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source: times finance author: xing wenwen

has xifeng liquor been cheated by its distributor again?

recently, its private label liquor "national flower porcelain xifeng liquor" invited the controversial internet celebrity sima nan as a guest for its mid-autumn festival event, which triggered a large number of negative comments, and many netizens even expressed their intention to boycott xifeng liquor.

on september 19, xifeng liquor’s emergency public relations efforts were “shut down” and the company issued the “notice on standardizing market promotion activities” (hereinafter referred to as the “notice”), which imposed strict constraints and requirements on related brand activities.

the "notice" shows that all market activities of xifeng liquor marketing management company and brand operation company are subject to a written reporting management system and can only be implemented after review and approval by the marketing promotion department of the marketing management company. in addition, experts, scholars, important leaders, cultural celebrities, etc. to be invited to the activities must comply with the core socialist values.

on the afternoon of september 21, sima nan responded on his personal weibo, saying, "let go of xifeng, come at me!" he said that he did not take money from xifeng liquor, did not endorse xifeng liquor, and did not advertise for xifeng. "xifeng liquor was one of the sponsors of the tang dynasty night banquet event in xi'an during the mid-autumn festival. i gave a speech and had a few conversations with several scholars and experts, that's all."

in recent years, as one of the four famous liquor brands,xifeng liquorconfined to a remote corner, its reputation and influence are fading. compared with the three famous old liquors, kweichow moutai, shanxi fenjiu and sichuan luzhou qujiu, xifeng liquor is like a fallen noble. although shaanxi xifeng liquor co., ltd. (hereinafter referred to as "xifeng liquor co., ltd.") has increased its assets and production capacity twice, it is still not very prominent in the national liquor market.

around 2010, in order to seek breakthroughs and go public, xifeng liquor, which had insufficient production capacity, started oem business, purchasing other flavored finished wines from external wineries and co-producing oem products. the financial sector once reported that according to incomplete statistics, xifeng liquor once had thousands of oem wines on the market.

it is rare in the domestic liquor industry for a famous liquor company to have so many non-direct brands. an employee of xifeng liquor marketing company said that he did not know how many oem brands there were now. in 2023, xifeng liquor had just entered the 10 billion revenue camp, and xifeng people shouted the slogan of rejuvenation, hoping to return to the ranks of first-class famous liquors as soon as possible. among them, the three major xifeng liquor oem products, 6-year and 15-year aging and huashan lunjian, have contributed a lot to xifeng liquor's revenue.

in the year when the "post-10 billion era" begins, can the oem business become a stepping stone to help xifeng liquor's revival, or a time bomb that triggers public opinion?

entering the 10 billion camp, oem products are still "biting back"

this incident was caused by the oem model that xifeng liquor has been operating for many years.

at present, xifeng liquor has two major product systems. the main products of the self-operated system include the old green bottle series of staple wines that compete with bofeng, and the high-end red xifeng series. the private-label wines operated by cooperative distributors and operators are called "strategic brand products" to the outside world. the cooperative distributors have the rights to design the wine and packaging, market, build the brand, and exclusively sell the series of products in designated areas.

among xifeng liquor's top oem wines, the 6-year-old and 15-year-old wines are produced by shaanxi xifuxiang brand operation co., ltd., while huashan lunjian belongs to shanxi hengfeng wine co., ltd. the national flower porcelain xifeng liquor involved in the incident is also well-known and is developed and operated by xi'an national flower porcelain brand operation co., ltd.

according to the prospectus disclosed by xifeng liquor co., ltd. in 2018, from 2015 to 2017, the cooperatively produced products of xifeng liquor accounted for 31.83%, 37.21% and 36.44% of the total sales respectively, which means that more than 30% of xifeng liquor's revenue came from oem.

as we all know, in the consumer field, underwear brandsantarcticthrough the oem business, they quickly seized the market and made a lot of money. but at the same time, the backlash of the oem model is also very obvious. oems are more powerful, product quality and channels are difficult to control, and the value of the main brand is diluted, all of which cause irreversible damage to the brand. in addition, the business model of making a lot of money will increase the inertia of the brand side, and product innovation and research and development will stagnate.

similarly, for xifeng liquor, there is a natural contradiction between long-term development and the short-term profit-seeking of oem dealers.

in march this year, xifeng liquor also suffered a setback due to improper behavior of its distributors.right to nameandright of publicitydispute, famous artisthuang bohuang bo was sued for xifeng liquor and its two distributors. although it was found that xifeng liquor had nothing to do with the incident and that it was an infringement dispute involving its client, shaanxi qinhuang royal banquet, and the party involved, shaanxi qinhuang royal banquet brand management co., ltd., had publicly apologized to huang bo in june, the brand image of xifeng liquor was undoubtedly hit hard.

in fact, xifeng liquor is not unaware of the negative impact of the oem model. in 2019, xifeng liquor changed its leader. the new chairman zhang zheng reiterated the goal of 10 billion yuan in revenue and returning to the first-class liquor market, and carried out drastic reforms. on the one hand, it promoted red xifeng and old green bottle to strengthen the image of its own brand; on the other hand, it comprehensively cleaned up and rectified low-end sub-brands, reduced its dependence on large merchants, and rectified the chaos in the channels.

in terms of product planning, xifeng liquor is consciously moving upward. the flagship product red xifeng (official online price is 1,499 yuan/bottle) was launched in 2019; in 2021 and 2023, xifeng liquor launched five-star red xifeng (official online price is 3,980 yuan/bottle) and red xifeng 1978 (official online price is 588 yuan/bottle), covering the mid-high-end, high-end and ultra-high-end tracks. on august 25 this year, zhou yanhua, deputy general manager of xifeng liquor co., ltd., mentioned at a marketing meeting that it is necessary to adopt a refined and differentiated strategy to accelerate the layout of mid-high-end products and achieve the long-term sustainable development of the red xifeng series of products.

in terms of marketing model, xifeng liquor co., ltd. divided the original marketing company into three parts. shaanxi xifeng liquor marketing management co., ltd. (hereinafter referred to as the "marketing company") is responsible for managing self-operated products, shaanxi xifeng liquor brand operation co., ltd. (hereinafter referred to as the "brand operation company") is responsible for managing private label products, and the e-commerce company is responsible for operating online products, thus subdividing product marketing work.

on september 20, a person from the marketing company responsible for self-operated products told times finance that the reformed marketing management system is still in use today, and each subsidiary is responsible for its own product line, which enables better management.

"the company did have a lot of underwriting products (referring to private label products) before, but the brand operating company has already cut off many brands. i don't know exactly how many there are now. some of them are still in stock and may still be on sale. some consumers may be confused about our brand line and products." said the person from the marketing company.

on the same day, a person from the brand operation company responsible for oem products told times finance that sorting out oem products is part of the company's strategy, and the company has long stopped developing new products. as for the retention of operators, he said that the company will eliminate some brands every year based on the sales of operators, similar to the last-place elimination mechanism.

four failed attempts at ipo, still a long way to go for nationalization

although there has been some success in product development and brand channel organization, the failure to go public so far remains an unspeakable pain for xifeng liquor.

from 2012 to 2018, xifeng liquor co., ltd. attempted to go public four times, but failed repeatedly due to allegations of financial fraud and corruption. it is the only liquor company among the four famous liquor companies that has not yet been listed. the baoji municipal government also hopes that xifeng liquor co., ltd. will resume listing as soon as possible. in september 2022, when responding to the relevant proposals of the shaanxi provincial committee of the chinese people's political consultative conference, it proposed to speed up the sorting out and resolution of various legacy issues that affect the listing of enterprises, continuously standardize corporate management, and lay a good foundation for the listing of xifeng liquor co., ltd.

the failure to go public has led to limited operating funds and production capacity, which is a major reason why xifeng liquor has found it difficult to regain its former glory.

according to xifeng liquor co., ltd.'s 2018 prospectus, the production of xifeng liquor's base liquor in 2017 was 8,200 tons, but in the same year it purchased a total of 19,400 tons of base liquor, with the proportion of purchased base liquor as high as 70.31%.

in recent years, xifeng liquor has not disclosed specific sales and production data, only announced sales revenue, which has been growing steadily overall. in 2021 and 2022, xifeng group achieved sales revenue of 8.01 billion yuan and 8.429 billion yuan respectively. in 2023, xifeng group's sales revenue increased by 23% year-on-year to 10.34 billion yuan, entering the "10 billion club" of liquor. in addition, the top oem products contribute greatly to xifeng liquor.

according to xifeng liquor, the sales target for 6-year and 15-year aged liquors in 2023 is rmb 1 billion. wang yan'an, chairman of shaanxi xifuxiang brand operation co., ltd., the company to which xifeng liquor belongs, said in march last year that 48% of the set target had been achieved and that it would be exceeded within the year. at the same time, the above-mentioned person from the brand operation company also said that the sales progress of 6-year, 15-year aged liquors and huashan lunjian this year was good.

in august this year, xifeng liquor co., ltd. completed its third round of capital increase of approximately rmb 489 million. the corresponding investment project was xifeng liquor's 100,000-ton base wine production and supporting projects. this project was also called a milestone project in the development history of xifeng liquor by zhang zheng.

it is worth noting that a bond tracking rating report from changan huitong group shows that xifeng liquor co., ltd. is in the ipo application stage. just after entering the 10 billion camp and stuck in the ipo application stage, xifeng liquor was threatened with a boycott by a large number of netizens due to a marketing storm.

however, baijiu marketing expert cai xuefei believes that the incident has limited actual impact on xifeng liquor.

"the behavior of the distributors cannot represent the corporate behavior of xifeng liquor. moreover, from the notice issued by xifeng liquor, it can be seen that xifeng liquor did not know about this matter beforehand. most consumers are not aware of this matter.sima nanthe awareness of alcohol is very weak, and ordinary people pay more attention to quality and low price when buying alcohol. from this perspective, this incident will not affect consumers' purchases. "on september 21, cai xuefei said in an interview with time finance.

to date, the regional characteristics of xifeng liquor are still very distinct, with the majority of sales in the province. this can be seen from the sub-brand fengtan xifeng liquor.

according to xifeng liquor, as of the first half of 2024, there were 237 distributors of sealed-jar xifeng liquor, an increase of 38 from the same period last year. a total of 15,632 effective terminals for sealed-jar xifeng liquor have been developed nationwide, with more than 80% concentrated in shaanxi, of which xi'an accounts for more than 50% of the market.

at present, xifeng liquor is still implementing the marketing strategy of "focusing on deepening the base market within the province and building model markets outside the province", and has created model markets in many areas in shaanxi, southern and northern markets.

this year, xifeng liquor and yingmin liquor started cooperation to explore the northeast market. it is expected to set up 800-1200 terminal stores in shenyang and achieve annual sales of 20 million yuan.

in addition, the fengxiang type is a non-mainstream type, which also limits the market breadth of xifeng liquor and requires a longer cultivation time, which also greatly increases the difficulty of xifeng liquor's nationalization.