China Lifestyle
Drizzt’s Take:
I used to follow China Lifestyle quite abit. I like that it is a rather big player in its consumer segment and its sound balance sheet. That was before work took a toll on research. Right now i have a chance to relook this company. It hasn’t climbed my in this china bull. Which puzzles me. does this company not have the kind of growth drivers associated with most China companies like Synear Food and China Hong Xing?
CHINA LIFESTLYE: Making Labixiaoxin China’s household snack
Written by Sim Kih
Wednesday, 10 October 2007
TOGETHER WITH Nomura’s Asian head of regional consumer research, Michael Gilmore, Financial PR managing director Kathy Zhang visited China’s No. 2 jelly dessert maker recently.
At China Lifestyle Food & Beverages Group headquarters in Fujian (Jinjiang), the duo met CEO Zheng Yulong for a chat about the Group’s marketing strategy.
Half of China’s jelly market is shared between China Lifestyle and No.1 jelly dessert maker Guangdong Strong.
Over half a billion yuan (Rmb 538.9 million) worth of China Lifestyle’s convenience snacks were sold in 2006.
They are popular, especially China Lifestyle’s signature Labixiaoxin brand which won China’s top jelly dessert branding award in 2004, the year before the company listed on SGX.
Celebrity Hong Kong actress Cecilia Chung was spokesperson for China Lifestyle’s jelly dessert brand Labixiaoxin.
Priced at Rmb 8.90 per 500g loose pack, the Labixiaoxin jelly dessert sells for about 20% less than Guangdong Strong’s competing product.
China Lifestyle’s pricing strategy has made it the dominant player in third- and fourth-tier cities, as well as rural areas of second-tier cities such as Jinjiang.
Zheng told Kathy that the company intends to strengthen its presence in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. The company relies on distributors such as China’s No. 1 foreign hyper-mart Carrefour to sell in Beijing and Shanghai.
Han Chunlin, a key sales and marketing man from a leading Chinese producer of dairy milk, Mengniu, was roped in last year to be vice president of China Lifestyle’s sales and marketing effort.
Brand equity is an important aspect of China’s fiercely competitive convenience food and beverages industry.
China Lifestyle upped advertising and promotion expenditure by more than half last year. A&P expenses increased 57.8% to RMB 34.2 million or 6% of its turnover in FY2006. The strategy is to increase A&P expenses to 8% of turnover by FY2008.
Aggressive advertising and promotional campaigns win consumer loyalty. Labixiaoxin’s brand visibility has been boosted by TV ads, sponsorship of Chinese MTV programs and even engagement of celebrity entertainment artistes as brand spokesperson on popular TV channels such as Hunan TV and China Central TV.
China Lifestyle’s jelly market share is increasing. It reached 12% in 2006, compared with a mere 8% in 2005.
Working in tandem with the advertising and promotional blitzes are third-party distributors who display China Lifestyle’s snacks in over 20,000 hyper marts, supermarket and grocer stores throughout China.
In June this year, China’s No. 2 foreign hypermarket chain, the French-Taiwanese RT-Mart, began distributing China Lifestyle’s jelly desserts in its 68 outlets throughout China.
Kathy and Michael checked out China Lifestyle’s brand presence at two retail malls.
China Lifestyle Food & Beverages Group boasts a 12% share in China’s fiercely competitive jelly dessert market. Photo by Kathy Zhang
At a shopping mall in Quanzhou (Xinhuadu), Kathy observed that China Lifestyle’s jelly desserts were prominently displayed, with its own stand-alone loose pack promo counter right next to Guangdong Strong’s.
At a mall in Xiamen (Trust–Mart), however, the Labixiaoxin products shared only an eighth of a loose pack promo counter with Hsu Fu Chi jelly deserts. This was also the mall where Guangdong Strong rented space for its own counter. Competing dessert brands Qinqin, Want Want and Hsu Fu Chi were more prominently displayed than Labixiaoxin.
Continue reading here at Next Insight
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