Global sucralose, acesulfamy and other sweetener raw material field of the subdivision leading "Jinhe industry" (002597) recently launched a formal consumer oriented strategic new products - Phila sweet zero card sugar, officially launched on July 7, the Phila sweet upgrade once launched, it has attracted the attention of investment institutions, media, the industry. This push new, Jinhe can open up billions of generations of sugar market new blue ocean?

Photo credit: The flagship store of JD.com, Philharmonic Sweet

Why sweetener giant Jinhe Industry will at this time node, choose to push new from the B end to the C end?

What kind of healthy sugar product will the C-terminal new product launched in 24 years?

What impact will the new products have on the sugar substitute market?

We learned the news after the first time connected the Jinhe Industry (002597) management, exclusive for you to unveil this mysterious new product behind the sweetener leading enterprise's new strategy.

01

To gain an advantage by following the trend:

2019 has been a great year for low-sugar sugar-free products worldwide, and sugar reduction has become an irreversible trend

In the past, "sugar" was an important factor in the success of new packaged food and beverage products. But now, "sugar reduction" has become an important selling point for the big companies to launch new products. Why the change? The central driver: consumers' growing appetite for health. Nearly half of U.S. baby boomers want to cut back on sugar and buy more reduced-sugar foods, while two-fifths are cutting back on sweets, according to new data from Innova Market Insights. [1]

This also means that whoever can seize the opportunity on the road of sugar reduction is expected to occupy more market share in the future.

Let's take the beverage category for example. The era of sugar-free drinks has arrived: For example, the star of the soft drinks market in China, the Yuanforest, is unsweetened drinks. Coca-Cola, which introduced diet Coke in 2005, has seen a long period of declining sales in its carbonated soft drinks since 2013. But in the second quarter of 2018, However, its single low-sugar sugar-free carbonated beverage has achieved a double-digit growth. Coca-Cola found that consumers' demand for sugar reduction is becoming mature and becoming a new fashion, so it continued to increase the number of sugar reduction products since 2018, and launched nearly ten new sugar reduction products in succession.

So far, the new low sugar and no sugar products launched by Coca-Cola include: Zero Sugar Coke, Zero Calorie Sprite, Zero calorie Funda, Coca-Cola Fiber +, Sprite Fiber +, Chun Cha Sha unsweetened Tea drink, Pure Yuesen Fiber Water, Cucumber Sprite Fiber +, Sprite Coconut Pie, COSTA Low Sugar Ready-to-drink coffee, Yi Quan +c Reduced Sugar Edition, Minute Maid Daily Light Life and other low sugar series. It's worth noting that Coca-Cola's first quarter results for 2019 showed its sixth consecutive quarter of double-digit growth in zero-sugar beverages.

This trend has also swept the beverage category of the offline catering market. In 2018, as the first company in China to introduce sugar reduction instead of syrup, it also tasted the sweetness. According to industry sources, in the first few months of the launch, only one in 10 consumers chose to use low calorie and low sugar syrups due to the limited awareness of consumers. But within a few months, the numbers suddenly exploded, and as consumer awareness increased, the amount of syrups used in 2018 reached a staggering 1,000 tons

In short, the trend of sugar reduction and sugar-free is not only spreading in the beverage category, but also sweeping various subcategories of the food industry such as dairy products, snacks, baking, wine, instant noodles, etc. As a supplier of sugar-free and low-sugar solutions and sweetener products for the giants, Jinhe Industry is also making a lot of money.

According to the previous report of 36kR, Jinhe Industry not only provides sugar-free sweet raw materials for many food and beverage giants, such as Coke, Nestle, Danone, Mengniu, Yili and other companies, but also its Acesulmi global production capacity market share reached 65%, sucralose ranked the second in the world, in the leading oligopolistic position in the sweetener segment.

As the saying goes, "Spring River water warming duck prophet", it is also because Jinhe Industry has been engaged in the production and sales of sweetener raw materials for decades, and constantly enhance the ability of research and development and innovation, to provide sugar reduction solutions for the market, Jinhe is especially sensitive to changes in market demand, the company not only for the new tea beverage industry has developed more customized solutions for B-end sugar reduction and low calorie syrup, It also helped tea brands TO launch healthy drinks with lower calories and sugar content without affecting taste. It also prepared its first TO C brand -- "Philharmonic Sweet" from 2017.

This series of layout, can be said to be along the trend, seized the opportunity of the rise of the Chinese sugar market. But the question is, why would an oligarch focusing on B-end sweeteners have such courage to invest a lot of money, talents and technical resources to develop the C-end market, which it has never done before, and extend and promote new products to the C-end market? The strategy behind it? We will answer them all in the following sections.

02

Why is there not yet a mature C-end substitute sugar brand in China under the certain trend? The answer may be that no company wants to be the first to eat

Recently, the 2019 meeting of the ADA (American Diabetic Society) announced a drink blacklist, which concluded that sweetened beverages should not be drunk, which has aroused wide concern and debate among the medical community and the public around the world. Are sugar-free sweet drinks healthy? In the fight against diabetes, obesity, anti-saccharification demand is growing, how on earth consumers should enjoy the sweet taste more healthy? In Europe and the United States, where the development of sugar reduction products is relatively mature, consumers still have misunderstanding, not to mention in China, where the development is still in its infancy.

According to Mr. Yang Le, chairman of Jinhe Industry, "The more sweeteners we sell to the European and American markets, the more confused we become: why the European and American countries have done such a good job in sugar reduction consumer education? How can China's 1.3 billion consumers have the convenience and right to freely choose sugar-free products in every consumption scenario in their daily lives? That's the question we've been thinking about. Why is it that you can drink Coke Zero everywhere in a small town in Europe, but diet drinks are completely unavailable in many restaurants in China's first-tier cities? A hot pot or a kebab instead of regular Coke or sugary drinks like plum soup or coconut milk, which are loaded with sugar? If you are diabetic, you can only choose mineral water to avoid sugar intake? After all, life needs a sweet touch, not a flat flat."

As the young chairman of the A-share school, Mr. Yang Le has lived and studied in North America for several years. He also often goes to Europe, America, Japan, Korea and other countries to attend exhibitions and visit customers. He is very familiar with the trend and development process of sugar reduction in developed countries.

"The establishment of 'Philharmonic Sweet' is not only a commercial consideration, but also out of corporate social responsibility. We hope to become the first one to eat crab in the Chinese market, not only selling healthy and safe sugar reduction products, but also doing a good job in sugar reduction consumer education, popularizing science knowledge related to sugar replacement, so as to help Chinese consumers to eat better quality, taste, nutrition and delicious. The right sugar for your body. In response to the National Nutrition Plan (2017-2030) issued by The General Office of the State Council, it is also a special action to actively promote a healthy lifestyle for all people and focus on "three reductions and three health benefits". So that Chinese consumers can enjoy sweet and delicious taste while also having a healthier and more nutritious choice of sweeteners." "He added.

Through searching Taobao and Jingdong and other e-commerce platforms, we found that the domestic C-end is not without sugar substitute products, some brand sales are also good, but really willing to take the responsibility of consumer education and public science, willing to spend large costs and risks, to cultivate the market, to do consumer education brand, Jinhe Industry is a pioneer.

Behind this, not only because of its keen sense of business opportunities and consumer demand changes, but also as a global segment of the leading enterprise to shoulder the corporate social responsibility.

03

Redefining sweetness:

Can Philharmonic Sweet leverage the new blue sea of sugar reduction in the Chinese market?

1. Golden Opportunities in the Red Sea: C-terminal sugar market

According TO Mr. He Xiangkun, the person in charge of the B end business of Jinhe Industry, in the condiment shelves in Europe and the United States, the ratio of sugar substitute products to sucrose products is 9:1, while in China, the figure is only about 1:9. At present, China's population obesity problem, diabetes problem, anti-saccharification, anti-caries and other health needs are increasing day by day, C-end substitute sugar products market potential is huge, is an upcoming blue ocean opportunity.

In Europe and the United States, brands such as Equal and Splenda have already exceeded 1.5 billion US dollars in volume and are sold in more than 80 countries around the world. China is currently the fastest growing consumer goods market in the world. It is believed that Slenda brands will appear in the Chinese market in the near future. Will more players enter this field after Jinhe? We will also continue to track the development of this category.

2, years of grinding a sword technology precipitation, more than 200 formula test adjustment, Philharmonic sweet 2.0 version of the product force

Mr. He Xiangkun introduced to us that the 2.0 version of Philharmonic underwent more than 200 formula tests and adjustments by the R&D team. Different from the ratio of 1:7 sweetness between the first generation of Philharmonic sweet and sucrose, the second generation of Philharmonic sweet has realized the ratio of 1:1 sweetness with sucrose, so that users do not need to change the habit of adding sugar to obtain the same sweetness and improve the convenience of use.

From the perspective of formula research and development, Philharmonic Sweet has pioneered the combination of new artificial sweeteners and natural nutritional sweeteners in China.

Through more than 200 tests and adjustment of formula ratio, we have obtained a taste similar to sucrose while ensuring health and nutrition. With the same taste, we can reduce all calories, sugar and fat to zero, which is one of the core pain points of current sugar reduction products and also the barrier.

Behind this is the core competitiveness brought by decades of technological precipitation in the formulation process and application of research and development technology of Jinhe Industry.

In addition to the selection of premium new sweeteners such as stevia, sucralose and erythritol, the formula also incorporates resistant dextrin, a type of dietary fiber, which increases the function and nutrition of the product. According to Innova2019's Top 10 trends in the global food and beverage industry, consumers are increasingly concerned about brain and intestinal health. It has also brought the popularity of dietary fiber, which has become one of the most noteworthy trends this year.

In addition, the packaging design and specifications of La La Sweet are close to the preferences of young people. There are both portable boxes that can be carried around and large packages in vertical bags suitable for home cooking. Different from the simple packaging of substitute sugar in the past, La La Sweet packaging has strong visual impact and is more in line with the preferences of millennials.

3. Online e-commerce presale and brand co-branding cooperation, and future market strategy analysis

Excellent product building can only be said to be the first step to push new success, after the sales and marketing strategy of every link, is crucial. So what kind of market strategy will Philharmonic Sweet, a supplier, adopt when it extends to the C-end market?

1) Develop new media content marketing strategies for target audience young consumer groups

We have noticed that Alecsweet has officially entered the flagship stores of Tmall and JD.com since yesterday, and has launched the pre-sale of 2.0 new products with very strong discounts. Read the original article to participate in the pre-sale. At the same time, La Sweet also chooses Weibo, Xiaohongshu, Douyin, b station and other channels where young people are more active, to reach and influence target consumers by creating high-quality content. Let people know that there is a better sweet alternative.

2) Launch the brand co-branding plan and the marketing strategy of 1+1>2

According to Sam, the person in charge of the brand of Philharmonic Sweet, the goal of Philharmonic Sweet is not to shout slogans. The promotion of a revolutionary product should let more people experience, try and then talk about love and lifestyle. Therefore, after consolidating product strength and brand strength, Philharmonic Sweet will also make efforts to cooperate with brands. Currently, they are not only cooperating with offline brands such as coffee chains, new tea drink chains, hotel and catering chains, to help these brands keep up with the trend of sugar reduction, increase the selling points to attract users, and provide higher quality products and services. We are also negotiating cooperation with excellent brands for C end. For example, the company has teamed up with UPYIM, a high-end bird's nest brand, to create a gift box set that allows the fairies to enjoy "anti-sugar, beauty and delicious taste" in one step.

For those brands that have the same target audience and can achieve synergistic effect between brand power and product power, Philharmonic Sweet will increase cooperation in the future, so that more people can enjoy sweet health.

3) Develop new offline retail and distribution channels

In the future, Philosweet will also develop offline channels, planning to enter the Family convenience store, and layout Hema Fresh, Meicai, Yonghui Super Species and other new retail channels. According to the development of the market, further channel laying plans will be made. The core goal is to make consumers more convenient to see and buy Philosweet healthy sugar.

04

Conclusion: The new journey of sweetener oligarchy

In recent years, companies in the field of B extend TO C, and companies in the field of C expand TO B is an important trend.

New Hope, Cargill and other giants in the traditional TO B field are expanding to the layout of the consumer side, and have achieved very good results through several years of experience.

As the leader of food additives and ingredients industry, sweetener leading supplier, Jinhe this use of their technology, supply chain, cost advantage and other barriers in the B end market precipitation, in the consumer goods market force, launched a new generation of healthy sugar products after in-depth insight into the user, it can be said to grasp the opportunity of sugar consumption upgrade, Subvert the current Chinese market existing sugar substitute products.

In the future, how will it develop its strengths and circumspect its weaknesses, and whether it can become the first high-end sugar substitute retail brand in China? Let's wait and see!

Reference source:

[1] Innova: Sugar Reduction is Becoming a Major Dietary Requirement for Consumers, May 23, 2019, Raw Materials for Health online