Image source@Visual China
Text | Good Finance
Towards the end of the year, Shede Liquor has recently (600702. SH) abruptly announced a new round of management adjustments: Ni Qiang stepped down as chairman of the board of directors and chairman of the strategy committee of the board of directors and continued to serve as a director; Pu Jizhou will serve as chairman of the board of directors and chairman of the strategy committee of the board of directors, responsible for the overall governance of the company; Wu Yifei will be appointed co-chairman and Tang Hui will be appointed president.
Shede Liquor said that the personnel change is a normal management adjustment, and the production and operation of the listed company is stable and will not be affected.
In the eyes of some sensitive investors, the change of leadership at the end of the year may not be so simple.
After all, judging from the resume, Pu Jizhou is a veteran of Shede Liquor, while Ni Qiang was once a core executive of the major shareholder Fosun. In other words, the resignation of Ni Qiang and the succession of Pu Jizhou can actually be understood as a change in the management of Shede Liquor by the new and old factions of Shede and Fosun.
Therefore, behind this, there is either a potential evaluation of Fosun's past annual performance, or an advance layout of next year's liquor consumption market, or both.
However, just when all kinds of speculation arose, another news of Shede Liquor Industry that "from January 1, 2024, the ex-factory price of 500ml taste Shede (including the fifth generation and celebration packs) dealers will be increased by 20 yuan/bottle", which directly led to the stock price, but also vaguely explained the reason for the change of leadership of Shede Liquor at the end of the year......
Using price increases to combat the slowdown in growth, Pu Jizhou's "three fires"
In fact, if you only look at the year-end change of leadership of Shede Liquor, there may be a variety of interpretations, but if you connect with the price increase of "taste Shede" after Pu Jizhou took office, it is not difficult to see that the end of the two story lines seems to point to the basic performance and stock price performance of Shede Liquor.
Tianyancha APP data shows that in 2023, during Ni Qiang's tenure, Shede Liquor achieved revenue of 5.245 billion yuan in the first three quarters, a year-on-year increase of 13.62%, and attributable net profit of 1.295 billion yuan, a year-on-year increase of 7.93%. At first glance, it seems to be good, but in fact, compared with the growth rate of 28% revenue and 23.76% profit in the same period of 2022, Shede Liquor has shown a significant slowdown trend.
In the context of the poor performance in the first three quarters and the inversion of the liquor market price this year, which further shrinks the brand's space for dealers, it may be quite difficult for Shede Liquor to lead the annual revenue to reach the growth rate of 21.86% in the same period last year in the fourth quarter.
Even Shede Liquor is still growing throughout this year, but the growth rate may be slightly conservative compared to last year.
At the same time, the decline in Shede Liquor also represents the gross profit margin indicator of the brand's market competitiveness, which has declined from 78.34% in the first three quarters of last year to 75.28% in the same period this year. This is definitely not good news for Shede Liquor, which has already secured the mid-to-high-end market, but wants to go further.
Therefore, when the various weak signals of the fundamentals were transmitted to the capital market, as of the close of December 25, Shede Liquor was 88.7 yuan/share, which shrank by more than 40% from 154.65 yuan/share at the beginning of the year (closed on January 3), and the market value evaporated by 22.931 billion yuan during the year, second only to the head of Wuliangye, Yanghe, Luzhou Laojiao and Shanxi Fenjiu.
So in this situation of internal and external troubles, it seems reasonable to let the more professional "veteran" Pu Jizhou replace Ni Qiang, who was "airborne" from the major shareholder Fosun.
In this regard, Pu Jizhou has indeed lived up to expectations, judging from the recent "taste willing" price increase, it seems that it has found a breakthrough point to quickly improve performance in the short term.
For this price increase, some investors interpret it as: the price increase means that the "destocking" of the channel is basically over, and now dealers need to replenish inventory. However, as of December 28, Xiangshan Finance has observed from multiple e-commerce platforms that the terminal price of Taste Shede seems to be still in the inverted stage, so whether the channel inventory of Shede has been completed may be further confirmed by comparing the inventory in the 2023 annual report and the first quarter report of next year.
However, judging from the logic and results of price increases, no matter what the channel inventory of Shede Liquor is, its gross profit performance in the first quarter of next year seems to be improved.
This profit is related to the market, but some of it may also be squeezed out of dealers.
You must know that unlike the price increases of high-end liquor such as Moutai and Guojiao 1573 to consolidate the brand tonality, the price increase of mid-end or sub-high-end liquor such as Shede Liquor and Jiannanchun is essentially to test the bottom line to the market or distributors without significantly crossing the price band, so as to quickly improve revenue performance.
Especially in the current embarrassing and fragile mid-to-high-end liquor consumption market, even if Shede Liquor takes the lead in completing the channel inventory, dealers may still not be able to sell at a good price, but will be unwilling to make up too much inventory in the window period at this time due to the backlog of omni-channel liquor inventory and the impact of price inversion.
After all, for dealers, at this time, a large amount of purchase at the original price is willing to taste, not only may sell one at a loss, but also occupy a lot of capital cash flow and warehousing costs. In this case, the sales enthusiasm of dealers will decline sharply, and the performance growth of Shede Liquor may become more slow......
In addition, if the liquor industry is willing to take the time-limited price reduction of Guojiao 1573 and let the dealers play the game of exchanging price for volume, although it is logically feasible, the premise is that the brand's market positioning and channel management must be tenacious and powerful enough, so as not to self-defeatingly disrupt the brand's entire dealer price system. This is an almost impossible "risky" choice for Shede Liquor, which has just ended the period of rapid channel expansion and stabilized the mid-to-high-end brand market.
As a result, the Shede liquor industry can only increase the ex-factory price of the dealers who are "taste Shede", and force the dealers to release greater sales enthusiasm in the Spring Festival consumption season by moderately squeezing channel profits, so as to quickly reverse the fundamental performance of Shede Liquor.
The more differentiated the liquor, the more reluctant it is to be inseparable from the old liquor strategy?
In fact, from the perspective of the long-term development of Shede Liquor, Pu Jizhou's appointment is an inevitable result.
Because in addition to his qualifications and experience, Pu Jizhou is also the main designer and operator of the "old wine strategy" of Shede Liquor. Behind the strategy of old liquor, in essence, it is the key to the current impact of the high-end brand of Shede liquor industry, and it is also the core "weapon" to resist the differentiation of liquor and the sinking and squeeze of high-end famous liquor.
You must know that a major trend in the current liquor market is the polarization of the low-end and high-end of "drinking less and drinking better". The market of low-end liquor differentiation often means integration and substitution for mid-to-high-end liquor, so only when the brand now stabilizes the image of mid-to-high-end liquor can it better achieve large-scale growth in the future market.
In terms of subdivision, the sinking of high-end famous wines, such as Moutai series wines, will squeeze all grade brands except high-end, and then extend downward, that is, to form a hierarchical effect of big fish eating small fish and small fish eating shrimp. In this way, if Shede Liquor can stand more firmly in the middle and high-end fields, then it can eat more in the lower market and be eaten less by Wuliangye......
However, the embarrassing thing is that although the old wine strategy has been implemented for many years, "how to transform the advantages of old wine into brand upgrade advantages" has always been troubled by Shede. So much so that although Shede Liquor has more than 100,000 tons of aged high-quality base wine, and can also wrestle with high-end famous wines in terms of products, it is a big gap in terms of high-end branding.
Leaving aside Moutai Wuliangye for the time being, let's just say that the gap between Shede and Luzhou Laojiao is very obvious. In terms of gross profit margin, the gross profit margins of Luzhou Laojiao from 2020 to 2022 are 83.05%, 85.70% and 86.59% respectively, and Shede Liquor is 75.87%, 77.81% and 77.72% respectively. Especially in the past two years, the gross profit margin performance of Shede Liquor has declined slightly.
This shows that Shede's old wine strategy may not have brought more value to Shede. The gap in this is not to say that Luzhou Laojiao is better than Shede Laojiu, but more of the reason may be in marketing.
In the current liquor industry, when the differentiation of the liquor industry intensifies, the brand concentration continues to increase, and the overall inventory pressure of the industry, there are actually two things that liquor companies can do: improve quality and brand.
In terms of improving quality, Shede has made a lot of preparations. For example, it is the first to use the real vintage logo of the double year, and summarizes the "six old" brewing techniques of old cellar pool, old quyi, old brewing art, old sake lees, old craftsman, and old base wine, all of which are improving quality.
But in the matter of improving the brand, it is not good enough.
For example, high-end wine is "reluctant", which seems to be a masterpiece to enter the ultra-high-end market, but it is not pleasing in marketing.
It can even be said, "A good hand, a bad hand." ”
On the one hand, brands such as the way of giving, taste, wisdom, and reluctance seem to have rolled out the exhibition line, covering the high-end, mid-to-high-end market, but it seems to be a little messy on the consumer side. Because the liquor field is known as the "brand boundary" theory, that is, the number of sub-brands that can be driven by a main brand is limited, once there are too many sub-brands, it will reduce the recognition of consumers and even dilute the value of the main brand.
In contrast, Wuliangye Puwu and Wuliangchun, Luzhou Laojiao's Guojiao 1573 and Tequ, the brand differentiation is clearer, and the force point of high-tech is also clearer.
On the other hand, compared with the rich philosophical and cultural connotation of the brand itself, it is reluctant to lack a core "overall situation" view in the internal brand tonality, which is an important core of the high-end marketing of liquor brands.
At a time when everyone is discussing that young people don't drink liquor, why can Jiang Xiaobai be able to take over young people? The core lies in value recognition.
The consumer group of high-end liquor is still dominated by high-end business people, and this part of the people buy liquor, mainly to buy a brand identity. For example, the Dream Blue and Sea Blue series that have risen in the past two years. In fact, it also depends on the recognition of the brand core.
Only this kind of consumer recognition can finally be transformed into brand value and real gross profit margin. Everyone likes to drink old wine, and how to make more people like old wine is the core.
However, it is obvious that Ni Qiang, an executive of Fosun, who came from the airborne system, did not answer this question well, so now Shede and Fosun can only hope that Pu Jizhou, the original designer of the "old wine strategy", can re-find the high-end interpretation of the Shede brand, so as to truly give full play to the core advantages of the old wine strategy.
So when the new management represented by the "new handsome" Pu Jizhou debuts, where will Shede Liquor go in the future, and whether it can realize the "tens of billions of words" at that time, all this may be witnessed by time......