Reporter Wu Xia
The imbalance between supply and demand, overcapacity, slow sales, and high inventories are impacting the entire liquor market. According to the data of the "2023 China Liquor Market Mid-term Research Report" released by the China Liquor Industry Association, from 2018 to 2022, the number of liquor enterprises above designated size in the country dropped from 1,445 to 963, and the output dropped from 13.58 million kiloliters to 6.71 million kiloliters. Wine is becoming more and more difficult to sell, and the competition is intensifying, and the traditional enterprise information is redundant and the inventory is not transparent. In the face of various problems, Kweichow Moutai, Wuliangye, Yanghe and other leading liquor companies have joined the digital army, and liquor chain platforms such as 1919, Jiuxian.com, and Jingdong Liquor World have poured into the new retail track.
A new stage - the industry has entered a period of stock competition
For a long time, the natural advantages of high repurchase, high gross profit and high brand premium have made the liquor industry develop rapidly. According to data released by the National Bureau of Statistics, from 2002 to 2011, the revenue of China's liquor industry increased from 49.6 billion yuan to 374.7 billion yuan, achieving a nearly sevenfold growth. However, with the intensification of competition, the increase of industry concentration, and the adjustment of consumption structure, the era of thousands of horses running together no longer exists.
Data shows that in 2022, China's liquor production will be 67120,000 kiloliters, down 6 percent year-on-year20%。2023 is also not optimistic, from January to July, China's liquor production will be 23670,000 kiloliters, down 13 percent year-on-year3%。The industry has entered a period of stock competition, external consumption has declined, and the internal industrial chain is also coping with challenges.
The liquor industry chain includes three links: upstream, middle and downstream. The upstream covers the production and leading merchants of raw materials and packaging materials, the midstream is the liquor production and manufacturing link, and the downstream is the liquor sales chain, including distributors and self-operated direct sales channels.
In the upstream sector, liquor companies are facing challenges such as cost pressure, production instability and increased procurement risks. In the midstream, with the expansion of market size and product categories, problems such as low production efficiency, insufficient production capacity, unstable production quality, unclear production planning, and slow production line switching have become pain points faced by the manufacturing side. In the downstream link, the development of e-commerce has had an impact on both enterprises and distributors.
It is important to note that, unlike other industries, distributors are crucial for liquor companies to build their value chains. According to the financial report, as of the first half of 2023, the total number of distributors of 20 listed liquor companies is close to 520,000 (excluding rock shares). Among them, Laobai Dry Liquor, Yanghe Co., Ltd. and Zhenjiu Lidu ranked the top three with 11,296, 8,461 and 6,898 respectively, and the sum of the number of the three dealers exceeded half of the total, which shows the importance of dealers to wine companies.
Some experts pointed out that in the period of rapid development, good cooperation with distributors can not only reduce the sales burden of wine companies, but also save the cost of sales. However, when the market is sluggish, over-reliance on dealers will lead to the problem of upside down, which will affect the brand's own system. From the dealer's point of view, due to the lack of direct market-oriented demand data, resulting in high inventory and a significant increase in financial pressure, will hinder the healthy circulation of the entire chain.
Digitalization is an inevitable choice for wine companies to reshape the ** chain
In order to cope with the above problems, a number of leading wine companies such as Kweichow Moutai, Wuliangye, and Yanghe have already joined the digital army.
As early as the end of 2017, Kweichow Moutai proposed the "Smart Kweichow Moutai" project, which aims to fundamentally solve the problems of information islands, information barriers and inefficient chain management within Kweichow Moutai with big data analysis and application as the core.
In the second year of the project, Kweichow Moutai launched a raw material chain system, which reduced the process of purchasing raw materials from farmers in the past and greatly improved the efficiency of raw material procurement.
In the next five years, "Smart Kweichow Moutai" has built a series of digital management platforms such as the marketing management system of the joint-stock company, the terminal channel management system of Kweichow Moutai, the centralized procurement management system, the material management system, and the packaging production plan management system, which have effectively improved the internal chain and marketing management informatization capabilities of the enterprise.
Faced with the dilemma of a disproportionate proportion of distribution, Kweichow Moutai launched a direct sales digital platform - i Moutai in 2022.
In 2023, Kweichow Moutai will launch the "Xunfeng Digital World" APP, focusing on the virtual scene side, using the digital world model to allow users to deeply participate in the Moutai brewing project and attract young consumer groups.
Continuous digital innovation has enabled Kweichow Moutai to occupy the top 1 position in the market value of liquor in recent years.
Wuliangye, the "handle" of strong flavor liquor, is to build smart stores, open up the digital construction of channels, and optimize the new retail Internet direct sales system by using first-class direct sales channels. At the same time, Wuliangye also relies on the digital marketing system to make production, warehousing, logistics, terminal sales, terminal product inventory, merchant payment, order production and other links completely visualized.
With the help of new Internet technology, Wuliangye has realized all-round changes in the upstream chain, production, management and marketing, and successfully transformed from a traditional to a modern digital enterprise.
Yanghe shares have long been aware of industry problems such as inventory backlog, chaotic prices, and goods channeling, and started channel digitalization in 2013.
Through years of construction, dealers can use the digital system to manage 50 terminal stores at the same time, and more efficiently carry out terminal store expansion, inspection, distribution and dynamic sales. At the same time, using the developed "one thing, one code" applet platform, Yanghe can track and trace the production, quality inspection, logistics and terminal consumption of each product in real time.
In the face of the current channel network composed of more than 8,000 dealers and five or six hundred thousand terminal stores, Yanghe can achieve complete transparency in the flow of goods and efficient management of incoming and outgoing pallets.
Nowadays, with the digitalization of the first chain, the leading wine companies have been at the forefront in terms of operational efficiency and cost. For small and medium-sized enterprises that want to survive and differentiate themselves in the industry for a long time, it is an inevitable choice to accelerate the digital construction of the first chain and realize end-to-end remodeling.
New Retail – A New Space for Dealers
In China's liquor market, tobacco and liquor mom-and-pop shops are one of the traditional distribution models, and then physical channels such as liquor industry chains and hypermarkets were born. With the outbreak of the Internet economy, alcohol e-commerce has become the new main channel, but due to the characteristics of online transparency, low profitability and difficult development, it only occupies 35% market share. In order to tap new increments, a number of liquor ** chain platforms such as 1919, Jiuxian.com, and Jingdong Liquor World have poured into the new retail track.
New retail, that is, a platform that can combine online and offline, traditional companies and Internet companies.
1919 was the first batch of new retail models in the wine industry, and in 2007, the founder Yang Lingjiang innovated the first wine ordering service, becoming the earliest prototype of new retail. In 2011, 1919 opened the curtain of e-commerce business, combining online and offline integrated operations. With the new retail operation model, in 2014, when many dealers' inventory was facing a backlog, the 43 old stores in 1919 (stores that have been open for more than one year) still had a growth of 40%-70%, which is enough to prove the strong vitality of the new retail model. Today, 1919 has become a direct supply platform for liquor integrating several major businesses such as e-commerce, chain management, chain management, urban distribution and warehousing, data marketing and information technology.
Jiuxian.com has become the head of China's liquor vertical e-commerce before trying the new retail model. In 2017, there were only 3Influenced by 5% of the industry share, Jiuxian.com tried a new retail model in Beijing, using the whole process logic of Internet online ordering, offline distribution, online drainage, and in-store experience, and Jiuxian.com's revenue reached 6 million yuan in the first year, and at this time, the average annual income of liquor retail stores was 3 million yuan. At present, Jiuxian.com has formed a new retail mature model composed of WeChat community matrix drainage, classified product system, intelligent Internet management and "five free service" experience design.
Founded in 2022, Jingdong Wine World is different from the development path of transforming from a traditional distributor to a new retail platform in 1919, JD Wine World has built a nationwide alcohol retail service system based on the ** chain and supported by physical stores. Liu Jun, CEO of Jingdong Wine World, has publicly stated that the supply system of Jingdong Wine World is difficult to replicate on other platforms, mainly through a fully closed logistics system and blockchain traceability technology to realize the visualization of one goods and one code of goods and circulation. In addition, in terms of the integrated operation mode of online and offline, Jingdong Wine World is very flexible, able to quickly respond to user needs through online orders, and at the same time, it can also provide services such as ready-to-drink experience.
Nowadays, in the context of the impact of the traditional dealer model, the combination of online and offline new retail is one of the ways for dealers to alleviate inventory pressure. At present, the wave of "Internet +" is sweeping, and emerging circulation platforms are rising rapidly, with the help of new technologies and new models, many traditional obstacles have been broken through, and a new ecology of production and marketing has been built. In the eyes of industry insiders, digital and intelligent marketing plays a key role in the new retail field of the liquor industry. With the continuous development and application of big data technology, new liquor retailers can better understand market trends, consumer needs and behaviors, so as to formulate more accurate marketing strategies, and it is imperative to develop a digital and intelligent chain of liquor industry.