Author: Xiao Li Feidao, Editor: Xiao Shimei
On February 23, the drunkard officially announced that Gao Feng became the chairman of the company. The market has long expected this, and in December 2023, Gao Feng has been appointed as the chairman and party secretary of COFCO Wine. According to the previous practice, the same person is also the head of the two companies.
At present, the share price of alcoholic liquor has retraced nearly 80% from the historical peak in 2021, and the market value has evaporated by 68 billion yuan.
Turbulent management
At the 2023 Drunkard Rich Conference, a "self-hacking PPT" was specially placed on the big screen of the speech - the performance was directly cut in half, the inventory was high, and the company was upside down, revealing the major business challenges that the company is currently facing. In this context, it is not difficult to understand the change of coach.
For this leadership team, the market has a lot of complaints. Gao Feng has a wealth of experience in COFCO system, and has worked in functional companies such as grain, oil and food import and export, COFCO Real Estate, and COFCO Land, but he lacks experience in liquor industry and management.
In addition, Zheng Yi, who was re-elected as general manager, was questioned by some investors in 2021, saying that he had no experience in managing liquor and no experience in sales, and his previous resume was mainly engaged in law-related work.
However, in order to achieve sustainable and rapid development, wine companies have high requirements for the experience, pattern and forward-looking judgment of the management, and the leadership team must be stable and reliable for a long time. Alcoholics have suffered a big loss at this point, and frequent personnel turmoil is one of the important reasons for the company's tepid development in recent years.
In the 27 years since its listing, the company has experienced many major shareholder changes, including Xiangquan Group, Chenggong Group, Huafu Group, and COFCO, with a total of 11 chairmen and 7 general managers, with a total of at least 80 senior executives.
In the liquor industry, the development of the first ten years, is the success of the group as the major shareholder of alcoholic liquor. It is not thinking about how to take advantage of the development and growth of the industry, but about finding ways to hollow out the drunkard wine and turn away the latter4200 million dollars. After that, the two went to court, the relationship collapsed, and Liu Hong, who was the chairman at the time, was also taken compulsory measures by the public security organs.
After that, Xiangquan Group once again became the major shareholder of Drunkard Liquor. Within two years, Xiangquan Group was forced to auction off the equity of the drunkard liquor to repay the debt due to insolvency. Huafu Group took over, and then in 2012, a major negative event of plasticizers broke out, and the alcoholic liquor continued to lose money, and was once on the verge of delisting.
In November 2014, Huafu Group was merged into COFCO, so that COFCO was the main alcoholic. However, even under the command of a large state-owned enterprise like COFCO, the management turmoil of alcoholic liquor is still frequent.
At the beginning of 2018, Chairman Jiang Guojin resigned. In April 2019, Vice Chairman Li Shiwei resigned, and Deputy General Manager Li Ming resigned. On April 23, 2020, General Manager Dong Shungang resigned. On the same day, Cheng Jun was appointed as deputy general manager and exercised the functions and powers of general manager. In August 2021, Cheng Jun, who had only been in office for more than a year, resigned, and Zheng Yi has served as the general manager until now.
A group of people and a set of policies, drunkards have not formed a joint force for long-term development. In addition, dealers have also suffered from crimes, facing the hidden dangers of "a gentleman and a courtier" and "new officials ignoring old accounts", and their loyalty is naturally discounted.
It is often said that entrepreneurs are the most important part of business development. The fact that the drunkard changes management so frequently is an obstacle to its long-term development.
The big dilemma of business
Wang Hao, before the peak, led the drunkard to create some gratifying results. However, in 2022, the growth rate of revenue and profit of alcoholic liquor has slowed down significantly, which has sounded the alarm to the market.
In 2023, the company's performance will directly open the Waterloo mode. In the first three quarters, revenue was 21400 million yuan, a year-on-year increase of **385%；Net profit attributable to the parent company was 4800 million yuan, a year-on-year increase of **508%。This is the first time in the past 7 years that alcoholic liquor has fallen off a cliff**, and its revenue growth rate is the worst among the 20 listed liquor companies, while most liquor companies still maintain double-digit high growth.
The main financial indicators of alcoholic liquor, **choice
According to available data, in the first half of 2023, the sales of the main products of alcoholic liquor will decline across the board, and the sales of internal ginseng, alcoholics, and Xiangquan will decline respectively. 9%。The sales of products are weak, and the inventory of alcoholic liquor is naturally high, with 5,708 tons at the end of the first half of 2023, a 90% increase from 2,993 tons at the end of 2020.
* At the level, the suggested retail price of high-end products 52 degrees ginseng wine is 1499 yuan, and the ex-factory price is 1050 yuan, but the batch price once fell to about 750 yuan. From the perspective of third-party e-commerce platforms, the retail price is only between 750 yuan and 850 yuan, which is almost 50% of the recommended retail price.
In this regard, the response measure of alcoholic liquor is to stop receiving sales orders for 52 degrees 500ml internal ginseng wine from July 10, 2023, and stop receiving orders for "alcoholic" and "Xiangquan" series products from October 10.
Looking at the contract liabilities, at the end of the third quarter of 2023, it was 2500 million yuan, a significant decrease of 51 compared with the same period in 20218%。The contract liabilities are due to the pre-sale accounts to the dealers, which continue to maintain a downward trend, indicating that the dealers have insufficient confidence in the sales of alcoholic liquor. At the same time, it also shows that the dealers' capital turnover pressure is high and the liquor inventory is high.
In stark contrast to the current "Waterloo" performance, Alcoholic Liquor ushered in a wave of high-growth "miracles" in the first few years after COFCO became the owner. Revenue soared from 600 million yuan in 2015 to 40 percent in 2022500 million yuan, net profit attributable to the parent company from 0$8.9 billion increased to 104.9 billion yuan. Especially from 2020 to 2021, the year-on-year growth rate of net profit attributable to the parent company was as high as %.
In hindsight, the high growth in recent years is more due to the distribution of goods through national channels, while terminal sales may not be good.
From 2019 to the first half of 2023, the total number of alcoholic liquor distributors has skyrocketed from 528 to 1,774. From 2020 to 2021, the growth rate will be the fastest, respectively. 6%。
In addition, in order to promote the high-end positioning of the internal reference wine, the drunkard liquor has innovated a "shareholder selling wine" model. In December 2018, the company established an internal reference sales company, operating as an independent company, including more than 30 liquor "100 million yuan merchants" across the country to take shares, and Jiuguijiu does not hold shares, but has the right to operate.
By binding large businesses with equity interests, it greatly stimulates the enthusiasm of shareholders to take goods and stock up. From 2018 to 2022, the income of ginseng wine increased from 2400 million yuan soared to 115.7 billion yuan.
Judging from the sales of the top five distributors of alcoholic liquor, the revenue in 2022 will be 1.5 billion yuan, accounting for 37% of the total revenue. Among them, the largest distributor brought in revenue of 11500 million yuan (accounting for 28.8 percent of total revenue.)4%), which is basically consistent with the income of ginseng wine.
When the liquor industry is going well, the drunkard liquor continues to press the performance of the distributors, and the terminal sales problem can also be covered up.
However, the more serious epidemic in 2022 and the external environmental impact will continue to cool down and enter a downward cycle. The drunkard's previous aggressive behavior was unsustainable, and the high performance came to an abrupt end, and was finally beaten back to its original shape.
To make herculean efforts to save a critical situation?
An excellent wine company with good growth needs comprehensive competitiveness created by various dimensions such as brand power, channel power, product power and organizational power (management).
In terms of brand power, in 2012, plasticizers and other events had an immeasurable damage and impact on the brand. And in the 10 years of the development of liquor, drunkard liquor has not been able to follow Mao Wulu to occupy the minds of consumers and consolidate high-end brands.
In addition, in the eyes of some investors, the company and its products are "ghost" and unlucky, and consumers are hesitant to choose at the festive banquet, so they should change their name and make suggestions to the company. Zheng Yi responded that the worship of ghosts is an important feature of Chu culture, and the brand name is not an obstacle. But this can also reflect the brand image of alcoholic wine in the hearts of some consumers.
In terms of product power, alcoholic liquor is also different. In the mainstream liquor consumption market, there are three main flavor types, including sauce aroma, strong aroma and light fragrance. The drunkard's liquor is a fragrant type, and as a niche fragrance, it needs long-term consumer cultivation.
The main product of alcoholic liquor, which occupies the price band of 1,000 yuan, has now fallen to 750 yuan, which means that the market's recognition of product power is not high.
It is difficult to make substantial improvements in the short and medium term due to the performance of internal reference in such a crotch pull. As a result, the management decided to create a new internal reference (Jiachen version). But in the downward cycle of the liquor industry, how many resources does it take to cultivate a high-end new product? Even if you let go of the fight, there is still a big question mark over whether you can be recognized by the market in the end.
In terms of channel power, it is not so optimistic. In the base camp of Hunan Province, the market share of alcoholic liquor accounts for only 7%-8%, which is far lower than the market share of other local liquor brands in the local market. It can be seen that the channel thrust of the local market of alcoholic liquor is not enough, which also reflects its fierce competition.
In 2021, the market share of the provincial real estate wine leader in each province, **Haitong**.
In the Hunan market, in addition to alcoholic liquor, local brands also have strong competitors such as Xiangjiao Liquor, Wuling Liquor, Deshan, and Yanhuifeng. Although the sales volume of the five companies is less than 4 billion yuan, no one can dominate the local market for a long time.
In addition, national brands, such as Mao Wulu, still firmly occupy the main share of Hunan's high-end liquor market, and internal ginseng liquor has gained a certain share, but the proportion is relatively small. Among the sub-high-end liquors, Jiannanchun and Shanxi Fenjiu are all strong opponents of alcoholic liquor.
In the markets outside the province, Henan, Shandong, and Hebei all have several hundred million revenues, but they account for a small share of the local market. For example, in Henan, a large consumption province, national brand wine companies are separated, local brands also have the driving force of policy support to become bigger and stronger, and the rest of the local wine will also regard Henan as an important market for expansion outside the province, so the pressure on the channel outside the province is huge.
In terms of organizational strength, compared with other wine companies, it is difficult to talk about competitiveness in the previously turbulent management of alcoholic wine.
As a result, Gao Feng may also have to accept the reality that drunkards have returned to mediocrity, and if they want to return to the previous growth miracle, they must think of something new.
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The content of this article related to listed companies is the author's personal analysis and judgment based on the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.); The information or opinions contained herein do not constitute any investment or other business advice, and Market CapWatch disclaims any liability for any actions resulting from the adoption of this article.
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