In 2008, Blue Moon began to make a profit, and founder Luo Qiuping came to see Hillhouse investor Zhang Lei, hoping that he could inject capital into Blue Moon. However, before the two could start talking in detail, Zhang Lei first made clear his requirements: I can invest in Blue Moon, but the premise is that Blue Moon must continue to lose money.
Founder Luo Qiuping was confused, normal companies pull investment, are trying to prove their development prospects and profitability, how to Zhang Lei here, but it is a loss-making company to pull to investment?
Zhang Lei saw Luo Qiuping's face full of doubts and began to explain. After listening to Zhang Lei's explanation, Luo Qiuping gritted his teeth and directly agreed. Four years later, Blue Moon is developing rapidly, and they are also making a lot of money.
What the hell is going on here? Why let Blue Moon continue to lose money in the first place? Today, Xiaobian will introduce you to the magical playing style of investor Zhang Lei on the blue moon.
The time when the Blue Moon entered the Wash Army was in the 1980s and 1990s. At that time, the country had just ended the special period and entered the reform and opening up, and the washing products on the market were very scarce, basically in the stage of washing powder, soap and detergent.
Therefore, Luo Qiuping, a major in organic chemistry, founded Blue Moon Company, hoping to enter the daily chemical market.
However, Luo Qiuping, who has no money and no one to buy, it is not easy to start a business, for nearly a decade, the development of Blue Moon has been tepid, there is no closure but there is no trend to develop, until the outbreak of FD in 2003.
Luo Qiuping saw the opportunity to take advantage of the opportunity of the whole people to wash their hands, launched hand sanitizer, so that the blue moon was so hot, and finally began to gradually move towards the direction of profitability.
In 2008, Luo Qiuping felt that the time was ripe and wanted to continue to expand the scale and expand the development of daily chemicals, especially laundry detergents. Because he believes that in the future daily chemical market, laundry detergent is absolutely important.
However, for a long time, Blue Moon has been suppressed by the two big brothers of foreign companies Procter & Gamble and Unilever, and they cannot open the market at all, nor can they really make a name for themselves.
Procter & Gamble entered the Chinese market in 1988, and Unilever was even earlier, selling LUX soap in China in 1923.
They are in China's daily chemical industry, almost all the toiletries for a hundred years, and now we are familiar with the tides, bilang, gold spinning, shu skin jia, crest are their products. At that time, China's demand for toiletries had just warmed up, and most of the market had been occupied by these two big brothers.
If Blue Moon wants to make a difference, it must not only have its own characteristics, but also have to invest a lot of money to go out of the circle under the eyes of Procter & Gamble and Unilever.
Therefore, Luo Qiuping decided to look around for investors, and at this time, investor Zhang Lei took the initiative to find him.
Zhang Lei told him that there was no problem with investment, but Blue Moon could not make a profit and must continue to lose money. Luo Qiuping was very confused: why should a company that is not easy to make a profit lose money? This completely subverted Luo Qiuping's consistent cognition.
All investors hope that the company they invest in can be profitable, and the more the better, but Zhang Lei, as an investor, has taken the side and demanded a loss. The reason why he said this was not that he really wanted Blue Moon to lose money, but in the next big game, he planned for Blue Moon's long-term.
First of all, the laundry detergent market is huge, just enough to exploit the loopholes of foreign-funded enterprises. Around 2008, although the global financial crisis broke out, it is undeniable that China's consumption was rapidly upgrading at that time, and people's demand for consumer goods was also increasing.
In terms of laundry, although soap and washing powder still account for nearly 95% of the market, the use of laundry detergent with deep cleaning and care functions is expanding from high-end consumers to low-end.
In the near future, with the popularity of washing machines, laundry detergent will inevitably become a hot toiletry for people. In the shopping mall, this phenomenon of huge future potential and fewer temporary suppliers is called the blue ocean market.
The blue ocean market is the market with the most investment value.
However, this investment requires a lot of research and development costs. For Blue Moon, which has just made money from hand sanitizer, it's an adventure. Even Luo Qiuping, his original plan was to stick to hand sanitizer while studying laundry detergent, so that profitability could continue to be maintained and new markets could be occupied.
However, the vision of investor Zhang Lei is just different.
He believes that the current Blue Moon profitability is not important at all, and even said that loss is the best choice, because in the case of rapid consumption upgrading at that time, if Blue Moon can seize the opportunity, it is very likely to become the first dragon enterprise in the domestic washing market.
On the one hand, at that time, in addition to Blue Moon, no other washing brand in China had this strength and possibility. On the other hand, Procter & Gamble and Unilever are overconfident, judging that China does not have the ability to consume laundry detergent for the time being, and for less than 5% of the population, they are dismissive of investing heavily in research and development.
Other domestic brands have no strength, and foreign-funded enterprises can't look at it, which is the opportunity for Blue Moon to take advantage. Being the first person to eat crabs is the one who has the best chance of eating good crabs.
Therefore, Zhang Lei suggested that Blue Moon make a comprehensive transformation, focus directly on laundry detergent, and do not cling to the hand sanitizer that has just made a profit.
As for Blue Moon's lack of investment funds, as long as there are investors, this is not a problem at all.
Secondly, the Blue Moon was still in a relatively weak state at that time, and it was very important to cultivate obscurity, and it was very important to avoid these two giants. At that time, Procter & Gamble and Unilever were almost on the verge of reaching a monopoly position in China's washing industry, except for them, the rest were basically small brands that did not enter the flow.
Even the Blue Moon has not been taken to heart by the two giants because of its long-term unprofitability. However, if Blue Moon begins to make a profit in the first year of the development of laundry detergent, the two giants will inevitably make a new judgment on the market.
Once they found that laundry detergent was really profitable, Blue Moon had no chance to make a big show. The reason why the business giant is terrible is not because of its many products and fame, but because it has enough money.
Ordinary small businesses, if they want to compete with giant companies, lose a lot of money.
After a price war, no matter how much development potential the company can't fight. Therefore, from this point of view, Zhang Lei believes that Blue Moon must lose money, but also blatantly and with great fanfare.
On the one hand, it is used to paralyze the two giants, so that they do not turn to the laundry detergent market and maintain their original cognition; on the other hand, this is also the behavior of Blue Moon Taoguang, and the development must be sneaky.
Even if there is a profit in the first year of research and development, we must continue to use all the profit money for research and development to create the illusion of "loss". Only in this way can we survive under the giants.
Zhang Lei's explanation, let Luo Qiuping Mao Sai suddenly open, this is a bold decision, but also a "unsuccessful, will become a benevolent" decision. Once they had previously misjudged and given up the blue moon that specializes in hand sanitizer, they would not even have the opportunity to survive.
After thinking about it for a while, Luo Qiuping finally made up his mind, agreed to Zhang Lei's request, and accepted the investment of Hillhouse Capital. After having the funds, Blue Moon began to engage in research and development, and launched laundry detergent products that year.
The two giants saw and saw the Blue Moon laundry detergent on the market, and checked "This is a company with continuous losses", and did not take it seriously.
In 2010, Hillhouse Capital invested $45 million in Blue Moon's angel wheel, adding $1.03 million the following year. Blue Moon sees that the time is ripe, the domestic consumer market has been upgraded, and it is time to promote Blue Moon laundry detergent to the public.
Therefore, he immediately CCTV advertising, found Olympic champion Guo Jingjing endorsement, and quickly seized offline sales channels. This series of rapid operations caught P&G and Unilever off guard.
They did not have time to study, and the name of Blue Moon Laundry Detergent was already rapidly launched, seizing the consumer market. As the head domestic brand of laundry detergent, Blue Moon quickly became a washing habit of the public.
According to the data, from 2007 to 2013, Blue Moon's operating income increased from 400 million to 4.3 billion, and in just a few years, Blue Moon's sales increased tenfold.
The market share of Blue Moon Laundry Detergent has ranked first for six consecutive years, more than Procter & Gamble and Unilever combined.
Luo Qiuping, the small boss of that year, also soared in value by 50 billion yuan. If it were not for the "loss" decision made by Zhang Lei, perhaps Luo Qiuping would still be a small rich and secure boss, and Blue Moon would not have become the top seat in the laundry detergent market. Of course, in this process, Zhang Lei has already made a lot of money.
According to Blue Moon's prospectus, Hillhouse Capital holds 10% of Blue Moon's shares through the HCM Fund and is Blue Moon's largest external investor and institutional shareholder. In 2020, Blue Moon was successfully listed in Hong Kong, basically laying the foundation for Blue Moon's imperial status. Blue Moon's investment has always been Zhang Lei's "work of the gods".
In that era, he persuaded the founders to give up the small wealth and security of a few hundred million yuan a year, so that Blue Moon could transform into a "loss-making" company. In order to make a lot of money in the long run.
Everyone understands the principle of abandoning short-term development and paying attention to long-term development. But when great uncertainty and risk lie ahead, few can calmly make a choice.
This is a pattern concept, but also a wise long-term investment thinking. Then, with the help of Zhang Lei, Blue Moon continued to innovate products, and also approached JD.com, using the JD.com online platform to double the effect of brand promotion and sales.
It can be said that if there is no Hillhouse investor Zhang Lei, perhaps there will be no current "Chinese version of Procter & Gamble" - Blue Moon.
However, since the listing, Blue Moon's stock price has been declining, and the profitability has also begun to decline, I believe that Zhang Lei and Luo Qiuping, who can create a myth, can always find a way to solve this downturn, let's wait and see.
Zhang Lei's investment myth has always been talked about, and he has also written his investment experience into a book "Value"
For the future, Zhang Lei is full of confidence, and he will continue to invest in his value investment field and dig this well deeper.
Zhang Lei's value investment concepts include "keeping the right and using odds", "if the water is three thousand, only take one scoop", "refuse to speculate", etc., these concepts are his experience accumulated in investment for so many years, and it is definitely worth our careful reading.
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【Academy】Value My Thoughts on Investment By Zhang Lei, Hillhouse Formula Investment Case ¥58 Purchase