Losing money to earn low-priced milk powder and have to endure

The low-cost milk powder camp has been moving a lot lately.

The New Hope Group, which has just entered the domestic milk powder market with a "cost price" of 99 yuan, has reached an offline cooperation with Wal-Mart to launch a sales offensive both online and offline.

The low-cost milk powder "sponsor" Junlebao plans to push the new low-cost super gold on May 20, while also stepping up the layout of offline experience stores.

However, judging from the current turnover of New Hope and Junlebao, neither of the two companies has made a profit. Some public opinion believes that low-cost milk powder brands, whether offline or online, "are currently in the stage of losing money and shouting."

Song Liang, a dairy expert, told the Beijing News that although in the long run, milk powder prices are bound to enter a downward channel, it will take time. Too low price is easy to kill the channel, and "price is no longer the decisive factor affecting consumers, the key is whether we can enhance professional services to consumers."

Low-cost milk powder from online to offline

On April 27, the infant milk powder "price butcher" New Hope Nutrition products Co., Ltd. announced that it had reached an "exclusive strategic partnership" with Wal-Mart, indicating that its newly launched 99 yuan low-cost milk powder "AiRuiyou" began to switch to offline channels. "AiRuiyou" will be on sale online and offline at the same time from May 1, and the price is 99 yuan.

In this regard, Wang Zhi, general manager of New Hope Nutrition products Co., Ltd., said that the cooperation with Wal-Mart "is an efficient integration of platforms and resources in improving the efficiency of channel construction and marketing promotion." the aim is to let more consumers experience "love Ruiyang" offline.

Industry insiders have pointed out that the price composition mechanism of milk powder in China has not been completely eliminated so far. So, off the front, how can New Hope circumvent this pricing mechanism? Wang Peng, brand manager of Sichuan New Hope Dairy Co., Ltd., responded that the cooperation mode between New Hope and Wal-Mart is relatively special, but it is not convenient to disclose the details, and the cooperation cost cannot be understood as "zero." it is only said that the channel cost of cooperation with JD.com and Wal-Mart is relatively close.

Liu Xiaoen, senior vice president of Wal-Mart's China Purchasing Department, told the media earlier that the cooperation with New Hope is a new attempt, with no expected performance and no guarantee of gross profit margin, saying only that "both sides have made a lot of efficiency improvements." save costs to consumers. "

Before the new hope, Junlebao, which also relies on e-commerce to enter the market, also carried out the layout of offline channels as early as last year. Liu Senmiao, manager of Junlebao's milk powder department, told the Beijing News, "at present, Junlebao already has 5000 stores, and when it reaches 20, 000, it is necessary to connect online and offline. There are not enough offline stores and they are expanding rapidly. "

According to information previously disclosed by Liu Senmiao, Junlebao already has 4000 O2O offline experience stores, in cooperation with mother and baby stores across the country, saving freight and network platform fees for offline sales and returning them to offline, thus requiring offline and online prices to be the same.

The price is low and the momentum is high, but you still lose money.

In fact, at the beginning of New Hope's cooperation with Wal-Mart, there were voices saying that New Hope was "losing money and making money."

Song Liang, a senior dairy analyst, believes that their cooperation is "not in line with the profit model of the current mainstream retail business". Big stores have their own difficulties, and the cost of personnel and rent is also very high, so it is difficult to come down.

He told the media that the entry fee for a supermarket chain is at least 4 million yuan a year, in addition to the display fees ranging from hundreds of thousands to nearly one million yuan, as well as hundreds of thousands of yuan in activity support fees, which are shared equally. A can of milk powder must be sold for at least 150 yuan to make money.

Even online channels, New Hope and Junlebao are not profitable at present and are still in the "money-burning" stage.

Liu Yonghao, chairman of New Hope Group, has made it clear that 99 yuan of milk powder will definitely lose money in the early stage, and only when the sales volume of the product reaches a certain scale will it be profitable. When asked about the specific profit and loss line, Wang Peng of New Hope said there were no plans or targets to increase the number of consumers to 500000 to 1 million this year.

Liu Senmiao of Junlebao said that the sales of Junlebao milk powder reached 210 million yuan in the more than half a year after its launch last year, and exceeded 100 million yuan in the first three months of this year, with a total of 500000 members.

Does this kind of sales make Junle Bao profitable? Liu Senmiao believes that profit is made up of several factors: first, scale, second, capacity utilization, and third, gross profit margin. "if you sell 300 yuan a can, you can make a profit by selling 5000 cans a year; if you sell more than 100 yuan a can, we estimate that we will have to achieve a turnover of 500 million to 1 billion yuan this year to make a profit."

At the same time, Liu Senmiao stressed that Junlebao milk powder is still in the period of market development, and consumers need to invest in trial and product promotion. "at present, this milk powder has not yet been used as a profit indicator, so let's do a good job in the market first. If you want to make a profit, you can reduce the investment a little bit. "

Lei Yongjun, chairman of Putian Shengdao milk powder marketing, according to experience, according to the traditional channel operation, the profit and loss line of milk powder enterprises is 500 million yuan in annual sales, if it does not reach this point and increases the investment, then the enterprise "must be compensated."

As for low-cost milk powder, Lei Yongjun believes that if the brand operation and personnel control are more sophisticated, the annual sales of 300 million to 400 million yuan will be the break-even line of low-cost milk powder.

The "price war" has begun.

More and more brands have joined the camp of low-cost milk powder, and the competition has begun.

Liu Senmiao, manager of Junlebao milk powder department, revealed that by the end of last year, 10 enterprises had prepared to make milk powder of about 100 yuan, and now two or three more enterprises have joined in.

Yashili recently publicly admitted that the original Niu Xiaohui, published in the media during Mother's Day, was Yashili "Neng Hui" gold infant formula.

Unlike Junlebao and New Hope, Yashili Neng Hui is not a new brand parachuted into the Internet channel, but a counterattack on the basis of eight years of traditional market experience. According to Yashili's official Wechat, eight years after the launch of Neng Hui, the price has dropped from about 160 yuan to less than 100 yuan, "ushering in a new era of high quality and low price for big-brand milk powder with 99 yuan," and its promotion channel is the same as New Hope, choosing JD.com.

However, Wang Dingmian, an expert in the dairy industry, said in an interview with the media that at present, its market share is not as good as that of several other brands, and that it is not as ready as New Hope to achieve publicity through low prices.

Low-cost milk powder "sponsor" Junlebao is not to be outdone. A new product with a lower price than the "three high" milk powder (high price, high cost and high profit) will be launched in the near future, Junlebao's official Wechat said on May 5.

Liu Senmiao told the Beijing News that the super gold milk powder will be officially launched on May 20 and will be priced at more than 100 yuan. "compared with foreign milk powder, the nucleotides, probiotics and other main ingredients of this milk powder are better than them, and if they are put on the market, they will usually sell for about 380 yuan."

The road of low-cost milk powder is a little confused.

In Lei Yongjun's view, consumers in first-and second-tier cities are more sensitive to brands and not sensitive to prices, and the real market for low-cost milk powder is in less developed areas, but e-commerce is out of reach in these areas. "the e-commerce model pays too much attention to low prices and does not attach importance to brand building, so it is difficult to land in the hearts of consumers, and consumers' purchases of milk powder will not grow explosively, which is also the fundamental reason why low-cost milk powder turns to the front line."

Lei Yongjun said that Jun Le Bao, New Hope and other low-cost milk powder from online to offline, but also need to innovate in the business model, "I think they are still quite confused." Milk powder shop to the terminal store, is bound to give part of the benefits to the terminal, in order to achieve the same low price as online, which will also have an impact on the online sales of milk powder.

In response to the quietly rising "price war" of low-cost milk powder, Song Liang said that in the long run, the price of milk powder is bound to enter a downward channel, but adjustment will take time, and too low prices can easily kill the channel and disturb the entire industry. "Price is no longer the decisive factor affecting consumers, the key is whether you can improve your professional services to consumers. In terms of service, Chinese dairy enterprises still have a long way to go. "