This article is from WeChat official account:Fresh Capital (ID: freesvc) , author: Li Feng (Feng Shui capital founding partner), the original title: “Li Feng: 2021 fiery consumption and investment will continue to do? | Fengrui Research Institute”, head picture from: Visual China
The consumer sector is one of the most watched tracks in the investment circle in 2020. Then by 2021, what changes will this area have? Around this topic, we will discuss in two aspects in this article:
Why is investment in the consumer sector so hot in 2020?
Will the consumer track still be this hot in 2021?
Before entering the main text, share the main points:
The hot consumer sector in 2020 is mainly due to the combined effects of the following factors: the good performance of rigid demand consumer goods stocks in the secondary market, the contrarian growth of consumption of necessities during the epidemic, changes in the investment direction of mainstream funds, and the listing of Perfect Diary, etc. The resulting model effect, changes in traffic structure, and the “dormancy” of big offline retailers have given new Internet brands opportunities to occupy offline shelves.
In 2021, whether it is foreign capital or RMB, ChinaThere is still a lot of money in the Chinese market. If you look at it from the perspective of more money and less money, the consumer track may continue to be the same as last year. But when it comes to categories, some consumer categories that are gaining momentum in 2020 may not be able to sustain high growth, and offline competition will be even more cruel.
From a macro point of view, due to the increase in Internet penetration and the blessing of new traffic, some new consumer brands may continue to “fire” in 2021. However, if the capital market’s judgment on model models such as Perfect Diary changes, some bubbles in the consumer industry will be burst or corrected, causing the industry to become colder and investment enthusiasm to decline.
The following is a specific analysis, I hope it can give you some inspiration:
1. Why is investment in the consumer sector so hot in 2020?
1. Food, tobacco and alcohol categories: unusual growth
The investment boom in the consumer sector actually took place against a very interesting background. In 2020, the per capita consumption expenditure of Chinese residents will decline year-on-year.
This data comes from the National Bureau of Statistics. In 2020, the national per capita disposable income will increase by 2.1% in real terms, which is basically in line with economic growth. However, in 2020, the global total retail sales of consumer goods will drop by 3.9% from the previous year. In other words, if everyone’s income increases, they spend less.
However, in the context of a decline in overall consumer spending, some consumer categories have achieved “year-on-year growth”-food, tobacco and alcohol. According to the National Bureau of Statistics, in 2020, the national per capita consumption expenditure on food, tobacco and alcohol is 6,397 yuan, a year-on-year increase of 5.1%, accounting for a percentage of per capita consumption expenditure30.2%.
One drop and one increase,food, tobacco and alcohol can be called “high growth”. High-growth industries will naturally attract the attention of capital and bring wealth effects.
2. Global liquidity has skyrocketed, and the wealth effect is obvious
We have also analyzed before. As an investor, when you are faced with huge uncertainties like the epidemic, you will often find the greatest certainty first, such as some that are well developed and are relatively negatively affected by the epidemic. Limited Internet company. However, many Internet companies are not listed on the A-share market, so everyone has turned to investing in rigid-need consumer products such as food, tobacco and alcohol.
We can see that in the secondary market, the food, tobacco and alcohol categories have performed very well in the past year. Many consumer product brands have ushered in “double growth” in stock prices and market value, such as liquor (Moutai, etc.), condiments (Haitian flavor industry, etc.), beer(Tsingtao beer, etc.), dairy products(Yili shares, etc.)……
Of course, there is an important background behind this global liquidity surge.
From a global perspective, there has never been a year like 2020 that “span class=”text-remarks” label=”remarks”>(crazy printing money). According to data from the International Association of Finance (IIF), the total global debt increased by 24 trillion U.S. dollars last year, reaching 281 trillion U.S. dollars Record high.
What effect did the 24 trillion U.S. dollars bring? The most direct impact is reflected in the stock market. Standard & Poor’s data show that in 2020, the global stock market value increased by 16% to 104 trillion US dollars, and nearly one-third of the increase came from Chinese stocks. Look specifically at the performance of A shares. according to”According to “Securities Times·Databao” statistics, the market value of A-share listed companies in 2020 will total nearly 80 trillion yuan, an increase of 20 trillion yuan from the end of 2019, an increase of 34%.
The capital market is hot, and those categories with strong growth will inevitably benefit more. This is why consumer companies such as food, tobacco and alcohol perform particularly well in the capital market. The growth performance of the secondary market will affect the investment decisions of the primary market.
3. Changes in the direction of the fund
In the past two years, many super platforms have emerged or are on the market. Many funds tend to believe that there are fewer opportunities in the TMT field and fewer funds investing in new platforms such as media and entertainment. On the contrary, consumption has become a new investment hotspot, and money has also come in this direction.
4. Model effect
The reason why consumer investment is hot is actually affected by the model effect. In the past, everyone thought it was difficult to invest in consumer products like investing in the Internet. In three or four years, a company with a market value of tens of billions was built until the perfect diary went public last year.
In November 2020, Yixian E-commerce, the parent company of Perfect Diary, which was established for more than four years, landed on the New York Stock Exchange, becoming the first Chinese beauty company to list on the US stock market, with a market value of over 12.2 billion U.S. dollars on the first day. This means that the perfect diary model has achieved phased success.
Then, more capital parties may be encouraged, hoping to stake their “perfect diary.” This brings another kind of wealth effect in the primary market.
5. Changes in traffic structure
In 2020, many outstanding players have emerged in the new consumer sector, and many new brandsThe speed of development is very fast. An important reason is the change in traffic dividend and traffic structure.
First of all, the time spent at home at home has risen sharply, and the increase in online time will bring new traffic and users, and increase the penetration rate of the Internet. Not only has Internet users increased, but the amount of time users spend on the Internet has also increased significantly. Bring traffic dividends to new brands.
Another embodiment of the traffic dividend is that the current traffic structure, traffic medium, and platform recommendation logic are changing at the same time.
Taobao has been revised in 2020, and most of the resources have been recommended. In fact, all major trading platforms and traffic platforms, including Taobao, have begun to make accurate recommendations. This means that there are more and more tags for trading and off-site traffic distribution. So, the more subdivided and accurate the product labels you make, the easier it is to obtain matching recommended resources on the trading platform. This change is very helpful to help the brand go from 0 to 1.
On the other hand, in the last wave of mobile Internet outbreaks, traffic was concentrated in the hands of a few Internet giants. With the rise of short video platforms, life sharing platforms, and live broadcast platforms, traffic began to be redistributed from a large oligarch to multiple small oligarchs. Different traffic platforms compete with each other, and brands will get more opportunities. In addition, the rise of content platforms has also given new development opportunities for consumer brands. Even if you don’t have a lot of budget, there is a chance that you will become popular because of a popular content.
6. The offline retail lacks new products
One of the most special things about consumer retail in 2020 is that the big names have “rested and rehabilitated” last year. Last year was the least new year for offline retail brands, and there were almost no new products on the shelves.
The reason is that when offline brands are new on the offline shelves, they need to do some product proofing tests two years in advance. After determining three or five new products, they must be placed in different levels within a small range. Among cities and population areas, try to accept new products. After trying it out, we will finally lock in which products to push in this year’s peak season. After locking in the new products, we will go to the whole country to call the supply chain, because most of the production end of the enterprise is close to the consumer end.
In January 2020, the epidemic broke out. Compared with innovative companies, big names will also have greater pressure on supply chain management and recovery. As the scope of the epidemic expands, it lasts longer than expectedIf the elephant is too long, the plan to launch a new product with a big name will be delayed. This gives Internet brands an opportunity to seize the shelves offline. Especially those small and medium-sized enterprises that have voices and brands online, and happen to have new products on their hands.
So, in view of the above six reasons, we see that investment in the consumer sector in 2020 is very hot. So here is a new question-what will happen in 2021?
II. Will the consumer track continue to be hot in 2021?
To answer this question, we can look at the growth in 2020, which will continue in 2021, and which may change?
1. Can the high growth of some consumer products last year continue?
The answer is: Some are capable, some are not necessarily.
As we mentioned earlier, in 2020, in the context of a decline in overall consumer spending, the food, tobacco and alcohol categories have achieved year-on-year growth. Is this normal?
Not normal.
Under normal circumstances, according to the stage of China’s social and economic development, in the proportion of consumption, necessities will gradually decline, and non-essential goods and service industries will gradually increase. This is largely affected by the epidemic. The epidemic has affected everyone’s desire to consume, and ultimately reflected the composition of consumption.
But what is certain is that in 2021, with the gradual control of the epidemic, the living conditions of residents will also tend to normalize, and our consumption expenditure methods will also be more in line with the laws of this stage of development.
Then, the preliminary conclusion that can be drawn is:
First of all, household consumption will resume positive growth this year;
Secondly, the consumer staples that performed well during the epidemic last year, considering the existing high base, it is difficult for the overall scale to continue to grow at a high level this year, and it may grow at a low level or remain flat.Its proportion in total consumption will also decrease accordingly. On the contrary, the offline service industry, which was hit hard last year, will rebound more strongly this year and is more likely to achieve high growth.
Of course, last year there was another popular track-foreign trade e-commerce. Can it continue to be hot this year?
In 2020, looking at the global supply chain, China will recover the fastest and its size will naturally become the main support of the international supply chain. Therefore, in the second half of last year, China’s foreign trade achieved rapid growth. Among them, foreign trade e-commerce has developed particularly fast, and it has become a hot investment area.
But by 2021, the industry has begun to see some obvious changes:
First of all, the northern hemisphere is about to enter the summer. As developed countries get better and better control of the epidemic, the global supply chain is likely to resume one after another. In the second half of last year, China’s absolute role in the global supply chain may be dispersed, and everyone will reopen global procurement. Therefore, in 2021, China’s foreign trade will still grow, but because the base is too high, it will face certain challenges to maintain high-speed growth.
Secondly, due to restrictions on offline transactions last year, many offline trading companies were forced to go online. So we can see that the number of China’s foreign trade e-commerce companies grew very fast last year. With the restoration of the supply chain and the redistribution of demand, even if the total demand continues to grow, the massive increase in the supply side will intensify the competition of foreign trade e-commerce, and the survival of the fittest will accelerate.
2. How much money is in the market? Will the wealth effect last?
Preliminary answer, yes.
If the central banks of developed countries do not undergo a major shift in fiscal and monetary policies (such as raising interest rates, shrinking liquidity, etc.), this year Global liquidity will still be huge. What does this have to do with China?
China is the only major company in the world that maintains positive growth in 2020Major economies have a GDP exceeding 100 trillion yuan. Judging from the data in January and February this year, my country will still be able to maintain a relatively good level of growth in 2021. At the just-concluded two sessions, this year’s GDP growth target was set at more than 6%. Considering that China still has long-term growth capabilities, capital is bound to be optimistic about China.
Specifically, the money in the domestic market mainly comes from two dollars:
One is foreign investment. If the fiscal and monetary policies of various countries do not change, some of the released liquidity will inevitably flow into China. There is enough foreign investment, and China is attractive enough.
The second is domestic capital. Everyone should have noticed. The central bank proposed in February, “A sound monetary policy should be flexible, precise, reasonable and appropriate, adhere to a stable policy, not make a sharp turn, grasp the time and effectiveness of the policy, and handle the recovery of the economy. And the relationship between risk prevention”. It seems that the gate may not release too much money, but at least there will be enough money to support economic development.
So, whether it is foreign capital or RMB, the Chinese market will have enough money this year. However, specific to the wealth effect, this year may not be able to report particularly high hopes. At least in the first quarter, the global stock market has fluctuated.
3. Will the direction of the fund change?
Since there is enough money in the market, if we only look at it from the perspective of more money and less money, money will still be invested in the direction of consumption. However, it depends on whether the popularity will be as high as last year.
4. How will the boilerplate effect change?
From a macro point of view, due to the increase in Internet penetration, with the blessing of new traffic, some new consumer brands may continue to “fire” in 2021.
However, as mentioned earlier, the listing of Perfect Diary has brought a certain model effect for investment in the consumer sector. In 2021, the capital market performance of Yixian e-commerce will continue to play a model effect in the consumer sector.
In other words, the capital market finally accepts what a company with a market capitalization that Perfect Diary is a company, which determines to some extent whether consumer brands in the primary market can continue to be popular in 2021.
If the capital market recognizes its development model and is optimistic about its long-term profit, it may be worth more than it is now; if the capital market questions the business model it represents, some bubbles in the new consumer sector will be punctured or corrected. As a result, the industry has become colder and investment enthusiasm has fallen.
In general, investment will return to rationality. It is recognized that consumer brand entrepreneurship still needs to pursue medium and long-term branding. Dividends can play a boosting role, but the most important thing is to make money and repurchase.
5. How will the traffic structure change?
The answer is: New traffic platforms may be gestating.
From a micro point of view, as we mentioned before, the accurate recommendation of the traffic platform is helpful to help the brand from 0 to 1, but because it is too accurate, will also make it more difficult for the brand to go from 1 to 10. , Breaking the circle is more difficult and not easy to scale.
From a macro perspective, as we mentioned earlier, the particularity of the current stage: the flow structure, flow medium, and platform structure are changing at the same time, and huge opportunities and challenges are accompanied by them. According to previous experience, the current generation of platforms’ traffic is close to the upper limit, and new platforms are bound to appear. What is the new form? We have no definite answer.
The new platform has either found incremental time or is competing in the stock market for alternatives, such as time replacement and form replacement. We are also curious who can move the first brick first.
6. How will offline competition change?
The answer is: The offline competition will be even more cruel this year.
I just mentioned that many offline big names went through a year of “rest and rest” last year. Then this year, the big names must be full of energy. They may put the innovations accumulated in two years and the budget funds of two years into one year. Centralized output, “tested together in two sessions.”
Last year’s Double Eleven big brands “dominated the list”, and perhaps by this year, big brands’ emphasis on the Chinese market will become more normal. From the perspective of online channels, the big names will have more resources to invest in the battle. From the offline point of view, this is even more so.
The importance of offline experience is gradually increasing. For a long time in the past, users were accustomed to comparing prices online after seeing products offline, but now the user’s habit has changed to be planted online and consumed offline. So we can see that many brands that have grown up online are now radiating offline.
But if you want to fight offline, you have come to the battlefield of advantages of traditional brands. An important advantage of traditional big names lies in the national supply chain. For example, if I am a brand that sells water, after launching a new product, I can quickly produce it in a production area closer to the sales area without having to move the water everywhere. Another advantage is on the shelf. Traditional big brands like Coca-Cola and Nongfu Spring have a greater say in the placement of shelves, which will also put a lot of pressure on start-up brands.
So, when looking at the brands that became popular last year, we may need to keep our eyes on longer. By next summer, will these new brands still occupy the top three in consumers’ minds? If the new brand can stand out from this fierce offline knockout round, it will be considered a success.
7. Write at the end
No matter how the consumption track changes this year, there is an old saying for entrepreneurs that will not change: Entrepreneurs basically rely on perseverance to turn suffering into sweetness. When everyone is optimistic, there are usually some problems. When everyone is not optimistic, there are usually hidden opportunities.
This article is from WeChat official account:Fresh Capital (ID: freesvc) , author: Li Feng