Sixteen years is difficult to realize the "dream of listing", and Langjiu's "sauce fragrance second" position is also difficult to guarantee?

Text|perseverance

Source|Bowang Finance

Since Jinhui Liquor landed on the Shanghai Stock Exchange in 2016, there has been no new listing of baijiu.

In the 7-year window, the IPO of liquor companies finally broke the ice.

It is a pity that it is not Langjiu, which has made frequent moves in the capital market, but Li Du, a rare wine that belongs to the same sauce type.

In fact, as early as 2007, Langjiu began to prepare for listing, but it was shelved under the influence of enterprise scale and business performance, and then experienced rumors of backdoor listing, but there has been no progress; Until May 2020, the prospectus was submitted again, but in exchange for 53 questions from the CSRC, it was finally terminated in April 2022.

Why hasn't Langjiu, who calls himself "Sauce Xiang Lao No. 2", come true to his dream of going public for sixteen years?

Although the liquor sector is prosperous, the pressure of langjiu is only increasing

According to public information, Langjiu was established in August 2007 and is a large-scale modern enterprise group with the production and sales of Langjiu as its main business.

It has to be said that the liquor industry is currently developing more and more vigorously.

According to Frost & Sullivan, in terms of revenue, the market size of China's liquor industry increased from 536.4 billion yuan in 2018 to 603.3 billion yuan in 2021, and driven by the healthy growth of the industry brought about by regulatory measures, the continued trend of premiumization, and the growing popularity of sauce-flavored liquor, the liquor industry is expected to continue to expand in the next few years, and sales are expected to reach 769.5 billion yuan in 2026.

Source: Frost & Sullivan Source.

In terms of aroma type, in recent years, sauce aroma type liquor has become very popular due to the high product quality, rich aroma layer, and unique umami taste that cannot be found in other types of liquor products. The market share of sauce-fragrant liquor has also increased driven by Kweichow Moutai, so sauce-fragrant baijiu has become the second largest aroma type by market size since 2018. The market size of sauce-flavored liquor increased from 105.6 billion yuan in 2017 to 190 billion yuan in 2021, with a compound annual growth rate of 15.8%. Since then, benefiting from the growth of consumers' pursuit of high-quality and unique production processes and the increase in demand for rich products, it is expected that the market size of China's sauce-flavored baijiu will continue to expand, and surpass the strong aroma type to become the largest baijiu aroma type in 2026, accounting for 41.8% of the entire liquor industry in the same year.

Source: Frost & Sullivan Source.

In addition, with the increase in consumer purchasing power and the premiumization of liquor brands, it is expected that China's liquor consumption will shift to sub-high-end and high-end liquor products, and the market size of sub-high-end and high-end products is expected to reach 371.9 billion yuan in 2026, with a compound annual growth rate of 12.3% from 2022 to 2026, the highest value among all liquor products in all price ranges. The market share of sub-premium and high-end liquor products is expected to reach 48.3% in 2026, an increase of 12.6% over 2021.

Source: Frost & Sullivan Source.

But it is worth mentioning that although the sauce aroma type has achieved outstanding results, most of them are contributed by Kweichow Moutai.

According to Kweichow Moutai's 2021 financial report, it achieved revenue of nearly 110 billion yuan that year, accounting for nearly 60% of the entire sauce and wine sector; The net profit was 52.46 billion yuan, accounting for more than 67%. This also means that other major sauce brands, including Langjiu, can only divide the remaining less than 40% of the market, and now Zhenjiu Lidu is officially listed on the main board of the Hong Kong Stock Exchange, becoming the "second stock of sauce wine" after Kweichow Moutai, and the pressure on Langjiu is only increasing.

Big moves are frequent, but high-end is not easy to go

High-end is the next breaking point in the liquor industry.

Also in order to "break through" the suppression of Kweichow Moutai, Langjiu made frequent moves.

Since the market loves Moutai, Langjiu has closely followed Moutai in product positioning, trying to create high-end products through price increases.

The specific method is very simple, Langjiu first adjusted the product positioning of its Qinghualang brand, changed from the original "sauce model" to "one of China's two high-end sauce liquors", and then bundled the concept of the upstream and downstream of the Chishui River, carried out overwhelming advertising and publicity of the brand, and finally increased the price to create a high-end sauce brand.

The price of Langjiu is also obvious, in 2000 the first generation of Qinghualang was launched, in 2017 positioned as "one of China's two major sauce fragrant liquors", trying to raise the height of its own products by using the Moutai brand, in 2019 the price of Qinghualang gradually increased from 780 yuan / bottle to 859 yuan / bottle, and then to 909 yuan / bottle, in September 2020 Langjiu also announced the implementation of a planned quota system for sauce-fragrant products, and the retail price of Qinghualang was adjusted to 1499 yuan / bottle. In other words, it took only one and a half years for Langjiu to build Qinghualang into a high-end brand and become a large item with a factory price of 1,000 yuan.

In order to create a high-end brand concept, Langjiu is really willing to "put down the blood". According to the prospectus, the sales expenses of Langjiu from 2018 to 2020 were 2.94 billion yuan, 1.94 billion yuan and 2.02 billion yuan, respectively, which once reached more than 30% of revenue, far higher than the industry average.

In January this year, Langjiu further split the Qinghualang Division into the Qinghualang Division and the Honghualang Division, and Qinghualang was also recognized by the market under a series of actions of Langjiu.

In the liquor industry, "it has always been imitated, never surpassed", which is exactly Kweichow Moutai.

In the process of Langjiu catching up with Moutai, although Qinghualang has entered the high-end product series in terms of price, the gap between it and Moutai is still like a gap. Both the outside world and Langjiu itself are also aware of this situation, and Wang Junlin, chairman of Langjiu, once said, "At present, there is a gap between Qinghualang and Moutai in terms of total volume and brand influence." In addition, some consumers also said, "The price of Langjiu is quite high, but the taste is far less than Moutai, and there is a psychological gap after purchase."

In addition, Langjiu's strategy of borrowing Moutai marketing has also been "bombarded" by other sauce and fragrant wine companies.

In September 2018, colleagues from Guizhou Renhuai Sauce Xiangjiu wrote an open letter to Wang Junlin, chairman of Langjiu, with a clear theme, "There is only one authentic Sauce Xiangjiu in China, and there are no two major sauce aromas". From the current point of view, if there really are two major sauce aromas, the second largest sauce aroma can only be Zhenjiu Li Du, and it cannot be ranked Langjiu.

Create a strategy of incense, the future is not lost

Langjiu, who originally focused on sauce aromas, is now also trying to step into the field of fragrant.

In 2019, Langjiu proposed the "big and fragrant strategy", and Wang Junlin also emphasized at the 2022 Langjiu Chongyang Xiasha Ceremony that "Langjiu will carry out a comprehensive upgrade of all products next year, which will be an inflection point for the upward development of Langjiu", and what has attracted much attention is that in February this year, Langjiu held the 2023 Langjiu and Xiangxiang Strategy Conference and the third Langjiu Manor Three Pins Festival, at which Wang Junlin clearly said, "In the next 2-3 years, Jianxiang Langjiu will point to 10 billion, We will build Kanxiang into the second growth pole of Langjiu and the first in the Kanxiang market."

From the perspective of Langjiu's strategy, it tries to transition from "strong fragrance + fragrant" to "large and fragrant".

Nowadays, the basic layout of Langjiu is full price band and aroma type, forming a combination of sauce, thick and three aroma series product portfolio, but the sauce aroma type is still an important development engine.

As for why the focus of Langjiu has shifted, it is very likely to be differentiated competition.

Throughout the entire liquor industry, the fragrant Maotai, the fragrant Wuliangye, and the fragrant Fenjiu, no matter which one is carried, Langjiu is obviously not an opponent, in comparison, the famous Xiangxiang track is also the main promotion of the mouth cellar of Huijiu.

But what Langjiu knows, how can other wine companies not know, it is clear that the development prospects of Jianxiang are far less than other hot tracks.

Data is the best proof of this. According to Frost & Sullivan's data, the market size of mainland and fragrant liquor in 2021 is only about 30 billion yuan, which is not even one-fifth of that of sauce wine. In addition, the compound annual growth rate of Kanxiang in the past five years is only -0.2%, while the compound annual growth rate of soy wine has exceeded 15%. Whether in terms of scale or growth rate, fragrant liquor is far less than sauce wine.

There is also an important reason that there are no special requirements for the production area of aromatic liquor, which leads to many and scattered players, and does not form a regional scale. Although there are no obvious head wine companies in the track, it is inevitable to compete directly with brands such as Kouzi Cellar, Baishali, Baiyunbian and Yuquan Wine, and if Ruolang Wine wants to expand Kanxiang to the national market, it is inevitable to be challenged by local Kanxiang enterprises.

In fact, Kouzi Cellar has more competitive advantages than Langjiu in the Jianxiang track, and in the 2022 annual report, it is clear to build "China's first brand of Jianxiang high-end liquor", whether in terms of market share or resources, Kouzi Cellar is significantly better than Langjiu.

Langjiu, who is trying to break the circle by making a power and fragrant track, has little chance of winning.