Maxwell insists that it is difficult for a single product to turn around and the countdown to factory closure in China has entered.

Closing the factory to reduce fixed cost

No. 3 Jiaoyuan Road, Guangzhou is Maxwell's only production factory in China. Now there is no longer the original hustle and bustle, and it is difficult to find the original international coffee giant.

In July 2015, the "owner" of this factory has just changed from Mondelez International to Guangzhou Zhenyin Coffee Co., Ltd.

Although Maxwell was once one of the four largest coffee manufacturers in the world, the fate of being spun off by the group last year made the industry not surprised by the plan to close the factory. "it wasn't built in a day."

In 1985, Kraft Foods, the registrant of Maxwell's trademark, came to Guangzhou with a world-class coffee production line-Kraft Guangtong Food Co., Ltd. (hereinafter referred to as "Kafu Guangtong"), and the factory was officially put into production in 1987. Since then, it has been expanded on a large scale due to the growing demand for Maxwell coffee. The new Kraft Guangtong began operation in 1997.

Kraft Quantong may be confident about the expanded plant, but its market share gap with Nestl é is growing. Even compared with Kraft's other brands such as biscuits and fruit juices, Maxwell's performance always seems to be difficult to break through.

In 2009, Maxwell was rumored to be "for sale", although its officials came forward in time to clarify, but this step seems to have only been delayed.

In 2012, Kraft Foods split its snack business for the global market into Mondelez International. Two years later, Maxwell was spun off in the coffee business integration between Mondelez International and Aikon Holdings Pte Ltd. Data show that the integration of Mondelez International will indirectly acquire up to 49% of the shares in the new company and $5 billion in cash.

"obviously, integration has not improved Maxwell's situation, profit growth is still difficult to maintain the operation of Chinese factories, and the increase in fixed costs has become a bit of a chicken rib, but it still chooses to abandon the factory after all. but it can still sell imported products through existing channels." Zhu Danpeng said.

Stick to the single product and miss the opportunity

With similar positioning, similar pricing and similar packaging, in the heyday of instant coffee, Maxwell and Nestle coffee always appeared on the shelves accordingly.

Maxwell and Nestl é, which also entered the Chinese market in the 1980s, were originally evenly split in the market, but the gap became apparent at the beginning of the 21st century.

Public data show that by 2004, Nestl é had gained 70% of the market share of instant coffee, while Maxwell's market share was just over 10%. In the following decade, this figure did not have too many ups and downs.

If you make one wrong move, you will lose the whole game. For Maxwell's defeat, a number of experts told reporters that this has a lot to do with its product strategic planning.

Ma Lei, a beverage observer, said in an interview with reporters at Rule of Law weekend: "Coffee is a pillar product of Nestl é, while Maxwell is only a low-range product under Kraft Foods."

Although Kraft Foods is in the vanguard of entering China, there is a big gap between Kraft's investment in Maxwell and Nestle.

Nestl é has its own complete marketing system in China, while Maxwell mainly relies on dealers to operate. Just from the initial investment in the market, Maxwell is not nearly as good as Nestl é. Due to the misestimation of the Chinese market, it is no longer surprising to miss the initial opportunity. " Zhu Danpeng said.

In addition, in the development of China's coffee market for nearly two decades, "Nestle Coffee has been closely following the upgrading of consumption, from ordinary brewing to coffee companions, liquid coffee, and then to filling and glass bottles." Maxwell always revolves around instant coffee. " Ma Lei said.

Ma Lei also pointed out: "in fact, although it has been spun off from Mondelez International, sticking to the category is almost a common problem of Mondelez brands, which is also one of the reasons for the poor overall performance of Mondelez International brands in recent years."

Instant coffee besieged and suppressed

Although Maxwell has maintained his share in the instant coffee market, the impact on China's instant coffee market has obviously become the "last straw".

Public data show that in the past five years, the market share of instant coffee has dropped from 80.7% in 2009 to 71.8% in 2014, and will continue to decline, according to forecasts, by 2019, the market share of instant coffee will fall to 66%.

Nestl é is also affected. In February 2015, nearly 400 tons of unexpired Nestl é coffee was destroyed in Dongguan, Guangdong, with a market value of nearly 10 million yuan. Nestl é officials responded that the move was to keep products fresh and destroy stocks.

Similarly, Maxwell's plight is more imaginable.

In contrast, the market share of instant coffee and freshly ground coffee is expanding. In the past five years, the freshly ground coffee market represented by Starbucks and COSTA has grown by more than 38.6%, far exceeding the 13.5% growth rate of instant coffee.

Mintel's consumption report points out that this is also due to changes in consumer habits: "with the development of the emerging middle class, their retail-focused spending will be extended to the leisure economy. In China, we have also seen cafes flourish to compete with foreign brands. "

"although instant coffee has been affected as a whole, the coffee market is also polarized in the slow growth. Both instant coffee and coffee shops have corresponding room for growth, while canned coffee has been weakened. But in the limited instant coffee market, more and more new brands are entering China. " Zhu Danpeng said.

On the other hand, Maxwell's official response indicates more expectations for the Chinese market: in order to promote growth and create long-term value in Asia, it will form a strategic partnership with Chinese investment fund company Hillhouse Capital Group, and appoint Beatrice Chan as the company's general manager for Greater China, fully responsible for the new company's integrated retail and professional channel business, in order to have a larger market in China.

However, people in the industry are not optimistic about this.

"after closing the factory, it is even more difficult to have room for market development." Ma Lei said.

Zhu Danpeng said: "although the original dealer channel can still be used after switching to imported products, closing the factory is a serious blow to confidence for dealers who are already in a wait-and-see state. It is hard to imagine that a brand that cancels factories in China will develop better than before."