1. Fisherman’s Friend Asia-Pacific Conference China – The Challenge
Kevin Ding, Marketing Manager, DKSH China
Jakarta, July 10, 2014

2. Diversity

3. China is not one country but more like Europe
Whichever dimension we look at , China is composed of several distinct markets:
- Language / Dialect & Sub-culture
- Economic Development
- Habits / Needs
Only 7% of retailer chains can be found in both provinces
Population:
1.3 bn
Size:
9,6 mn sq km
City > 1 mn:
166
Municipality cities 4
Provinces 28
Cities
656
Country Towns
1,642
Towns
36,862
FMCG Retail Outlets
3,6 mn
Heilongjiang
Population: 38,3 mn
GDP per capita: RMB 32,600
Main language: Mandarin
Behavior: Heavy flavor food; Gift rather than own consumption
Shanghai
Population: 23,0 mn
GDP per capita: RMB 82,560
Main language: Wu (Shanghainese)
Behavior: Rich flavor food with a bit sweet; pay more for good product
Guangdong
Population: 104,3 mn
GDP per capita: RMB 50,500
Main language: Cantonese
Behavior: Light taste flavor and fresh food; More care about price

4. FF Sales by Product / Channel / Region
Sales in LoF
Consumer demanding and channel importance is different region to region

5. FF strategies … Focus on key cities and appropriate key channels
Different strategies upon the understanding of consumer and market needs region by region
Tailor-made product and promotion for specific key accounts

6. Competition

7. Continuous new product innovation by competitors
Over a thousand new product launched per year to attract young consumer
Keen fighting for listing due to limited shelf space in store

8. Huge A&P investment by competitors
Media Spending
Data source: Nielsen(TV/MG/NP) CTR(RD) CODC(OOH) IResearch(Digital) Period: Y2011-Y2013
Unit: RMB Mil
Brand
Y2013
Rank
Spending %
Wrigley's 1
1,351
24%
Alpenliebe 2
641
12%
Skittles 3
554
10%
SK&F 4
369 7%
Want Want 5
299 5%
Golden Crownstuff 6
260
Golden Throat 7
219 4%
Eclairs 8
172
3.11%
Chupa Chups 9
3.1%
Halls 10
152
2.7%
Others
1,359
25%
Total
5,548
100%
Heavy A&P spending by key competitors on both A-T-L and B-T-L

9. Keen competition from local, regional, global brands …
Data Source: IMS and AC Nielsen Retail Tracking 2012
Keen competition from key international brands but produced locally
Fisherman’s Friend was one of few “imported” brands positioned at “premium” segment

10. FF strategies …
Introduce new packaging (zip-lock pack) / flavor to attract new consumers
Tactically invest on brand advertising with massive sampling to drive brand awareness e.g. regional bus body / LCD advertising
Focus on key accounts via appealing in-store merchandising and promotions to attract consumer’s attention and trial

11. Trade Barrier

12. High trade cost Import Duty Sugar Sugar Free 10% 20% VAT 17%
Sub-wholesaler GM
Retailer Ave. GM
45%
1 GBP (ex-work) ≈ RMB 40 (RSP)
2,4 m+ stores
2,287 cities
High supply-chain cost and long lead time due to large geographical size of China
Extremely high trading terms by MT channels along with their expansion in 3rd and 4th tier cities (new store opening, listing, etc….)
2.4 M stores located in 2,300 cities which need huge manpower investment for store maintenance

13. Other barriers
Strict shelf life requirement by MT chains – 2/3 shelf life is the basic requirement while some key accounts even ask for ½ shelf life
Chinese label regulation be more strict and still changed frequently without prior notice, rigid CIQ procedures

14. FF strategies …
Focus on well developed 1st and 2nd tiers by direct selling to shorten the lead time and save the cost
Expand to more 2nd and 3rd tier cities via local sub-wholesaler who can provide better after-service
Focus investment on top 20 key accounts which can contribute 80% sales

15. Thank you for your attention.
DKSH Shanghai Limited
3rd Floor, Tomson Commercial Building,
710 Dong Fang Road, Pudong
Shanghai ,
People’s Republic of China

16. Disclaimer
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