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Starting from a 35-square-meter yogurt shop, in just a few years, Lechun has established a kingdom of yogurt as the core product and expanded a variety of health food categories around the needs of users. Today, Lechun has developed from a unicorn company in China's yogurt industry to an innovative benchmark enterprise in China's food industry. How does it do it?
Wen / Zhang Sixuan, Zhou Ning, Han Xiaoting, Wang Yingling, Cao Xin
Beijing Lechun Youpin Food Technology Co., Ltd. (hereinafter referred to as "Lechun"), born on May 27, 2014, started from a 35-square-meter yogurt shop, and in the first year of its business, it broke through the fiercely competitive dairy industry and gained millions of fans. In the second year of entrepreneurship, a box of small yogurt will be achieved with an average monthly repurchase rate of up to 25%. In the third year of entrepreneurship, with the same small yogurt, it has won several rounds of financing from investment institutions such as IDG and Zhen Fund, and won the favor of Coca-Cola Asia Pacific investment startups. With yogurt as the core product and a variety of health food categories around user needs, today's Lechun has developed from a unicorn company in China's yogurt industry to an innovative benchmarking enterprise in China's food industry.
Born for Purity – Le Pure Yogurt was born
In the summer of 2013, Zhang Murmur, who studied at Le Cordon Bleu (Le Cordon Bleu) in France, returned home. Tasting a domestic yogurt, Zhang murmured a tight frown and looked at the ingredient list, and teased: "Full of additives? At this moment, she remembered that Le Cordon Bleu Academy was also a yogurt with added fruits, and that yogurt tasted pure and elegant, full of milk. After that, Murmur tried nearly 100 domestic yogurts and found that all yogurts were added with preservatives, colors, flavors, thickeners and other synthetic additives. At the same time, the product segmentation structure of the domestic yogurt market has not met the consumer demand at all levels.
At the end of 2013, she launched the "Looking for Really Good Yogurt" campaign on Weibo, and analyzed nearly 200 kinds of yogurt she had eaten and received recommendations from yogurt lovers one by one, and sorted them into a blog post called "Looking for Good Yogurt", which attracted the attention of tens of thousands of "yogurt control". Through this activity, it was once again verified that in China, high-quality yogurt is still a vacant land waiting to be explored, which also strengthens Zhang Muyin's determination to make a truly pure and healthy yogurt. In early 2014, Zhang murmured headlong into the yogurt lab. In the end, after 3 months, four yogurts were prepared that were exactly the same as le Cordon Bleu's taste: plain yogurt, lemon yogurt, blueberry yogurt, and vanilla chestnut yogurt. Zhang mumbled the name of this yogurt "Lepur", from the French "Le pur", meaning pure, perfect.
Quality products with fresh names, how to promote next? Just when she hesitated, zhang murmured at a friend party and met Denny (Denny Liu), who worked on dianping. A graduate of Wharton Finance, Denny worked for Blackstone, the world's largest private equity group, where he has in-depth research on the evolution of the global consumer market. In early 2014, Denny joined Dianping as head of brand marketing. Denny has also served as a special consultant for PepsiCo, Lenovo and other Top 500 consumer companies, and is one of the 30 under 30 people in Forbes Asia.
Denny encouraged Zhang to continue to make "Le Chun" and consider using the Internet model to operate the product. In May 2014, Lechun Company was officially established, and Lechun WeChat public account "Lechun Partners" was also opened. At the end of May, Le Pure Yogurt was officially launched, and even at a price of 99 yuan and four boxes that was much higher than the market price, the 120 boxes of yogurt sold out in less than an hour for the first pre-sale. 3,000 seed fans quickly converted into consumers, and the weekly limited pre-sale was equally popular. Denny once excitedly said: "All this is due to the high quality of Le Pure Yogurt and 3,000 seed users".
In June 2014, due to the company's financing needs, Denny officially joined Lechun full-time as CEO. Later, due to some differences in the company's development philosophy, Zhang Murmur left the formula and the company to Denny, choosing to completely withdraw from Lechun, and the foodie circle was in an uproar.
Continuous breakthrough Red Sea breakout
Denny took over Lechun and his first priority was to build a core team of members. He carefully selected 5 capable players to continue the entrepreneurial voyage of Lechun. His reason for insisting on Lechun is: "China's food industry needs to have a company that does products and operations in an 'open, transparent and participatory' way. If the company succeeds even a little, it will bring great changes to the Chinese food industry. ”
(1) Product upgrade, focus on three or three times
In August 2014, when Denny and Zhang Murmur handed over work, they found a problem: in the case of not being able to find a good milk source, Zhang Murmur added cream and milk powder to the first product to ensure the taste of yogurt. Zhang believes that cream and milk powder are not additives in the strict sense. But here's the point: all the tasting groups agreed that Le Pure Yogurt was fermented only with high-standard pure milk and high-quality lactic acid bacteria. Denny decided to stop using cream and milk powder and instead start with the milk source to solve the root cause. Iterate continuously from the milk source, fermentation strains and proportions, fermentation time and environment. Led by an expert with more than ten years of dairy experience, the R&D team did 20 product iterations in only one month, each time making 6 formulas, according to the user's tasting suggestions, and then continuously improving the formula. In just 30 days, Le Chun consumed a total of 300 kilograms of milk, experimented and tasted nearly 3,000 boxes of yogurt. The finished product filters whey yogurt for a rich and delicious finish.
Lechun calls the upgraded product "three-three-three times yogurt": that is, each box of Pure Yogurt is fermented by three times the fresh milk and three times the lactic acid bacteria, and then uses a patented process to remove 2/3 of the weight of water, leaving three times the pure nutrition. Lechun's Slogan is also unforgettable - "every bite is like licking the lid, three cups of high-quality yogurt to make a cup of Lechun".
(2) Open and transparent, that strange yogurt shop
In September 2014, LeChun received investment from Xu Xiaoping Angel, and Denny decided to set up a transparent offline brand experience center. In order to allow everyone to fully see the production process of Lechun from fresh milk to yogurt, the founding team finally put a complete dairy production line in a 35-square-meter space in Sanlitun, Beijing, after countless inspections and designs. In the front and back of the kitchen, separated by clear glass, two pasteurization tanks, two cleaning tanks, a condensing tank, a fermentation tank and an operating table, form a mini factory. The entire space is completely open to the user, separated from the customer by only a layer of transparent glass, so that the customer can clearly see the entire production process from the side of the road.
In January 2015, Le Pure Yogurt began soft operation in Sanlitun. On January 7, the order volume in just 3 days has exceeded 3,000 boxes. Denny wrote on his WeChat: It's a miracle. As a result, the company, which has been branded with "net red yogurt" from the beginning of its business, has officially entered the public's field of vision. However, the things that made Denny anxious also followed, and the problem of production capacity far from keeping up with sales made Denny fall into meditation.
(3) User participation, product iteration to do enough details
Denny understands that customer churn due to insufficient capacity is difficult to recover, but building larger production lines requires not only capital investment, but also a long time. At the same time, the team needs to have the ability to operate large production lines and maintain the heat of users, otherwise oversupply and will fall into a vicious circle. After weighing the pros and cons, Denny believes that only if the product is different can it compete with other brands and attract more users. He decided to focus his limited funds on the iterative development of products and explore other financing channels to further increase production capacity.
Before the product development, Denny posted an article on Lechun's WeChat public account and Weibo entitled "Complete transparency and openness: 8 product details behind a small box of original yogurt". The article describes in detail the recipe and production process of Le pure yogurt, which greatly enhances the customer's good feelings and makes the customer more assured of the product.
In product development, when Lechun received user feedback that "chestnuts with yogurt taste is not the best, it is recommended to replace with hazelnuts with their own fragrance and elimination effect", the Lechun team immediately adjusted the yogurt ratio, and invited more customers to try it many times, and finally launched a new flavor of hazelnut vanilla to replace the vanilla yogurt that customers believe that the taste is not the best.
After the product development, Denny proposed that the illustration on the back of the yogurt packaging box be created by the customer, the Le Chun club would release the theme that was timely or meaningful for the user to participate in the creation, and invite the received works to be voted by netizens, and the most popular creations would be listed in the new batch of product packaging. Le Chun's "magazine" yogurt play has received countless creative works in each issue.
Continuous innovation and fun
(1) Capacity improvement to solve the problem of chicken and egg
The model of user participation in continuous iteration of the product has greatly increased the popularity of Lechun. Of course, Denny didn't leave the problem of solving capacity behind. In February 2015, after successfully obtaining IDG Capital Series A financing, Le Chun acquired a small yogurt factory. After four months of construction, the new production line began trial production in June 2015. With the increase in production, in August, the products were sold nationwide through the WeChat public account channel of the online "Le Chun Partners". A month later, production capacity was warned again, and IDG Capital and Zhen Fund invested again in expanding the production line.
In February 2016, relying on the support of Huachuang Capital's high-growth corporate bonds, Lechun introduced gea's 10 million-level production equipment, a well-known German manufacturer with 85 years of experience in the production of filtered whey yogurt, and its production capacity quickly doubled, entering the stage of large-scale automated production. Lechun has also become the only enterprise in China with a fully automated production of filtered whey yogurt factory, and its daily production capacity has increased to 100,000 boxes.
(2) Channel innovation, online and offline omni-channel layout
In addition to offline physical stores and WeChat public accounts, Le Pure Yogurt has become a special product of five-star hotels Peninsula and Waldorf since April 2016. Sanlitun has many embassy districts, and a Fan of Le Chun From France recommended Le Chun Yog to a friend who is looking for fresh local yogurt, the Executive Chef of The Peninsula Hotel. Relying on word-of-mouth transmission, the hotel took the initiative to purchase Le pure yogurt. Subsequently, Le Chun also radiated high-end hotel chains such as Marriott and Hilton.
At the same time, Le pure yogurt has been sold in Beijing 7-11 supermarket, Rosen, FamilyMart, Good Neighbor, Convenience Bee and other convenience stores. In 2017, Lechun began to expand offline channels, expanding from Beijing to Shanghai, Chengdu, Wuhan and other places. At the same time, Lechun is also continuing to build e-commerce channels, on the one hand, to open JD.com, Tmall stores; on the other hand, to cooperate with the target audience of fresh platforms, community O2O and other channels. Lechun's channels can be described as To B, To C, O2O, and offline experience stores blooming everywhere, forming a pattern of online and offline omni-channel integration and collaboration.
(3) Product innovation, user-driven category expansion
With the help of customers, Lechun has achieved the ultimate differentiation of products. The reason why it can get a piece of the pie from the mouths of Mengniu and Yili is due to the concept of Lechun 'openness, transparency, participation' and user participation in the whole process and making the ultimate good product. In the end, Le pure yogurt developed to 19 flavors, and there was a steady stream of explosive products around the needs of users. At this time, Lechun has formed a management model of multi-SKU, less inventory, and fast fashion brand supply chain.
(4) Guard the user and open the yogurt social function
Le chun model, foodie company
(1) Lechun mode, user-driven operation mode
Since 2015, the Le Chun team has been immersed in the practice of growth hacking (Growth Hacking, which is a new team role between the market and technology, mainly relying on the power of technology and data to achieve various marketing goals) and the pirate model (referring to the 5 stages of the user life cycle: user acquisition, user activation, user retention, revenue and recommendation dissemination) as the leading user operation mode, after continuous attempts and iterations, gradually polished out a set of their own operating model - "user-driven" Products and Operations. Externally, the user is used to form a 1990 user operation model to efficiently complete the iteration and dissemination of products; internally, it forms a user-centered innovative organizational structure to respond quickly and meet customer needs.
The user-driven organizational structure is more flat, including five main departments: first, product operation, user-centered, continuous iteration and research and development of new products; second, content operation, through content output, storytelling and other ways to build a brand; third, user growth, so that user consumption to drive brand communication, Lechun basically does not invest in advertising, its brand communication is completely dependent on users; fourth, user operation, that is, customer relationship management; fifth, user experience, responsible for Lechun's continuous product iteration and user experience optimization and upgrading every two weeks.
(2) The pattern is copied, and Le Chun is not only yogurt
Through the initial yogurt products, Lechun has built a certain healthy, high-quality product tone. Then from a wider range of breakfast, meal replacement, office snack scenes to expand, and gradually enrich the product portfolio, continue to expand to breakfast bread, breakfast oats, meal replacement shakes and other types. Lechun's category expansion process adopts the method of "open and transparent participation": the demand originates from user proposals or life scenarios, and the user is highly involved in the product development process, and detailed and in-depth research will be done on each new field and disclosed to users in the form of strategies. Taking Honest BagTM as an example, in October 2018, 300 R&D members of Lechun, at the instigation of everyone, began to explore a new category: bread. 300 R&D members searched for Weibo, Little Red Book, Dianping, Zhihu... Thousands of user reputations about Lechun found that the most paired with Lechun yogurt is bread. In order to deeply study the user's demand for bread, Lechun formed a "hardcore bread group". Screening the 112 hardcore bakers who joined the group finally developed the explosive product of honest bags.
In the blink of an eye, Le Chun has gone through 5 years. From starting from scratch, to a 35-square-meter yogurt shop, to an innovative food (food) company with independent research and development, procurement, production, warehousing, logistics, and full-channel operation of the whole industry chain. When the outside world laments the rapid development of Lechun, Denny and everyone in the team knows that every step of Lechun is a thousand hammers. Continuous innovation and polishing continues.
About the author | Zhang Sixuan: Associate Professor, School of Economics and Management, Beihang University;
Zhou Ning: Professor, School of Economics and Management, Beihang University;
Han Xiaoting: Professor, School of Economics and Management, Beihang University;
Wang Yingling: MBA, School of Economics and Management, Beihang University;
Xin Cao: Doctoral student, School of Economics and Management, Beihang University
Article source | This article was published in the April 2021 issue of Tsinghua Management Review with deletions
Responsible Editor | Zhou Yang
Mailbox | [email protected]
