Text|Alpha Workshop.01 Characteristics of failure Recently, in the 2024 liquor investment strategies released by major institutions, there is a consensus: the growth driver of the liquor market in the future will mainly come from the supply side rather than the demand side, and the trend of concentration in the head liquor companies is more obvious.
In the past decade, the concentration of the liquor industry has been increasing, and the CR5 market share of the top liquor companies (the top five companies) has increased from 20% to 43%. In the next ten years, GF's food and beverage team is expected to increase the CR5 share to 70%.
In essence, this is the result of the liquidation of small and medium-sized wine enterprises.
In the stock competition market, the overall demand growth rate of the liquor industry may decrease. "Supply-side reform" will be the main driving force for the next round of liquor bull market.
In this way, baijiu is far from reaching its "darkest moment". Who will be eliminated first in this race?
Successful wine companies are often similar, and unfortunate wine companies have their own misfortunes.
In the liquor industry, the successful experience of some brand liquor companies has become a lesson for them. After "pulling out the seedlings to grow" in a short period of time, all of them are declining revenues, shrinking scales, high inventories, and even "tripping" by former partners.
Looking at these misfortunes, we may be able to find some "characteristics of failure".
First, the huge reservoir of dealers supports the growth of performance. Relying on middlemen to "top up" rather than consumer recognition will only get rich on paper after all.
The second is to try to attract pick-up heroes with "unique means" other than conventional operations. Once the hope is disappointed, the whole plate will be disappointed, and it will encounter backlash.
The third is to become famous by virtue of marketing. Under the prestige, it is negligent to improve quality and consolidate reputation. The liquor is unstable, the quality is substandard, and even decays during the boom period of liquor.
02 The pain of distribution is well known, and in the past few years, alcoholic liquor (000799SZ) is growing rapidly, thanks to the large number of liquor products acquired by distributors.
However, in the first half of 2023, the sales revenue of the three main products of Jiujiu Liquor, the internal reference series, the alcoholic series and the Xiangquan series, decreased year-on-year. 46% and 7669%, showing a situation of both volume and price falling.
The cause of the difficult situation can be seen from the sales strategy of the high-end brand of alcoholic liquor.
Jiujiu Liquor has chosen the "manufacturer value integration model", deepened the collaboration with core distributors, and laid out the internal reference brands nationwide, relying on the hands of big businessmen with channels and resources.
On December 26, 2018, Hunan Ginseng Liquor Sales Co., Ltd. (hereinafter referred to as "Ginseng Sales Company"), jointly funded by more than 30 high-end liquor "100 million yuan (distribution) merchants" across the country, was established to undertake the sales of ginseng liquor. It is worth noting that among the shareholders and executives of the company, there is no alcoholic liquor company and related persons.
Alcoholic Liquor tries to change the synergistic relationship with its core distributors and give them more freedom.
For example, the drunkard sells the internal ginseng liquor to the internal ginseng sales company at the factory price, and the internal ginseng sales company sells it to the first-level distributor at a higher price. Dealers who participate in the sales company can benefit from the performance of the sales company.
Under this incentive model, big businessmen have taken goods and hoarded goods, and their enthusiasm is highWhile making the drunkard wine develop rapidly, it also buried hidden dangers.
After three years of frantic expansion, the consequences are finally visible: at the end of 2021, the advance receipt of alcoholic liquor was 13800 million yuan;At the end of 2022, the advance receipt payment is only 4300 million yuan, a year-on-year decrease of about 686%。Between 2019 and 2022, inventories of alcoholic liquor nearly doubled from 3,460 tons to 7,375 tons. This means that the unsalable terminal makes dealers reluctant to pay for the goods.
What followed was a sharp drop in the performance of drunkards.
According to ** report, at the beginning of its establishment, the goal set by the internal reference sales company was to "achieve 1.5 billion yuan in revenue in the Hunan base market in 2022, and complete 500 million yuan in the three base markets of Henan, Shandong, and Hebei markets respectively." ”
However, in 2022, the total revenue of internal reference wine will only be 115.7 billion yuan.
The performance is not up to standard is only one aspect, and the upside down of the batch and the channeling of goods between regions also plague the drunkards.
The retail price once hit 1499 yuan for a bottle of 52° ginseng wine, and the actual transaction price of e-commerce platforms and offline cigarette hotels has fallen to 820 yuan, which is lower than the wholesale price of 850 yuan.
In July this year, the ginseng sales company issued a notice to stop accepting sales orders for 52 degrees 500ml ginseng wine from now on. Wang Zhe, the former deputy general manager of the internal reference sales company, admitted, "Now more than 90% of the company's channeling, restocking, and low prices come from online, and it is very difficult to govern online."
What's more, such as the extensive and bold "big business model" of Jinsha sauce wine.
Under the boom of soy sauce and wine, from 2017 to 2021, Jinsha Liquor greatly increased its expenses, and through high rebates and subsidies, it drove dealers to frantically hoard wine and suppress goods. In just five years, Jinsha Liquor's sales have increased from 1500 million grew to 606.6 billion yuan.
It is not known how many of these goods are hoarded in the warehouses of distributors, but at the Jinsha Liquor Forum in November this year, Fan Shikai, a senior executive of the China Resources system who took over from the former chairman Zhang Daohong, revealed that Jinsha Liquor cleaned up more than 1 billion yuan of channel inventory in the first half of this year. In the same period, the revenue of Jinsha Wine was only 97.7 billion yuan.
In 2022, Jinsha Wine's revenue will be cut in half to 3 billion yuan, and the scale in the first half of this year will shrink by 70% year-on-year.
03 If it is said that the drunkard liquor and Jinsha Liquor use distributors to exchange goods for growth, Guotai Liquor is listed in failure, resulting in the price order being out of control and being eaten back.
Under the construction of Tianjin Tasly Group, Guotai Liquor has become the second largest soy sauce liquor enterprise in Moutai Town from an unknown small distillery, and has become one of the tens of billions of camps.
In 2017, Guotai Liquor was only 57.3 billion yuan, but in 2019, it tripled to 1.9 billion yuan, and it soared to 10 billion yuan in 2021 before applying for A-share listing.
The "first jump" in scale growth is not unrelated to the unique dealer incentives of Guotai Liquor.
In 2016, Guotai Liquor launched a plan called "Equity Incentive and Manufacturer Alliance", which aims to consolidate the benefit sharing between distributors and the company through equity incentives. Dealers can enjoy equity incentives when they get a certain amount of goods. Different from ordinary distributors, these big merchants not only take lower prices, but also hold shares in Guotai Liquor.
Between 2017 and 2019, the number of Guotai liquor distributors increased from 318 to 799. In 2019, the number of dealers holding shares in China and Taiwan reached 104.
There are two main aspects of the interests of dealers to join the alliance.
On the one hand, at that time, the terminal pricing of Guotai and national standard vintage wine continued to rise with the year, and dealers could enjoy the premium of inventory appreciationOn the other hand, Guotai Liquor was planning an A-share listing at that time, and once the listing was successful, the distributors who held the equity could make huge profits.
An industry insider once said, "There are many distributors who have no experience in the alcohol industry, and they are just a bunch of people who play with capital, and these people don't know how to sell alcohol at all." ”
The "benefit" strategy works. Guotai Liquor, which has entered the camp of tens of billions of wine companies, has also skyrocketed in valuation.
According to the prospectus, in November 2018, when Guotai Liquor was transferred for the last time, the company's overall valuation was only 4 billion yuan. In terms of the amount raised and the number of shares issued, if Guotai Liquor is successfully listed, the total market value after the issuance will be between 23.8 billion yuan and 25 billion yuan.
However, after submitting the prospectus in May 2020, Guotai Liquor received feedback on as many as 47 questions from the CSRC and withdrew its listing application in June 2021.
The expectation of listing was disappointed, coupled with the bursting of the "soy sauce and wine bubble", the dealers who hoarded liquor and gambled on the listing for cash, as well as the ordinary dealers who did not hold shares but took the goods relatively well, occupied a lot of funds and waited for the "unbundle".
The Economic Observer once reported that a Hubei dealer cooperated with Guotai for two years and took 6 million goods, more than half of which were not sold.
In order to alleviate the financial pressure, these distributors had to sell a large number of Guotai liquor, especially the shareholding dealers who took the goods at a low price, and the selling had a cost advantage. Under the pressure of low-price shipments from various channels, the relationship between manufacturers and distributors has become more and more tense due to the fact that the relationship between Guotai and national standard liquor has become more and more tense.
Taking Guotai national standard wine as an example, according to Sohu Finance, the official suggested retail price this year is 699 yuan, and the actual price in the store is 430 yuan, which is lower in Jingdong Guotai.
Henan is the key area of Guotai liquor. As of 2022, 30% of the 73 Henan Guotai distributors have terminated their cooperation with Guotai Liquor. According to ** reports at the time, after the 2022 dealer conference, there are still a number of distributors who plan to sue Guotai Liquor.
In the Chinese liquor culture, what is drunk on the table is the brand and the face is drunk. It's a looming rule of the game – *people flock to it;The more the price falls, the more no one cares.
For wine companies, if they cannot promote terminal sales, they can only promote market circulation through downward adjustment**. Although the inventory can be digested for a long time, after the collapse, the confidence of dealers is difficult to recover in a short time, and they are worried that they will become the last pick-up man.