Transcript 1. Title Slide – Title of presentation (Subtitle of

Fisherman’s Friend Asia-Pacific Conference
China – The Challenge
Kevin Ding, Marketing Manager, DKSH China
Jakarta, July 10, 2014
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Diversity
China is not one country but more like Europe
•
Whichever dimension we look at , China is composed of
several distinct markets:
- Language / Dialect & Sub-culture
- Economic Development
- Habits / Needs
•
Population:
1.3 bn
Size:
9,6 mn sq km
City > 1 mn:
166
Municipality cities
Provinces
Cities
Only 7% of retailer chains can be found in both provinces
Country Towns
Towns
FMCG Retail Outlets
4
28
656
1,642
36,862
3,6 mn
Heilongjiang
 Population: 38,3 mn
 GDP per capita: RMB 32,600
 Main language: Mandarin
 Behavior: Heavy flavor food; Gift rather than own consumption
Shanghai
 Population: 23,0 mn
 GDP per capita: RMB 82,560
 Main language: Wu (Shanghainese)
 Behavior: Rich flavor food with a bit sweet; pay more for good product
Guangdong
 Population: 104,3 mn
 GDP per capita: RMB 50,500
 Main language: Cantonese
Behavior: Light taste flavor and fresh food; More care about price
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FF Sales by Product / Channel / Region
Sales in LoF
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Consumer demanding and channel importance is different region to region
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FF strategies …
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Focus on key cities and appropriate key channels
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Different strategies upon the understanding of consumer and
market needs region by region
•
Tailor-made product and promotion for specific key accounts
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Competition
Continuous new product innovation by competitors
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Over a thousand new product launched per year to attract young consumer
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Keen fighting for listing due to limited shelf space in store
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Huge A&P investment by competitors
Media Spending
Data source: Nielsen(TV/MG/NP) CTR(RD) CODC(OOH) IResearch(Digital) Period: Y2011-Y2013
Unit: RMB Mil
Brand
Wrigley's
Alpenliebe
Skittles
SK&F
Want Want
Golden Crownstuff
Golden Throat
Eclairs
Chupa Chups
Halls
Others
Total
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Rank
1
2
3
4
5
6
7
8
9
10
Y2013
Spending
1,351
641
554
369
299
260
219
172
172
152
1,359
5,548
%
24%
12%
10%
7%
5%
5%
4%
3.11%
3.1%
2.7%
25%
100%
Heavy A&P spending by key competitors on both A-T-L and B-T-L
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Keen competition from local, regional, global brands …
Data Source: IMS and AC Nielsen Retail Tracking 2012
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Keen competition from key international brands but produced locally
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Fisherman’s Friend was one of few “imported” brands positioned at “premium” segment
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FF strategies …
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Introduce new packaging (zip-lock pack) / flavor to attract new
consumers
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Tactically invest on brand advertising with massive sampling to
drive brand awareness e.g. regional bus body / LCD advertising
•
Focus on key accounts via appealing in-store merchandising and
promotions to attract consumer’s attention and trial
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Trade Barrier
High trade cost
Import Duty
- Sugar
- Sugar Free
10%
20%
VAT
17%
Sub-wholesaler GM
10%
Retailer Ave. GM
45%
2,4 m+ stores
2,287 cities
1 GBP (ex-work) ≈ RMB 40 (RSP)
•
High supply-chain cost and long lead time due to large geographical size of China
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Extremely high trading terms by MT channels along with their expansion in 3rd and 4th tier
cities (new store opening, listing, etc….)
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2.4 M stores located in 2,300 cities which need huge manpower investment for store
maintenance
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Other barriers
•
Strict shelf life requirement by MT chains – 2/3 shelf life is the basic requirement
while some key accounts even ask for ½ shelf life
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Chinese label regulation be more strict and still changed frequently without prior
notice, rigid CIQ procedures
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FF strategies …
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Focus on well developed 1st and 2nd tiers by direct selling to
shorten the lead time and save the cost
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Expand to more 2nd and 3rd tier cities via local sub-wholesaler who
can provide better after-service
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Focus investment on top 20 key accounts which can contribute
80% sales
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Thank you for your attention.
DKSH Shanghai Limited
3rd Floor, Tomson Commercial Building,
710 Dong Fang Road, Pudong
Shanghai , 200122
People’s Republic of China
www.dksh.com
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Disclaimer
 Due care has been used in preparation of this presentation and DKSH makes every effort
to provide accurate and up-to-date information. Nevertheless, this presentation may be
subject to technical inaccuracies, information that is not up-to-date or typographical errors.
DKSH does not assume liability for relevance, accuracy and completeness of the
information provided. DKSH reserves the right to change, supplement, or delete some or
all of the information on this presentation without notice.
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and should not be reproduced or used without DKSH’s written permission.
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