Introduction: The future can't be **, everything is possible.
On December 9, at the 2023 Alcoholic Wine Conference, Gao Feng attended and delivered a speech for the first time as the Secretary of the Party Committee and Chairman of COFCO Wine Investment.
COFCO Wine & Spirits is a wholly-owned subsidiary indirectly controlled by COFCO, which holds the Alcoholic Spirits (000799SZ) has a 50% stake in Zhonghuang Company, which makes COFCO the actual controller of alcoholic liquor. At the level of corporate governance, the management team and decision-making power of alcoholic liquor are also mainly determined by COFCO.
Since 2015, when COFCO took over the company, the chairman of the board of directors has usually been a senior executive in the COFCO system. Before the peak, Wang Hao, secretary of the party committee, chairman and general manager of COFCO Liquor, also served as secretary of the party committee and chairman of the board of directors of Alcoholic Spirits.
Before Wang Hao served as the chairman of Jiujiu Liquor, his predecessor Jiang Guojin was also the "old man" of COFCO, who served as the managing director and executive director of China Food*** under COFCO, and the general manager of COFCO Meat Investment.
Gao Feng's sudden appearance, coupled with the fact that Wang Hao, who spoke at the Drunkard and Drunk Conference last year, failed to appear in the press release of this year's conference, which made the participants talk.
Thinking that this conference is considered by industry insiders to be a reflection conference, coupled with various events before the conference, the outside world is full of expectations for the next big changes in alcoholics.
For example, two months ago, there was a suspension of alcoholic liquor. Drunkard Liquor has announced that since October 10, the national market will stop receiving orders for "Drunkard" and "Xiangquan" series products.
As soon as this news came out, it attracted a wide response from the market. On the interactive platform of the Shenzhen Stock Exchange, some investors asked: After a year of strategic adjustment, the company has completely stopped the market to rectify the market after a year of C-end reform, have you ever thought about whether the plan is correct?
In response, the company said that the company recently stopped taking orders for the "drunkard" series of products, aiming to conduct a nationwide market combing and rectify the market order, which will further improve the market standardization, increase the product approval price, and boost channel confidence.
The shock caused by this incident is still fermenting and evolving, and COFCO Wine, the actual controller of alcoholic liquor, has ushered in a new "head" - it can be said that the current situation is difficult to describe, and the future cannot be **, everything is possible.
01 The bull market is running wild
In the 80s of the last century, Xiangxi artist Huang Yongyu named the drunkard wine and designed its outer packaging.
In 1998, the net profit of alcoholic liquor surpassed Moutai and ranked behind the champion Wuliangye. However, after experiencing the impact of the plasticizer incident in 2012, there were many twists and turns, and it was not until 2014 and 2018 when COFCO became the actual controller of alcoholic liquor that the company's performance became bright, turning from a loss to a profit, and once reached a new height. Nowadays, as the "No. 1 brand of Hunan liquor", drunkard liquor is one of the "business cards of Xiangxi".
In 2018, after Wang Hao became the chairman of Alcoholic Liquor, he led Alcoholic Liquor Company all the way forward and opened a "highlight moment".
Since joining COFCO in October 1990, Wang Hao has worked in the audit department of COFCO Corporation, the finance department of several subsidiaries, and the strategic planning department of the group.
Under his leadership, from 2018 to 2022, the sales of alcoholic liquor increased from 11$8.7 billion doubled to $40500 million yuan, and the stock price has also risen more than tenfold.
Coinciding with the 2018 liquor bull market, the team under Wang Hao's leadership, with years of experience in liquor management, focused on the new goal of "impacting tens of billions of sales" when the scale of alcoholic liquor had just reached 4 billion yuan.
It's just that the journey of 10 billion yuan has just started, and the situation has changed dramatically.
According to the third quarter report of Alcoholic Liquor in 2023, the company's main revenue is 214.2 billion yuan, a year-on-year decrease of 3854%；Net profit attributable to the parent company was 47.9 billion yuan, down 50 percent year-on-year75%。
Among the 20 listed liquor companies, the revenue growth rate of alcoholic liquor in the first three quarters ranked first from the bottom, and the net profit growth rate ranked second from the bottom.
In the first two years, the double growth rate of revenue and net profit exceeded 80%, and the drunkard liquor ranked among the "top students" fell to the bottom ranks.
One of Wang Hao's high-end routes for drunkard liquor is to build his high-end brand Nei Ginseng Liquor into the fourth high-end brand after Moutai, Wuliangye and Guojiao 1573. In 2019, the retail price of 52 degrees 500ml ginseng wine has risen to 1,499 yuan.
He also said that COFCO's positioning for alcoholic liquor is the whole country, and it is impossible to only focus on the Hunan market.
Such a grand plan, in addition to those who dare to stock the strength of dealers, downstream consumers are not willing to pay. In the first three quarters of this year, the sales expenses of alcoholic liquor reached 63.9 billion yuan, accounting for 29 percent of its revenue85%, ranking second among 20 wine companies. In terms of quarter-end results, the high investment in brand publicity and promotion expenses did not bring the same proportion of returns.
Especially after the liquor industry has entered the adjustment cycle, the reservoir of distributors seems to be full.
From the indicator that reflects the dealer's purchase order - contract liabilities, it can be seen in general. The rapid reduction of contract liabilities often means that dealers' purchase orders shrink dramatically.
At the end of 2021, the contract liability of Alcoholic Liquor was as high as 13800 million yuan. In the first quarter of this year, that number plummeted to 3700 million yuan, as of the end of June this year, although the contract liability has rebounded to 44.8 billion yuan, but a year-on-year decrease of nearly 20%.
Right now, drunkards are struggling to "survive the winter".
02 Value remodeling
In-depth analysis of the dilemma faced by drunkards, there are several major problems in front of us.
Most obviously, there is frequent leadership turnover, which can affect strategic coherence.
On September 1, 2017, Jiang Guojin was re-elected as the chairman of Alcoholic Liquor, but resigned half a year later, and Wang Hao took over as chairman. In the last month of 2023, COFCO Wine, the actual controller of alcoholic liquor, ushered in the peak of the new chairman.
In addition to the chairman, the position of general manager of the company, which is mainly in charge of management, has also undergone frequent changes. On April 23, 2020, Dong Shungang, then general manager of Alcoholic Liquor, resigned. On the same day, Cheng Jun was appointed as deputy general manager, exercising the functions and powers of general manager, and concurrently serving as chief financial officer.
In August 2021, Cheng Jun, who had only been in office for more than a year, resigned. The drunkard also appointed Zheng Yi, the former vice president and general counsel of COFCO Wine & Spirits Investment, as the general manager.
Every time the drunkard changes leadership, the marketing strategy changes accordingly, and the distributors and salespeople have to actively adjust to adapt.
And distributors are also one of the important challenges faced by alcoholics.
"Pressing goods" is an open secret in the liquor industry. Pressing goods refers to the manufacturer's preferential policies to stimulate dealers to cooperate with more goods. However, many of the phenomena of overdraft are at the expense of overdraft market demand, overdraft inventory capacity and even overdraft dealers.
At the end of 2019, there were only 528 liquor distributorsIn the first half of 2023, it surged to 1,774, an increase of more than three times.
These distributors have become the "reservoir" of alcoholic liquor, and have made extraordinary contributions to the vigorous growth of alcoholic liquor in the vigorous development stage of the liquor industry.
Nowadays, some dealers have high inventories, and it is difficult to bear the heavy financial pressure brought by warehousing and payment tasks, and they urgently need to withdraw funds, resulting in price reduction sales and "fleeing goods" chaos.
On April 19 this year, Hunan Internal Ginseng Liquor Sales Co., Ltd., a subsidiary of Alcoholic Liquor, issued the "Notice on Strengthening the Order of the 52-degree Internal Ginseng Liquor Market", which will deduct the quota in the plan by 5% of the contracted amount once it is verified that the goods fleeing and low-price sales will be confirmed.
It can be seen from this notice that the drunkard has made up his mind to strictly investigate the internal reference liquor channeling, and takes individual illegal dealers as a typical "knife".
According to Hexun.com, in mid-October this year, the internal reference **once amounted to 760 yuan per bottle. Recently, the wholesale price of dealers is 850 yuan per bottle, and an e-commerce platform is only around 820 yuan for a single bottle, and the membership discount is even lower. The suggested retail price of high-end wine is 1,499 yuan, which is much higher than the actual selling price of about 800 yuan online and offline, and the actual payment price of 850 yuan for wholesalers.
Compared with the decline in revenue and net profit, what is more worrying is brand reputation.
The price of alcohol is easy to fall and difficult to recover. Once the ** collapses, the image of the internal reference brand will also be seriously impacted.
At present, it is difficult for the internal reference to rebound in the short term, and the possibility of challenging the high-end wine market again is very small, and the only way to restart the market is to rely on new products.
At present, the drunkard is launching new products, trying to open up the market through the upgrading strategy of internal reference wine - internal reference "Jiachen version".
Xu Liyang, general manager of the internal reference liquor sales company, revealed that the listing of the Jiachen version, as the "only core strategic product" of the internal reference liquor brand, is by no means a simple product upgrade, but means that the marketing of the internal reference liquor brand is reconstructed and the value is reshaped: "We will rely on the Jiachen version to create the core single product of the internal reference liquor." ”
The cultivation of new products is a long process, which requires the accurate positioning of the brand and the best products, and wine companies must also focus on investing a lot of resources.
On the basis of these two, the cultivation of consumer cognition also needs a process. Among them, how to make full use of resource investment in dealer expenses is particularly important. Under the current headwinds in the liquor market, it is difficult to predict whether the internal reference liquor will bring the alcoholic liquor on the track of positive development with the "counter-cyclical" of new products.
03 Reflection Conference
At this drunkard wine and rich conference, Gao Feng appeared for the first time as the chairman and secretary of the party committee of COFCO Wine & Spirits Investment and delivered a speech. General Manager Zheng Yi counted the top pressure that alcoholic liquor will face in 2023. The industry joked that it almost became a "reflection conference" for drunkards.
The courage to face up to the shortcomings and mistakes of the past and the courage of the drunkard to face the problem frankly is worthy of recognition. This also marks that the drunkard takes the initiative to change and tries to save himself from the predicament.
With the appearance of the peak, several ongoing initiatives of alcoholic liquor have attracted attention:
The first is a shift in the way marketing is done. In order to ship, the rebate discount given to the dealer by the drunkard in the past has now been changed to a code scanning reward to stimulate the opening of the bottle. This is actually a part of the rebate to the dealer and passed on to the end consumer.
According to the introduction of the Drunkard Liquor Conference, in 2023, the investment in the C-end of the alcoholic wine will increase by 10%, the opening of the bottle and the scanning of the code will increase by 91%, and the change of the lid will increase by 51%. The winning rate of "One More Bottle" has increased from 5% to 10%, and there are a series of changes such as cash red envelope rain and QR code scanning points.
Although all major wineries are currently carrying out digital marketing and terminal rebates, Jiujiu Liquor has promoted the linkage between the B-end and the C-end through the cost reform, superimposed on the low base effect, which is expected to bring about a rapid increase in dynamic sales.
Second, drunkard liquor began to focus on Hunan Province. Previously, sales in Hunan Province were operated independently by large distributors, but now the drunkard has established a Hunan business department, implemented a channel sinking strategy, established a sales network in the towns and villages of the province, and is committed to expanding the Hunan base market.
Hongtan 18, a large single product exclusively sold in Hunan Province, has achieved an all-round growth in bottle opening, banquet sessions, core terminals and products. Hongtan 18's bottle opening and scanning code has increased by 700%, and strives to become the preferred brand for Hunan banquets in 2-3 years.
Last but not least, the management of Alcoholic Liquor said that in the future, the internal ginseng liquor will be committed to creating core products.
Zheng Yi believes that as a representative of the fragrant type, the internal reference wine has unique advantages in the category. The 52-degree internal reference "Jiachen version" will become the only core product of the internal reference series, accounting for more than 60%. At the same time, the drunkard also plans to bring the Hongtan series of products to the market, increasing its proportion to more than 30%.
There are seven main aromas, including strong aroma, light aroma and sauce aroma, as well as other aromas such as honey aroma and herbaceous aroma. In 2021, Futuxiang wine has become the 11th national standard flavor type, ranking after strong aroma, sauce aroma and light fragrance.
The strategy of core large products is the key factor for whether the alcoholic liquor can expand from a well-known local liquor company in the province to the whole country.
In this regard, Zheng Yi also expressed his position at the meeting - "Never expand sales through large-scale product development, never reduce brand positioning for sales, never reduce quality for sales, and never sacrifice price for sales." ”
Perhaps, the drunkard's plan is in the long run. In order to maintain the brand power of alcoholic liquor, we do not blindly pursue performance growth, but pursue growth based on dynamic sales. It should be said that the drunkard's problems for the enterprise itself are clear, and the attitude is also pragmatic.
Of course, the above problems are only exposed to the public eye, and they are discovered. How to optimize the internal organizational structure, whether the division of rights and responsibilities is clear, how to implement the cost investment, personnel management and other aspects are the factors that really play a decisive role.
The management is honest in its reflection, but the adjustment is not done overnight, and the process is even quite painful. The soy sauce wine has entered the adjustment period since 2020, and it has not yet been completed, and it is also known that it will continue until the middle of next year.