sales difficulties and serious inventory backlog! langjiu wang bowei's tough channel policy puts dealers in a dilemma
2024-09-09
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signs indicate that langjiu distributors are facing a dilemma. on the one hand, even with an inverted price, sales are still difficult; on the other hand, if they do not continue to pay for inventory, they may lose their qualifications as distributors.
recently, wang junlin, chairman of langjiu group, conducted intensive research in inner mongolia, hunan and other markets, and listened to the operating conditions and feedback from participating dealers. he was accompanied by the market leaders of the relevant regions and business units of langjiu sales company. the visit of langjiu senior management is ostensibly a way to comfort dealers, but this warm and affectionate move does not touch the core of the problem, and pales in comparison with the substantial profit concessions that dealers really desire. signs show that langjiu dealers are facing a dilemma. on the one hand, even with inverted prices, sales are still difficult; on the other hand, if they do not continue to pay for inventory, they may lose their dealer qualifications.
this dilemma occurred during the period when wang junlin's son wang bowei served as general manager of langjiu. wang bowei's tough channel policy put distributors in a difficult situation.
wang bowei is a graduate of tsinghua university with a degree in science and engineering. he later went to the united states for further studies and obtained a master's degree in business administration. however, his academic brilliance did not seem to translate into brilliant achievements in the workplace. in the early days, he focused on his major and sought breakthroughs in the field of science and technology, but the reality was contrary to his wishes. his performance was mediocre under the huge halo. so he chose to go to the united states to start a new chapter. his short overseas experience also did not achieve significant results, but his frequent job hopping concealed the fact that he was confused about his own positioning. in the end, he chose to join the family business langjiu group, aiming to inherit his father's business.
frequent job-hopping successor
the cooperation between father and son wang bowei and wang junlin should have been an eye-catching industry story, but the actual business performance was not as smooth as poetry. wang bowei entered the game with his high education and youthful spirit, trying to set off a youthful storm of management reform in the ancient wine cellar of langjiu, but after the storm, what was left was the channel cracks that needed to be carefully repaired.
image caption: wang bowei speaking at an event
unlike most people who are admitted through normal examinations, wang bowei's admission into tsinghua university was not entirely dependent on his college entrance examination scores. xinkan finance found that wang bowei's name was on the list of tsinghua university's 2006 independent enrollment, which shows that wang bowei entered this top university through special channels. as for wang bowei's expertise, the enrollment list did not explain.
data source: tsinghua university announcement
when he entered the university campus, his expertise did not seem to be fully demonstrated. instead, a rumor about "wang bowei's shy and introverted personality and not good at speaking" spread in the school at that time. this personality trait also affected his performance on campus to a certain extent. in his four years of university life, he received very few honors.
under the halo of tsinghua university, wang bowei entered the workplace. at that time, he chose yunnan north aurora optoelectronics technology co., ltd., a technology company that had nothing to do with the family business, and began his career as an engineer. however, the reality was not as glorious as he had imagined. after working in the company for more than a year, wang bowei decided to leave. after experiencing the first period of hard work in the workplace, he did not choose to continue to work in the technology industry, but chose to return to the academic world and went to the united states to pursue an mba in 2012.
during his study trip in the united states, wang bowei's rich experience is like that of an explorer, with internships spanning various fields. at solartown, he was a salesperson; at campbell soup company, he was a brand manager; in the r&d laboratory, he was a scientist; in the software testing company, he was a test engineer; in the international business education company, he was a strategic consultant. in 2014, he graduated from the smith school of business at the university of maryland. in just three years, he appeared in the ranks of fortune 500 companies such as campbell soup company, capital one financial corporation, and new york life insurance company. after quickly shuttling back and forth between many companies, he failed to leave a deep mark in any position. this top student seemed to have never found his own career direction.
in 2018, wang bowei made his first appearance at langjiu, where he served as assistant to the chairman and secretary of the board of directors. this change seemed to mark his abandonment of career exploration, and he chose to return to his family's liquor industry, and began to serve as the company's general manager in 2023. on the surface, wang bowei's frequent job hopping is a desire for growth and challenges, but behind it may be confusion about his own positioning and anxiety about career achievements. this unstable past career trajectory can't help but make people question the ability of this general manager.
although wang bowei has made bold attempts in many fields, he seems a little immature in the traditional liquor industry compared with his peers who have rich management experience. in addition to the young wang bowei, langjiu also introduced ma xingkun, born in 1988, as the supply chain director, wang lei, born in 1986, as the mechanical automation director, and shen yi, born in 1980, as the dean of the quality research institute. langjiu is launching a youth storm of management reform around wang bowei, trying to bring new thinking and management concepts to the company through the creation of a new team.
it is not entirely a good thing for the company to introduce a large number of new management blood, because young people are eager for quick success and profit, emphasize "short, flat and fast", do not think about problems comprehensively, and lack forward-looking awareness. if there are major strategic mistakes, the operating results will be ruined. take lao gan ma as an example. this well-known hot sauce brand has won the favor of the market with its unique flavor and quality under the leadership of its founder tao huabi. however, with tao huabi's abdication in 2014, her two sons li guishan and li miaoxing took over the baton of corporate management. li guishan is responsible for external sales strategy, and li miaoxing is in charge of internal production. unfortunately, this handover of power did not bring the expected prosperity. instead, lao gan ma encountered unprecedented challenges, and experienced drastic turmoil from management to products.
in order to prevent langjiu from being ruined by his young team, wang bowei actively sought change during his tenure as general manager, focusing on promoting changes in organizational structure and sales strategy. in 2023, langjiu's sales performance seemed to have failed to meet expectations, which prompted him to make a profound adjustment to langjiu's sales structure at the beginning of 2024. in this change, chen jianwei, who was formerly the executive vice general manager of the sales company, was forced to transform and focus on the affairs of langjiu manor company. similarly, hu hong and yi mingliang, the two deputy general managers of the sales company, also resigned from their leadership responsibilities in the qinghualang division and the strategic promotion department, respectively. at the same time, li jun, who performed better, was promoted to assistant to the general manager of the sales company and concurrently served as general manager of the honghualang division.
wang bowei's sales strategy is undoubtedly deeply influenced by wang junlin. at the beginning of 2024, there were market rumors that wang bowei would increase the supply price to distributors by 20 to 30 yuan. this strategy aims to stimulate the enthusiasm of distributors to actively pay for purchases before the price increase, in order to lock in profits before the price adjustment. however, the actual performance of the market is contrary to expectations, and the wholesale prices of various products of langjiu have shown a continuous downward trend. according to wind data, as of september 8, 2024, the wholesale price of langjiu honghualang 10 has fallen from its peak of 355 yuan to 270 yuan, a drop of 85 yuan, a decline of about 25%; the wholesale price of honghualang 15 has also fallen from 525 yuan to 425 yuan, a drop of 100 yuan, a decline of about 20%; and the price of qinghualang has fallen from a peak of 960 yuan to 825 yuan, a drop of 135 yuan, a decline of about 15%. there are even market rumors that the price of qinghualang in some markets has even fallen below the psychological barrier of 700 yuan.
the market fluctuations of the continuous decline in prices of all products not only reflect the subtle changes in the market supply and demand relationship, but also reflect the dealers' concerns about the uncertainty of future market trends. the dealers' inverted prices not only squeezed their already slim profit margins, but also brought the risk of inventory backlogs, which made them feel under great pressure. no wonder they concentrated on reflecting the real problems of sales difficulties and serious inventory backlogs during the chairman's visit.
wang junlin and the company's top management's continuous and intensive visits to dealers may seem like a way to appease dealers, but this warm and affectionate move pales in comparison to the substantial profit concessions that dealers really want. the reason why wang bowei's sales strategy did not touch the core of the problem seems to be directly related to his high sales costs.
although langjiu has not yet gone public and its financial data has not been made public, according to market analysis, its high sales costs are an indisputable fact in the industry. data from langjiu's ipo announcement shows that from 2017 to 2019, langjiu's sales expense rate averaged 30%. even though it declined in 2020, it still remains at around 20%. this figure is much higher than that of industry giants such as maotai, wuliangye, luzhou laojiao, and fenyang liquor, whose sales expense rates are as low as 3.74% and as high as 13.42%.
faced with the growth bottleneck of langjiu, wang bowei has also been gradually trying new channels such as e-commerce and live streaming, and has achieved certain sales results in the short term. however, this performance growth is at the expense of profits. for example, in the 2023 "919" fine wine super category day event on an e-commerce platform, langjiu's transaction volume increased by 376% year-on-year, ranking first, but this growth was based on large-scale promotional activities, and there were even large-scale activities of 50% off on the event page.
in the context of langjiu's inverted market price, this strategy of exchanging price for sales is undoubtedly a short-term solution. wang bowei's short-sightedness in sales strategy may pose a hidden danger to langjiu's long-term development. wang bowei needs to think more deeply about how to sell wine.
when the storm of youth in management swept in, its potential destructive power was confusing. dealers had already begun to express their actual dissatisfaction through their actions, which was undoubtedly a resounding "bad review" of wang bowei's sales strategy. as for the future, whether those big dealers would leave like fallen leaves in autumn has become a suspense that makes people both curious and uneasy.
management level does not match high salary
langjiu is pressuring distributors to purchase goods mainly because the group is actively expanding its production capacity. according to official news from langjiu, the company plans to increase the annual output of sauce-flavor liquor to 100,000 tons and the annual output of mixed-flavor liquor to 150,000-200,000 tons by 2030, and the storage volume must reach more than 500,000 tons. compared with the company's current annual output of 60,000 tons and 180,000 tons of storage volume, the growth rate is more than 3 times. in the future, these increased production capacities will have to be sold by the sales team led by wang bowei, and forcing distributors to hold large inventories is also a helpless move.
in contrast to the inverted prices and sales difficulties faced by distributors, the number of langjiu distributors has risen against the tide, surging from 1,683 in 2018 to more than 3,000 in 2024, and internal competition within the brand has continued to intensify. with the surge in the number of stores, the market saturation is also increasing, which makes people worry whether langjiu's growth story is coming to an end.
faced with the difficulties of increasing number of distributors and general sales difficulties, langjiu is bound to fail to deliver a satisfactory sales answer sheet. according to the survey data of wine media in 2023, langjiu ranked only ninth in the liquor industry with a revenue of 20 billion, and ranked third in guizhou province. this former leader in the field of sauce-flavored liquor has been surpassed by xijiu and moutai's sauce-flavored liquor series in the sauce-flavored liquor track. in addition, according to the financial report of huazhi liquor store, the two high-end liquor brands of moutai and wuliangye accounted for more than 80% of its liquor revenue, which also means that langjiu, which has long proposed to "be on par with moutai", has "fallen behind" in its strategy of sprinting to high-end.
in 2023, langjiu made a major strategic adjustment, upgrading its strong-aroma series of liquors to a blended-aroma type, striving to make breakthroughs in the two major areas of sauce-aroma and blended-aroma. however, langjiu's current blockbuster product, the fourth-generation qinghualang, has a large inventory, and the growth of honghualang is still weak.
in langjiu's new product promotion strategy, the fifth generation of qinghualang was given the important task of reshaping its market positioning. langjiu group also announced that the starting price would be 1,200 yuan per bottle, which would be gradually increased to 1,500 to 2,000 yuan per bottle in the future. however, excessively high pricing may cause the brand to fall into the "high-end trap", lose emotional connection with consumers, and eventually be labeled as the "price increase king" by the market.
in contrast to the price cuts on distributors and the decline in the company's ranking, langjiu is not stingy with its internal senior management. according to the data in langjiu's 2022 prospectus, the 20 directors, supervisors and senior executives of langjiu co., ltd. received a total annual salary of 63.4198 million yuan, with an average of about 3.34 million yuan per person. at that time, this data was the total annual salary of executives of 14 listed liquor companies on the a-share market. it has to be said that langjiu and the wang family are biased in the distribution of benefits. faced with the current situation of inverted distributor prices and sales difficulties, high salaries and low abilities seem to be more suitable to describe langjiu's senior management.
langjiu's ipo road was also full of ups and downs. three attempts to go to the board of directors failed. in addition, the securities regulatory commission questioned the company in a 10,000-word article. the 53 interlocking questions reflected that the company had long deviated from the path of standardized and sustainable healthy growth. in comparison, the level of management and the current situation of inverted prices and sales difficulties of dealers are just the tip of the iceberg of its operating difficulties.
