In the first half of 2024, under the multiple influences of insufficient effective demand internally, differentiated economic operation, intensified geopolitical risks externally, and rising external uncertainties, the overall consumer market environment leaning weak is an unspoken consensus within and outside the consumer industry.

For consumer companies, a weak consumption environment is not a favorable survival condition, but that does not mean that the consumer companies in this situation do not have effective strategies to deal with it. In his work "Kaizen no Kagaku," renowned as Japan's "sacred operation," Inamori Kazuo, who has experienced multiple economic cycles, pointed out that the moment they enter a defensive state is the beginning of a company's decline. To avoid this situation, it is necessary to continuously explore new business areas and achieve success.

We can also glimpse the development concept from the continuously innovative leading daily chemicals company, Blue Moon (06993).

On August 22, Blue Moon disclosed its performance report for the first half of 2024. The financial report data shows that in the first half of the year, the company recorded revenue of 3.131 billion Hong Kong dollars, an increase of approximately 40.9% year-on-year; and recorded a net loss of 0.664 billion Hong Kong dollars. The reason for the loss was the company's persistence in "venturing into new businesses," during which the company vigorously promoted new products, expanded new e-commerce channels, and brand-building operations, leading to a significant increase in sales and distribution expenses.

By combining the evolution of Blue Moon's products, since pioneering the upgrade from 'powder' to 'liquid' category in the Chinese laundry detergent era in 2008, its pace of 'innovation' has never stopped. In 2015, it launched the 'Concentrated+' laundry detergent machine for washing, once again triggering a disruptive change from 'traditional laundry detergent' to 'concentrated laundry detergent' in the industry. Moving forward to August 2024, the company launched the 'All-in-One Supreme' new product during the Blue Moon Festival, further enriching the essence of the new era of laundry through the introduction of industry-leading products.

Whether in prosperous times or a downturn, Blue Moon's consistent innovation undoubtedly requires a significant financial and physical investment, which in turn puts certain pressure on the profit margin. However, from a long-term perspective, by continuously innovating to create more value for users, the industry, and society, as well as providing better cleaning experiences, it will further drive the company's long-term high-quality development.

Next, let's further explore the company's operating philosophy of how to achieve long-term development through the latest financial report and strategic actions of Blue Moon.

Behind the loss: "attacking" is more important than "defending."

Looking back at the domestic and international laundry detergent market in recent years, there is no doubt that the current laundry detergent industry is in a new consumer era of simultaneous consumption upgrade and capacity expansion, with high quality and high functionality requirements.

According to the "2022-2026 Laundry Detergent Market Status Survey and Development Outlook Analysis Report", from a global perspective, laundry detergent has a clear vertical iteration trend, and it basically follows two parallel paths: one is liquidation, the mainstream product "soap-powder-liquid" iteration, and continuous improvement of product performance. The second is concentration, with improved surfactant formulas and increased active ingredient content. Laundry aids mainly demonstrate multi-functionality to meet various sub-segment demands such as softening, fragrancing, deodorizing, and anti-static.

It is worth noting that the change and improvement in consumer perception not only bring new market opportunities to the laundry detergent industry but also mean that laundry detergent brands need to be at the forefront of the industry in order to continuously innovate with a forward-looking vision and seize the industry's development dividends with strong product power.

Blue Moon clearly "understands this well".

In 2015, Blue Moon took the lead in introducing the Supreme "Concentrated +" laundry detergent, promoting the industry's "concentration" transformation. In 2018, it further upgraded and launched the Supreme Bio-Technology laundry detergent to meet the diverse needs of users, continuously improving product effectiveness and enriching the product matrix. This year, at the Blue Moon Festival, the Supreme Bio-Technology laundry detergent (total cleaning) made a heavy debut. As a masterpiece of ten years of supreme product functionality, the all-round supreme new product dissolves in water upon contact, matching the 15-minute quick wash mode, achieving super cleanliness and no residue. In addition, it also has multiple stain removal, total cleaning, multiple odor removal, and 72-hour lasting fragrance functions, fulfilling the precise needs of different consumers in various laundry scenarios with one bottle.

It is worth mentioning that the Blue Moon Supreme Series laundry detergent uses a "concentrated+" formula, with up to 47% active ingredients, which is three times that of the national standard laundry detergent, thus bringing outstanding cleaning results. Based on the "concentrated+" formula, combined with more refined product features, the Supreme Series laundry detergent is an efficient and worry-free cleaning method, breaking the traditional laundry concept and leading the arrival of a new era of laundry.

However, for companies to achieve long-term sustainable development, it is not enough to have innovation alone. They also need to establish deep connections and communication with consumers and provide them with more experiences and knowledge.

This also means that while Blue Moon is ramping up its innovation, it also needs to increase marketing investment, cultivate consumer awareness, and strengthen its connection with consumers.

By sparing no effort to cultivate consumer awareness, this is also the reason why Blue Moon recorded a loss in the first half of the year.

Regarding the reason for the loss of profits in the first half of the year, Blue Moon explained in its financial report that it was mainly due to the increase in sales and distribution expenses caused by increased sales activities, especially in the business of promoting new products, expanding new e-commerce channels, and brand building.

Specifically, in the first half of 2024, in the face of changing consumption patterns and consumer demands, Blue Moon strategically adjusted the product placement and sales models on e-commerce platforms to reach more consumers effectively. For example, it increased marketing investment in live-streaming e-commerce, inviting top influencers to live stream and sell products. While reaching a wider range of consumer groups, it also achieved a significant increase in sales. According to data released by Blue Moon, the group ranked first in cumulative sales on multiple mainstream e-commerce platforms during the "618" shopping festival.

In addition to live streaming, Blue Moon actively reaches out to consumers through various marketing activities. For example, Blue Moon organizes events such as "Blue Moon Festival" and "Supreme Clean Journey", inviting consumers to exchange washing experiences face-to-face and experience the charm of the products firsthand. It is worth mentioning that on August 20th this year, during the "Super Moon" astronomical phenomenon, Blue Moon launched the "take a picture of the moonlight" activity on Weibo, Douyin, and other platforms, inviting consumers to take and share the most beautiful pictures of the moonlight, conveying their expectations for luck and further closing the gap between the brand and consumers. At the same time, during the live broadcast event with CCTV Super Brand Day, Blue Moon carefully created common laundry pain point scenarios such as dining, sports, and home, inviting the host Sa Beining to become the "clean experience officer", and together with consumers, they challenged stubborn stains from hot pot, the smell of sweat after playing basketball, and "invisible stains" in daily life, personally experiencing the charm of Blue Moon's "cleaning three treasures".

Therefore, because the investment at the current stage is greater than the current sales growth, it has led to a loss phenomenon in the first half of the year for Blue Moon.

In theory, as a leading company in the industry, Blue Moon should achieve steady growth in performance with the help of the Matthew effect. But why does it still spend a lot of resources and financial means to compress the profit margin?

Combining the content above, as the era of laundry detergent changes, consumer demand naturally cannot remain unchanged. Therefore, for Blue Moon, the answer lies in the fact that "offense" is more important than "defense".

Specifically, as the industry continues to change, product categories are also accelerating their innovation and upgrade. The development law of making a splash with a single move is no longer suitable for a more diversified and higher quality market trend. Under such development background, good companies find ways to meet user demands and gain good reputation, but successful companies find ways to create super products, lead the trend of the times, and achieve both reputation and profitability.

Therefore, even if cultivating a new market requires more "consumer education" costs, and it is even more difficult and risky than grabbing a share from the existing market, Blue Moon still spares no effort in cultivating new consumer markets and leading the development trend of the industry.

From the 12-year-long Blue Moon Festival, it can be seen that Blue Moon has patience and determination in market cultivation and layout. As an exclusive festival created by Blue Moon for consumers, Blue Moon continuously deepens its close relationship with consumers by imparting scientific washing knowledge and clean lifestyle, and continuously consolidates the market recognition of its brand and products. Recently, the 12th Blue Moon Festival has officially started. Blue Moon is partnering with CCTV Super Brand Day to launch a series of exciting activities, conveying the supreme cleaning principle to consumers, demonstrating the power of supreme cleanliness, and promoting a scientific, healthy, and clean lifestyle.

Behind the innovation: Anchoring the future growth of laundry

Of course, if we take a longer-term perspective, Blue Moon's continuous innovation and leadership in the industry trend undoubtedly involve more strategic considerations.

From leading the industry with the introduction of deep-cleaning laundry detergent to promote the leap from 'laundry powder' to 'laundry liquid', to overcoming technological challenges by introducing the first domestic concentrated + laundry detergent - Machine Wash Eternity, and then innovating and upgrading to launch Blue Moon Eternity Bio-Tech Laundry Detergent, leading the industry into the 'concentrated +' bio-tech era.

During this period, behind Blue Moon's continuous disruptive innovation leading the industry's new trend of development, the actual target is the considerable growth space of the new laundry liquid consumer market.

Take the rapidly growing takeaway market in recent years as an example. Before the emergence of takeaway platforms, the public did not have the demand to order food online, even if they did, users were not aware of it themselves. It was not until platforms like Ele.me and Meituan extensively promoted ordering food online, gradually cultivating the habit, forming a business + takeaway platform + user ecosystem, creating a new dining demand among users, and in this process, creating a huge industrial consumption chain - some data indicate that by 2027, the market size of the takeaway industry is expected to reach 1.9 trillion yuan, with a potential industry penetration rate of 30.4%.

Therefore, for Blue Moon, behind the new product iterations leading the industry's new trend of development lies a huge consumption space.

Relying on data. It is reported that before 2008, the public generally used laundry powder and soap, with laundry liquid accounting for less than 4%. Blue Moon quickly seized the market advantage with a deep-cleaning laundry detergent, ushering in the 'liquid' era of laundry in China. In 2011, in response to Chinese washing habits, they introduced special detergents for hand washing. In 2018, Blue Moon Eternity Bio-Tech Laundry Detergent was launched.

Starting in 2008, with the launch of laundry detergent in China, in just 4 years, Blue Moon's sales skyrocketed to 10 billion, with a market share across all channels reaching 24%, and driving China's laundry liquid penetration rate from 4% to 44%. The significant increase in penetration undoubtedly released a huge consumption space. According to Frost & Sullivan's speculation, from 2020 to 2024, China's laundry detergent industry will still maintain a high average compound annual growth rate of 13.6%. By 2024, the national laundry detergent industry market size will exceed 50 billion yuan.

Today, in the new era of laundry detergent - the trend of concentrated laundry detergent, there is also significant growth space.

According to the report by Huajing Industry Research Institute, compared to the penetration rate of concentrated laundry detergent in developed countries like Europe and the USA, the penetration rate of domestic concentrated laundry detergent in China is significantly lower. In 2019, the penetration rate of concentrated laundry detergent in the United States was 98.8%, while China's market penetration rate was only 8.2%.

And now, in the midst of the consumption upgrade, concentrated laundry detergent has become the trend. According to statistics, the market size of concentrated laundry detergent in China in 2019 was 2.231 billion yuan, with a penetration rate of 8.2%. It is estimated that by 2024, the market size will reach around 5.5 billion yuan, and the penetration rate will exceed 10%. Compared to regular laundry detergent, concentrated laundry detergent is more convenient to use and has higher cleaning efficiency, thus leading to a steady increase in penetration rate and still having great potential for the future.

Therefore, for Blue Moon, the current early strategic investment targets not only the company's product innovation, but also projects the future growth momentum of the enterprise.

Industry pioneers demonstrate responsibility and commitment.

In addition, in addition to anchoring future growth potential, the premium laundry detergent upgraded by Blue Moon currently also has some social significance and industry value.

Firstly, from an industry perspective, the small size of the premium product can help retailers reduce storage space, save transportation costs, increase shelf output, and match emerging channels such as e-commerce.

Secondly, on a social level, the premium product is more environmentally friendly, not only saving water and electricity, but also significantly reducing the packaging materials and overall carbon emissions used for washing. According to the evaluation of the China National Washing Products Industry Association, if Chinese consumers use concentrated detergents, it could reduce electricity consumption by 8.567 billion kWh, carbon dioxide emissions by 1.7472 million tons, and laundry waste water by 2.4211 million tons every year.

To sum up, in the trend of concentrated laundry detergent, Blue Moon's decision this time to sacrifice 'short-term profit' in exchange for 'long-term development' strategic layout, clearly demonstrates the company's foresight in strategy and its efficiency in execution as a leading enterprise.

To be more specific, Blue Moon's current early investment will also bring more development possibilities for the enterprise and the industry. First, looking at the industry development trend, Blue Moon's promotion of concentrated products and the construction of emerging channels are expected to help it become a leader in the concentrated era and shape the future growth direction of the enterprise for the next 5 or 10 years. Second, having the courage and confidence to bear the current losses also reflects Blue Moon's confidence and commitment as an industry leader, by sacrificing the company's short-term profit to bring a better laundry experience to more consumers and contribute to the industry's green development.

As the saying goes, "A wide view is suitable for taking in the scenery." Blue Moon, which is entering the "new business", deserves more expectations and attention from the market.