Wang Xiaolu wants to soar from more than 1 billion yuan in revenue to more than 4 billion yuan.
In August 2023, at the Wang Xiaolu Channel Partner Conference, founder Wang Xiong told his national distributors, "The sales of more than one billion tiger skin and phoenix claws are far from our upper limit...... We believe that in the entire Chinese market, Wang Xiaolu, a single product of tiger skin and phoenix feet, has the opportunity to achieve more than 4 billion. ”[1]
Image source: Wang Xiaolu
Wang Xiaolu's brand record gave Wang Xiong confidence.
In 2016, Wang Xiaolu was established, and in 2019, the brand's main product was replaced with tiger skin and phoenix claws, and it grew rapidly. From 2019 to 2023, its revenue will increase from 20 million yuan year by year to more than 200 million yuan, 800 million yuan, 1 billion yuan, and 1 billion yuan. According to Sullivan data, from 2019 to 2023, Wang Xiaolu ranked first in the sales of tiger skin and phoenix claws in the country for 5 consecutive years.
At the same time, Wang Xiaolu, who started online, only took 3 years to spread the product to 200,000 retail terminals, and offline revenue will account for 75% in 2023.
However, it is not easy to win 4 billion yuan. This means that Wang Xiaolu has to move from the stage of benefiting from category dividends in the past to the new stage of occupying the category, and the difficulty is not at the same level.
In the snack industry, there are not many cases where a single category contributes 4 billion yuan to the brand. Among the snack companies listed on the A-share market, only Qiaqia Food has achieved more than 50% market share, and sunflower seeds have contributed about 4.5 billion yuan in revenue to Qiaqia Food (2022 data). Wang Xiaolu, the general manager of the brand center at the time, once revealed that if Wang Xiaolu wants to achieve this goal, he also needs to achieve the occupation of the category on the premise of a market share of nearly 50%. [2]
There is no shortage of participants in the tiger skin and phoenix claw category, and it is even more common to bring "capital" into the game. According to Wang Xiong's observation, the crisis behind the brand's own growth is emerging: insufficient innovation in the product dimension, unstable delivery in the supply chain dimension, and unstable price orders in the market dimension in parallel with goods channeling. [1]
Can Wang Xiaolu occupy the category and win 4 billion yuan in revenue? From Wang Xiong's point of view, he planned the path to realization, "A consumer goods company has three battlefields, products, brands, and channels. If you want to occupy a certain category, you have become an expert in the three battlefields. ”[3]
Judging from Wang Xiong's past remarks, he started a business to seek stability, pursued "things with a high probability of getting results", and had a set of entrepreneurial logic of "winning first and then fighting", "(entrepreneurship) first understand the accounts." You must win against others, and you can win. If you can't win, mobilize resources to fight against one. For example, when I was making phoenix feet, I told people that my competitors might not be able to beat me for the time being, because their budget might only be 1/10 of mine. ”[3]
At present, Wang Xiaolu is trying to use the strategy of "ten to one, crushing opponents with absolute strength" in terms of products, brands and channels, and is rushing to 4 billion yuan. At the beginning of this year, Wang Xiaolu announced that in 2023, he would focus on the three major battlefields with "10 times the force", achieving product innovation, brand exposure, and network expansion, with a year-on-year increase of 40% compared with offline performance. [4]
First, the category is only "good", and it can't support 4 billion yuan?
In 2016, at the age of 34, Wang Xiong resigned to found Wang Xiaolu and sold cooked braised pig trotters. By the end of 2018, Wang Xiaolu lost nearly 2 million yuan. In 2019, Wang Xiong decided to replace the brand's main product with snacks tiger skin and phoenix feet, and the turning point of Wang Xiaolu's fate was opened, and the brand's sales reached 1 million yuan in the first month of entering Tmall, and won 20 million yuan in revenue at the end of that year.
The different categories selected directly determine the business results, which caused Wang Xiong to think deeply: the category fundamentally determines the business model and financial model of the enterprise, "The category is your life, and what kind of category you choose means what kind of road you will take, whether it is flat or rugged." ”[3]
Referring to the past entrepreneurial experience and the categories that have been verified by the market, Wang Xiong found the secret of good categories: low customer acquisition cost, high repurchase rate, moderate and slightly better gross profit margin. And tiger skin and phoenix claws belong to a good category in Wang Xiong's eyes. In the past five years, there have not been many "good categories" recognized by Wang Xiaolu. In addition to tiger skin and phoenix claws, there are only a few categories such as boneless phoenix claws, shredded duck necks, and marinated quail eggs, with a total of more than 20 SKUs.
Image source: Wang Xiaolu
Wang Xiaolu's company's resources also flow to a single category of tiger skin and phoenix claws very clearly, for example, it would rather manually cut the nails of phoenix claws at the cost of losing more than 2% of gross profit, pursue product differentiation, and spend gross profits on the promotion of other categories, and only rely on the overflow of tiger skin and phoenix claws for sales.
Wang Xiong once explained the reason: when the resources are insufficient in the early stage of entrepreneurship, only enough focus and resources are used on the most efficient single product (tiger skin and phoenix claws) to succeed, "making the category equal to the brand is not the only logic of success, but I prefer this logic, because the efficiency is relatively high." ”[5]
Obviously, Wang Xiaolu adopts a typical large-scale single product strategy. However, if the large-scale single product strategy allows Wang Xiaolu to seize the time window and rely on differentiated products to quickly open the market, which is the A side of the strategy, then how to solve the ensuing problem of continuous growth in scale under product homogenization is the B side of the large-scale single product strategy.
With the entry of the boneless man, baicaowei, and three squirrels, the tiger skin and phoenix claw category is becoming more crowded. In Hi Special Purchase, Wang Xiaolu once competed with Qiang Xiaolu, a channel with a lower price, and was "close to the face" on the adjacent shelves. [6] On major platforms such as Xiaohongshu, Taobao, and Pinduoduo, there is no shortage of tiger skin and phoenix claw brands with labels such as "Wang Xiaolu Tongyuan Factory" and "Wang Xiaolu Pingti".
At the same time, offline, which is the main source of Wang Xiaolu's revenue, is contributing more and more revenue to the line, but the growth rate is declining. In 2022, Wang Xiaolu's revenue will exceed 1 billion yuan, and offline revenue will account for more than 65%, a year-on-year increase of 116%. By 2023, Wang Xiaolu's revenue will reach more than 1 billion yuan, and the proportion of offline revenue will increase to 75%, with a year-on-year increase of 40%.
Wang Xiaolu decided to change the product strategy.
In August 2023, at the Wang Xiaolu Channel Partner Conference, Wang Xiong told his dealers nationwide, "The sales of more than one billion tiger skin and phoenix claws are far from our upper limit...... We believe that in the entire Chinese market, Wang Xiaolu, a single product of tiger skin and phoenix feet, has the opportunity to achieve more than 4 billion. And announced that the product positioning will be extended, from the original "tiger skin and phoenix claw expert" to "phoenix claw expert".
The extension of product positioning is not entirely based on the consideration of more "good categories" in the first place. Starting from the new stage of tiger skin and phoenix claws to 4 billion, solving the crisis and shortcomings behind growth at the product level has become a new measurement factor.
According to Wang Xiong's observation, combined with the B-side of the large-scale single product strategy, the current problems in the growth of its products are mainly concentrated in three aspects: first, the coverage of the population is not wide enough, such as the lack of sinking products, the lack of taste richness; second, the utilization rate of the terminal row is insufficient, the channel value is not sufficient, such as few SKUs, when some channels control the number of phoenix claw products on the shelves, the alternative plan is insufficient; and the third is the lack of the second curve. [1]
The implementation level corresponds: Wang Xiaolu will focus on the first aspect, focusing on tiger skin and phoenix feet, expanding addictive flavors, gimmick flavors, and single-pack and channel customized specifications in the sinking market; for the second aspect, more chicken snacks and marinated snacks will be launched as supplements; for the third aspect, Wang Xiaolu will still focus on the tiger skin and phoenix claw category, and at the same time extend to the claws with stronger mental relevance and product interoperability, and explore the possibility of cultivating other core categories or large single products. [1]
"Basic flavors can grab the end of the board, some products may be niche but have a high repeat purchase rate, and some flavors are easy to acquire new customers. In the past, we didn't have such an understanding, just three or four flavors such as marinated incense, spicy, and pepper sesame were in the world there. [7] Acquire customers, help retail terminal sales, expand sales scale, and increase profits...... Wang Xiong began to consider the broader business perspective and decide whether to put the product on the shelves.
The 10-fold force strategy has also been reflected, and the influx of resources related to products has begun to show signs of it, including Wang Xiaolu's organizational structure has entered a new round of adjustment, and the product department that was originally subordinate to the marketing department has been promoted to a first-level department, with Wang Xiong personally serving as the number one product manager to control the new process of products; the supply chain has shifted to asset-heavy operation, and a digital and intelligent chemical factory has been established in Chuzhou to control quality control, stabilize the price fluctuations of upstream raw materials, and improve R&D intensity and shorten product delivery cycles.
2. Without 500,000 controllable terminals, you can't become a "channel expert"
In addition to products, channels have also been valued by Wang Xiong. Offline is regarded by him as Wang Xiaolu's strategic channel and the first channel.
"Snacks are not just needed, and the convenience of buying determines its market capacity. [3] Wang Xiong's emphasis on offline channels is not complicated, it is not only a consumption scenario that he prefers from common sense, but also the largest source of revenue verified by Weilong, Qiaqia Food, Youyou, etc., with about 90% of its revenue contributed by offline.
As early as June 2020, Wang Xiaolu began to build an offline channel system. In September of the same year, offline monthly sales exceeded 10 million yuan. In the first half of 2021, Wang Xiaolu's offline monthly sales exceeded 30 million yuan, and offline channel sales accounted for about 50%. In 2023, the number of Wang Xiaolu's retail terminals will reach 200,000, and the monthly offline sales will exceed 100 million yuan, contributing more than 750 million yuan in revenue throughout the year, accounting for about 75% of the total revenue.
Image source: Wang Xiaolu
Dealers are the main force of Wang Xiaolu's deep cultivation of offline channels. However, since Wang Xiaolu entered the offline, his game with some dealers has not stopped.
In December 2023, Wang Xiaolu successively issued the "Notice Letter on the Company's Stop Supplying to the Hi Special Purchase System" and the "Notice Letter on the Company's Cessation of Cooperation with Hema System" (the follow-up Wang Xiaolu and Hema re-established cooperation), announcing that due to the inability to sell according to the company's standard price order, he would stop supplying to the two channels, and issued a warning to dealers: all our current cooperative dealers/distributors are not allowed to supply to the Hi Special Purchase System/Hema System, and will be disposed of in accordance with the flow of goods system once investigated.
The two statements have a common background, and Wang Xiaolu's chaotic prices and dealers' goods have been put on the bright side. In August 2023, Wang Xiong bluntly said: "Now the price of our entire company is described as 'collapse'. Whether it is an online channel or an offline wholesale market, the price list has been very confusing. ”[1]
If you want to achieve the revenue target of 4 billion yuan, it means that Wang Xiaolu must solve the problem of dealers' goods channeling and the resulting price confusion. Wang Xiong first discovered that dealers were fleeing goods in June 2021, and in July of the same year, Wang Xiaolu began to make a series of adjustments. In the past three years, it has tried many solutions, including cutting the tie-in policy, removing the distributors who flee the goods, setting up a price order committee, and implementing a one-bag-one-yard ...... Among them, "a complete grasp of POS data (Point of Sales, point-of-sale terminal data)" was emphasized by Wang Xiong. [8]
Wang Xiong has an account in his heart: "The data of all dealers purchasing from Wang Xiaolu should be equal to the data obtained after subtracting the gross profit of the dealers and the commission of the front and back office from the POS data of the retail terminal." That is to say, all the money that dealers buy from me can be calculated back through POS data. If you can't come back, it must have gone somewhere else. ”[8]
According to Wang Xiong's account, the outlets are far less important than the real control of the outlets, and the outlets that can obtain POS data are the "effective outlets" that Wang Xiaolu can control. At present, among Wang Xiaolu's 200,000 retail terminals, there are 100,000 retail terminals that have complete POS data. But this is not a number that is enough to satisfy Wang Xiong.
"We want to be the channel expert with the largest number of outlets and the most efficient sales efficiency. Regarding the number of terminals to be expanded, Wang Xiong's idea is, "The goal of the entire company is to achieve 500,000+ (controllable) terminals." ”[1]
It has 500,000+ controllable terminals, which is directly related to its goal of achieving more than 4 billion revenue. "Whether it is based on our current brand penetration rate or the number of outlets, the sales of more than one billion tiger skin and phoenix claws are far from our upper limit. [1] From Wang Xiong's words, it can be inferred that one of his ways to calculate Wang Xiaolu's future growth space is based on the revenue scale corresponding to the number of offline outlets.
On the road to 4 billion yuan, Wang Xiaolu has also invested 10 times the number of troops in offline channels.
In 2023, Wang Xiong will set up the "Haidilao Special Project" within the company to lead and solve problems related to offline channels in order delivery, price management, sales and service as the CEO. [1]
At the same time, Wang Xiaolu launched the "big circulation strategy", not only emphasizing extensive market coverage and penetrating from first- and second-tier cities to sinking markets, but also emphasizing the operating efficiency of retail terminals, through the establishment of sample cities, model areas, and model outlets, to provide resource and financial support to channel providers with large demand and high sales, and encourage channel providers to improve the output of single stores to become regional benchmarks and drive the overall growth of the region. [1]
In addition, Wang Xiaolu is also trying to improve dynamic sales and promote the expansion of the number of outlets through a series of measures such as cost support, the operation department polishing the growth model, and dispatching internal personnel to assist the channel in adjusting the display, organizing the layout, and doing activities.
Third, 200 million yuan will be invested in 3 years, and if you can't see ROI, you have to invest in the brand
Wang Xiong felt that he might have made a decision contrary to that of most entrepreneurs - 10 times the strength of the army to bet on the brand, "9 out of 10 founders may not be willing to invest in the brand." It can be very confusing to not see the ROI, spend money, but not know how much to sell. ”[3]
Heavy investment in the brand has been promoted by Wang Xiaolu for a long time. In the early days of the launch of tiger skin and phoenix claws, Wang Xiong used his funds to create a stronger brand sense for Wang Xiaolu, "When the net profit is only 50,000 yuan a month, I have to spend 400,000 yuan to advertise." [9] Since then, Wang Xiaolu's brand investment has soared, accounting for an important share of revenue. According to Wang Xiong, "From 2019 to 2022, almost all the money we made was spent on investing in brands. ”[3]
Obsessed with building a brand, Wang Xiong has his own logic. Looking inward, being a brand can increase the premium, provide a larger value chain for the company's operation, support its cooperation with dealers, and distribute more benefits to both parties. Without the value chain, no dealer is willing to do things with me, and without the value chain, we cannot sink to 500,000+ outlets. Wang Xiong once said bluntly. [1]
Looking outward, brand building is an important way for FMCG companies to achieve market expansion.
After studying the brand launch strategies of large FMCG groups such as Procter & Gamble and L'Oreal, Wang Xiong believes that the purpose is to improve the mental penetration rate of brands (unprompted first mention rate), and the mental penetration rate of brands that can really occupy the category can usually reach more than 50%. [3]
In 2021, Wang Xiaolu conducted a survey of 20 cities, and the result was that the brand mental penetration rate was 6%-7%. After a one-year period of big drama launches, channel laying, offline activities, Douyin grass planting and other activities, Wang Xiaolu found an external agency to conduct research and found that the brand penetration rate reached about 15%.
"When you buy melon seeds, the answer in your mind must be Qiaqia, and the answer in your mind must be Weilong, and we are still far from the penetration rate of such a brand. Far from it, then there is a lot of room for development. [3] Wang Xiong hopes to increase the penetration rate of the brand to more than 50%, and make Wang Xiaolu equal to tiger skin and phoenix claws in terms of category mentality. "We do brand research every year, and after doing it, we probably know where part of the mountain we climbed, whether it's 1/4 or 1/3, and we have to continue to work hard. Many people are reluctant to invest in brands because they don't know where they are. ”[3]
In terms of specific launch strategies, Wang Xiaolu has shown great enthusiasm for short-term sales conversion and long-term brand building. Looking back at past brand communication cases, it is not difficult to find that there are not only live broadcast activities that take ROI as the consideration for short-term impact on GMV, but also the planning and production of short films on various topics in order to amplify the brand voice and pursue long-term user mental acquisition, as well as the media delivery of major dramas and elevators.
In 2021, Wang Xiaolu will launch the advertising film "Jin Danjue" to solve why there is no phoenix in the zodiac. In the short film, the chicken inserts phoenix feathers on its tail and flies on the branches to occupy a seat in the zodiac. The phoenix is about to regain everything lost, and immediately makes an appointment with the Siberian tiger who speaks Henan dialect to fight with the chicken. The group beating incident was in front of the Emperor of Heaven, and the three major parties were punished into the alchemy furnace. Seven or forty-nine days later, the stove exploded with a "bang", and the "delicious and fried" tiger skin and phoenix claws were born.
Image source: Wang Xiaolu
Funny, nonsensical, and brainy are the main characteristics of the plot. And similar characteristics have repeatedly appeared in Wang Xiaolu's other commercials, variety shows, and even live broadcast rooms. Wang Xiong believes that happiness is the essence of Wang Xiaolu as a snack, and happiness itself has value and will not disappear with time, "I told the people in our brand department that if we persist for 10 years and can shoot 4 films a year, and those 4 films become more and more interesting every year, I think it (happiness) will become Wang Xiaolu's totem." ”[3]
Wang Xiaolu hopes to become a company that continues to bring happiness to everyone through products, which is the long-term value of Wang Xiaolu. [3] Wang Xiong plans to continue to invest resources in the brand in the future, so that Wang Xiaolu can become a phoenix claw brand expert who delivers happiness to users, "Our non-traffic pure brand expenses in the next three years will not be less than 200 million." We will firmly do big drama marketing, entertainment marketing, and IP co-branding, and cooperate with some head IPs with very traffic. ”[1]
IV. Conclusion
Wang Xiong does not shy away from the admiration of Qiaqia food, and has repeatedly mentioned that he wants to learn from Qiaqia food.
The sunflower seed category of Qiaqia Food has grown from a revenue of 1.44 billion yuan in 2008 to more than 4 billion yuan to 4.512 billion yuan for the first time in 2022, which lasted 14 years. During this period, the sunflower seed category fell into a period of low growth for 5 years (2012-2017), and the annual revenue growth rate was once reduced to 2.55%.
In order to get out of the growth dilemma, Qiaqia Food has made a series of adjustments: focusing on the main categories and extending to the more relevant nut categories, implementing the "million terminal strategy" and "offline channel digitalization", and concentrating resources to build core category brands and improve premium capabilities. A number of measures have promoted the sunflower seed category to successfully exceed 4 billion yuan, and the growth rate of Qiaqia Food's annual revenue (2018-2022) has increased to more than 9%.
is also to achieve a jump from more than 1 billion yuan to more than 4 billion yuan, Wang Xiaolu in the three major battlefields of products, channels, and brands, it is not difficult to see the figure of Qiaqia Food. The difference is that Wang Xiaolu focuses on the tiger skin and phoenix claw category, which has never been verified by Qiaqia Food.
Reference Sources:
[1] "Wang Xiaolu Channel Partner Conference Halogen Master Sharing|Co-potential, Symbiosis, Win-Win", 2023.10, Xiaolu Political and Educational Office
[2] Twenty-four, "Interview with Wang Xiaolu: It's been four years, why are you still making phoenix feet?|Brand Deep One Degree", 2023.7, chop pepper Spicy
[3] "Selling pig's trotters is dangerous, selling tiger skin and phoenix claws is the first in the country!Wang Xiong: Category is the life of entrepreneurs", 2023.2, Chaos Academy
[4] "2023 Wang Xiaolu Brand Annual Memorabilia", 2024.2, Wang Xiaolu
[5] Zhao Youran, "Interview | Wang Xiong, founder of Wang Xiaolu: Focusing on making phoenix feet, can you go far?", 2021.7, food industry headlines
[6] Liu Dongxue, "Good Sellers Want to Tear Off the Label of "Advent"", 2022.6, 1996
[7] Yao Lan, "Wang Xiaolu's "Seven-Year Itch"", 2023.11, 300 million generations
[8] Wang Xiong, "Creating National-level Snacks from 0-1: Wang Xiaolu's Ultimate Single Product Strategy", 2023.2, Chaos APP
[9] Xu Yanqian, "Wang Xiaolu's Million Ferry Ticket and 3 Billion Voyage", 2021.5, participated in CANPLUS
This article is the original of FBIF Food and Beverage Innovation, Author: Dajun, Editor: Bobo, please contact for authorization for reprinting.