750 billion liquor rivers and lakes, dealers have encountered great changes

21st Century Business Review

2024-06-02 21:56Posted on the official account of Guangdong 21st Century Business Review

Reporter丨Xie Zhiying, Editor丨Chen Xiaoping, Jiang Yuying

Moutai is new and handsome, and frequently shows favor to dealers.

"For dealers, I will respect their profit model." On May 29, Zhang Deqin, chairman of Moutai, made his first appearance at the shareholders' meeting and said so.

In mid-May, he had a special discussion with dealers in Zhejiang, Fujian and Jiangsu provinces.

"Dealers are Moutai's family members and an important support for Moutai's growth." Zhang Deqin emphasized the close relationship between the two.

"Nearly 50% of Moutai's direct sales channels are close to the ceiling." Xiao Zhuqing, a liquor marketing expert, told 21CBR that distributors are still the anchor of the marketing system of liquor companies.

However, the changes in the channels of the wine industry have become unstoppable.

In Wuliangye, the proportion of traditional dealers in the channel has also fallen to 60%, and the second and third echelons represented by Yangfenlu have strengthened their emerging channels.

China's liquor industry, with an annual volume of 750 billion, is now in a period of deep adjustment, and the traditional single distribution model has begun to collapse.

Change is coming

Zhang Deqin is showing goodwill, however, Moutai dealers do have reason to worry that their fundamentals have been shaken.

In 2023, Moutai will rely on new channels such as self-operated and "i Moutai", and its direct sales revenue will reach 67.2 billion yuan, accounting for 46%.

It will be e-commerce, supermarket channels, but also into the rest of the "agent" channels, if this part is excluded, the proportion of dealers around the country, may be less than half.

Wuliangye is also making efforts to diversify its channels, and it sold 30 billion yuan last year in three modes: group buying, specialty stores, and online platforms.

The two leading brothers, from 2019, will reduce the proportion of traditional dealers from an absolute advantage of about 9 percent to less than 6 percent.

"Almost all liquor listed companies are turning to the construction of multiple channels, and in terms of data, Moutai, Wuliangye, Luzhou Laojiao, etc. have changed significantly." A liquor practitioner revealed to a reporter from 21CBR.

According to statistics, the revenue of 20 listed wine companies through direct sales channels alone exceeded 100 billion yuan for the first time last year, a year-on-year increase of more than 2%.

Under the general trend of diversification, e-commerce and new Internet platforms are particularly valued by major leading wine companies.

The most successful practice is "i Moutai", which contributed 22.37 billion yuan in revenue last year, with a growth rate of 88%.

"As an Internet direct selling platform, i Moutai is in line with the development trend of alcohol e-commerce and also adapts to consumers' online shopping habits." According to Cai Xuefei, an analyst in the liquor industry, it has a strong brand endorsement, simple operation, guaranteed winning rate, and a certain arbitrage space, which is welcome.

Going online is almost the unified action of the head wine companies. One signal is that the second echelon "Yangfenlu" has separately listed the data of its online channels.

Source: Yanghe shares

The diversification of wine companies' channels has its own internal driving force.

For example, compared with distributors, there may be more profit margins, which remain within the wine company.

Moutai is the most obvious, its direct sales gross profit margin is 95.5%, 6 points more than the distribution channel, Wuliangye is 86.8%, you can also get 7 more points, throw away the operating costs, and still make money.

Moving to new channels such as online can also gain incremental customer groups, especially young people.

According to the data of "Magic Mirror", in 2023, the online scale of liquor/flavored liquor will reach 90 billion yuan, and the sales growth rate will reach 77.7% year-on-year.

Source: Yunjiu Vision

Its online penetration rate has exceeded 10% and is in an explosive period. Many wine companies, with their incremental space, are online.

"Represented by direct sales, the core of channel diversification lies in direct connection with core customers, and from the perspective of wineries, we actually have to do it."

Zheng Guangxian, chairman of the 1919 direct business company, analyzed to reporters that the head wine companies are seeking to lock in the core consumer groups in order to take the initiative.

Source: 1919

Zheng Guangxian believes that the essence of the competition for liquor channels has undergone profound changes.

"In the past, what we did was the 'plate in the plate' of the channel terminal, to grab more offline distribution points, and now the stock competition is to grab the 'plate in the plate' of the core users, and only by seizing the core customer group can we use the small disk to drive the brand market."

In such a situation, if the distributor cannot meet the demands of the wine company, it is inevitable that it will be squeezed.

Some industry insiders told reporters that Zhang Deqin's appeasement, perhaps in view of the large proportion of Moutai's direct sales and the fast pace, does not want to overkill, balancing the interests of traditional distribution and emerging channels, however, the power to drive channel diversification will not change because of feelings.

Price war

In the wave of diversified channels, most wine companies are most concerned about online.

"The sales scale of Jingdong Liquor is between 400-50 billion, and 8% is liquor."

Zhao Yu, general manager of the liquor business department of Jingdong Supermarket, told reporters that online purchase of liquor is becoming more and more common, and the growth rate is expected to remain above 20% this year.

It's just that the attitude of wine companies is still cautious.

For example, Yangfenlu, which separately discloses online data, has an annual volume of more than 30 billion, and the proportion of online is not high.

Yanghe is the most prominent, with online direct sales of 4.368 billion, while Fenjiu and Luzhou Laojiao have only 1.668 billion and 1.42 billion respectively.

"The biggest difficulty in the development of online sales of liquor is how to coexist with the existing channel system. After all, most companies are already competing for stock, and one is the other. Zhao Yu confessed to the "21CBR" reporter.

For wine companies, a practical problem lies in price control, and there is a natural contradiction between the two systems.

In the traditional offline rivers and lakes, wine companies pressure distributors to set prices very high, so that they can give multi-level channels, leave enough profits, and ensure that everyone has money to earn; The platform takes online direct sales, and if you want to grab customers first, you tend to hit the price directly to the end.

As a high-value standard product, some platforms are even willing to pay their own money, directly discount and subsidize, as a "knife tip product" to attract customers, which greatly impacts the price system of wine companies and shakes the foundation of their high profits.

In this situation, wine companies have to maintain their order strongly, and there are games and even conflicts between platforms and wine companies.

In mid-March, Wuliangye publicly shook Pinduoduo, saying that many stores on the platform sold counterfeit and shoddy products;

Pinduoduo also responded strongly, and the Wuliangye sold supported inspection, and tens of billions of subsidized goods supported "fake one penalty ten".

The two sides pinched each other, which is really a price game.

52 degrees of the eighth generation of Puwu, Wuliangye's core large single product, the guide price is 1499 yuan, at that time, the ex-factory price has just been raised to 1019 yuan, the price on Pinduoduo is only 868 yuan, and the price of some coupons is as low as 829 yuan, and the store page shows "brand official authorization, 100% authentic".

Regarding the core product 52 degrees Guojiao 1573 series, Luzhou Laojiao has also suspended online cooperation.

In fact, if the goods cannot be sold, even if the winery and distributors are strongly tied, it is difficult to maintain the control of goods and stable prices.

Especially in the past three years, offline business has become more difficult, and sales have slowed down.

"A large number of wine companies, including Wuliangye and Luzhou Laojiao, have to send letters to not allow agents to supply to Internet platforms without permission." A person familiar with the matter told reporters.

Ignoring the reality of channel diversification, even if wine companies forcibly control and stabilize prices, it is not a healthy zero-supply relationship, and it is difficult to maintain the order for a long time.

This year, Zhao Yu participated in the channel conferences of many wine companies, and he was surprised to find that the complaints about wineries in offline channels are far greater than those of e-commerce websites.

"In my past knowledge, wineries have invested a lot in offline channels and have a high budget, so they can be said to take care of every detail, and the cost of online is very small. As a result, the offline opinions are still so big, I am very puzzled. Zhao Yu said.

Some industry insiders told reporters that many distributors keep asking for fees from wineries to strive for resource support, and they are also forced to do so.

Around the distribution rights and various cost exchanges, it is often easy to have rent-seeking space, and the personnel in the chain are also prone to corruption risks.

In recent years, corruption among senior executives of wine companies has often occurred. Most of the leading wine companies are state-owned assets, and there is also a risk of loss of state-owned assets.

Judging from Wuliangye's attitude towards Pinduoduo, a large number of wine companies still have a cautious or even reserved attitude towards e-commerce platforms.

However, it is wishful thinking to ignore the changes in the channel, deliberately avoid online, and blindly pressure the goods to dealers, hoping to control prices and maintain order.

Re-establish order

In the face of diversified channels, wine companies can find a compromise to avoid direct conflicts and give full play to their strengths.

The first point is to take the initiative to adopt workarounds to avoid the pain points of price inconsistency.

It is understood that Wuliangye and Yanghe brands have double gift boxes on online platforms, which are exclusively for online to avoid direct price conflicts, and the gift boxes are delivered directly to the door, which is also in line with the scene of gift-giving.

A large number of wine companies also promote the differentiation of specifications, such as the offline main product is 500ml, and the online sales are 550ml, 558ml or even 750ml, trying to avoid direct price comparison.

Zhao Yu told reporters that keen wine companies are not only online goods, but also good at tapping the unique advantages of the platform.

For example, some wine companies find that traditional online tastings may not be effective in acquiring young customers, so they are willing to update their marketing strategies online, screen seed users online, and give away a bottle of sample wine to better reach new customers.

They are also willing to try online traffic, taking Zhenjiu as an example, that is, they have created their own online brand activity IP "Zhenjiu Retro Season".

"It's easy to cater to the rhythm of online sales." Zhenjiu officially introduced to the reporter of "21CBR".

Wu Xiangdong Source: Zhenjiu

At the same time, a large number of local wine companies, which have a solid local base but no national influence, and it is not easy to leave the province, are willing to borrow online platforms to promote their national strategy on a rolling basis with a higher input-output ratio.

Almost all wine companies are interested in one of the assets of online platforms - data.

Zhao Yu said that under the premise of fully protecting user privacy, user reviews, feedback, SKU click-through rates and conversion rates of e-commerce provide decision-making reference for wine companies.

Zhao explained that wine companies are willing to mine this data for product development to penetrate more segmented customer groups, and the popularity of a large number of gift-packed products has benefited from these insights.

In offline channels, there is also data feedback, which is limited by the subject and level, the dimension is insufficient, and it is easy to be distorted, and the feedback is very slow, so the reference value is very limited.

It is undeniable that traditional dealers still have irreplaceable value.

"Alcohol is a social product, and the sociality of the product comes from the offline scene and consumer cognition, which cannot be replaced online."

Cai Xuefei commented that traditional dealers are not only sales channels, but also brand propagandists, shouldering the functions of payment, transfer, logistics, after-sales and other functions, which is the foundation of the status of distribution channels that is difficult to shake.

Xiao Zhuqing told reporters that traditional agents often have a unique reputation and contacts in the local area, and their active recommendation and credit guarantee are the core elements of major wine companies to establish regional markets.

Zhang Deqin called the dealer "family", also because it has territorial stickiness, circle resources and social influence. As strong as Moutai, it is inseparable from the blessing of superior resources.

For dealers, online platforms are not all rivals.

In JD.com, dealers can also use the third-party store opening model to enjoy the traffic of the platform, Zhao Yu said, "The distribution of advertising traffic is fair, exactly the same as self-operation." ”

Online players are also experimenting with fusion gameplay.

1919 launched the "1919 Quick Drink" project for high-growth instant retail scenarios, providing fully managed services for physical liquor merchants, and consumers can buy alcohol instantly and deliver it in as fast as 19 minutes.

The signal released by the leading wine companies has been very clear, and the distributors must be sensitive enough to win the long-term success in the era of change.

In May, Moutai held a performance meeting, and the official introduction said that it has formed a relatively complete channel ecosystem, including social distribution, e-commerce, supermarkets, self-operated channels (self-operated companies, i Moutai), etc.

"We will strive to promote synergy and balance among various channels." A senior executive of Moutai said.

Everyone understands that it is impossible to go back to the past.

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