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As the liquor industry continues to undergo in-depth adjustments, leading liquor companies have begun a new round of strategic competition, and this time they are entering the vintage wine market.

Recently, Wuliangye (000858.SZ) and Shede Wine (600702.SH) have announced new progress in vintage wine. Since the beginning of this year, well-known wine companies including Yanghe Shares (002304.SZ) and Jinsha Wine have also promoted vintage wine as a key corporate strategy. In the industry's view, under the competition of stock, the concept era of liquor has passed. Wine companies hope to rebuild consumer trust and value system through vintage wine, but the mandatory nature of vintage wine rules still needs to be improved.

Wine companies are intensively developing vintage wines

Recently, Shede Wine Industry announced its aged wine strategy 2.0 and the industry's first group standard for "Altar-Stored Aged Wine (Luzhou-Flavor Liquor)", adding weight to the vintage wine market. Reporters noted that the group standard defines the concept of Luzhou-Flavor Altar-Stored Aged Wine, as well as the production, inspection, labeling, packaging, transportation, storage and other aspects, and stipulates the minimum base wine age for Altar-Stored Aged Wine, requiring it to be no less than 5 years.

In early July, Wuliangye also announced the launch of a full range of classic Wuliangye products, also targeting the high-end vintage wine market. It is reported that the full range of classic Wuliangye products consists of classic 10, 20, 30, 50 and other products, corresponding to 10, 20, 30 and 50 years of base wine respectively.

Previously, Yanghe Co., Ltd. and Jinsha Liquor Co., Ltd. also made the vintage liquor strategy one of their key strategies. In April this year, Yanghe Co., Ltd. announced the strategy of mellow and soft vintage liquor, and launched the Mengzhilan Handmade Class 10, 15, and 20 products, all of which are original liquors of corresponding years. Jinsha Liquor Co., Ltd. and Jingzhi Liquor Co., Ltd. under China Resources Wine Industry have joined the real vintage liquor plan of the China Alcoholic Drinks Association and listed the relevant products as core products for sale.

The concept of vintage liquor is not unfamiliar in the liquor industry. The vintage liquor market quickly heated up around 2000. However, for a long time in the past, although vintage liquor belongs to the high-end product line of liquor, most of them are concept products. Many numbers marked on the bottles are product names or digital concepts, and the actual base liquor year is not disclosed. This is related to the higher cost of old base liquor.

According to independent wine critic Xiao Zhuqing, old wine requires a lot of time to mature and has a very high capital cost, so most wineries previously would not sell large quantities of old wine. For example, most 15-year-old base wines are used as flavoring wines for blending.

However, judging from the vintage wine products launched by wine companies this year, most of them are "serious" and the age of the base wine is clearly reflected.

Rebuilding the value system of high-end liquor

In the industry’s view, as the saying goes, “aged wine becomes more fragrant,” domestic consumers have a special preference for “aged wine.” Wine companies are intensively increasing their investment in aged wines in the hope of rebuilding consumer trust and the value system of high-end liquor.

In the past, liquor companies mainly established a value system by creating high-end brands, highlighting the scarcity of famous liquor products, and setting corresponding high prices. However, in recent years, as the liquor industry has entered an era of stock competition, consumers have also returned to "price rationality + consumption rationality", and competition in the liquor market has gradually entered an era of quality and brand.

In recent years, the output of liquor has continued to decline. In 2023, the output of liquor by large-scale enterprises nationwide was 4.492 million kiloliters, which was nearly half of the 8.712 million kiloliters in 2018. The market showed a pattern of strong differentiation and concentration.

At a previous industry event, He Yong, secretary general of the China Alcoholic Drinks Association, said that the era of scarcity of Chinese liquor has passed and the era of branding has arrived. The liquor industry needs to resolve the contradiction of trust between the supply side and the demand side, that is, the contradiction of trust between products and consumers.

Wang Chaocheng, chairman of Shengchu Group, also believes that the current high-end liquor market is influenced by both the economy and consumer groups. Drinking less and drinking better wine has become an industry consensus. How to use higher quality products, especially to provide good wine in a way that consumers can understand simply and intuitively, has become a key competitive strategy for each liquor company.

On the other hand, amid competition for liquor stocks, the old liquor category continues to maintain high growth, and liquor companies also value the incremental opportunities therein.

In January this year, JD Supermarket and the China Alcoholic Drinks Association jointly released the "2024 Aged Wine Consumption Trend Report", which showed that the domestic aged wine market transaction volume has grown rapidly in recent years, maintaining a growth rate of about 20% for 10 years. At present, the transaction scale of China's aged wine market has exceeded 100 billion yuan, and it is expected to exceed 150 billion yuan in the next five years.

Wine industry analyst Cai Xuefei told China Business News that the domestic wine market has entered a stage of stock competition. Companies need to maintain performance growth mainly through two major paths: nationalization and product structure upgrading. Against this background, companies are focusing on vintage wines in the hope of increasing product premiums and thereby improving performance.

It is worth noting that although domestic wine companies have been intensively increasing their investment in vintage wines, the vintage wine category still has no relevant mandatory rules to protect it.

Previously, the China Alcoholic Drinks Association issued the "Group Standard for Vintage Liquor", including the "Jarn-Stored Aged Liquor (Luxury-Flavored Liquor)" issued by the China Food Industry Association this time, which are group standards and are not mandatory. However, in the European and American markets, there are strict legal regulations for the year labeling of vintage liquor.

But in Cai Xuefei's view, although the issue of mandatory standards for vintage liquor has not yet been resolved, under the centralized market structure, although the leading liquor companies are promoting the establishment of group standards, they can also establish differentiation and play a role in promoting the development of the industry.