Procter & Gamble delists! Former giant falls from grace, another storm unfolds!

One

There are no evergreen trees in this world, let alone an undefeated general forever.

Thirty years on the east side of the river, thirty years on the west side; enterprises also have their life cycles.

Breaking news just in: American fast-moving consumer goods giant Procter & Gamble (P&G) has been delisted from the Euronext Paris stock exchange! This once invincible Western champion in the daily chemical field is gradually fading into twilight!

P&G itself issued a statement saying that due to cost and management needs, coupled with low trading volume, it has requested to delist its shares from the Euronext Paris stock exchange, and the Euronext board has approved this request.

Yes, you read that right. Even the once flourishing and unbeatable FMCG giant P&G may be abandoned by the times.

Indeed, winter has come. The once giant P&G company is already on the path of decline. Its rate of decay is so fast that it catches everyone off guard, makes everyone anxious, and causes everyone to sigh in regret!

Ma Huateng once said: "If a giant fails to keep up with the times even slightly, it may fall. When a giant falls, its body temperature is still warm." This seems to be said for P&G!

Isn't such a painful lesson worth our vigilance?!

Two

When it comes to P&G, Chinese people are not unfamiliar.

This was once an incredibly impressive company. From a small candle-making workshop to the world's largest daily consumer goods company, P&G has a history of 182 years. It owns many products well known to the public, such as Rejoice, Tide, and Head & Shoulders. In 2008, its global sales once reached 83.5 billion USD.

Since entering China in 1988, P&G has been highly sought after in China. Rejoice, Olay, Pantene, Safeguard... these products opened the eyes of the Chinese people. It can be said that for many years, many Chinese people carried the scent of P&G products.

The Chinese market thus became a cash cow for P&G. P&G's market share in China once reached 47%, with hair care products exceeding 50%. Almost all well-known FMCG brands in the market were under P&G's brand umbrella.

However, as if overnight, this once invincible global FMCG giant owning numerous famous brands such as Rejoice, Pantene, Vidal Sassoon, Head & Shoulders, Safeguard, Crest, Tide, and Ariel is rapidly declining.

According to P&G's financial reports, since 2013, P&G's global sales have almost stagnated or even declined. In 2013, P&G's global net sales were 73.9 billion USD, but by 2017, it had dropped to only 65.1 billion USD, a year-on-year decline of 13%.

Especially in the third quarter of 2018, net profit dropped by as much as 40% year-on-year, which instantly shocked the FMCG circle and made many peers hear the sound of ice cracking!

In the Chinese market, P&G has encountered an unprecedented crisis. Its global CEO David Taylor even lamented helplessly: In China, our second largest market, not a single core category is increasing users, and most are even declining.

The movie "Youth" said: A generation's youth has passed, changed beyond recognition. Although they laugh as before, it is not hard to see the changes brought by time to everyone.

These words also seem to be said to P&G...

Three

Happy families are all happy in the same way; unhappy families are unhappy in their own ways. What is the root cause of P&G's misfortune?

In my opinion, P&G's downward parabolic trajectory in China mainly stems from a combination of favorable timing, location, and human factors.

1. Timing: From a seller's market with extreme material scarcity and weak competitors to a middle-class consumer era with abundant material goods, numerous competitors, and wolves surrounding, the rare opportunity for P&G's extensive large-scale expansion has passed.

In 1988, when P&G first entered China, it was the best era. At that time, China was in the early stage of reform and opening up, with severe material shortages and a seller's market; as long as there were products, there was no worry about sales.

Whether it was Rejoice, Olay, Pantene, or Safeguard and many other brands, they amazed the Chinese people at the time. Even with high prices, they were warmly welcomed by Chinese consumers, ushering in an unprecedented prosperous era.

Thirty years later, the land of China has undergone earth-shaking changes. In 2018, China's per capita GDP exceeded 10,000 USD, and China has entered the middle-income country stage. The era of extensive growth and scarcity has passed.

As the Chinese market matures, many local FMCG brands that were previously squeezed out by P&G have begun to exert strength and target P&G. In the toothpaste market, there are Yunnan Baiyao and Shuke; in the shampoo market, Lafang and Shulei; in soap brands, Liushen, Lux, and many others have surged forward.

Although they do not belong to the same group and cannot form a united force, under the siege of many competitors, P&G still finds it difficult to cope. Consumers' diversified choices have made P&G no longer irreplaceable, so its market decline is not surprising.

2. Geographical Advantage: With the advent of the Internet era, especially the rapid development of mobile Internet, e-commerce has ushered in a golden age. This has left Procter & Gamble, which heavily invested in offline channels, struggling and at a loss.

Originally, large daily chemical companies like Procter & Gamble mainly relied on department stores and supermarkets to sell their products. For example, they had long-term cooperation with Walmart. As Walmart expanded and opened supermarkets everywhere, Procter & Gamble's business grew with the store openings.

With these traditional distributor channels, Procter & Gamble could squeeze out other brands' survival space and occupy large-scale mall stores, leaving consumers with no choice.

However, with the arrival of mobile Internet and the boom of e-commerce, everything changed. Alibaba's philosophy of "making it easy to do business anywhere" built a "long tail" e-commerce platform that aligns with the shift in consumer mindset from scarcity to abundance. Personalized demands have been fully ignited, and purchasing behavior has become extremely fragmented.

For example, a young mother in a remote county joins an online community for trendy moms. Someone mentions a niche product from faraway UK or New Zealand. She searches on Taobao, and hey, there really is a purchasing agent. She places an order. Two or three days later, the product arrives.

All this is because of the Internet. Now, people no longer have to buy Procter & Gamble products only at large supermarkets; they take out their phones, click a mouse, and have unlimited choices.

Now is the era of B2C and also S2B2C, but the future belongs to the C2B era—producing according to consumer demand. All this is completely incompatible and very different from Procter & Gamble's DNA.

3. People: Procter & Gamble's reliance on traditional TV advertising can no longer reach the new generation of consumers, leading to brand aging and even becoming a "mom's brand."

Everyone probably remembers that Procter & Gamble used to be the king of CCTV advertising. Indeed, one of Procter & Gamble's most important marketing channels was TV advertising. Before smartphones became popular, this was a channel with very wide reach and high efficiency to contact consumers.

However, all this changed with the arrival of mobile Internet. Now, fewer young people watch TV, fewer people in big cities watch TV, and new media marketing has become popular, capturing most people's attention.

However, Procter & Gamble still continues with its inertia thinking, focusing advertising mainly on TV. Even when trying new media, it still cannot break out of the traditional TV advertising mold, drifting further away from young consumers' attention and gradually retreating from consumers' minds.

Over time, Procter & Gamble has faced a brand aging crisis and is considered by many consumers born in the 80s and 90s as a brand for moms. Some even feel:

Procter & Gamble is already an old brand, it feels like there are no new products. It's a brand I buy for my mom, and she likes it. We don't use it.

For the middle class with strong purchasing power but pursuing personalization, the once-ubiquitous Procter & Gamble brand has, to some extent, become synonymous with mediocrity and ordinariness. They prefer to choose small and beautiful brands that fit their personal image.

Facing the crisis, Procter & Gamble once frantically reduced its brands, trying to concentrate advantages and fight again. However, so far, these efforts have been ineffective, and Procter & Gamble's decline continues, likely following a further downward parabola!

Writing this, I can't help but sigh: the most important thing for a company is the strategic thinking and control ability of its entrepreneurs. This former fast-moving consumer goods giant, Procter & Gamble, failed to grasp the trend of mobile Internet development and the rise of China's middle class, and failed to turn the ship in time. It declined from prosperity in just a few years, which is truly lamentable!

Bless Procter & Gamble!

Four

This is an exciting era, full of countless opportunities that make people's hearts beat faster. A great brand is often created in an instant; it is also an era of risk, where unknown dangers make everyone shiver.

History always repeats itself astonishingly!

In July 2017, Belle announced its delisting, and the fundamental reason for the delisting was actually the same as Procter & Gamble's: aging matching and unchanging marketing. Belle's shoe sales mainly relied on offline stores during the booming development of e-commerce platforms from 2013 to 2016.

Belle did not expand on Tmall or JD.com but developed its own online mall. However, due to chaotic pricing strategies, the online mall once became a discount platform for clearing Belle's inventory.

Another example is the French brand Etam. In 1994, Etam entered China and opened its first store in Shanghai. Because design, production, and sales were all completed locally in China, many people thought it was a foreign brand acquired by a Chinese company.

The arrival of storms is like Peter Bernstein said in "Against the Gods": the rise or fall of enterprises, stock market booms or crashes, wars and economic depressions, all repeat in cycles, but they always seem to come when people are unprepared.

In such a world where rise and fall happen suddenly, mere survival may not be enough, or only persecutory paranoids can survive. Every entrepreneur must always be cautious, tread carefully, with adrenaline surging; must have only worry, only concern, only a sense of death.

Especially important is that entrepreneurs must clarify their positioning and emphasize the most important function: strategic thinking and control! They must focus time and energy on observing strategic trends, avoiding traps, seizing the era, retaining users, and promoting innovation.

A critical point in the development of an enterprise often comes down to just a few steps. One step forward leads to happiness, one step back leads to dusk. Whether to deviate or proceed correctly at this crucial moment depends on the entrepreneur's strategic thinking and grasp.

The era will abandon you without even saying goodbye!