news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

The price cuts of Moutai that started in April this year are beginning to affect the entireLiquorAccording to the "2024 China Liquor Market Mid-term Research Report" recently released by the China Alcoholic Drinks Association, 80% of the respondentsWine CompanyThe industry said the market has cooled.

Held on July 12China ResourcesAt the Wine Channel Partner Conference, Hou Xiaohai, Chairman of the Board of Directors of China Resources Beer (Holdings) Co., Ltd., said that the existing cooperation model of wine manufacturers needs to be adjusted urgently, and proposed to build a community of shared destiny for manufacturers. In the industry's view, since this year, discussions on new manufacturer relationships have continued, and the long-standing situation of "strong manufacturers and weak merchants" in the liquor industry will see a turnaround.

The liquor market is facing a cold

The above-mentioned 2024 Chinese liquor market mid-term research report shows that the recovery trend in 2024 is weak. Under the competition of stock, 80% of the surveyed liquor companies said that the market has cooled down, consumption is diversified, strong differentiation, and breadth competition has become a fact. The report also shows that the sales volume of the surveyed liquor distribution companies in the first half of the year decreased by 37.5%, the sales revenue decreased by 52.1%, and the average customer price decreased by 68.8%.

Relevant survey data show that, affected by external factors and rational regression, liquor consumption in the first half of the year also showed a diversified and differentiated trend. "From January to June 2024, the top three best-selling price ranges in the liquor market were 300-500 yuan, 100-300 yuan, and 100 yuan and below, accounting for 29%, 22% and 18% respectively, and the price inversion of high-end liquor was more obvious."

The first to feel the chill in the liquor industry are the distributors of liquor brands.

It is reported that a liquor distributor recently pointed out in an interview with the media that the liquor business is dull this year, the market competition is fierce, and the prices of many well-known liquor brands have been inverted to varying degrees. Currently, liquor distributors can only operate with small profits and try their best to maintain current inventory and cash flow.

Liquor distributors from Shandong area pointed out that the liquor products on the market this year are highly homogenized and the prices are transparent, so the competition among liquor dealers is very fierce. They undercut each other in vicious price competition, and even sell below the purchase price. The profit of some high-end liquors in retail stores is only 3% to 5%, making it difficult for them to operate in the long term.

The analysis pointed out that for a long time, the domestic liquor industry has been showing a situation of strong manufacturers and weak merchants. Liquor companies assign tasks to distributors in various regions, and distributors are responsible for distribution in the regional market, playing the role of a buffer. In the first half of 2024, due to the sluggish market sales, the problem of price inversion has not been alleviated, the pressure on channels has also increased simultaneously, and the relationship between manufacturers has become more tense.

The survey shows that in the first half of 2024, more than 60% of distributors and terminal retailers said that inventory increased, which is higher than the same period last year. 40% said that the degree of inversion of actual product sales prices has increased, and more than 50% of wine merchants believe that profit margins have decreased.

Independent wine critic Xiao Zhuqing believes that previously, wine companies used their strong market dominance and brand position to push goods to channels, which is an important reason why some liquor companies achieved performance growth in 2023. However, the tolerance of distributors is limited. In order to pay rent, wages or loans, more distributors will choose to sell goods at low prices to realize cash, which is also the root cause of the current inverted liquor prices.

China Resources Wine Industry plans to build a community of shared destiny for manufacturers

The intensification of competition among manufacturers has also attracted more and more attention from wine companies. At the China Resources Wine Channel Partner Conference, Hou Xiaohai admitted that he had investigated many domestic markets during the Spring Festival and found that the current manufacturer relationship needed to be adjusted. "China Resources Wine is promoting the construction of a community of shared destiny for manufacturers, allowing the manufacturer relationship to gradually develop from simple contract transactions to deeper cooperation with consistent goals, compliance with rules, business collaboration, resource sharing, and risk sharing, and it will be the main direction for improving the manufacturer relationship in the next five years or more."

Hou Xiaohai believes that 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. The prices of manufacturing and circulation factors remain high, and labor and various costs are increasing. The development trend of consumption is difficult in the short term, tough in the medium term, and optimistic in the long term. Under the "Matthew effect", the nationalization and regionalization trend of enterprises is obvious.

Regarding how to build a community of shared destiny for manufacturers, Hou Xiaohai said that we must first enter the new world of the wine industry and explore the "beer + liquor" large customer channel model and a new manufacturer relationship to build a community of shared destiny. At present, China Resources Beer is still exploring the high-end beer, channel dealers are building liquor merchants and group purchases, and exploring tobacco and alcohol shops, banquets and other scenarios.

The basic path to building a community of shared future for manufacturers includes: manufacturers are responsible for "selecting and nurturing" major customers, and are responsible for market areas, responsibility allocation, and market order, while major customers are responsible for business development and daily market management; in terms of business responsibilities, market expansion is handed over to major customers, and management supervision is handed over to manufacturers; in terms of cost management, cost investment belongs to major customers, and management evaluation belongs to manufacturers; in terms of network expansion, expansion and maintenance belong to major customers, and inspection and evaluation belong to manufacturers; in terms of market order, maintenance and execution belong to major customers, and inspection, arbitration, etc. belong to manufacturers.

Regarding Hou Xiaohai's proposal to build a community of shared destiny for manufacturers, Wang Chaocheng, chairman of Shengchu Group, a liquor industry, said that the current domestic liquor industry has formed a distribution model of "huge profits in the upstream, small profits in the merchants, and micro-profits in the terminal", and now this manufacturer-manufacturer relationship is no longer sustainable. "To build a community of shared destiny for manufacturers, there must be a normal profit-sharing structure between manufacturers. At the same time, companies must respect market realities and trust data from the front line of the market to design products in a targeted manner. In the current difficult situation of the industry, liquor companies should take the initiative to assume more responsibilities."

Baijiu analyst Cai Xuefei also pointed out that as China's alcohol consumption accelerates and rational consumption awakens, the focus of work between manufacturers should shift from traditional channels and sales to value services for consumers, which objectively requires wine companies and wine merchants to redefine industry responsibilities in order to better adapt to changes in the consumer market. "The new manufacturer relationship is expected to unfold in multiple aspects such as manufacturer interest integration, digital inventory management, and experiential marketing, but whether the liquor industry can adapt to this new change remains to be seen." (Chen Junhong)