| Author of Entrepreneurship Frontline
| Editor by Wang Yajing
| Editor by Danzong
| Li Yufei
review | Songwen
If nothing unexpected happens, Blue Moon will end with a loss in the first half of 2024.
On July 16, Blue Moon issued a profit warning. is expected to record a comprehensive loss of approximately HK$665 million attributable to the company’s equity holders in the first half of 2024, with the loss amount expanding by nearly 300% compared to the same period last year.
The outside world did not seem surprised by this result. Wind data shows that Blue Moon’s stock price has risen for four consecutive trading days since the day after the profit warning announcement was released. Among them, on July 17, Blue Moon’s stock price closed up by more than 6%.
In fact, since its listing in December 2020, Blue Moon has experienced losses in net profit in the first half of the past three years.
From the first half of 2021 to the first half of 2023, the losses attributable to equity holders of Blue Moon were HK$43.937 million, HK$149 million, and HK$167 million respectively, and the losses were getting higher and higher.
Along with profits, the company's stock price has fallen. At the beginning of its listing, Blue Moon's market value reached a peak of HK$112.2 billion. However, as of the close of trading on July 30, its stock price was HK$1.99 per share, leaving a total market value of only HK$11.7 billion.
In less than 4 years, the market value has evaporated by more than 100 billion Hong Kong dollars.
What confuses the outside world is that Blue Moon, which has always firmly held the position of "the number one laundry detergent brother", how did it end up here? In the first half of this year, Blue Moon handed over a mixed report card.
From the perspective of revenue, all product categories of Blue Moon have recorded growth. Overall sales have increased by no less than approximately 38% year-on-year, and both gross profit and gross profit margin have increased.
(Picture / Blue Moon Announcement)
But the more it sells, the higher Blue Moon’s losses are. Blue Moon estimates that in the first half of 2024, it will record a comprehensive loss of approximately HK$665 million attributable to the company's equity holders, with the loss amount expanding by nearly 300% compared to the same period last year.
This is the lowest value since its launch in December 2020. The financial report shows that from the first half of 2021 to the first half of 2023, the losses attributable to the company’s equity holders were HK$43.937 million, HK$149 million, and HK$167 million respectively, and the losses gradually increased.
(Picture / Blue Moon Financial Report)
For the huge profit loss, Blue Moon attributed it to the increase in sales and distribution expenses caused by the increase in sales activities, especially the business of promoting new products, expanding new e-commerce channels and brand building.
Although Blue Moon has not disclosed sales and distribution expenses in the first half of 2024, over the years, this data has been "astronomical" compared with profits.
From 2021 to 2023, its sales and distribution expenses will be HK$2.392 billion, HK$2.651 billion, and HK$3.244 billion respectively, growing at a double-digit rate every year.
(Picture / Blue Moon Financial Report)
In fact, Blue Moon has been “burning money” on live broadcasts. For example, during the "618" period, Blue Moon invited a "top-tier" Guangdong couple from the short video platform to live broadcast the goods at Blue Moon's Guangzhou headquarters, and gave away Apple mobile phones during the live broadcast.Some media reported that a total of 5,000 Apple phones were given away during the live broadcast.
It has to be said that live streaming has indeed brought sales. According to Blue Moon, during the "618" Shopping Festival, the group ranked first in cumulative sales on multiple mainstream e-commerce platforms. In the first half of 2024, sales from new e-commerce channels will increase by approximately 4.5 times year-on-year.
But the capital invested is obviously more. Blue Moon admitted frankly that compared with sales growth, the growth rate of sales and distribution expenses is higher, which is also one of the important reasons for the group's profit losses.
In the opinion of Zhu Danpeng, a Chinese food industry analyst, Blue Moon’s products have good quality-price ratio, but the price-performance ratio is insufficient.
"When a company wants to complement its online and offline shortcomings, it is in line with demand to deploy e-commerce channels. However, e-commerce channels focus on cost-effectiveness and the prices will be more affordable, which will inevitably eat into profits." Zhu Danpeng said.
Even so, Blue Moon still thinks this is a meaningful thing. It said that the group increased sales and distribution expenses in the first half of this year to deploy online e-commerce platforms. This move will help consolidate its market position on e-commerce platforms and drive long-term sales growth.
If it continues to invest high sales expenses, resulting in high profits losses, will Blue Moon change its investment in online e-commerce? How much does the company plan to invest in online e-commerce?
In this regard, Blue Moon told "Interface News·Entrepreneurship Frontier" that the company has always adhered to the omni-channel layout strategy, continued to promote channel optimization in depth, and actively deployed emerging channels. In the future, the company will continue to adjust its channel layout strategy in a timely manner based on channel development and changes in consumer shopping habits, and continue to improve and optimize channel construction.
, Anxious "Brother No.1" trapped in laundry detergent
According to statistics from the China Federation of Commerce and others, Blue Moon laundry detergent has ranked first in the market share of similar products since 2009, and is known as the "Laundry Detergent One" elder brother".
But washing and care itself is an extremely involved track, including foreign giants Procter & Gamble (including Bilang, Tide, etc.), Unilever (including Omo, Jinfang, etc.), as well as Liby and Welu A series of domestic brands such as Shishi, Super Energy, Plant Care, and Vitality 28 are competing for this market.
In the laundry detergent track, there is no doubt about Blue Moon’s status. However, when the involution intensifies, even the giants are facing the crisis of retreating if they do not advance.
To be precise, Blue Moon’s scale growth is encountering challenges.
The financial report shows that from 2020 to 2022, Blue Moon’s revenue was HK$6.996 billion, HK$7.597 billion, and HK$7.947 billion respectively, and has maintained growth.
(Picture / Blue Moon Financial Report)
If it continued to maintain its growth trend, Blue Moon was expected to break through the HK$8 billion threshold in 2023, but unfortunately, Blue Moon fell 7.8% year-on-year to HK$7.324 billion this year.
Zhu Danpeng believes that from the perspective of the entire industry, channel, platform and consumer end, creating product differentiation is the key to Blue Moon's performance.
"Because comparing price, it must be because the product is not differentiated enough. If the product is highly differentiated, it is not comparing price, but comparing differentiation." Zhu Danpeng said, how to establish the advantage of differentiation , is one of the best directions for Blue Moon to ensure growth, maintain profits and manage market value in the future.
In fact, in the market, many brands have embarked on the road of diversification. For example, Liby has entered the fragrance industry and created products such as laundry beads and explosive salts. Velox has shampoo and shower gel. and other products, while Plant Care has created products such as tissue paper and wet toilet paper.
According to incomplete statistics from "Interface News·Entrepreneurship Frontier", from 2021 to 2023, in addition to continuing to increase the number of new laundry detergent products, Blue Moon has launched a no-wash antibacterial hand soap, washing machine cleaner and multi-purpose antibacterial liquid , a pure foaming shower gel.
Judging from the data, Blue Moon is still "trapped" in laundry detergent. ’s financial report shows that in 2023, Blue Moon’s revenue from clothing cleaning and care products will reach HK$6.501 billion, accounting for 88.8% of total revenue.
(Picture / Blue Moon Financial Report)
Strangely, Blue Moon did not even disclose the amount of investment in research and development. "Interface News·Entrepreneurship Frontier" combed and found that in the financial report from 2020 to 2023, when Blue Moon talked about research and development, it only stated that the group established an R&D technology center at the beginning of its operation and established Blue Moon Washing Research in 2015. Institute, which specializes in developing and evaluating laundry products and methods.
Today, the group focuses on dual-line research and development, including launching new products to meet consumers’ changing preferences and improving user experience, as well as developing and sharing scientific and practical cleaning methods with consumers. However, the data on R&D expenditures has never been available. disclosed in financial reports.
"Interface News·Entrepreneurship Frontier" tried to understand from Blue Moon why companies do not disclose R&D expenditure data? How many R&D personnel does the company have? What proportion of R&D personnel are focused on laundry detergent? Future R&D innovation strategy? Are there any plans to expand into products other than skin care?
Blue Moon only responded to "Interface News·Entrepreneurship Frontier" saying that the company disclosed information strictly in accordance with the requirements of the Hong Kong Stock Exchange. In the future, the company will continue to focus on product development in all categories, launch new targeted and functional products, and actively expand the market for personal cleaning care and household cleaning care categories.
