If you want to hurry, you can't reach it, and practice internal skills in the cold winter!
Author: An Ning.
Editor: Mondo.
Wind: Rocks.
*: Rhodium Finance - Rhodium Finance Research Institute.
Sailing on the sea depends on the helmsman, and changing the commander is like changing the knife.
Since February 2024, the liquor industry has frequently broken out the news of changing the commander, first Jinsha Liquor, Jingzhi Liquor, and then drunkard liquor.
On the evening of February 23, 2024, the board of directors unanimously elected Gao Feng as the chairman and Zheng Yingnan and Zheng Yi as vice chairmen.
As soon as the news came out, investors in the secondary market called for "peak peak and new peak", "new year and new atmosphere"...
Behind Yin Yin's expectations, there is the embarrassing urgency of the performance stock price falling into a trough, the stock price will fall by more than 45% in 2023, and the market value will shrink by more than 20 billion yuan. In the first three quarters, revenue and net profit declined respectively. 75%, the worst performance in the past 7 years.
It is said that newcomers have a new atmosphere. The above pressure has reached the peak of the "new handsome", can it be reborn in 2024?
Frequent changes of coaches and then welcome veterans of the "COFCO Department".
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According to the announcement, Gao Feng joined COFCO ** Development Company in April 1996 and is a veteran of the "COFCO Department".
According to the International Financial News, as early as December 2023, at the "Rich Conference" of alcoholic liquor, Gao Feng said that COFCO Liquor would fully support the management team of alcoholic liquor, and start a new journey of high-quality development of alcoholic liquor around the core orientation of "consumer-centric and creating value for customers". At that time, there was speculation that he might become the new chairman.
In the long run, Wang Hao, the former chairman, is also a veteran of the "COFCO Department". At the end of 2017, he became the chairman of COFCO Liquor, and in March 2018, he succeeded Jiang Guojin as the chairman of Alcoholic Liquor, that is, since 2015, Alcoholic Liquor has changed three commanders.
The general manager has also changed three terms, and in April 2020, the former general manager Dong Shungang resigned from all positions. Since then, Cheng Jun has been the deputy general manager, exercising the functions and powers of the general manager, and he resigned in August 2021. Zheng Yi, the former vice president of COFCO Wine & Spirits Investment, took over the baton and has been in office so far.
According to wind data, the company has changed 10 chairmen since its listing in 1997, with an average tenure of less than 3 years.
Looking at the large-scale liquor enterprises, they are roughly divided into three types, namely, private enterprises with clear property rights represented by Langjiu and Zhenjiu Lidu and Jinhui Liquor; Listed companies in the liquor industry controlled by the region's **; Liquor companies controlled by foreign capital, such as Guizhou Alcohol and Zhijiang Liquor controlled by Zongyi Group, Golden Seed Jinsha Liquor controlled by China Resources Group, Liquor controlled by COFCO, and Shede Liquor controlled by Fosun.
Xiao Zhuqing, a wine marketing expert, said that for wine companies controlled by foreign capital, such as Jinsha Liquor, Drunkard Liquor, Shede Liquor, etc., due to the tripartite interest game between local forces and controlling shareholders represented by regional ** and old employee groups, the cost of internal communication is high, and personnel changes often occur.
According to the 21st Century Business Herald, the peak trial period is one year. It remains to be seen whether there will be any further changes in the chairmanship. According to Caijing, a former employee of the alcoholic who did not want to be named said that Gao Feng will face great challenges when he is ordered to take over this time. For a long time, the internal struggle of the enterprise has continued, and at the same time, a variety of problems left over from history have affected the operation.
Ups and downs of the past
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According to the official website, the predecessor of Jiugui Liquor Co., Ltd. was Jishou Distillery, which was founded in 1956 (later restructured into Xiangquan Distillery). In 1970, "soul man" Wang Xibing entered the distillery, 5 years later became the director, under its leadership the rapid development of the enterprise, with the "Xiangquan" liquor became the largest distillery in Hunan, in 1985, the art master Huang Yongyu designed a new packaging, and named "drunkard", so far Jishou distillery has "Xiangquan", "drunkard" two brands.
According to CCTV, in 1993, the retail price of alcoholic liquor was raised to more than 300 yuan, and the strategy made it a unique high-end brand. When it landed in the capital market in 1997, its revenue had reached 410.3 billion yuan, net profit attributable to the parent company of 1600 million yuan, and the ** price on the day of listing exceeded 30 yuan, becoming one of the few ** shares in A shares at that time. It can be said that Wang Xibing and Huang Yongyu jointly created the myth of drunkards.
However, the good times did not last long, and Wang Xibing resigned in 2000, and the net profit of the company's revenue fell by 25 that year46% and 6009%。Fortunately, after Tian Jiagui took over the baton, he formulated a series of goals such as entering the top three in the industry, eliminated low-grade products, and took the road of "high-grade, high-value-added, and high-grade", and the company's profits increased in 2001.
In 2002, Peng Shanwen took over the baton, and later transferred the equity to the Chenggong Department represented by Liu Hong. Liu Hong, who made his fortune in the capital market, has no experience in liquor, and during his tenure, the company frequently lost money, wore stars and hats many times, and once occupied the company's funds.
It was not until 2007 that Zhonghuang became the largest shareholder through auction acquisition, and the drunkard liquor was able to be reborn and turn losses into profits, and profits have always maintained a growth trend from 2007 to 2012. Unfortunately, in November 2012, the alcoholic liquor was detected to exceed the plasticizer standard, and the company lost money again in the year of strict consumption management of the "three publics".
In 2015, after COFCO indirectly held 50% of the equity of Zhonghuang, it dispatched management to Jiujiu Liquor the following year, and its performance resumed growth. Unexpectedly, in 2019, it was reported by the dealer with his real name to add cyclamate. At that time, COFCO Wine & Spirits insiders said that the products involved should have come from before COFCO became the owner, which was a historical legacy.
After some combing, the drunkard liquor has been full of ups and downs and ill-fated along the way, and the liquor industry has already turned upside down.
According to the Tianfeng ** research report, affected by the implementation of the liquor consumption tax in May 2001 and the cancellation of the preferential policy of income tax in 2002, the liquor industry has set off a wave of high-end. Superimposed political and commercial demand and healthy consumption once again promoted high-end development, and Moutai, Wuliangye, Yanghe Co., Ltd. seized the opportunity to ride the upswing.
In the long run, the drunkard was thrown off a lot. After learning from the pain, Wang Hao, who took over as chairman in 2018, established an internal reference company. He said, "COFCO is confident and prepared to build the internal reference into the fourth largest high-end brand after Guojiu Moutai, Wuliangye and Guojiao 1573. The establishment of the internal reference liquor sales company will become a milestone in the development of the alcoholic liquor joint-stock company, and also represents the drunkard liquor joint-stock company sounded the clarion call for the internal reference to march to the whole country."
Thanks to "high-end + nationalization", the revenue scale of alcoholic liquor from 2018 to 2022 will increase from 118.7 billion yuan increased to 40500 million yuan, net profit attributable to the parent from 222.7 billion yuan increased to 104.9 billion yuan. Among them, the drunkard series from 77.9 billion yuan increased to 22700 million yuan, Xiangquan series from 10.9 billion yuan increased to 2200 million yuan, internal reference series from 2400 million yuan increased to 115.7 billion yuan, the proportion of revenue from 206% to 2857%。(choice data).
It is worth mentioning that due to the high gross profit margin of the internal reference series, it is above 90% all year round, which has become a major grasp for the improvement of corporate profitability. The share price has grown from a low of 10 in November 201881 yuan once climbed to 274 in September 202129 highs and a cumulative increase of 243737%。In view of his proud achievements, Wang Hao is also known as the person who "created the myth of drunkards".
However, drunkard wine seems to have a magical power. In 2023, the performance of several years of growth turned downward again, and the three major series of products declined across the board in the first half of the year, resulting in a decline in revenue and net profit. 23%。
In the first three quarters of 2023, revenue decreased by 38 percent year-on-year54% to 214.2 billion yuan, net profit decreased by 5075% to 478.7 billion yuan, gross profit margin decreased by 092 percentage points to 789%, net profit margin decreased by 554 percentage points to 2234%。The share price has also nearly halved, from 136 at the beginning of the year6 yuan fell to 73 at the end of the year$2.
What's the problem?
Raise prices, press goods, and squeeze bubbles
If you want to hurry, you can't reach it
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It all comes down to the strategic aspect. Zhu Danpeng, an analyst in the food industry, once pointed out that the "trick" to the soaring performance of alcoholics is actually to press goods.
The so-called pressure is to stimulate dealers to take goods by adjusting sales policies and preferential activities, so as to increase sales in a short period of time. In the short term, it can quickly pull performance, but if it blindly relies on it, it will overdraft dealers and market purchasing power, which will undoubtedly beat the drum and pass the flowers, pile up false bubbles, and put the crisis behind.
According to the Red Star Capital Bureau, the model of relying on dealers to drive sales originated from Hunan Internal Ginseng Liquor Sales Co., Ltd., which is associated with alcoholic liquor. The company is a sales company established in 2018 by a number of distributors as initiating shareholders, and the alcoholic liquor is not directly controlled, and the internal ginseng liquor is sold to the internal ginseng liquor sales company at the ex-factory price, and then it is sold to the first-class distributors at the price difference. Participating dealers can receive dividends from the sales company.
Under this mechanism, the number of alcoholic liquor distributors has soared from 528 in 2019 to 1,586 in 2022; Internal reference ** has also soared, from the ex-factory price of 500-600 yuan bottle, once increased to 1030 yuan. The company's revenue increased from 1.5 billion yuan to more than 3 billion yuan in 2021.
It seems to be infinitely prosperous, but in fact, problems follow. ** Only then will the high-end end market pay. Once it deviates from its own matching and unsalable products, the pressure on dealers will naturally be great, and then the phenomenon of goods channeling and upside down will be derived.
From 2019 to 2022, the inventory of alcoholic liquor climbed from 3,460 tons to 7,375 tons. Taking 2022 as an example, except for the Xiangquan series, the production volume of internal ginseng, drunkard, and other series is significantly greater than the sales volume. The annual production volume of the internal reference series is 1,580 tons, the sales volume is 1,147 tons, and the ending inventory reaches 1,347 tons, which has exceeded the annual sales volume.
Realizing the seriousness of the problem, the company had to make drastic reforms. As bluntly stated in a record of investor relations activities in 2023, the most important work this year is to adhere to the cost reform, increase investment in promoting sales and consumers, and reduce B-end expenses, which will have a certain impact on payment collection in the short term. The company will insist on the cost reform in the first place, and this year's goal is to improve the dynamic sales side, improve the cost structure, and increase steadily. The data of drunkard consumers scanning codes and exchanging empty boxes for wine have increased, driving the growth of dynamic sales. This year, the company did not put pressure on dealers to maximize the destocking of dealers.
It's not too much of an exaggeration. In the first three quarters of 2023, corporate sales expenses decreased by 24% year-on-year66% to 639.5 billion yuan, a decrease of 99% to 106.6 billion yuan, the current contract liabilities decreased by 27 percent year-on-year2% to 251.3 billion yuan.
In other words, companies are beginning to take the initiative to squeeze the bubble and de-industrialization into the first priority. It is commendable to understand the awe of risks, but from the above-mentioned double drop performance, is the cost too large and the U-turn is late? How to boost performance in the future?
In the view of Cai Xuefei, an analyst in China's liquor industry, as a regional brand, the high growth of alcoholic liquor in recent years, its brand power is difficult to support, especially the positioning of high-end internal reference wine, it is difficult for alcoholic liquor to support this thousand-yuan product nationwide in the short term. Therefore, once there is a fluctuation in the market, the drunkard will be under a lot of pressure.
Indeed, it is not possible to rush to the end. Blindly raising prices to impact high-end, ignoring market acceptance, resulting in inflated performance, and finally having to experience the pain of squeezing bubbles and "hard landing".
Practicing internal skills and ushering in an inflection point?
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Of course, drunkard wine did not sit still.
On the evening of February 28, 2024, the disclosed record of investor relations activities showed that in the face of fierce competition, the company actively adjusted its business strategy, "implementing a differentiated and focused strategy, and building a Chinese boutique wine company".
"Differentiation" is mainly to give full play to the advantages of "unique fragrance, unique production area, and unique culture"; "Focus" is mainly the implementation of "product focus, resource focus, market focus". The products focus on Hongtan drunkard wine and 52-degree internal reference wine; The market focuses on the Hunan base market and the model market outside the province, and strengthens the linkage of the BC market.
In response to the trend of consumption downgrade, the company has laid out and accurately supplied the low-end market through "Xiangquan" and "internal products". In 2023, the domestic products will achieve good growth in the banquet market, and the golden "internal products" will also be launched. Xiangquan products cut some Xiangquan code skipping and launched two "Xiangquan King" products.
Drunkard Liquor said that at this stage, there will be no large-scale investment, and it is necessary to further improve the quality of existing dealers, continue to optimize the customer structure, improve the business scale of individual dealers, strengthen channel control, and strengthen product and sales linkage.
In other words, in 2024, the alcoholic liquor will still be based on stability, quality first, and it will still be in the process of squeezing the bubble.
In Rhodium Cai's view, the more cold the winter shuffle, the more strategic and internal skills must be achieved. The above-mentioned focus, strengthening, and promotion direction of drunkard wine is correct. The continuous decline in profitability means that enterprises are tasting the pain of wrong payment, and it also means that the resilience of development and the resistance to pressure are enhanced.
Winter passes, and dawn comes after darkness. Will it be an inflection point when the peak takes over the baton?