**: Wine industry reference.
*: 21st Century Business Herald.
Written on the front: After ten years, China's wine industry has once again ushered in a turning point in the cycle.
The liquor industry has been adjusting signals this year: ** upside down, high inventory, performance differentiation, stock price halving, and exhibition cooling are frequently staged, but industry leaders and strong regional brands are still growing against the trend and showing strong resilience. The beer industry continues to promote the process of high-end this year, but can the trend of high-end driving the beer industry continue?The cycle of domestic wine reduction continues, but towards the end of the year, imported wine is finally waiting for the good news that China and Australia have reached a consensus on the settlement of wine tariffs.
At the end of the year and the beginning of the year, the 21st Century Business Herald launched a series of articles, focusing on the most representative wine companies this year and dismantling the year of changes in the wine industry.
21st Century Business Herald reporter Xiao Xia reported from Chongqing.
Does Wuliangye raise the price?
It has been a month since the official announcement of Moutai's price increase, and whether the eight generations of Wuliangye will follow up is still the hottest topic in the industry, and channels, brokers, consulting companies, and industry leaders have made suggestions. Whether the price should be raised or not, both parties have given sufficient reasons.
The 21st Century Business Herald reporter learned from the channels close to the dealers that after repeated discussions in the past few weeks, the dealers as a whole gradually tend to raise prices, and the main ones who advocate price increases are big businessmen, but when and how much the price increase will be officially announced.
In the past decade, Wuliangye (000858SZ) adopts the following tactics, continues to upgrade its products, and has repeatedly increased the ex-factory price and guide price to align with the leader, maintaining a leading position in the industry. Despite the intensification of competition in the thousand-yuan belt in recent years, the share of the eight generations of Wuliangye still far exceeds that of its opponents.
Looking back on this year, Wuliangye has taken positive measures in product sales, brand building, overseas exploration, and terminal construction, especially through in-depth participation in a series of international and national events, and the brand proposition of "Great Country Strong Fragrance, Harmony Wuliang, and Chinese Wine King" has been promoted in recent years.
As expected by the management at the beginning of the year, Wuliangye's performance this year maintained double-digit growth, with revenue exceeding 62.5 billion yuan in the first three quarters, and it is likely to rise to another 10 billion yuan level throughout the year, becoming the second wine company in the industry with annual revenue exceeding 80 billion yuan.
However, under the trend of weakening as a whole, the strategy of maintaining growth in the liquor industry has further tilted from volume to price: liquor companies that have benefited from the structural upgrading of their products have generally grown against the trend this year.
Wuliangye, which has completed a round of product upgrades, is facing the test of volume and price: the eighth generation of Wuliangye is the absolute main force of revenue, and continuing to increase the volume will put pressure on the batch price, and controlling the volume is conducive to the brand and value, but to complete the "14th Five-Year Plan" goal of 100 billion yuan, it is necessary to maintain the stability of the volume. The debate of price increase: Wuliangye is the ceiling of high-end liquor.
The two views of different dealers on the price increase of Wuliangye have been reported by the 21st Century Business Herald before. Recently, a number of institutions have also joined in to improve the logic and effect of high-end liquor price increases.
According to the analysis of the recent research report of Huachuang** food and beverage team, the ex-factory price of high-end liquor is an important label of brand status, and the essence of wine companies competing to raise prices is also to compete for the brand order, and the terminal price is more affected by market supply and demand, and after the transition of the channel side and profit distribution, the ex-factory price change has a limited impact on it.
Meng Sishuo, chief analyst of Dongxing ** food and beverage, believes that the price increase of high-end wine companies is actually to break the current balance between wine companies and the market and create a new balance between supply and demand. Once Wuliangye and Guojiao take the lead in raising prices, it is likely that other mainstream liquor companies will follow, and the competition of high-end liquor will be balanced in the new market.
Wuliangye is more critical to high-end liquor than Moutai to some extent.
At the Chengdu Spring Sugar Conference in April, Wang Chaocheng, chairman of Shengchu Group, mentioned that this year's high-end liquor is under great pressure, one of the reasons is that it is subject to the ** of Wuliangye, and the change of Moutai ** has little impact on most liquor, and Wuliangye is the ceiling of 99% of China's liquor. ”
At the autumn sugar meeting in November, Wang Chaocheng talked about Wuliangye again, and proposed that Wuliangye needs to reduce the amount if the price is to rise, otherwise it will be difficult to break through the mainstream high-end products in the industry.
Wuliangye's leading position has been established in the first decade of the last century. In the 1990s, Wuliangye's sales revenue continued to lead the entire liquor industry. At the 50th International Statistical Conference held in 1995, the National Bureau of Statistics, the China Organizing Committee of the International Statistical Congress, and the China Technology Evaluation Center jointly awarded Wuliangye the title of "King of China's Liquor Industry".
In the 2000s, Wuliangye continued to lead the industry in terms of scale, and the launch of a large number of OEM products contributed to it. Although this kind of product brings volume, it dilutes the value of Wuliangye's main brand. At the same time, the early promotion of Wuliangye to the national commercial system, but also gradually hindered the terminal control of Wuliangye, coupled with the phased price increase was less than expected, Wuliangye was later surpassed by Moutai.
In the 2010s, Wuliangye continued to promote OEM products and maintain the value of the main brand. After 2017, the "second entrepreneurship" was launched, and the "100 cities, 100 counties, 100 stores" plan was launched to promote channel reform, reduce the dependence on large merchants, and put forward the "control and profit sharing" model to strengthen the control of the distribution system.
In 2019, Wuliangye saw the opportunity to launch the eighth generation of Wuliangye, completing another upgrade of its main products. In the past two years, after the new management of Wuliangye was in place, the ex-factory price and guide price of the eighth generation Wuliangye were promoted to be on par with Feitian Moutai, and by promoting direct sales and strengthening digital construction, it further strengthened terminal dynamic sales and increased profits.
In the first half of this year, Wuliangye's revenue from liquor products was close to 41.9 billion yuan, of which the revenue from the direct sales model was nearly 17.6 billion yuan, accounting for nearly 42%, and Moutai was in the lead. In the first half of the year, the top five distributors of Wuliangye accounted for less than 17% of the total sales, and their dependence on large merchants has been greatly reduced compared with previous years.
Based on the judgment that the share of the liquor industry will be further concentrated in the leading enterprises, Wuliangye has also adjusted its brand communication in recent years, and put forward the brand proposition of "Great Country Strong Fragrance, Hemei Wuliangye, and China Liquor King", emphasizing Wuliangye's long-term leading position in the category and industry.
Photo by 21 reporters) By maintaining high-intensity cooperation with high-end platforms, the high-end position of the Wuliangye brand has been further consolidated in the past two years. This year, Wuliangye continued to carry out marketing around international economic and trade events, cultural and sports events, and deeply participated in a series of international and national events such as the APEC Summit, the Boao Forum for Asia, the China International Import Expo, the Chain Expo, the world brand Moganshan University, the Universiade and the World Science Fiction Convention held in Chengdu.
Wuliangye has also reached an in-depth cooperation with CCTV and has become an important sponsor of this year's CCTV Spring Festival Gala and Autumn Gala. According to Wuliangye's announcement in May this year, it will continue to cooperate with ** Radio and Television Station in this year's power project and the Spring Festival Gala in 2024.
Products, channels, and brands work together, and the eighth generation of Wuliangye still maintains a dominant position in the thousand-yuan ** band, and the revenue of Wuliangye's main brand exceeded 67 billion yuan last year. Among the competitors, only Guojiao 1573 and Moutai 1935, which are expected to reach the standard this year, are more than 10 billion yuan, and thousand-yuan liquor such as Langjiu Qinghualang, Junpin Xi Wine, Nei Ginseng Wine, and Dream Blue M9 are generally still in billions or even billions of yuan.
According to Sheng Chu's report this year, the scale of thousand-yuan liquor is expected to exceed 150 billion yuan in five years, of which Wuliangye accounts for more than half. There is still room for structural upgrading of Wuliangye.
However, although Wuliangye is currently leading in scale, its growth has slowed down compared with the previous stage.
Since 2016, this round of liquor boom cycle has led to the intensification of competition in high-end liquor in recent years. However, at the same time, the overall scale of liquor consumption continued to decline, and the performance improvement brought about by the upgrading of product structure has become the main driving force for the growth of the industry.
Shanxi Fenjiu and Yingjiagong Liquor, which have maintained rapid growth this year, are such representatives, which are currently in the stage of leaping from sub-high-end to high-end, and there is still room for nationalization and sufficient growth potential.
Wuliangye has already achieved nationalization, and has maintained a large volume in the high-end ** belt, and the pulling effect of the upgrade of Wuliangye in the eighth generation has been released two years ago.
Anxin** research report believes that due to the limited profit of the channel, the current positioning of some dealers on the eighth generation of Wuliangye is mainly diversion products, seeking turnover rather than profit.
Moreover, due to the requirements of local performance growth, Wuliangye has also continued to increase its volume in recent years, and it is difficult to have the spare strength to open the price gap.
From 2020 to 2022, the sales volume of Wuliangye products will be less than 280,000 tons grew to nearly 330,000 tons, with sales of more than 2 in the first half of this year10,000 tons, a year-on-year increase of more than 15%, narrowing the gap with Moutai in terms of volume to a certain extent.
However, it can be seen from the development of Moutai in recent years that there is no room for further upgrading of high-end liquor. Kweichow Moutai still maintained relatively rapid growth last year and in the first half of this year, which is related to the upgrading of its product structure in two aspects
On the one hand, despite the limited production capacity of the main Moutai, in recent years, it has increased the ex-factory price in disguised form by increasing non-standard products and promoting direct sales, which has brought an increase in revenue and profits. Some research reports believe that in recent years, the proportion of non-standard products in Moutai's total revenue is expected to increase from 23% in 2020 to about 40% this year.
On the other hand, through the launch of new products such as Moutai 1935, Moutai has raised the ceiling of the series of liquor from the sub-high-end to the 1,000-yuan ** band, which has driven the rapid growth of the revenue and profitability of the series of liquor.
In recent years, Wuliangye has also been promoting the construction of a product matrix. The main brand of Wuliangye currently forms a "1+3" product pattern, in addition to the eighth generation of Wuliangye, it also includes the low-degree Wuliangye with a thousand-yuan ** belt, the classic Wuliangye with an ultra-high-end ** belt and the 501 Wuliangye with a price of 5,000 yuan. On the basis of the previous "4+4" structure, the strong fragrance series of liquor further focuses on the four national single products of Wuliang Tequ, Wuliangchun, Wuliang Alcohol and Jianzhuang.
However, at present, the main brand of Wuliangye still relies on the eighth generation of Wuliangye, and the first distinction between Wuliangye 1618, low-degree Wuliangye and other products and the eighth generation of Wuliangye has not been opened. The strong fragrance series of wine ** belt is mainly concentrated in the sub-high-end below 500 yuan, and there is a lack of a large single product that can enhance the ceiling of the series of wines.
During the China International Famous Wine Expo to be held in Yibin on December 18, Wuliangye Nongxiang Liquor Co., Ltd. will hold a new product launch conference, which is expected to further enrich Wuliangye's product matrix and brand system. If you can launch a large single product with a significant improvement, it can not only open up the upward space for the series of wines, but also ease the growth pressure of the main products.
In addition, Wuliangye will continue to promote the construction of channels this year, and plans to invest 200 million yuan in the construction of a number of fifth-generation stores with high quality across the country within two years to further complete the layout of terminals.
Perhaps, as the research report of Huachuang ** said, the current core is not how much ex-factory price is raised, but to further promote product diversification and channel flattening, so as to truly achieve the balance of volume and price of core products and operate freely.