuan and Hengshun in Jiangsu introduced the concept of year in liquor and introduced it in the vinegar industry for one year and three years. Years of vinegar in three years and three types of specifications, the market responded well. Tiandijiao Apple Vinegar is a new category of vinegar beverages developed under the inspiration of a leader using vinegar, snow vines, vinegar, and fruit wine. It has opened up a vast market for vinegar accompanied by vinegar and created a precedent for Chinese vinegar drinks. "Fengwei" also boldly introduced pepper products from India and South Korea into the country and used foreign raw materials to produce condiments. This is an innovation in the transplantation of raw materials. Sanjiewuye Group's invention of grain and savory soup essence is also a typical case of Chinese condiment transplantation innovation. It has created a new category for compound seasoning soup essence.

Future disputes, the battle of the model

Condiment companies must also innovate in the channel model while product innovation. This is a condiment company's two battleships in the industry reshuffle battle, and one must not be less. Condiments, as a small category in the traditional food industry, continued the marketing model of “wholesale market + farmers market + supermarket” for many years, and the competition of condiments has been upgraded to competition in the marketing mode.

Condiment chain model. This will become one of the most competitive mainstream models for condiment companies in the future. The chain business model, whether using self-operated chain or franchise chain, has several advantages over the traditional channel model in the application of the condiment industry: First, the chain operation model is verified in the operation of many industries. The successful business model and management model, and its professional and unified management, ensure that franchisees have a higher success rate than their own entrepreneurs. Secondly, the strong condiment product R&D capability of the chain headquarters can guarantee the competitive advantage and build a strong guarantee and backing for franchisees. Franchisees can devote all their energy to daily operations and management. Thirdly, the strong brand spread of the chain headquarters guarantees the market share, and the unified brand communication of the chain headquarters saves the franchisees money and resources. Fourth, because the franchisers use the image, trademarks, services, prices, etc. of the chain headquarters, this not only enhances the consumer's trust, but also guarantees the franchisee's sales. Fifth, the chain headquarters is unified purchase, unified logistics and distribution, which greatly reduces the cost of purchase and warehousing, logistics costs, but also avoid the risk of the purchase channel selection. Sixth, the duplication of successful experience reduces the risk of marketing. The chain company has dedicated personnel to fully investigate the changes in the market environment, policy environment, changes in customer form, consumer demand, and consumer propensity faced by the chain company, resulting in the Chain stores can take countermeasures as soon as possible to adjust to the best conditions for operations.

Condiment counter mode. As a condiment for daily consumption, the current dependence on large supermarkets is strong. Soy sauce, vinegar, monosodium glutamate, seasoning oil, tender meat powder, chicken powder, mushroom powder, abalone powder and other new products are dazzling, all kinds of canned, bagged, bottled and other attractive products, people dizzying. Seasonings currently enter large supermarkets and stores. They are basically through local distributors. Distributors' loyalty to the brand is not high. They take into account factors such as complete categories and entry fees, and they will operate several brands at the same time. Which brand or which variety to sell, buy more. In response to this situation, the specific solution is: the condiment manufacturing company specifically designs a shop or counter in this brand, in accordance with the "unified business philosophy, unified image identification, unified product service, unified management, unified The expansion of the penetration "into the large supermarkets, can be directly in the large supermarkets in the store to open stores or counters, but also through the franchise of local dealers to enter large supermarkets and other stores, this is actually a chain of a variant model.

Joint venture expansion model. Condiment companies, regardless of whether they build their own channels or use large supermarkets for sales, have a hard time bypassing the dealership. Distributors and manufacturers have always been inseparable from whoever they are, but they are long and disparate. Companies need to promote the sales of their own products to maximize sales, dealers need to make profits on behalf of the company's products, on the surface the interests are the same, but in fact the relationship between the two is always thorny and full of ups and downs. In China's market conditions, dealers are still an indispensable part of the business sector, which is determined by the unique national conditions. To make dealers loyal, it is necessary to meet the two needs of the dealer: First, to solve the dealer's sense of security, to protect the long-term interests of dealers; second is to make dealers profitable in the near future. The key to this is to bundle interests and have the same goals. The joint venture is the best model for resolving this conflict. Joint venture, also known as joint sales, refers to the concept of a business model that applies to sales channels. The joint ventures can be divided into loose joint ventures, limited company joint ventures, partnership joint ventures, contracted joint ventures, and assisted joint ventures according to the different organizational forms. There are no advantages or disadvantages in the joint venture business model itself. This is mainly due to the methods and techniques used by the users in adopting the business model. The joint venture model organically binds the responsibilities and rights of both parties, effectively avoiding the risks of both manufacturers and distributors, and solving the conflict between channels.