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(Hou Xiaohai, Chairman of the Board of Directors of China Resources Beer)

Our reporter Huang Xingli (chinatimes.net.cn) reports from Beijing

At present, China's wine industry is at a critical juncture of deep adjustment and transformation. Faced with the problems of high channel inventory and sluggish terminal consumption, leading companies are trying to smooth out the price list in order to smoothly cross the industry cycle. In a market environment full of uncertainty, how to reshape the manufacturer relationship and solve the problem of dynamic sales with innovative strategies has become the core issue of strategic planning for leading companies.

"We are entering a new world of consumption where the internal and external environment is changing, risks and opportunities coexist, and manufacturers are under pressure. In the face of changes and challenges, the relationship between manufacturers needs to be adjusted and upgraded, and a community of shared destiny for manufacturers should be built." Hou Xiaohai, Chairman of the Board of Directors of China Resources Beer, gave an in-depth interpretation of the new concept of "community of shared destiny for manufacturers" for the first time at the 2024 China Resources Wine Channel Partner Conference held on July 12-13. The reporter of "Huaxia Times" learned from the conference site that it was based on such strategic considerations that the three major liquor brands of China Resources, Golden Seed Wine, Jingzhi Liquor and Jinsha Wine, also released new marketing strategy signals at this conference and actively tried to explore new models of cooperation between manufacturers.

Bottom energy storage "review" manufacturer relationship

The "2024 China Liquor Market Mid-term Research Report" recently released by the China Alcoholic Drinks Association outlines the subtle changes in the current liquor market - the recovery trend in 2024 is weak, and 80% of companies said that the market has cooled down under the competition for existing stocks. Diversified consumption, strong differentiation, and broad competition have become a fact.

"2024 is the year of bottom-up energy accumulation." He Yong, Secretary General of the China Alcoholic Drinks Association, said this at the 2024 China Resources Wine Channel Partner Conference on July 12. He mentioned that through recent surveys, it was learned that people's market expectations in the first half of this year were weaker. In the second half of the year, many manufacturers and companies hoped to reduce volume and control prices, and focus more resources on core products. In addition, the survey found that more than half of the distributors prefer to maintain cash flow and put survival first.

Regarding the polarization of the liquor market this year, Industrial Securities also mentioned in a research report released on July 8 that from the perspective of consumption scenarios, the second quarter is a relatively off-season, mainly for channel replenishment, and the scenarios are mainly daily resident consumption. Under the influence of the high base, the banquet scene has declined, and the business scene performance is still weak. "Affected by the short-term fluctuations in the wholesale price of Moutai, the sector has adjusted, but the logic of squeezed growth in the industry is still clear, and the sales in the Mid-Autumn Festival and National Day peak season in the second half of the year are still worth looking forward to." The research report also pointed out.

Hou Xiaohai said that the manufacturer-company community of shared destiny is a comprehensive upgrade of the manufacturer-company relationship, which has transformed from traditional commercial transactions to a partnership relationship for jointly developing and maintaining the market, and finally formed a close community with a shared destiny and shared risks. Hou Xiaohai also fully elaborated on the nine concepts of the manufacturer-company community of shared destiny at the conference, namely, consistent goals, compliance with rules, complementary functions, business collaboration, empowerment, resource sharing, value creation, risk sharing, and clean and upright conduct.

Talking about the manufacturer-supplier relationship in the current market, Fan Shikai, general manager of Guizhou Jinsha Jiu Liquor Co., Ltd., also stated at the roundtable forum of the conference that the manufacturer-supplier relationship depends on market demand, the manufacturer's business philosophy and cooperation model. Today's market requires manufacturers to move from simple transactions in the past to cooperative relationships.

The current liquor market is in the process of exploring the bottom again since the industry bottomed out in 2012. Looking back at the trends in liquor sales revenue and profits over the past decade, He Yong believes that the current industry is at the inflection point of increasing and shrinking consumption. How to define it depends on how manufacturers view the contradiction between supply and demand, how to resolve the contradiction between products and consumer trust, and building a community of shared destiny for manufacturers is the foundation for building trust. He Yong also pointed out that liquor is a long-cycle industry, and its value attributes and spiral upward trend have never changed. Backed by China Resources Beer's decades of highly competitive experience, China Resources Wine can respond more effectively to changes in market demand.

Wine merchants think about breaking out

As the liquor industry is facing a squeezed growth trend, famous liquor brands are accelerating their expansion into lower-tier markets, and the industry differentiation phenomenon is becoming increasingly prominent. Channel distributors who are at the forefront of the market and directly serve consumers are the first to feel the chill brought about by this wave of industry changes.

"The current situation of mid-to-high-end liquor is that the total market volume is limited, competition among liquor dealers is fierce, and retail stores only make 3%-5% profit from selling a bottle of mid-to-high-end liquor, which makes it difficult to sustain long-term operations." A distributor in Anqiu, Shandong Province, pointed out at a channel conference when talking about the current situation of liquor dealers' price-cutting. In his opinion, the reason for the involution of liquor dealers is product homogeneity. I have the same product as you, and the purchase price of the same product is the same. In order to snatch limited customers, retailers cut prices with each other. You reduce 80 yuan, and I reduce 100 yuan, which creates a vicious cycle, and even sell below the purchase price.

Faced with this dilemma, the distributor actively sought innovative models to solve the pain points of terminal sales. "Selling famous liquors is not profitable, which is a common pain point for terminal wine merchants. If you only sell certain famous liquors, the profit may be only a few dozen yuan, which is not profitable at all." He took Jingzhi's related products as an example and said that if they are successfully recommended to customers, the gross profit margin is more than twice that of selling famous liquors. He especially mentioned that when Jingzhi's new products were launched in September last year, his company innovatively adopted the "partnership" model to form a "community of destiny" with famous tobacco and alcohol hotels. In his view, through this kind of deep cooperation and common development, it can not only guarantee appropriate profits, but also solve the stubborn problem of chaotic product prices and maintain product price stability.

In addition, taking the liquor market in Anhui Province as an example, there is a saying in the industry that "no one from the east can enter Anhui", which vividly depicts the fierce competition in the local market. Especially in Bozhou, the birthplace of Gujing Gongjiu, it is conceivable how difficult it is for other liquor brands to penetrate the market. A Jinzhongzi liquor distributor from a county under the jurisdiction of Bozhou, Anhui, introduced at the conference on July 13 that the liquor market in his county is almost monopolized by several major brands in Anhui Province, and Gujing Gongjiu occupies an absolute dominant position. With its market scale, good product structure and large-scale cost investment, most of the high-quality terminals in the local urban market are sold exclusively by stores, making it difficult for its agent-related products to enter these terminals smoothly.

Faced with the difficulty of sales, the distributor said that the chances of directly competing with famous liquors in the urban market were slim, so he adopted the strategy of "surrounding the city with the countryside" and set his sights on the township market where famous liquors were relatively weak. In his opinion, in the township market, the difference in brand power between different brands was not significant, which provided a possibility for regional wine companies to break through, especially by focusing on the township banquet market, which could not only effectively promote the brand and introduce the taste, but also directly promote product sales, becoming an important breakthrough for them at present.

In his opinion, although terminal display has a certain promotional effect, compared with banquet marketing directly facing consumers, its effect is more indirect. Therefore, he emphasized that the banquet marketing strategy should be deepened, and the banquet should be introduced to drive the gift consumption of visiting relatives and friends, and then drive the consumption of ready-to-drink. However, it is far from enough to open up the banquet market in rural areas. The distributor also clearly realizes that in the future, it will face challenges such as how to gradually break through the blockade of famous wines in the urban market, how to improve the product structure of the banquet market, and how to expand the sales share of non-banquets.

Focus on launching marketing war

During the industry's period of deep adjustment, by reorganizing manufacturer relationships, China Resources Liquor has released new marketing signals to the outside world before the arrival of this year's peak sales season.

In recent years, China Resources has rapidly expanded its presence in the liquor industry through a series of investments and acquisitions. So far, China Resources has three major liquor brands under its umbrella, namely Jinsha Liquor, Jingzhi Liquor and Jinzhongzi Liquor. In February last year, China Resources Beer made major adjustments to its organizational structure and established two major divisions, beer and liquor. Among them, the liquor business is professionally managed by China Resources Wine Holdings, while the beer business is professionally operated by China Resources Snow Beer.

At the China Resources Wine Channel Partner Conference held on July 12, Wei Qiang, Vice President of China Resources Beer and General Manager of China Resources Wine, said that based on the in-depth insight into the current wine industry and the new development goals, China Resources Wine has identified three major development strategies: beer + white dual empowerment strategy, production area strategy and category strategy. "In the past year, China Resources Wine has achieved certain results in the implementation of its strategy, and the second half of 2024 will also be a critical period for breakthroughs."

It is reported that under the core strategy and overall thinking and planning, in the past year, China Resources Wine Industry has fully empowered the brand renewal, product upgrades and channel changes of Jinzhongzi Wine Industry, Jingzhi Liquor Industry and Jinsha Wine Industry. Among them, Jinzhongzi Wine Industry's losses in 2023 have been significantly narrowed year-on-year; Jingzhi Liquor Industry has implemented brand strategy upgrades to become the leader of Zhixiang and take up the banner of Shandong wine revitalization; Jinsha Wine Industry has worked hard to clear inventory at a reasonable price, optimize the main line of the "Abstract + Jinsha Huisha" dual-brand strategy, and clarify the brand positioning of "the origin of Chinese sauce wine-the creator of mellow sauce aroma from the upper reaches of the Chishui River". By promoting the stable and high-quality growth of the three major banner brands, it will bring a benchmark demonstration role to promote the new development of the liquor industry.

The reporter noted that among the three major liquor brands under China Resources Wine, only Golden Seed has released the latest performance data. According to its performance forecast released on July 9, it is expected to achieve a net profit attributable to the parent company's owners of 10 million to 15 million yuan in the first half of 2024, which will turn losses into profits compared with the same period last year.

At this channel conference, the three major brands of Jinsha Wine, Jingzhi Liquor and Jinzhongzi Wine also released their latest marketing strategies and plans. The reporter of China Times learned from China Resources Wine that in the second half of the year, China Resources Wine will continue to empower Jinsha Wine, Jingzhi Liquor and Jinzhongzi Wine to continuously renew their brand strategies, increase their efforts in marketing, and create a strong driving force for development.

Wei Qiang said that manufacturers should work together to win the future, and launching marketing campaigns is the key. Through the platform of China Resources Wine, the process system of each liquor brand of Jinsha Wine, Jingzhi Liquor and Jinzhongzi Wine can be improved, the process technology can be exchanged and improved, talents can be cultivated and developed, the channel network can be shared and value-added, and the overall layout and publicity and promotion of brands and products can be achieved. Under the empowerment of the "beer + white" strategy, the brands of Jinsha Wine, Jingzhi Liquor and Jinzhongzi Wine are expected to further release the potential for high-quality development and achieve steady and healthy growth.

Editor-in-charge: Lu Xiao Editor-in-chief: Han Feng