快消行业发展分析报告-Bain贝恩咨询PPT课件.ppt

1、This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent1SHA1311- KO wholesale works . ion v8China FMCG industry RTM and WS development practiceBain presentation (draft)Novembe

2、r 2013This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent2SHA1311- KO wholesale works . ion v8Summary of key messages (1/2) FMCG companies face a series of challenges in s

3、electing and managing RTM models when they pursue growth in China - Sheer size of opportunity (universe of outlets)- Managing pricing is particularly difficult in China, because Chinese shoppers are “repertoire” and because of complexity of markets/channels- Need to balance execution effectiveness,

4、and cost to serve with increasing reach Most successful FMCG companies in China need to be good at managing multiple RTM models at the same time as a sustainable competitive advantage. There is no one size fits all approach- Direct selling (controlled model): Core strength of some MNCs (including KO

5、) for organized and even fragmented trade but Chinese FMCG players increasingly adept at this model- Indirect selling: commonly utilized by Chinese FMCG players given speed, reach and lower cost but many models with varying roles and levels of control The most successful MNC and Chinese FMCGs tailor

6、 direct and indirect selling models to different market and channel/customer priorities, with strong internal capabilities and systems to manage conflicts between models123This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on

7、by any 3rd party without Bains prior written consent3SHA1311- KO wholesale works . ion v8Summary of key messages (2/2) Managing hybrid models (combination of direct selling and indirect selling) is a dynamic process. Successful FMCGs continuously evolve their models along with different stages of de

8、velopment- Adapt to market dynamics e.g. urbanization, industry consolidation, channel mix evolution- Optimize costs with increase in scale and internal capabilities, without sacrificing control Many FMCGs invest in building dedicated internal capabilities and systems for each model. For indirect se

9、lling: wholesaler management capabilities and systems critical but so are network of scaled, capable and loyal WS- Management tools and detailed playbooks to manage pricing transparency, margin pool, transshipment, optimize cost to serve etc.- WS reps dedicated to recruiting, setting targets, incent

10、ives, upgrading/training W/S, increasing loyalty and occasionally restructuring- Fully integrated with sales systems For many FMCG companies, there is a large size of the prize from successfully managing the complementary indirect selling model564This information is confidential and was prepared by

11、Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent4SHA1311- KO wholesale works . ion v8AgendaManaging multiple RTM models in ChinaKey success factors for managing indirect selling models in ChinaSome implications for KOThis

12、 information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent5SHA1311- KO wholesale works . ion v8 FMCG companies in China face a series of challenges in selecting and managing RTM mode

13、lsSheer size of opportunity, universe of outletsComplexity of managing different markets and channels- Different drop size and economics- Managing pricing is particularly difficult in China- Constantly evolving market and competitive dynamicsLarge and fragmented network of distributors/ wholesalers

14、to manage; size & capabilities vary significantlyEvolving internal capabilities and costs pressures1No “one-size-fits-all” model. Need to balance between execution effectiveness, and cost to serve in extending reachThis information is confidential and was prepared by Bain & Company solely for the us

15、e of our client; it is not to be relied on by any 3rd party without Bains prior written consent6SHA1311- KO wholesale works . ion v8FMCG companies in China need to be good at managing multiple RTM models at the same timeDirect selling & distribution(KO: DSD)Direct selling, indirect distribution(KO:

16、DSS)Indirect selling(KO: Semi-controlled, WS)SellDistributionOwnExternalExternalOwnPreliminary2Full control over POS display and activationLarge initial investment in infrastructure and teamHigher cost to serveControl over POS display and activationDistributors with right logistic capabilities for d

17、rop size economicsRelatively high cost to serveCan have varying levels of control over distributors/WS, and POS executionQuality of distributors/WS can varyTypically lower cost to serve This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to

18、 be relied on by any 3rd party without Bains prior written consent7SHA1311- KO wholesale works . ion v8 Example: Want Want developed combination of indirect and direct sales models to sustain growthNote: Most revenue is from China MainlandSource: Company annual report; Analyst reports; Literature se

19、archWant Want RTM development 290s Quickly expanded across China through indirect sales and distribution model for general trade (same RTM for snack food & beverage)- Sell mainly through W/S mkts; only manage tier1 DTs- 25 sales offices in China - Very limited sales rep. #, only responsible for coll

20、ecting money from tier 1 distributors001205 Growth constrained by varying quality of wholesalers and relatively weak internal sales capabilities0610 Built up direct sales model and internal capabilities & teams for modern trade and key city GT- 300 sales offices & 4-5k own sales rep.- KA and “He Wan

21、t” (direct selling/indirect distribution) grew to 60%+ of revenues Built up indirect sales model for E&D with focus on increasing penetrationPreliminaryThis information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party wit

22、hout Bains prior written consent8SHA1311- KO wholesale works . ion v8Example: Want Want relied on indirect sales and distribution model to drive quick expansion in 90sSource: Company Annual Reports; Expert Interviews; Literature Searches2 Mainly sell through W/S markets 25 sales office in China Very

23、 limited Want Want own sales people-Only responsible to collect money from T1 DTs-No visibility on T2 DTs or belowWant WantT1 DistributorsT2 DT / WSIndirect selling & indirect distribution(95% of sales)Mostly GT outletsSellingDeliveryPreliminaryThis information is confidential and was prepared by Ba

24、in & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent9SHA1311- KO wholesale works . ion v8Example: Want Want built up direct sales model for MT and key cities from 2006-2010Source: Company Annual Reports; Expert Interviews; Lite

25、rature Searches2Global and national KA retailersWant WantKA salesT1 Distributors“He Want” salesT2 DT / WSDirect selling & distribution(20% of sales)Direct selling & indirect distribution(40% of sales)Indirect selling & indirect distribution(40% of sales)Regional and local MT, key city GTFragmented t

26、radeDirectly sells and delivers to 20 global & national KAsManaged by 200 Want Want KA salesDelivery by own delivery fleet or through 3rd party logistics providers “He Want” model covers 1M retail outlets in 2008 Established 300 sales offices 4-5K Want Want own sales people and 10 -15K DSRs for both

27、 “He Want” & DT mgmt. in 2008 15K DT/WS nationwide with monthly sales ranging from a few thousands to 100M RMBSellingDeliveryPreliminaryThis information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior

28、 written consent10SHA1311- KO wholesale works . ion v8Example: Want Want then built up E&D indirect sales model to accelerate beverages starting in 12Source: Company Annual Reports; Expert Interviews; Literature Searches2Global/ national & selective regional KA retailersWant WantKA salesRetail T1 Di

29、stributors“He Want” salesT2 DT / WSDirect selling & distribution(20% of sales)Direct selling & indirect distribution(35% of sales)Indirect selling & indirect distribution(35% of sales)Regional and local MTGeneral tradeExtend KA coverage to largest regional MT chains200 Want Want KA salesDelivery by

30、own delivery fleet or through 3rd party logistics providers Expanded to over 350 sales offices in China Stabilized # of own sales people and increase # of DSR and in-store push-girls-Introduced “Liang Want” project to strengthen in-store execution Stream down to 8K high quality DT/WS nationwide (onl

31、y a small % through T2 DT)SellingDeliveryFocus on E&D outletsE&D T1 DistributorsIndirect selling & Indirect distribution(10% of sales)Started to recruit E&D dedicated DTs with territory exclusivitySupported DTs with segmented entry toolkit for different E&D types (layout, promo plan, etc.) T2 DT / W

32、SPreliminaryThis information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent11SHA1311- KO wholesale works . ion v8Example: Wrigley as an MNC company adept at managing indirect and dire

33、ct selling models2 Indirect selling & distribution, with set of scaled distributors Replicated indirect selling & distribution, enlisting new distributors Built up direct selling model for MT Indirect model: improved distributor scale, capabilities and systems Direct model: reorganized to better ser

34、ve different KAs 50-100 cities 100 new cities per year 1000 cities all over China Mostly traditional trade 70% TT, 30% MT 50% TT, 50% MT 1 brand: Doublemint 2 brands: Doublemint, Extra Multi-category, multi-brandsRTM model# ofcitiesProduct/ brand portfolioChannel mixPhase I: DEVELOPING REPEATABLE MO

35、DEL(93-02)Phase II: Horizontal growth (02-11)Phase III:Vertical growth (since 11)PreliminaryThis information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent12SHA1311- KO wholesale work

36、s . ion v8 FMCGs tend to use different RTM models tailored to different market and channel priorities/dynamics3/4GeographicGeographic and channel prioritiesChannelsMetroU1U2CountyT&VMT/KAGTHigh/mid-end E&DLow-end E&DOther channels (e.g. sports venues, etc.) Different mix of RTM models, driven by- Na

37、ture of category- Market scale/share (thereby cost/economics)- Internal capabilities Continuously evolve RTM models along with different stages of development- Adapt to market dynamics- Optimize costs with increase in scale and internal capabilities, without sacrificing controlIllustrativeand other

38、considerationsThis information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent13SHA1311- KO wholesale works . ion v8Example: Wrigley tailors its RTM models with differential focus on k

39、ey cities and TT*Carrefour, Wal-Mart, Auchan, RT-Mart, Lotus, Metro C&C*Distribution can be done by a 3rd party logistics providerSource: Expert Interviews; Literature SearchesKey cities(50 key and provincial cities)B cities(200 prefecture cities)C, D cities & rural(smaller prefecture cities, counti

40、es, towns)Global 6 KA*(10% sales)Other MT(40% sales)TT(50% sales)Direct selling & distribution*Mix of direct and indirect selling; Indirect distributionIndirect selling & distribution Wrigley covers 3M outlets in China and have visibility on 800K outlets where their 2,000 sales reps and 3,400 DSRs s

41、ell into Centralized sales database of these 800K outlets, and T1 distributors Focus on top 50 cities, with strong sales presence in marketOutlet reach and flexibility3/4This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by

42、 any 3rd party without Bains prior written consent14SHA1311- KO wholesale works . ion v8White space(no control)Developed market(greater level of control)Stage 2Stage 1Contract/conditionalityCompensation modelNo contract; purely transactionalBasic 2 party contract, subject to renewal each yearMark up

43、 + rebates on vol. targetMark up + rebates on vol. target & conditionsLevel of POS control/visitsInfrequent visit by DSRsNot knownILLUSTRATIVE Category exclusive Contract with sales target & high level execution KPIFloor price mark upVisibility/ trackingOnly sales to wholesaler POS visibility throug

44、h route coverage Audits on wholesaler Visited by DSRs and some by sales Markup + Rebates based on vol. target & product availabilityAnnual contract, subject to basic conditions.Tracking of 2nd tier WS utilized by wholesalerTracking of 2nd tier WS and POS coveredMore frequent visit by DSRsFragmented

45、trade: Indirect selling model evolution with increasing local scaleExample: Wrigley continuously evolves its RTM model with local scale to assert greater control3/4This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3

46、rd party without Bains prior written consent15SHA1311- KO wholesale works . ion v8Example: Beverage Co. evolves from indirect selling model to direct model as its local market share increasesMarket entry: Indirect selling with little controlDeveloping stage: Evolves towards direct sellingStronghold:

47、 Direct selling, strong control, moderate costOntrade & TTFMCG co.Master WST2 WSFMCG co.Master WSNew ChannelOntrade 1Ontrade 2TTTerritory 1Ontrade 1Ontrade 2TTTerritory 2FMCG co.Territory 1T1 WST2 WSSales planningSales target planningSales tactic planningSales rep managementDistribution & warehousin

48、gOrdering & InvoicingPost-sales servicesChannel developmentChannel maintenance*Sales target planningSales tactic planningSales rep managementDistribution & warehousingOrdering & InvoicingPost-sales servicesChannel developmentChannel maintenance*Sales target planningSales tactic planningSales rep man

49、agementDistribution & warehousingOrdering & InvoicingPost-sales servicesChannel developmentChannel maintenance*Channel mgmt.LogisticsSource: Bain experienceWS in chargeFMCG co. in charge# of sales rep5 per city in early stage (key role is to develop WS)30-50 per city in mature stage (# of outlets vs

50、. # of sales rep = 200:1, key role is to manage and supervise T1 WS)# of WS1-210-2010-30 per city (# of outlets vs. # of sales rep = 40-50:1, key role is to visit outlets, manage activation and W/S management)OntradeTTTerritory 3T1 WST2 WSOntradeTTT1 WST2 WST1 WS2-5T2 WSOntrade & TTOntrade & TTT1 WS