Image source @ Visual China
Text | The list of market capitalization, the author | quiet, the editor | Jia Lele
During the Winter Olympics, Ice Pier and Gu Ailing are the two top streams that deserve it.
The two listed companies related to the ice pier have continuously increased the limit, and the company that signed Gu Ailing's contemporary spokesman has also been praised for its accuracy, and Tomson By-Health is one of them.
By-Health's brand marketing has been precisely on the spot. In 2010, he signed a successful strategic transformation with Yao Ming, and in 2018, he signed a contract with Cai Xukun to focus on the young people's market.
The signing with Yao Ming has achieved Tomson By-Health, but the spokespersons who will follow may not be able to continue this achievement. This is mainly because the market environment and industry pattern of Tomson Biogen have changed compared with ten years ago.
Why did signing Yao Ming achieve Tomson By-Health? How Tomson Biogen has been successful, what changes have taken place in the current market environment, and what difficulties are facing, this article will try to answer them one by one.
01 Kill out of chaos
Chinese is the most edible people in the world, under the influence of traditional concepts such as the homology of medicine and food, what to eat and what to supplement, we instinctively want to rely on eating to solve all physical problems.
Under such a deep-rooted cultural concept, Chinese's acceptance of health care products is very high.
Because health care products are a profiteering industry, the gross profit margin of Onlly No. 1 in the 90s can reach more than 80%, the efficacy is unclear, and the entry threshold is low, so there are many entrants.
The pace of standard formulation and supervision is always lagging behind the development of the industry, and the health care product industry is full of chaos.
The famous brand "Chinese Turtle Essence", which claims to extract a variety of nutrients from the body of the turtle, was exposed by the reporter that there is only one turtle in the whole factory, and the advertising approval number marked in the red peach K advertisement has not been approved, and such excessive marketing and fraud have gradually lost the trust of consumers.
At the same time, the direct sales model of foreign health care products has entered China, which has also led to the barbaric growth of some health product companies that blindly pursue performance. Among them, the "QuanJian incident" has cast a haze on the direct sales model of the health care product industry.
As a result, in China's health care products industry has become a controversial industry, on the one hand is synonymous with IQ tax, pyramid schemes, on the other hand is the myth of wealth creation, once the sun god, Onlly No. 1, brain platinum and so on have achieved a group of people on the rich list.
Almost all of these rapidly rising and declining brands are telling a feature of China's health product industry, which has a short life cycle.
And Tomson By-Health seems to have broken this law, from 2002 to the present, Tomson By-Health has become the industry leader.
The success of By-Health is inseparable from two words: pharmacy and Yao Ming.
First, pharmacies have largely played a role in justifying the name of health care products, and the huge sales network also constitutes a barrier.
In a chaotic industry, products from the pharmacy channel are more likely to gain the trust of consumers.
According to the prospectus, as of June 30, 2010, there were 8,553 retail terminals in pharmacies and 450 retail terminals in supermarkets, with a total of 9,003 retail terminals, of which pharmacy channels accounted for 95%.
At the same time, some pharmacies have also set up special counters with By-Health and have special nutrition consultants stationed to carry out "knowledge marketing".
Pharmacy as a high-quality channel, the first entry of the product and the channel provider has formed a good cooperative relationship, occupy a favorable position, in the face of a huge sales network and complex market management, the products of the enterprises that enter the market after the entry are difficult to make a breakthrough in a short period of time.
Second, the endorsement of sports stars has enhanced the popularity and reputation of Tomson By-Health. Yao Ming, who is strong and strong, makes consumers have certain expectations for efficacy.
In 2010, Yao Ming was being warmly praised by public opinion. Signing Yao Ming is the most important step in the shift of By-Health's development strategy from channel-driven to brand-driven.
Since then, the expansion of Tomson By-Health has been obvious. By the end of 2010, By-Health had 13,000 terminal sales outlets, and by the end of 2012, it had exceeded 40,000, an annual increase of 75.4%.
Relying on channel advantages and brand power, Tomson By-Health has maintained high growth for several consecutive years after listing.
Relying on the pharmacy channel to successfully break through By-Health, By-Health has to follow the unspoken rules of the pharmaceutical retail market, which also leaves hidden dangers for the future development of By-Health.
02 The collapse of the moat
In the reckless stage of the development of the health care products industry, By-Health has taken the leading position by building channels and brand barriers, but with the changes in industry supervision, consumer mentality, shopping channels and other aspects, the advantages of By-Health are disappearing.
First, the new Advertising Law promulgated in 2015 clearly stipulates that health care products cannot find a spokesperson. The product lines endorsed by Cai Xukun and Gu Ailing are all food series.
After losing Yao Ming, By-Health's performance declined in 2016, and the net profit attributable to the mother fell by 15.78%. The decline in performance is not unrelated to the loss of Yao Ming, but the main reason is the adjustment of the channel structure.
Second, the rise of online channels.
China's dietary nutritional supplement (VDS) industry started late, and Amway NUTRILITE has educated and nurtured the market as an enlightening teacher for the market. For a long time, the direct sales channel represented by Amway and the pharmacy channel represented by By-Health have occupied a major position.
With the rapid development of e-commerce, the collapse of the "Quanjian Empire", and the sudden outbreak of the epidemic, the channel structure of China's VDS industry has undergone great changes.
Among them, the proportion of online channels soared from 2.9% in 2010 to 37% in 2019, surpassing direct sales channels to rank first, and the leading edge continued to expand in 2020, accounting for 42.7%. The pharmacy channel was compressed from about 50% to less than 20%.
Under this trend, By-Health has made two changes, online and reshaping offline channels, both of which show that the advantages of the past have become the shackles of today.
In terms of online, In 2016, By-Health plans to exert efforts in online channels, put forward an e-commerce branding strategy, and launch the large items "Daily Plus" and "Jianleduo" and the joint venture brands "Natural Treasure" and "Merricks" to seize the online market share.
The reshaping of offline channels more truly reflects the unfavorable side of relying on pharmacies.
The book "Our Real Case of Marketing" published by The United Zhida Research Institute describes the reshaping of By-Health channels as follows:
The unspoken rule of retail pharmacy terminals: sell at a low price and sell at a high price. The manufacturer ships to the dealer at a 2-3 discount, the dealer then ships to the retailer at a 3-5 discount, and the retailer sells to the consumer at a high price. The layers of price increases in the intermediate links make Tomson By-Health's products higher than their domestic counterparts, and there is almost no room for price increases.
Tomson By-Health once chose to try to increase the supply price in the regional market, and raised the 30% discount supply price to 50% off, but "the next day" found that the display position of the product was transferred to the bottom of the shelf, and the salesman also began to negatively induce customers to choose other competitors with high gross profits.
In recent years, By-Health has continuously adjusted for dealers, put forward specialty sales, dealer fission and other programs, adjusted dealers to the direction of "quasi-subsidiaries", and laid their own brand of self-operated, associated and franchised stores, and built a chain nutrition center, with the intention of strengthening the control of offline channels.
However, whether it is to exert force on the line or intend to control the terminal and build a terminal, it takes time, and the chaos and pressure in this process need to be borne by Tomson By-Health itself.
Online expansion requires various promotions and discounts, and offline terminal outlets are not under the management of Tomson By-Health, which leads to news and complaints about the large price difference between Tomson By-Health's different channels.
In order to avoid the bad competition between online and offline, By-Health proposed an online and offline integration strategy, which lasted from the second half of 2021 to the first half of 2022. But specific to the operation plan Tomson By-Health has been secretive, for whether the online and offline price is unified also about him.
Liang Yunchao, chairman of By-Health, mentioned in his internal speech: "Tomson By-Health, like Made in Germany, does not believe in good quality and low price." In a price increase, the reason why Tomson By-Health was found in the survey was that its own price was in the upper middle and did not match the brand in the top position.
From the company's philosophy and actions, it can be seen that Tomson Byjian is taking a high-end road, and the lack of control over the price system will definitely damage the brand power of Tomson By-Health.
03 Dilemma: Rivals and Profit Margins
With the development of China's economy and the education of scientific nutrition concepts for many years, Chinese consumers, especially young people, have changed their concept of health care product consumption, and the epidemic has raised the health awareness of the whole people, and the demand for dietary nutritional supplements and health foods has been expanding.
In the new industry context, By-Health is facing more and stronger competitors and the resulting decline in profit margins.
Good industry prospects and huge market space have attracted many enterprises to cross-border entry. Under the background of the pharmaceutical industry such as medical insurance control fees and collection and price reduction, its traditional Chinese medicine enterprises have sought new profit points, and the momentum of cross-border entry into the health care product market is the strongest.
At the end of 2020, Ipson announced that it has carried out strategic cooperation with Camex, a health food brand under the Kanglong Group in the United States, in related channels to lay out the field of big health. In addition, nearly half of the exhibitors of The China International Health and Nutrition Expo 2021 are from the pharmaceutical industry.
The advantages of cross-border health food of pharmaceutical companies are very prominent.
First, the level of R&D and production equipment of pharmaceutical companies is implemented in accordance with the standards of pharmaceutical production, and the production and research and development conditions fully support cross-border health products and foods, and the stricter the health food requirements, the more beneficial it is to pharmaceutical companies.
Second, to expand the category, the most critical point is whether the channel can be reused. The channel advantages of pharmaceutical companies are more readily available.
In addition to pharmaceutical companies, many milk powder companies are also in the cross-border health product market, Jianhe Group has acquired the Australian health product company Swisse, and Feihe has acquired vitamin World, a nutritional and health supplement retailer.
Tomson By-Health's channel barriers do not have advantages in the face of pharmaceutical companies and milk powder companies, and dietary nutritional supplements in the traditional offline pharmacy market has grown weakly, and there are many competitors for new functional health foods, and By-Health will face the dilemma of being attacked from the stomach and back.
In the face of such a situation, By-Health acquired Australian health product company Life-Space Group Pty Ltd (hereinafter referred to as "LSG") for 3.56 billion yuan in cash in 2018 to develop the probiotic business. In 2020, it acquired online channel operator Guangzhou Maiyou, relying on Maiyou's first-hand online data to develop a new brand for online business.
However, the above development is not smooth. Affected by the implementation of the E-commerce Law in 2019, LSG's Australian market business failed to meet expectations, and a provision for impairment of goodwill and intangible assets was 1.57 billion yuan, resulting in a significant loss in 2019.
Although Guangzhou Maiyou brought 266 million yuan of revenue to Tomson Biogen in 2020, the net profit margin of Maiyou was only 4.2%, which directly led to a 62.99% year-on-year increase in the marketing promotion fee and 190.51% increase in the platform promotion cost in Tomson By-Health's sales expenses.
Since the listing of By-Health, sales expenses have remained high, accounting for about 27% of operating income, and as a company with a gross profit margin of about 65%, sales expenses account for nearly half of the remaining profit space.
From 2011 to June 2021, the growth rate of sales expenses and operating income of By-health can be seen that the growth rate of By-health's operating income is almost spawned by the increase in sales expense investment.
As soon as the investment in sales expenses slowed down, revenue growth immediately declined.
According to By-Health's 2021 semi-annual report, domestic business revenue accounts for 93%, of which online channel revenue accounts for 19.5% of domestic revenue. Offline channels remain Tomson Biogen's main source of revenue.
Since 2013, the growth of offline channel performance has shown a weak trend, high sales expenses have compressed the profit margins of Tomson By-Health, while the growth of online channels and the promotion of new health food brands rely more on marketing promotion.
If you want to maintain the original profit level, By-Health must choose between the insurance line and the insurance line.
04 Conclusion
In 2020, version 2.0 of the corporate core values released by By-Health at the 25th anniversary celebration of the company included a "innovation for change, adapting to change with speed: holding the old map can never find a new continent." ”
Innovation and change almost run through the entire entrepreneurial process of Tomson By-Health, from its founder from the popular health product company Helios to find the field of dietary nutritional supplements after leaving, to the field of a number of companies in the field of direct sales when today's by-health to open up pharmacy channels.
By-Health's strong pharmacy channel could have achieved its industry king status, but the explosion of functional health food in different scenarios such as "punk health" suddenly "opened" the original industry ceiling.
By-Health and cutting-edge health care brands stand on the same starting line, coupled with the cross-border of pharmaceutical companies, the future fight will only be more intense.
bibliography:
[1] "Cultivating Inside and Expanding Outward, Promising: Functional Food ODM Giants Facing the World" Huachuang Securities
[2] "2020 China Dietary Nutritional Supplement Industry Development Report" Medical Insurance Chamber of Commerce
[3] "Our Real Case of Marketing" Lianzhong Zhida Research Institute
[4] "Pharmaceutical companies are in the limelight of cross-border health care products, and traditional "Jian brand" products are gradually marginalized? China Times