According to the latest quarterly data from the Maternal and Infant Research Institute, Hengan ’s diaper brand An Erle's performance fell 5.8% to 120 million yuan. As a brother of domestic diapers, is being strongly pursued by other brands, will Hengan's status be shaken?
Group's diaper business revenue fell by approximately 14.4%
Last year was an eventful year for Hengan International. A short report was like a storm that dragged the company's stock price to the bottom of the sea. Last year, the Guan Aner brand of diapers gained a 17% growth rate online to 480 million yuan in sales, but the total revenue of the group's diaper business (including Ankang adult diaper brands, etc.) fell by about 14.4%. To approximately RMB 1.54 billion, accounting for approximately 7.5% of the Group's overall revenue (2017: 9.9%).
In the latest first quarter of 2019, Anerle diapers experienced a decline in performance, a drop of 5.8% to 120 million yuan. Although In the first quarter, Anerle still ranked first in domestic diapers and ranked seventh in the overall ranking, but such achievements have sent a dangerous signal in this quarter.
Brands are catching up strongly, a new generation replaces the old one?
As China's diaper industry enters the Red Sea era, more and more players enter the market, and market competition is becoming increasingly fierce. In the Q1 quarter of 2019, not only well-known overseas brands such as Pampers, Curiosity, Unica, King, etc., but even the majority of domestic diaper brands have achieved relatively good growth. In particular, brands such as Bird's Nest and Babu Dou that followed Anerle did not make a big difference in terms of scale, but their growth could worry Anerle. Among them, the ninth-ranked Babudou increased by 146.4%, and sales of 83 million yuan launched a strong catch-up against Anerle and Que's. The twelfth place Lu Anshi is constantly making efforts with a rapid growth of 74.6%.
Omni-channel layout, Hengan is catching up
In recent years, fragmented channels such as e-commerce, micro-commerce, and overseas purchasing have greatly impacted traditional shopping channels. Until 2018, Hengan only strategically increased the diaper business's investment in e-commerce channels and mother and baby stores, and continued to implement an omni-channel strategy. For the year ended December 31, 2018, the sales of e-commerce channels increased by about 10% year-on-year, while the traditional sales channels declined severely, by about 35%.
Hengan Group's e-commerce channel has developed rapidly. In its 18-year financial report, Hengan's e-commerce channel turnover (including retail sales and WeChat sales) exceeded approximately RMB 2.9 billion, an increase of approximately 50% over the same period last year. In the first quarter financial report, Anerle had the highest share of online channel Tmall, accounting for 60% to 68.18 million yuan, followed by JD.com, accounting for 35.2% to 40.01 million yuan.
It is understood that in the future, Hengan will continue to expand the coverage of e-commerce channels and launch special products for e-commerce, such as e-commerce matching packages and promotional activities for e-commerce. Hengan believes that the improved efficiency in sales, supply and logistics will help the Group's e-commerce sales and profits in 2019 continue to increase.
Can market segments consolidate the position of Hengan's diaper industry?
In the field of diapers, in addition to Anerle, Hengan also laid out other sub-categories.
Qimo diapers, a diaper brand developed by Hengan Group specifically for the high-end market, is committed to becoming a high-end refined baby care brand in China. It adopts the new concept of refined product branding and incorporates the elements of the little lion, with a distinctive personality Re-branding. At present, the overall domestic diaper industry is trending towards high-end development. Qimo diapers have become one of the development centers of Hengan. In 2018, Qimo diaper sales increased by more than three times year-on-year, accounting for more than 5% of diaper sales revenue.
Ankang adult diapers is a brand of Hengan's "Silver Hair Economy". With the population aging trend, the market demand for adult diapers in China will continue to increase. In this field, the current market dominance is still in the hands of local brands, so it is extremely important to occupy the high ground and win the first move. In 2018, Ankang's revenue was approximately 170 million yuan, a year-on-year increase of 15.1%, accounting for 11.4% of total diaper revenue.
Although Anerle started earlier than other domestic diapers, in recent years many domestic diaper brands have emerged. They rely on their stable product quality, good reputation, brand marketing innovation, and proper channel play. Rush to the front of the diaper track. As domestic brands continue to rise, it remains to be seen whether Anerle and even Hengan can settle in the top spot, but it is worthy of recognition that it is precisely because of the strong development of these new domestic products that they are constantly rewriting the industry pattern of domestic diapers.