Chapter 1017 - The rise and fall of an industry
Chapter 1017 – The rise and fall of an industry
After Shi Dazhu left, Zhong Qingxian asked. “Manager Feng, you think his health product company can make money?”
“Why not?”
“If it was five years ago, I will be confident that his company can make money. He is an expert on the sales of health products, and I had learned a lot from him in the past. But at that time, the health products industry is on the rise, and almost everyone who sells health supplements can make money. But it also resulted in many fake products entering the market!”
“It is different now. After the crackdown, most health supplements companies are bankrupted. Lehaha had given up on health supplements and focused on beverages. How many of those health products from that era are still in the market now?”
Feng Yu nodded. “You are right. Most of the health products cannot be found now. But didn’t you notice that new health products are appearing in the market?”
“Yes. This is a legal industry, but the golden era is over. Many of these new products are not selling!”
“That is because they can’t find the right positioning!” Feng Yu thought to himself. Only a genius can come up with the idea of giving health products and gifts!
Zhong Qingxian is confused. Positioning? What positioning can a health product be? It is just a fast-moving consumer good.
“Every industry has its rise and fall, and many factors are causing this. One of the main reasons is the industrial policy! The health product industry had diverged from its course, and the market is filled with fake products. Of course, there will be a crackdown to clean up the industry. After all the fake products are gone, the ones remaining are all authentic.”
“Have you realized that people are starting to focus on their health again? If you can find the right opening, the health product industry will rise again!” Feng Yu replied firmly.
“Really?”
“All industries will have to go through the introduction phase, growth phase, maturity phase, and decline phase. The health products industry has stopped suddenly during its growth phase at that time, and this industry is not eliminated from the market!”
Zhong Qingxian thought about what Feng Yu said and nodded.
The health products industry had not reached the decline stage naturally because of the crackdown. Now, the regulations on this industry had relaxed, and this industry can rise again.
But Zhong Qingxiang still felt it is too risky to lend Shi Dazhu 50 million USD.
Many people do not understand many of Feng Yu’s investments. But in the end, Feng Yu prove everyone that he had made the right investments.
“Manager Feng, when do you think the beverage industry will reach the decline phase?”
“It’s still too early to talk about that. Our Chinese beverage industry is still in the introduction phase and has not even reached the growth phase. Just look at our Lehaha’s products. Our sales are still increasing every year, right? Jianlibao’s sales had also increased this year. In the market, many new brands had appeared, and all of them are doing well. You can compare the industry now and five years ago.”
“Then, when will the industry reach the maturity phase?” Feng Yu was right. Many new beverages have appeared in the market, and all of them are selling well.
“It will take at least ten years. By that time, the potential of all cities would have dried up, and the villages’ market will be opened up. The sales will still increase, but it will be at a slower pace. There will also be no new players in the industry.”
Even before Feng Yu’s rebirth, there are still new beverage brands entering the market every year. But at the same time, many brands are eliminated because of management issues or cash flow issues.
At that time, there are countless brands and beverages in the market, and only a few brands are selling well. The two Cola giants, Kang Shifu, Tong Yi, Lehaha, Hui Yuen, Jia Duo Bao, Red Bull, etc.
Among all the brands, Feng Yu admired Jia Duo Bao the most. This company had become one of the industry leaders with just one product.
But in this life, Jia Duo Bao had been suppressed by the two Cola giants first. Followed by Jianlibao did not decline, and Lehaha is doing better than Feng Yu’s previous life. Tong Yi and Kang Shifu will also not succeed too.
Le Bashi was still around, but they had given up on the northern China market and is focusing on the southern provinces. The sales channels are not as comprehensive as Lehaha. They have high transportation costs, as they do not have many branch factories around China.
Huiyuan had done well with their fruit juice. Because they had joined the Beverage Alliance, they are growing faster compared to themselves in Feng Yu’s previous life.
Zhong Qingxian had told Feng Yu before that if he knew fruit juice could sell so well, he would have acquired Huiyuan and merge them into Lehaha. Now, they are not selling no matter what.
Zhong Qingxian does not know that in Feng Yu’s previous life, his energy drink, Yuanli, was suppressed by Red Bull, and he suffered massive losses. In this life, Yuanli was developed earlier and had used athletes’ endorsements to increase its sales.
Zhong Qingxian’s Yuanli energy drink had confined Red Bull to Guangdong province. It did not give them any chance to become popular in China. Lehaha’s carbonated drinks had not done well in Feng Yu’s previous life, but they are successful in this life.
Zhong Qianxiang does agree with Feng Yu that it’s hard for food and drink products to enter the decline phase, as people need food and drinks.
Maybe some beverages might decline, but the industry will not decline. It’s just like tea. After a few thousand years, many people are still drinking tea.
“Manager Feng, does that mean the companies you invested in are the companies you think will enter the growth phase?”
“Yes, but some of them will be in the maturity phase. But all these companies will not enter the decline phase anytime soon.”
Supermarkets are in the Introduction stage now and will enter the growth phase in a few years. Maybe, in another twenty years, this industry will enter the maturity phase. But it’s too early to talk about the decline phase.
Online shopping will suppress traditional retailers, but can never replace them. This is because online retail needs time for delivery, while customers can just grab and go to traditional retail shops.
Motorcycle industries are now in the growth phase but will enter the maturity phase in a few years. But at that time, Songjiang Motors can switch too electric scooters, and the electric scooter can extend the growth phase by at least ten years.
Actually, many of Feng Yu’s investments still have not entered the highspeed growth phase. For example, his minerals. He had invested in this industry very early because mines were cheap then.
In another two years, the value of minerals like precious metals will increase, and that’s the time Feng Yu reap the profits.
Zhong Qingxian looks at Feng Yu in a daze. Could this be Feng Yu’s secret to his wealth? Select an industry and invest. But how does he pick the industry?
Translator’s notes:
Industry Life Cycle