Written by Wenlin
Editor|Yang Yong
Source | Produced by hydrogen consumption
ID | HQingXiaoFei
On Mother's Day this year, the biggest marketing attraction in the FMCG industry is the blue moon advertisement. Blue Moon teamed up with Douyin's head anchor "Mr. Dong" to launch a live broadcast warm-up advertisement with a sentence of "Mom, you use it first", which was understood by countless netizens as an allusion to "laundry is a woman's duty", and she had no sense of thoughtfulness and gratitude to her mother.
(Picture from Blue Moon Xiaohongshu account)
Subsequently, Blue Moon officially responded to this controversy and solicited holiday slogans from netizens. Because netizens did not buy Blue Moon's response, Blue Moon officials quietly deleted the response in a scolding voice soon after. Immediately, Blue Moon's share price began to fluctuate, and as of the close of trading on May 9, Blue Moon closed at HK$2.09, corresponding to a market value of HK$12.254 billion, a decrease of about HK$500 million compared with before the public opinion on May 6.
On the day of the live broadcast of the event, whether it was Blue Moon's own live broadcast room or the live broadcast room of the partner "Mr. Dong", Blue Moon's product sales did not make much splash. In fact, Blue Moon has been "unable to sell" in the past three years, and the reason behind the decline in performance is far more than marketing being scolded.
Net profit fell for three consecutive years
Blue Moon struggles to maintain market share
Around Mother's Day this year, Blue Moon announced that it was still the double champion of laundry detergent and hand sanitizer in China. However, the financial reports of the past three years show that since 2021, Blue Moon has experienced a three-year decline in performance. The company's revenue growth rate from 2021 to 2023 will be 8.59%, 4.6%, and -7.84% respectively, and the company's net profit attributable to the parent company will also decline from HK $1.014 billion in 2021 to HK $325 million in 2023, a cumulative decline of more than 68%.
Blue Moon's latest 2023 financial report shows that Blue Moon's revenue in 2023 will decrease from HK$7.947 billion in 2022 to HK$7.324 billion, net profit attributable to the parent company will decrease by 46.81% year-on-year to HK$325 million, and operating profit will be HK$130 million, down 80.5% year-on-year. In 2023, Blue Moon will only achieve a slight increase in online channels, and the revenue of the other two major channels, including offline channels, will decline to varying degrees.
(Picture from Blue Moon's 2023 financial report)
Blue Moon said in the financial report that the decrease in profit was mainly due to the increase in sales and promotion expenses, including increased publicity through different sales channels, multimedia, omni-channel and consumer education to enhance the coverage of various sales and distribution channels and new products. In 2023, Blue Moon sales expenses increased significantly to HK$3.244 billion, an increase of 22.38% year-on-year from HK$2.651 billion in 22. The rise in marketing costs is not unrelated to the signing of three athletes including Quan Hongchan of the Chinese diving team as endorsements. However, judging from the performance data, the effect of this heavy investment is not obvious.
(Picture from Blue Moon Weibo)
At the end of 2020, Blue Moon was successfully listed on the main board of the Hong Kong Stock Exchange, and its stock price soared, with a market value of more than 100 billion Hong Kong dollars, becoming another investment masterpiece of Zhang Lei, the founder of Hillhouse Capital, after JD.com. According to media calculations, after the listing of Blue Moon, Hillhouse held 9.3% of the shares, and its return was as high as 21 times according to the opening price.
Blue Moon laundry detergent was founded in 2008, when the market share of laundry detergent in the domestic market was only 4%, and consumers were still in the enlightenment stage. Zhang Lei cooperated with Luo Qiuping, who made Blue Moon hand sanitizer, to create "Blue Moon Laundry Detergent" out of nothing, and invited Guo Jingjing, the hot diving champion at that time, to endorse, and sent 20,000 promoters to push consumers in shopping malls, which once made Blue Moon the first brand in the domestic laundry detergent category.
When investing in Blue Moon, Zhang Lei hoped that it could become "China's Procter & Gamble". Public data shows that after signing Guo Jingjing's endorsement that year, Blue Moon maintained the first market share for 9 consecutive months, with a market share of 33%. At its peak, Blue Moon's market share was as high as 52.7%.
The product is not competitive
Is innovation a "chicken rib"?
At present, Blue Moon's products are divided into several product lines: laundry cleaning, laundry care, sterilization and disinfection, personal care cleaning, bathroom cleaning, kitchen cleaning and general cleaning. According to the latest financial report, Blue Moon's performance is mainly driven by laundry detergent products. From 2021 to 2023, its laundry cleaning business will always account for more than 84% of its revenue. Although the sales of the personal cleaning business soared under the epidemic dividend, the best result in history was only HK$836 million in 2020. Other cleaning products are not Blue Moon's strong point, and they are quite different from the clothing cleaning category.
In Blue Moon's laundry cleaning product line, the main marketing promotion in recent years, which is also the Mother's Day marketing rollover, is the colorful concentrated Supreme laundry detergent launched by Blue Moon as early as 2018. This product is priced at a high price, mainly targeting the high-end market, and Blue Moon has also injected greater expectations into it, hoping that it can lead the market to achieve the transformation from "ordinary liquid" to concentrated liquid like "powder to liquid".
According to the analysis of industry insiders, Blue Moon's Supreme Concentrated Laundry Detergent will increase the content of the active agent of the laundry detergent from less than 20% to more than 47%, which is essentially an improvement in washing quality. But judging from the overall market performance, the product may be a good product, but Blue Moon did not sell it well.
First of all, in terms of product performance positioning, the higher-priced "Supreme" did not focus on washing cleaner when promoting, but has been emphasizing that high-consumer groups do not focus on "less consumption". Its marketing keywords "machine washing artifact, machine washing supreme, high-end and opening the era of machine washing pumps" did not capture the pain points of consumers' desire for efficient laundry in the current fast-paced era.
(Picture from Blue Moon Xiaohongshu account)
Secondly, this product really does not give consumers a reason to "buy". The slogan "one pump washes 8 pieces" does not clearly explain what common pain points consumers solve, nor does it clearly explain how this product is fundamentally different from ordinary laundry detergent and laundry detergent.
Finally, the "82.5% reduction in dosage and more cost-saving" mentioned by Supreme also made consumers unmoved. Even if the dosage is small, the price of a bottle of "Supreme" is several times that of ordinary laundry detergent and laundry detergent, and they do not feel the value of "saving money".
Almost at the same time as Blue Moon launched the Supreme Concentrate, laundry pods that wrap concentrated laundry detergent in a transparent film began to become popular in China. This product caters to the needs of the domestic lazy economy, melts when it meets water, one can wash 6 to 14 pieces of clothing, and as a concentrated laundry detergent designed for machine washing, the active substance content of laundry pods exceeds 45%, far exceeding the content ratio of 15 to 25% of ordinary laundry detergent. According to Sullivan data, from 2017 to 2020, the compound annual growth rate of China's laundry pod market exceeded 16%. Domestic daily chemical brands Liby and Tide have quickly launched laundry pods to seize the market opportunity, while Blue Moon has not entered the laundry pods.
In order to recover market share, in 2021, Blue Moon launched professional laundry detergent products such as sterilization and deodorization, underwear, etc., in an attempt to find incremental space in the subdivided field. But in fact, so far, Blue Moon's best-selling products are still the two major items of the Bright White and Deep Cleansing series. Looking at Blue Moon's financial reports in recent years, single products have become the biggest reason restricting its development, and laundry detergent has almost supported the entire Blue Moon.
(Picture from Blue Moon Xiaohongshu account)
For Blue Moon, once the main product line has a poor pool and the sales of fist products fail, it will have a great impact on the overall business. Therefore, the apparent failure of the large single product "Supreme" reflects the dislocation and mismatch of Blue Moon in product innovation over the years.
Single channel, only online is growing?
According to the financial report, in terms of channels, in 2023, except for a slight increase in online channels, the other two major channels will decline to varying degrees. In detail, in 2023, the company's online sales channel revenue will be HK $3.805 billion, a year-on-year increase of 1.3%; Offline distributors achieved revenue of HK$2.755 billion, down 15.3% year-on-year, mainly due to dealers' reduced inventory levels after the epidemic; The revenue from direct sales to large customers was 763 million, down 18.5% year-on-year, and has regressed to the level of 2019.
Some industry analysts believe that the sharp decline in offline channels does not bode well for Blue Moon. Da Daily Chemical and Home Cleaning products must achieve in-depth distribution in order to quickly reach consumers in a large area when new products are launched.
Since 2015, after Blue Moon left the offline supermarket shelves, which accounted for more than 60% of sales at that time, the offline self-built direct sales channel "Moon Hut" also failed, and the offline layout mainly relied on large customers. The reason why large customers are "big" is that a large number of goods are diverted to subordinate distribution and rushed to the wholesale market. This inevitably leads to a chaotic product price system and thin margins for best-selling products.
Since 2019, Blue Moon's online channel sales have surpassed offline distributors and supermarket channels for the first time, becoming the main source of revenue. Compared with its peers, Blue Moon has an earlier layout of online channels, and to a certain extent, there is a first-mover advantage. However, with the price war on the platform side and the intensification of involution between brands, Blue Moon's online life is not easy.
First of all, the price war on the platform side has brought Blue Moon's online price system to the brink of collapse. Taking Blue Moon Deep Cleansing Laundry Detergent as an example, the price of Pinduoduo's 10 billion subsidy is 58.9 yuan for 11 catties, the price of 12 catties in Taobao's official flagship store is 79.9 yuan, and the price of 12 catties in Jingdong's self-operated laundry detergent is 69 yuan.
(Picture from Blue Moon Xiaohongshu account)
Secondly, with the intensification of competition in the industry, brands such as Liby, Tide, and Super Energy have also begun to deploy widely online, and the online advantage of Blue Moon is shrinking step by step. Among the many products to choose from, consumers will of course only choose the large quantity and low price, and in the low price, Blue Moon does not have an advantage.
Today, the market value of Blue Moon, the first stock of laundry detergent, is only 13.2 billion Hong Kong dollars. For daily FMCG products, consumers' shopping habits are still offline. After recognizing this, Blue Moon also said in its 2022 financial report that it hopes to expand its channels to convenience stores, fresh supermarkets and small and medium-sized stores to facilitate consumers to buy nearby.
And, with the rise of China's lower-tier market, there is a huge demand gap in third-tier cities and below. According to the latest insight report on household cleaning and paper commodity consumption in the sinking market released by Jingdong Supermarket, Liby and Diaopai are more popular in the sinking market. Blue Moon wrote in its financial report that it is also trying to cater to the current situation of consumption upgrading in the third-tier and below sinking markets, reducing the medium-high pricing of products and increasing the penetration rate of lower-tier cities.
Shopping malls are like battlefields, and if Blue Moon wants to return to the top, it must always use redoubled efforts and time to recover the backwardness caused by product innovation and channel layout mistakes in the market.