Image source @ Visual China
Text | Pencil road
Another foreign brand to withdraw from China?
Recently, the well-known chocolate brand Hershey fell into the rumor of "withdrawing the cabinet and closing the store and withdrawing from the Chinese market". Some reports and relevant people broke the news that Hershey China has quietly withdrawn from the original office, a number of executives have left, and now There are about ten people in Hershey China, and e-commerce has indeed had operational problems.
In response to the rumors of the withdrawal of the store, although Hershey quickly clarified, Hershey's current embarrassing situation was once again exposed to the outside world.
In recent years, Hershey's development in China has not been smooth. Consecutive years of losses, declining sales, reduced market share, and rumors of downsizing continue... It all shows that the once beautiful times are "retreating" from the mainstream market.
From FY2015 to FY2017, Hershey China was in a red-making position. In 2018 and 2019, the Hershey Chinese market fell by 20.5% and 13.4% respectively. In 2020, Hershey's sales in the Chinese market fell by 46%, of which the decline in the fourth quarter reached 82.2%. Market data shows that in the Chinese chocolate market in 2020, Hershey's market share is only 3.2%.
Some insiders have analyzed that many emerging brands or international brands will change according to the needs of the domestic market after entering the Chinese market, but Hershey is obviously not good enough. Relatively speaking, other foreign chocolate brands, or new domestic products, are constantly brushing the "sense of existence", not only fancy marketing, but also from the packaging value, product gimmicks and other aspects of the all-round attack on consumer minds.
Today's fast fashion brands and consumer brands are fiercely competitive in the market. Facts have proved that even classic brands must constantly speculate on the minds of consumers and constantly compete for ideas in order to gain a firm foothold.
Hershey falls into the "Rashomon"
Valentine's Day, which has just passed, was a hot season for chocolate, but for well-known chocolate brands, Hershey's holiday was not good.
Hershey was exposed to the news of withdrawing cabinets and closing stores in China, and has repeatedly rushed to the Weibo hot search list in recent days. According to media reports, the original hershey chocolate distributors from Beijing, Shanghai, Guangzhou, Shenzhen and other places have revealed that Hershey (China) Investment Management Co., Ltd. (hereinafter referred to as Hershey) has quietly withdrawn from the office in Xinmei Union Square, Pudong New Area, Shanghai.
Pencil Road found through query verification that it is indeed impossible to search for the Hershey Tmall flagship store, and in the Hershey Jingdong self-operated flagship store, a number of products are also displayed out of stock.
This phenomenon is reminiscent of the beginning of last year, when The company was rumored to be "withdrawing from the Chinese market". Some consumers have noticed that Hershey has begun to withdraw from many supermarkets and stores in China, and some products are no longer replenished after they are sold out.
In response to the rumors, Hershey responded immediately.
First of all, the answer was given to the verification of a number of media, and then on the evening of the 12th of this month, the WeChat public account "Hershey Chocolate" issued a clarification statement. The article claims that Hershey "withdrew the cabinet and closed the store in many places", "the online flagship store terminated operation", "withdrew from the Chinese market" and other contents are inconsistent with the facts.
Hershey also pointed out that China has always been one of the important markets for Hershey. Hershey's commitment to Chinese consumers will continue its long-term development strategy in the Chinese market. Hershey will continue to invest in the Chinese market and work with distributors and partners to continue to promote business and operations in the Chinese market.
For the e-commerce problem, Hershey explained that due to the surge in sales of Hershey products during the Spring Festival, the supply of Hershey Jingdong self-operated stores was in short supply, and some products were currently out of stock. Hershey is working with dealers to solve the supply problem, with the end of the Spring Festival and the supply of new dealers, follow-up goods will continue to keep up. In addition, in order to better serve consumers, the Hershey Tmall flagship store has optimized and adjusted its e-commerce business model, and the Current Hershey Tmall flagship is undergoing renovation, and it is expected that the launch time of the new official flagship store will be at the end of February.
However, Hershey's statement did not break the rumors.
According to the Daily Economic News, some departing employees said in interviews that from the end of 2020 to the beginning of 2021, there were layoffs in Hershey China, and some grass-roots employees also left their jobs when they saw the momentum was not good. At the same time, a number of executives have left one after another, for unknown reasons, and now there are about a dozen people in Hershey China. "Hershey China has entered the liquidation process, and the company's legal representative is not in China." The person in charge of the distribution company revealed.
Withdraw the store and exit, or continue to operate? Hershey is in the middle of a "Rashomon".
Awkward Good Times China
"Small body, big taste", Hershey once used this classic advertising slogan to enter thousands of households in China.
However, in recent years, Hershey's development in China has not been smooth.
The biggest headaches are long-term losses and declining sales. From FY2015 to FY2017, Hershey China was in a red-making position. In 2018 and 2019, the Hershey Chinese market fell by 20.5% and 13.4% respectively. In 2020, Hershey's global net sales were about $8.15 billion, up 2% year-on-year, but sales in China fell by 46%, including 82.2% in the fourth quarter.
It's not terrible to experience losses and declining sales in China, but it's particularly embarrassing to compare. Compared with the decline of the Chinese market, Hershey is in a state of continuous growth in North America. On February 3, Hershey released its financial results for the fourth quarter of fiscal 2021. Hershey's fourth-quarter sales were $2.326 billion, up 6.4% year-over-year, net income of $336 million, up 15.2% year-over-year, and diluted earnings per share of $1.62, up 16.5% year-over-year, the report showed.
Overall growth in North America also fed back into stock prices. As of the close of the US stock market on February 11, Hershey's total market capitalization reached $42.264 billion, maintaining an overall upward trend in the past year.
Why is the Chinese market with huge market potential dragging its feet? Brand marketing expert Zhang Yi analyzed the pencil road, Hershey is in a heavy marketing track, but it is not doing well at the marketing level. The layout of marketing channels is becoming more and more traditional, which also makes Hershey Chocolate gradually lose its audience, so that its market appeal is constantly decreasing.
In contrast, in the domestic chocolate market, whether it is other foreign brands or new domestic products, they are constantly brushing the "sense of existence", not only finding ways to fancy marketing, but also from the packaging value, product gimmicks and other aspects of the all-round attack on consumer minds.
"In addition, from the perspective of brand positioning, Hershey is also in an awkward position of not being able to go up and down." Zhang Yi believes that in the market now, Hershey can neither squeeze into the high-end market occupied by ferrero, Godiv and other brands, nor does dodve's dominance in the terminal market.
As can be seen from the user feedback, the Hershey scenery has also passed. A netizen commented under the news of Hershey's withdrawal, "When I was a child, I loved to eat, and there were many advertisements on TV, but it seems that I have not seen it for many years." ”
Market data also shows that in the Chinese chocolate market in 2020, Hershey's market share is only 3.2%, far lower than 32.8% of Mars Group, the parent company of Dove and Snickers, and 22.3% of Ferrero.
In addition to the unsatisfactory performance in the domestic market, Hershey is also in dispute at the legal level. According to the data, Hershey (China) Investment Management Co., Ltd. was involved in 37 pieces of information in legal proceedings, mainly for the disputes over the sale and purchase contract between the original distributor and Hershey.
In fact, in the handling of the remaining problems of the channel, Hershey China has long had disputes with a number of original distributors. At the end of 2020, Hershey China announced that it would adjust its Business Model in China and decided to cooperate with a large local distributor. The CEO of Hershey at the time said, "This transformation means that we no longer rely on our own large number of retail salespeople." ”
But for many retail distributors, the sudden receipt of a trademark license termination agreement has cost them dearly. "Hershey China did not handle other distribution contract disputes that were terminated without cause, and no one was willing to come forward to negotiate follow-up matters with the terminated dealer, and no one even told the reason for the termination." A dealer said in an interview with the media.
Internal and external troubles, even if Hershey insists that it will not withdraw from the Chinese market, but presumably life is not good.
"Foreign brand" fell to the altar?
From Old Navy, FOREVER 21, to Revlon, Disney English... From clothing, beauty, education, and today's chocolate, in recent years, more and more overseas brands have been frustrated in the domestic market and have had to start transforming, withdrawing stores, and even withdrawing from the Chinese market.
Among them, there are more or less "over-the-counter factors" interference, which increases the difficulty of the survival of overseas brands in China, and the rise of domestic products, public opinion events, and social trends seem to be tilted towards the side that is not conducive to foreign brands.
"But it's more about the brand itself and the market environment." Zhang Yi, the above-mentioned marketing expert, said that after years of development in the domestic market, overseas brands and local brands have reached a watershed.
Many overseas brands, whether in operation, management or product innovation, have not kept up with the development of the times, resulting in different degrees of marketing stoppage, insufficient innovation ability, slow research and development speed, brand sales plummeting and other issues.
On the one hand, many emerging brands or international brands, after entering the Chinese market, will change according to the needs of the domestic market, but the "Hershey" is not, which is why they will decline in performance; on the other hand, many domestic brands are also accelerating their development, with the understanding of the market, the understanding of users, and international brands to compete for the market. In the case of a two-pronged approach, the performance of the "Good Times" naturally has a large gap.
Of course, brands such as Hershey are also starting to adjust themselves.
In a recent clarification announcement, Hershey also said that it will adopt a new business model in the future to better and more flexibly serve the needs of Chinese consumers. At the same time, in the future, we will expand the market of baking and snacks, and carry out in-depth cooperation with emerging catering channels to meet the localization needs of Chinese consumers.
Today's fast fashion brands and consumer brands are very competitive in the market, and if they do not carry out refined operations, they may not be able to maintain long-term vitality.
Not only chocolate products, for any commodity, any industry, market opportunities are always closely linked to market demand. Taking the Chinese market as an example, on the one hand, there is a broad market space, and on the other hand, there are more and more diversified and personalized consumer needs. These needs include new requirements for the product itself, as well as new habits for the way products are sold and served. Even if it is a classic brand, it must constantly speculate on the minds of consumers and constantly compete for creativity in order to gain a firm foothold.
"In that regard, this is also an opportunity for new brands." After the Hershey incident, an entrepreneur lamented in the circle of friends.
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