How to really understand Moutai's rejuvenation strategy

Image source: @VisualChina

Text|Zero State LT, Author|Yang Ze, Editor|Hu Zhanjia

Moutai's rejuvenation strategy has been controversial on social media.

From the joint coffee "sauce latte" with Luckin on September 4, to the wine heart chocolate co-launched with Dove on September 14, and even further back, the launch of Moutai ice cream has triggered many waves of discussion. It was not until September 16, when Ding Xiongjun, chairman of Moutai, announced that Moutai co-branded products would come to an end, that the heat of the matter really declined.

In this action to connect young people, who is the aggregator of interests, and what can Moutai gain in cooperation with cutting-edge brands? If from the perspective of young people, Luckin is more scarce, it should be said that Moutai needs Luckin more.

01 

Younger

A move that Moutai must take now

The strength of Moutai is undoubted.

According to the half-year report released not long ago, in the first half of 2023, Moutai achieved revenue of 69.576 billion yuan and net profit attributable to the parent of 35.98 billion yuan, with a year-on-year increase of 20.76% for both indicators. Throughout the first half of 2023, when inventory is high and first- and second-tier liquor has reduced prices to inventory, this achievement shows Moutai's strength.

But if you ask the young people around you how they feel about Moutai, it's another level of question. I once did research and asked the young people around me if they want Moutai? None of them refused. After getting it, many people's first choice is to find channels to sell to scalpers and make money.

Is it too much of a temptation for money? If you change Moutai to luxury goods such as Hermes, LV, Gucci, limited editions such as Supreme and Balenciaga, or even Yamazaki whiskey, and then let them choose, many of them will choose to keep themselves.

Obviously, Moutai encountered a very embarrassing problem, how to make young people agree from the bottom of their hearts that Moutai is wine, not a financial product.

There are usually two ways to solve this, one is heavy marketing, that is, repeated exposure in channels where young people gather, such as Coca-Cola, Sprite, Mengniu, Yili is to put part of the advertising budget on Douyin, Xiaohongshu, Station B, iQiyi, Tencent Video, in which advertising, live broadcast, with the deepening of contact, gradually accepted by young people.

The other is to change the old impression of the brand by launching products that young people like. For example, Li Ning, Bosideng. Bosideng, founded for nearly 50 years, carried out a strategic upgrade in 2018, and launched a joint series of down jackets with top international designers such as former LV and Balenciaga designers and former Ralph Lauren design director, shining at New York Fashion Week, and then influenced Hollywood stars, and then changed young people's old impression of Bosideng through the construction of online and offline sales channels and the launch of new down jackets. The same is true of Li Ning, whose important step in rejuvenation is the launch of the "China Li Ning" sub-brand, which became a hit at New York Fashion Monday in 2018.

Using new products to drive brand rejuvenation is also Moutai's idea.

Since 2022, Moutai and Mengniu have cooperated to launch ice cream, and by May 29, 2023, Moutai ice cream has completed the layout of a total of 34 flagship stores in 31 inland provinces, autonomous regions and cities across the country, with a cumulative sales of nearly 10 million cups. In 2023, Moutai and Middle Street 1946 jointly launched 5 new Moutai ice cream products. In addition, starting from 2023, Moutai Group has continued to launch a variety of cultural and creative products, including blind boxes, figurines, refrigerator stickers and key chains.

Did these attempts work?

▲Photo: Moutai ice cream

At the beginning of the launch of ice cream, because Moutai did not open a number of ice cream shops nationwide at that time, the price of its products was speculated all the way on many e-commerce platforms, with the highest price reaching 240 yuan / cup, which was nearly three times the highest premium of 66 yuan / cup of the original price. But at the end of July this year, in Beijing, Liaoning, Hunan and other places, the original price of 66 yuan a box of ice cream discount promotion, disguised price reduced to only 9.9 yuan, Shaanxi also appeared "buy three boxes of the same taste Baxi ice cream get one box of Moutai ice cream" activity. Blind box products, in the second-hand trading platform, its price has dropped from the retail price of 79 yuan / unit to 25 yuan / piece, and free shipping. Most of the social media discussions are about resale sharing, and the proportion of self-use is not large.

Ice cream, blind boxes, and cultural and creative peripherals do not seem to help Moutai win young people, why is that?

We often say that the most important thing for a brand is to occupy the user's mind, and usually a brand can occupy consumer cognition with two ideas:

One is the product. By stating product characteristics and showing product value to gain consumer recognition, such as 0 sugar, 0 fat and 0 calories of Yuan Qi Forest, afraid of fire and drink Wang Laoji, the world's leading sales of men's pants experts, "non-cola" Meinenda are all product logic.

The other is to emphasize consumer groups. Attract more people through the crowd, such as Moutai, why is Moutai so valuable? Is it because of the unique flavor of sauce wine, or because of the group attribute of Moutai? The answer is obvious. As mentioned earlier, Bosideng and Li Ning's strategy is a very important part of being sought after by fashionistas at New York Fashion Week, and then welcomed by young people who pay attention to fashion.

From this point of view, ice cream, blind box, cultural and creative peripherals, in fact, is product thinking, from the product point of view, because young people like these products, so do these products can get the attention of young people, but ice cream is not a new thing, blind box play is not just emerged, cultural and creative peripherals are all over the place, now their popularity is because there is a group of young people first advocate a certain brand of ice cream, a brand of blind box, a certain IP of cultural and creative products, thereby driving other young people to like.

Therefore, Moutai wants to be younger, instead of making a fuss on the product side, it is better to directly find a gathering place for young people and influence young people.

In fact, luxury brands similar to Moutai have also been so successful in achieving youth.

02 

Luckin

One of the few options for Moutai to be younger

If I want to find the most successful brand in recent years, then I must first recommend the ace of LVMH, the world's top three luxury groups by market capitalization, Louis Vuitton (hereinafter referred to as "LV").

How did LV get younger?

They first cooperated with Supreme, a famous street fashion brand that once went to court, to launch a joint limited edition product, using Supreme's influence among young people to enhance young people's favorability of LV. On the day of the joint sale of LV and Supreme, tens of thousands of young people set up tents in Supreme stores overnight, and even fans and "scalpers" had fierce competition. In the second-hand market, the price of the most popular Box Logo T-shirts and Monogram hooded sweatshirts soared to $10,000. The topic of LV and Supreme co-branding continues to ferment in fashion circles, trend circles, and major social networks.

It can be said that with Supreme, young people have changed their perception of LV.

After that, LV hired Off-White manager Virgil Abloh as the first African-American art director, and designed many pieces that were loved by the fashion circle, including the popular LV Trainer. Driven by these products, LV has gradually removed the label of an old luxury brand and regained the popularity of young people.

Starting with LV, Burberry and Supreme, Prada and Adidas, Givenchy and Nike, Balenciaga and Adidas, Dior and Air Jordan... Luxury brands seem to have opened up the two veins of Ren Du, and have opened the road of co-branding with trendy brands and sports brands that young people like, and young people have begun to accept these luxury brands that their parents were once obsessed with.

Why do luxury brands choose co-branding?

The brand cooperates with influencers in a certain circle to launch co-branded models, and with its influence in this circle, the brand is brought into the circle. This is how the Nike SB product line was brought into the skateboard ring in the 90s. Therefore, luxury brands choose to cooperate with trendy brands that are highly sought after by young people and impress young people with trendy brands.

How can well-known brands quickly impress young people in China? The answer is imminent: where China's young people gather, including new consumer brands that are popular with young people. So we see that LV chose to cooperate with Manner, the world's first-line luxury brand Fendi chose to cooperate with Heytea, and China's most high-end consumer brand Moutai chose Luckin.

With Moutai's position in the field of consumer brands in China, I am afraid that no brand refuses to cooperate with it, but since it is cooperation, it must be mutually beneficial, and in the cooperation, can Moutai gain the favor of young people without losing brand value. From this point of view, Moutai does not have many choices, and Luckin at least has the following advantages:

First, Luckin is a Chinese brand and the boss of the specialty coffee track. Moutai is a brother, at least the status of the partner cannot be too different, even the top three in the industry have not been done, I am afraid that it will not be able to enter the eyes of Moutai. Luckin has just become the leader of the specialty coffee circuit, surpassing Starbucks China in terms of revenue for the first time in a single quarter, with a total of 10,836 stores, more than 4,300 more than Starbucks China.

Second, it is welcomed by young people, after all, Moutai wants to solve the problem of youth, which is the basis of cooperation. Previously, Moutai cooperated with Mengniu to promote ice cream, but Mengniu has not solved the problem of youth, and naturally the boost to Moutai is limited. According to statistics, Luckin's consumer group aged 18~34 accounts for nearly 70%, and Luckin's thick milk latte, raw coconut latte, cheese latte and other explosive products are popular among young people.

Third, be good at using co-branding for marketing. It should be said that Chinese chain beverage brands are all co-branded masters, and Luckin is also one of them, in the past two years, it has successively co-branded with well-known IPs such as LINE FRIENDS, Sad Frog PEPE, "Jojo's Bizarre Adventure: Sea of Stone", Doraemon, etc., through a variety of gameplay, has gained the attention of young people.

Fourth, coffee comes with its own lifestyle label. From the history of coffee popularity, first European celebrities gathered in cafes to chat and then Americans chatted at Starbucks, after the introduction of China, coffee once became a symbol of the lifestyle of developed countries, which labeled coffee as a lifestyle, and Moutai is also a symbol of lifestyle, "fine wine + coffee" has also become a communication technique.

Fifth, with a certain brand texture, at least it cannot always show people at a low price, affecting Moutai's high-end image.

There are many brands in China, and there are thousands of new consumption launched in recent years, but only the first three advantages of Luckin can screen out almost all brands, and I am afraid that only Luckin will be left to meet these five advantages.

On the contrary, from the perspective of supply and demand, there are many liquor brands that can cooperate with Luckin Liquor Latte, Wuliangye, Fenjiu, Luzhou Laojiao, Jiannan Chun, Gujing Gongjiu, these also need to be younger, they cooperate with Luckin, it seems that Luckin will not lose anything, of course, the best is Moutai.

It can be seen that if it is a joint way to rejuvenate as a strategy, then Luckin may be one of the few choices, but we should pay more attention to the fact that behind the rejuvenation of Moutai is a topic of continuous growth, from the existing situation, Moutai is through the reform of the existing business, carry out a diversification strategy to try to find the next growth point, to jointly develop new markets is only a part of this strategy, but diversification itself has risks, a slight carelessness will fall into the same crisis as Lego back then, Interestingly, in the Lego reform that year, joint names were also part of it.

03 

Requires vigilance and attention

A double-edged sword for diversification

In the 80s of the 20th century, the patents of Lego bricks expired in various countries, and many manufacturers began to imitate Lego bricks and sell them at low prices, at this time, Nintendo's game consoles and other video games were also grabbing children's play time, and Lego encountered a growth crisis.

Proman was appointed to become the new CEO of Lego, and his solution was to "de-brick" and use Lego's strong brand influence at that time to expand into video games, clothing, clocks, baby products, shoes, camping supplies and other fields, so that copyright business and merchandise sales became a new growth pillar. LEGO is also building LEGO theme parks around the world to promote LEGO education.

In terms of building block products, Proman changed the value of "not creating a world that reminds people of violence" that Lego has always pursued, and promoted LEGO to cooperate with the hit movie "Star Wars" with the theme of space war to launch a Lego version of "Star Wars". In addition to Star Wars, LEGO also broke with tradition with the "Galido" series, which is incompatible with other Lego bricks, and the completely fictional toy hero "Jack Stone" series.

Although the Lego version of "Star Wars" became the best-selling work in the history of Lego, and opened the wave of Lego cooperation with major popular movies, Lego in TV, movies, theme parks, clothing is also progressing smoothly, but at the same time the expansion of too many fields not only caused the company's internal loss of focus, but also caused consumer confusion - what is Lego?

Is it a toy, or a game, a costume, a clock? What are the features of LEGO products? The result of the confusion was the disappearance of consumer interest, which directly led to Lego falling into huge losses. In 2003, the company's sales plummeted to DKK 7.2 billion from DKK 10.1 billion the previous year, representing a loss of DKK 900 million; In 2004, Lego's losses widened to DKK 1.9 billion. In February 2003, large retailers squeezed large inventories, and Lego inventory at discount stores increased by 40%, more than 2 times safety stock. In 2004, Lego suffered unprecedented losses, nearly $1 billion in debt and a 40% drop in sales in just two years.

This year, the new CEO, Knudstop, was appointed to determine a new direction to bring LEGO back to bricks, focusing on core assets (bricks and LEGO system), core products (City series, DUPLO series), and core customers (children aged 5-9). In addition, LEGO optimizes the product development process and builds a product innovation matrix that sets boundaries for innovation, where innovation is no longer blind and does not innovate for innovation's sake.

Thanks to these efforts, LEGO returned to growth and became the world's largest toy brand today.

In contrast, the protagonist of today's article, the joint name of Moutai and Luckin, is like the cooperation between Lego and "Star Wars", by breaking the original system, looking for new growth points. Moutai's attempts in ice cream, culture and creativity are also similar to Lego. From the story of Lego's resurrection, we can see that there is a double-edged sword to solve the growth problem through diversification strategy, blind diversification may dilute its own advantages in the original industry, but also affect the cognition in the minds of consumers.

In fact, every attempt at diversification runs the risk of diluting the value of existing brands.

Wuliangye, the former top brand of liquor, is for rapid expansion, adopting the OEM model, produced by manufacturers and sold by distributors, resulting in the dilution of the brand value of Wuliangye, and finally handed over the top position of baijiu. You must know that the expansion of Wuliangye is only in the field of liquor, and Moutai involves more categories, and the challenge is definitely greater.

Moutai that is firmly in the top brand of liquor certainly needs new growth points, but the premise of finding new is to maintain the original advantageous position, you must know that the Chinese liquor track is as strong as a cloud, before Moutai, Luzhou Laojiao, Fenjiu, Wuliangye have all sat in the top position, and now they are still watching.