To become the first in the industry, it is very important to choose the right track and be highly focused.
Text: "Chinese Entrepreneur" reporter Li Xin
Edited by Mina
Image source: Medium Attempt Library
On April 26th ~ 28th, the 2024 (16th) China Business Mulan Annual Conference hosted by China Entrepreneur magazine was held in Wuzhen, Tongxiang City, Zhejiang Province.
The core points of Chai Xiu's speech are as follows:
1. It is very important to choose the track in the early stage of entrepreneurship, and it is very important to choose the right track and focus on it.
2. To be a brand is to make a product, only when the product quality is done well, the brand has a foundation.
3. If the brand wants to fight by price war, there must be only a dead end. Only continuous investment in the brand is long-termism and the attitude of doing business.
Chai Xiu, founder and CEO of Microcoland
The following is a transcript of Chai Xiu's speech (with deletions):
On this occasion, I still want to talk about cheese, because there are many people who don't know what cheese is. In particular, a lot of people have told me that we kids eat Microcolando cheese sticks and think that cheese is for children. Therefore, I would like to tell you here that cheese is not only the best choice for children, but also the most beautiful food that people of all ages from one year old should enjoy. In fact, many people don't know what cheese is made of, more than 95% of the world's cheese is made of milk, and of course there is also goat cheese made from goat's milk.
What are the benefits of cheese? This is very important, and I will share a relationship between cheese and height. In fact, every parent wants their child to be taller than themselves. In my case, I am 1.68 meters tall, my husband is 1.73 meters tall, and my daughter is 1.72 meters tall and my son is 1.94 meters tall. I started making milk and then cheese in 2001, and my kids were taller than they should be because they consumed more milk than their parents. Therefore, in China, as long as every parent wants their child to be tall, he must eat more cheese before the age of 18.
In developed countries in Europe and the United States, more than 30% of milk is made into cheese, because cheese can make dairy products have more and richer delicious expressions. In China, why today we consume cheese in such small quantities, businesses are responsible. Because many people in China don't know that there are thousands of varieties of cheese, they don't know that children can eat cheese if they don't like to drink milk. That's what I saw when I first entered the cheese market, so I felt like I was doing something very meaningful.
In addition to helping with height, cheese is also better absorbed. The absorption rate of milk in the human body is about 91%~92%, and after production and processing into cheese, the absorption rate increases to 98%, which is obviously better absorbed.
In 2016, I drifted from Northeast Shanghai to Shanghai. 2019 is the first year of Microcoland's brand building. Here, I summarize how Microcolando became the number one in the market, and it was important to choose the right track at that time. In the traditional dairy category, I couldn't make Mengniu and Yili's milk, Feihe milk powder, and ice cream, so I chose the cheese track. It was important to choose a track in the early days of the business, so we focused on the cheese track at that time and successfully fought a flanking battle in the dairy industry.
After focusing on the cheese track, who should the cheese be sold to, seeing that foreigners are selling tepid cheese in China, everyone can't say who the first cheese brand is. So we thought at the time, cheese education should start with children, and we chose the children's track. So after choosing a child, what kind of cheese to sell. Everyone knows cheese sticks, and we've sold nearly 5 billion cheese sticks to date. But when choosing this product, it was not easy. I often say that I have to be a qualified product manager myself. In terms of product selection, I have developed a habit for so many years, I think that to be a brand is to make products, and only when the product quality is done well, our brand will have a foundation.
In 2019, when I want to be a brand, where should I start? I am honored that in 2018, I met Mr. Jiang (Jiang Nanchun), and he said that if you want to be the head, if you want to be the first, you must play in the mainstream media. I was skeptical and started researching Focus Media. I worked hard for a few months, and in March 2019, when my product was proven to be OK by the market, it was OK to eat, fun, and nutrition, and focus on Focus Media.
Next, everyone saw the song "The Song of Microcolando Cheese Sticks" adapted from "Two Tigers", which made Microcolando a household name, a brand well-known to women and children. So today, I am also a teacher and friend with Mr. Jiang (Jiang Nanchun). We still believe that it is very important to find a good media channel in the creation of new products, focusing on explosion. It is the four focuses (focusing on the cheese track, focusing on large single products, focusing on high-potential people, and focusing on the mainstream media) that have achieved the first brand of Microcolando. In this process, the cheese we make is made with Chinese characteristics and innovative ideas.
From 2019 to 2021, Microcolando has become the No. 1 cheese brand in China. However, the revenue of 5 billion yuan has become a curse, and this hurdle has never passed. What is particularly difficult is that in 2023, you can see that this set of data (market share) is particularly beautiful, and our market share is still growing. We have a market share of 60% and 70% in many regions, which shows that Microcolando is determined to focus on cheese.
But last year, the cheese industry as a whole fell at a rate of 20%. After cheese sticks became a hit, nearly 100 companies began to make cheese sticks. Behind this data, in fact, we have also seen how Microcolando broke the circle in the crowd after a big single product exploded, and the product also broke the circle. But after that, we fell into the second stage of the strategy of how to play, how the road should be taken, this set of data (market share) looks beautiful, but in 2023, I feel the most tormented.
There are several reasons for the slowdown in the growth rate of large single items of cheese sticks: the industry is involuted - many brands have equipment and products, and what to do if they can't sell them, so they have to reduce prices. To this day, one thing I am proud of is that I have positioned myself as the boss and have never fought a price war.
I think that if a brand wants to win by fighting a price war, it must be a dead end. When I see an opponent fighting a price war, or when the team below reports to me and tells me that they are fighting a price war very badly and we are particularly difficult to do, I say you should be happy, we will lose competitors soon. That's why I said that the involution of the industry has an impact on me, but it also allows us to grow and progress.
Our cheese sticks used to be positioned for 3~9 year old children. Over the past year, cheese sticks have declined at exactly the same rate as the target demographic, but that's not a reason for Microcolando's slow growth and slowing growth. In fact, there are many ways, and standing here today, I tell you that we have found a way for cheese to break the second growth curve of the circle. In the face of difficulties, see who is firm, who can be determined to find a solution to difficulties, this is what me and my team have been struggling and breaking through in 2023.
I have said this to many investors in many places: the future of the cheese industry is a golden decade with long slopes and thick snow. The theme of today's closing speech is infinity, and I say that cheese has an infinite future. Because I believe that the cheese consumption of neighboring countries is 10 times that of the Chinese, and if the cheese consumption of the Chinese also becomes 10 times, it will be a 100 billion track. Now China uses milk to make cheese, not even 1% of the amount, but the price of milk in Japan is so high, and the price of Korean milk is so high, they have started the road of making fresher and more distinctive cheese with domestic milk, and I have seen this road.
I also know that in the next 5~10 years, Chinese will slowly accept some of the most popular cheeses among the thousands of varieties like abroad. For example, I tried all four cheeses in the breakfast buffet at the hotel today (April 27). The cheese flavor of this hotel is not bad, and the taste is good. But everyone here had breakfast this morning like me, and at least half of us didn't try cheese. So I believe that in the future, the variety of cheese in China will become more and more abundant, and slowly everyone will begin to like to consume cheese, because cheese is rich in calcium, rich in protein, and has functional properties.
I remember at the first China Cheese Summit in 2019, when we were not the No. 1 cheese brand, but I believe we can do it No. 1. Therefore, in 2019, Microcolando launched the Cheese Summit Forum, and I proposed the "Cheese Co-prosperity Plan", hoping to cooperate with dairy companies around the world to use local milk sources to form characteristic local cheeses. Therefore, we cooperated with Fuping in Shaanxi Province to research sheep cheese, and we researched and developed yak cheese in Qinghai and Tibet. I hope that more companies will make cheese, make the cheese category bigger and better, and let everyone realize the benefits of cheese. I think this is a company's contribution to society.
Another is to build its own supply chain. Last year, because of supply chain problems, our costs rose by more than 100 million. So we've now found a way to not rely solely on imports in the milk supply chain.
We are also building a corporate brand moat for Microcoland, according to Buffett's theory, among the four moats, Microcolando can do two: the first is the brand moat. We are continuing to build a brand moat, and only by continuing to invest in the brand is long-termism and the attitude of doing business. So, we're creating Microcolando = cheese, which is not just a children's cheese stick, but also other cheese categories. This also shows our ambition, and secondly, we want to create a cost advantage as we grow and become a moat for the company.
I have been telling investors and my team that Microcolando is a company with a sense of family and country. In fact, we provide more and better cheese to the Chinese people, so that more people can enjoy the cheese that is helpful to the health of the Chinese, so that Chinese dairy farmers do not pour milk when there is more milk, let him make cheese, can be stored for 3~5 years, will feel that we have done a very socially significant thing.
I also hope that in the history of China's dairy industry, from milk powder to liquid milk to cheese, if there is a strong stroke in the process of Microcolando, I will be very proud as the founder of Microcolando. Finally, I hope everyone will fall in love with cheese, and cheese makes life better.