By Jun Peng, Kauseway
Shanghai has officially entered lockdown mode from the end of March, and some compounds started even earlier. Food scarcity and supply chain challenges has been the hot topic in the media. Despite the unpleasant situation, what has this lockdown had of impact on the food sector and what will be the new norms for f&b companies operating in China after the lockdown? I had the honor to interview Søren Tinggaard, Danish Crown China VP, to share how they started and helped out compounds to get packaged meat supplies in Shanghai.
Background
In the early stage, because of the lack of supplies and delivery guys, many major online grocery buying apps went down, or were only open for order at a specific time of day and for limited numbers of orders. Thus, people set up different alarms and tried to be one of the first to place orders. Yet they could face “sold out” within just one minute, even though they woke up at 5am. It was not only about being the early bird, but also required good internet coverage and speed. This situation was certainly not desirable for elder residents, who do often not know how to order online. Thus emerged “Group Buying Masters” (团长) from each compound and building, among whom there were Daigous (代购）and Individual sellers on WeChat (微商), professionals working in retail or brands and those working in the top internet giants, e.g. Bytedance. People took autonomous initiatives to optimize each other’s resources to help themselves and neighbors with daily necessities. Some of these groups sell meat and eggs and some sell fresh vegetables and milk.
Due to uncertainty of what would be available through group buys, people stocked up and were more tolerant and welcoming for new brands, which they never tried before. This was a great timing for brands who were prepared to enter this vacuum. A great example is Danish Crown, a Danish leading food producer within to bacon, pepperoni, sausages and other ready meals, like Tulip Luncheon. Danish Crown China reacted fast when the lockdown was first introduced in Shanghai and immediately started delivering their products to different communities and compounds, helping thousands of households meet their meat demands.
The Interview with Søren Tinggaard, Danish Crown China Vice President
Q: How did Danish Crown start the group sales among compounds in Shanghai? What were the requirements and challenges when initiating such a delivery?
Søren: When lockdown started, our traditional B2B sales model was impacted due to the closing of restaurants and food shops, whereas at the same time we got inquiries from our Danish community in Shanghai asking whether we could deliver directly to them. We reacted fast and allocated internally our resources in terms of sales, customer support and logistics to adapt to the direct sales to the end users. Therefore, our products were introduced and expanded from one compound to another and the satisfied customers also introduced us to friends in other compounds and districts.
I would say that the biggest challenges for us were the changing restrictions or blocking in different streets, however we developed very good logistic partners in Shanghai before the lockdown and therefore they could make timely and safe delivery in a dedicated truck. All our products went through thorough disinfection against Covid all the way from Denmark to our Pinghu factory and to the end users, and there were traceable documents in each checkpoint. Another crucial factor when delivering meat products, was the packaging and cold chain management as some compounds may encounter delayed distribution to each household due to different check policies at the compound gate, therefore we made extra protection to make sure that the meat is delivered in customers’ hands freshly and we dedicated an individual label to each order, so that the compound management can easily sort them out to the right recipient.
Q: Has this group/community sales mode changed your perceptions of the Chinese consumers and your future sales strategy after the lockdown finishes?
Søren: This definitely got us re-thinking about our brand strategy. As a well-established brand in Denmark, Danish Crown has over 130 years of history, however the end consumers in China don’t know us, since we mainly sold through B2B partners in China. However, through the group selling mode, more new customers got to know us and we got surprisingly very positive feedback from them, which was also why we managed to expand from the small expat community to the local Chinese communities. Since we were able to talk directly to the end users, we engaged with them in a closer and more loyal way, e.g. to share various recipes on how to cook with our products and we also noted their preferences on type of products and flavors, which gives us first hand understanding of our end customers and their persona.
I would say that, when the lockdown is lifted, we will definitely adapt our sales and marketing strategy according to what we have learnt from this lockdown period. We will not change from B2B sales 100% to direct sales to consumers, however we will definitely increase our sales efforts on direct to consumers sales. The groups of consumers we have accumulated during lockdown will not be neglected and we will keep the relations with them and engage them for maybe new products launching, etc.
Q: What tools or platforms did you use to collect the orders for group sales?
Søren: We have PDF presentations and price lists for the regularly ordered products, e.g. bacon and pork, and we also utilize WeChat mini-program that is dedicated to group sales, even before the lockdown. This works very well as almost everyone in China has WeChat and is experienced in ordering online.
Q: What kind of advice will you give Danish and International food producers, who want to or are already selling in China?
Søren: In terms of volume, China is absolutely an attractive market for many foreign food producers, however the complexity of the market is also high. Therefore your successful experience back home may not work in China and you shall be open to try different models and sectors. In example, does the retail sector work well for you here just as it did at home? We also pivoted our approaches when it comes to strategy and target audience and now I can see that we will adjust again after the lockdown.
Secondly, you need to be online, and be visible to your consumers. A brand story and clear value proposition is crucial not only for food and beverage producers, but also to other sectors. How do your products and your brand differentiate from the other competitors? People are willing to pay a premium price when they know your values.
Finally, you need to act fast. Execution is key, especially for fresh food producers. The working and reaction speed here is fast as the consumers are used to fast order, fast deliveries. So prepare your team and logistics well for a rainy day.
Leave a Reply