Squeeze the water of tens of billions of this world
Sentence | Moda
The Present World (603369. SH) breathed a sigh of relief after a long absence.
In the past year, the trend of the domestic liquor industry can be described as high and low, with twists and turns: advertising bombardment during the Spring Festival, hovering in the second quarter, destocking pressure in the third quarter, and Moutai price increase in the fourth quarter.
For China's liquor industry, 2023 is a year to move forward with a heavy load.
But there are exceptions.
As the "second oldest Sujiu", the company recently released its main operating data: the company is expected to achieve a total operating income of about 10.05 billion yuan in 2023, a year-on-year increase of about 27.41%. This is a relatively good result.
However, although it has entered the 10 billion revenue club, many people inside and outside the industry who are staring at the liquor industry have made their eyes shine, but the performance of Shiyuan in the capital market is not satisfactory.
On the same day that this good news was released (December 29), the stock price of Jinshiyuan only edged up by 0.43%. As of now (January 16), the stock price has fallen from the highest point of 49.51 yuan / share on the day to the lowest point of 43.5 yuan / share, evaporating 7.5 billion.
Putting aside the current downturn in the A-share market, the reason why the outside world is not interested in one of the biggest positives in the past 20 years may also be:
First, after crossing 10 billion, can this world keep this record?
Second, where is the confidence of Jinshiyuan to achieve the goal of 15 billion yuan in 2025?
For this, this article tries to give an answer.
1. There is only one foot in the 10 billion yuan club
There is a saying in the liquor industry: 3 billion regional survival, 5 billion regional hegemony, and 10 billion run across the country. In the wine industry, tens of billions of revenue is undoubtedly an important milestone.
On the one hand, the revenue scale of 10 billion yuan is a "watershed" for first-line wine companies, and it is also the ticket to the next stage of industry competition under the trend of the era of famous wine;
On the other hand, after breaking through the 10 billion yuan revenue mark, wine companies will start a head-on confrontation with the national famous wine companies.
As one of the only two listed liquor companies in Jiangsu, Jinshiyuan is able to compete in Yanghe (002304. SZ) on the side of the couch, it is not easy to win tens of billions of sales.
This is also why, on December 29 last year, stepping on the tail of 2023, Jinshiyuan couldn't wait to disclose the "membership card" of the members of the "Ten Billion Club" to the outside world.
If nothing else, Jinshiyuan will become the seventh listed liquor company with a scale of more than 10 billion yuan in the liquor sector, in addition to Kweichow Moutai, Wuliangye, Yanghe, Shanxi Fenjiu, Luzhou Laojiao, and Gujing Gongjiu.
But judging from the data disclosed by Shiyuan, the revenue of 10.05 billion has only just been completed, which can't help but make investors sweat.
After all, after Shunxin Agriculture (Niulanshan) broke through the scale of 10 billion yuan in 2019, it was affected by factors such as the epidemic and changes in consumer demand, resulting in poor sales, and only stayed in the "10 billion club" for 3 years before falling below 10 billion yuan in 2022, falling back to 8.109 billion yuan with a decline of 20.7%.
In 2023, there is a deep question mark over whether Shunxin agriculture can reach another scale of 10 billion.
From the perspective of the industry, in the past year, the liquor industry has faced problems such as inventory backlog, price inversion, overcapacity, and industry differentiation, which constitute hidden worries about whether Shiyuan can stabilize its revenue of 10 billion yuan.
In the first half of this year, there were 983 liquor enterprises above designated size and 333 loss-making enterprises in the country, with a loss of 33.8% and a loss of more than 2 billion.
According to reports, in the middle of the year, the top three businessmen in a provincial capital city in southwest China had billions of yuan in inventory.
At the same time, in November last year, the China Liquor Circulation Association announced that distributors and agents had too much backlog to make normal purchases, and the 2023 Hangzhou International Liquor Expo, originally scheduled to be held from December 11 to 13, was postponed.
Industry experts estimate that the performance of wine companies in 2024 is still full of uncertainty due to the lack of effective digestion of the "dammed lake" of channel inventory, the lack of social purchasing power, and the significant increase in marketing expenses of wineries along with various promotional activities.
From the perspective of enterprises, Jinshiyuan is located in Jiangsu, not only to face the fierce rival Yanghe, and the Jiangsu market is a test field for liquor companies, almost every liquor company that intends to be nationalized regards Jiangsu as a place to fight.
According to industry estimates, the size of Jiangsu's liquor market is about 60 billion yuan, of which Yanghe accounts for half (the revenue in the first three quarters of 2023 has reached 26.483 billion), and the current world is 10.05 billion, which is still pressing the current world.
In the face of the current complex and volatile market environment, how to continue to maintain growth without being eaten by the market is a challenge that Shiyuan needs to face.
In other words, the road after 10 billion is not easy to walk. In the post-10 billion era, "deep cultivation in the province and breakthrough outside the province" will still be the top priority of today's world.
2. Is the fate of tens of billions of this world accidental or inevitable?
Although the number of "100.5" seems to be a little unstable, it is actually reasonable and planned to break 10 billion in this world.
At the end of 2022, the 2023 Jinshiyuan Development Conference emphasized the company's determination to exceed 10 billion in revenue in 2023.
Looking back, the performance of Jinshiyuan has doubled from 3.741 billion yuan in 2018 to 7.888 billion yuan in 2022.
The success of breaking 10 billion in 2023 seems to be inevitable, but there is no shortage of accidental elements in it.
In 2022, the consumption upgrade of the liquor industry will accelerate, the industry concentration will gradually increase, and liquor companies in Moutai, Wuliangye and other industries will start capacity expansion against the trend.
Someone has made statistics, this is the sum of the profits of Jinshiyuan in the past 8 years from 2014 to the third quarter of 2021.
In the past 30 years, baijiu has gone through three cycles: from 1989 to an upward cycle, and then to a downward adjustment period due to the Asian financial crisis, and around 2003, it has experienced another wave of upward movement, and at the end of 2012, it has experienced a decline caused by the restriction of three gongs;
In 2016, liquor entered an upward cycle again, but this new cycle has a very obvious feature, that is, production reduction.
Data shows that from 2016 to 2020, the output of liquor decreased from 13,583,600 kiloliters to 7,407,000 kiloliters, almost halved. By 2022, the output of liquor (65 degrees, commercial volume) will be 6.712 million kiloliters, less than half of 2016. Last year's situation was even worse, with 3.478 million kiloliters of liquor produced in the first 10 months, just half of the level of the previous year.
The logic of the expansion of leading enterprises lies in the fact that to do high-end, they need to have the quality endorsement of the concept of old wine, the concept of vintage wine, and the concept of wine in the production area, so the expansion of production is actually a certain capacity reserve for the future high-end competition.
For example, Moutai, on the one hand, is expanding production, and on the other hand, it is either raising prices or on the way to raising prices.
On the other hand, Jinshiyuan not only followed the footsteps of Moutai's expansion, but also was affected by the previous "sauce flavor fever", and even the original liquor production capacity in the expansion plan was also sauce-flavored - Qingya sauce flavor type is the flavor type that accounts for half of the production capacity in Jinshiyuan's expansion plan.
In 2022, Ping An Securities issued a research report arguing that soy sauce wine has passed the first stage of "gold everywhere", thus entering the halfway stage of "big waves and sand".
"Without Moutai's life, I got Moutai's disease." In the eyes of the outside world, the fate of this world, which has no foundation in soy sauce and wine, is gambling. Therefore, at that time, it was generally not optimistic about the expansion of production and the impact of tens of billions of revenues.
In recent years, the domestic liquor consumption market has suffered a significant impact, resulting in a continuous rise in channel inventory. This situation is still going on today, so digesting inventory has become the top priority for liquor companies this year.
According to the "2023 China Liquor Market Interim Research Report" released by the China Liquor Industry Association, after the Spring Festival last year, the transaction price in many liquor markets was lower than the distribution price, and the price inversion phenomenon was serious.
On the one hand, there is price increase and price inversion, and on the other hand, the Matthew effect of the industry is becoming more and more obvious. China's liquor industry is on the eve of drastic changes.
In fact, the inventory of Jinshiyuan has risen all the way from 2019 to the first three quarters of 2023, with 1.906 billion yuan, 2.195 billion yuan, 2.834 billion yuan, 3.042 billion yuan and 4.093 billion yuan respectively, and the inventory accounts for almost half of the revenue.
It stands to reason that the liquor industry has entered the darkest moment, and it is difficult for the current world to be affected.
But this world has ushered in an unexpected joy:
On the one hand, benefiting from the hot local banquet market, the economic environment has little impact on the demand for liquor in the price band of 100 yuan to 400 yuan, and consumers have instead upgraded their consumption, and the consumer price band has generally increased by 50 yuan to 100 yuan compared with previous years.
On the other hand, in each round of the industry downward cycle, the performance of regional leading brands is significantly better than that of local small brands and foreign brands, because when the general environment is not ideal and they dare not take action, regional leading brands invest relatively higher resources in the local market.
The data confirms this.
Turning over the financial report of today's world, it is the sales expenses that are soaring together with the revenue. Taking the first three quarters as an example, its sales expenses reached 1.476 billion yuan, an increase of 58.51%, and the expenses have exceeded the 1.39 billion yuan in the whole year of 2022. In comparison, the company's sales expenses in the same period in 2021 and 2022 will be 667 million yuan and 931 million yuan respectively.
Judging from the results, what is hidden behind the tens of billions of volumes may not be the result of enough hard work in this world. In other words, there is a lot of water in the tens of billions of revenue of Jinshiyuan.
In addition to squeezing out the water, the product route is not recognized by consumers, and how to solve the "dammed lake crisis" after the expansion of production capacity may pull the current world down the throne of tens of billions at any time.
3. In the post-10 billion era, can we find an antidote in this world?
Entering the 10 billion club is never a triumphant song of victory, but a clarion call for a charge.
For Jinshiyuan, which has entered a new stage, the key to deep cultivation in the province and breakthrough outside the province lies in high-end and nationalization.
As one liquor industry expert put it, if a liquor company has been confined to the provincial market and cannot break through, the company will fall into a "stock game" between itself and itself, just like fishing in a small river, weaving larger and larger fishing nets will only speed up the speed of exhaustion.
Therefore, it is a necessary and inevitable choice for the world to move towards high-end and strengthen the national layout.
In the 2019 annual report, Jinshiyuan put forward the "three strategies" of "differentiation, high-end, and nationalization" for the first time, and proposed to "accelerate the construction of a new pattern of brand nationalization".
Among them, it is planned that the national brand will be upgraded from the leading brand in the province to the national leading brand, and seize the opportunity of sub-high-end expansion and ultra-high-end differentiation.
In this strategy, the national brand is the main force of high-end and nationalization of today's world.
Taking the ultra-high-end Guoyuan V9 as an example, it is not a soy sauce wine in the traditional sense, but an innovative category, with the prominent feature of "elegant sauce", which competes with Moutai at a high price of 2,600 yuan.
Gu Xiangyue, the current chairman of the board, once said: "Guoyuan V9 Qingya sauce fragrance is an innovative fragrance category, which is in line with the trend of lighter taste after the improvement of consumers' aesthetics; ”
However, alcohol consumption needs to be cultivated for a long time, and consumers will compare different product taste experiences, from the formation of consumption memories to the formation of consumption behavior habits. It is unknown whether Qingya sauce can become a memory point.
What is certain is that the pattern of nationalized head liquor companies has been solidified, and Moutai, Wuliangye, Yanghe, Luzhou Laojiao, and Fenjiu have formed a pattern of nationalized liquor, and it will be difficult for new brands to grab the national market share, and the cost of catching up is too high.
It is difficult to say that there are still opportunities for the V9 products in the high-end line.
It is gratifying that at the 2024 Jinshiyuan Development Conference held recently, Jinshiyuan readjusted its strategy and put forward the development strategy of "multi-brand, single-focus, and nationalization".
In the multi-brand strategy, Guoyuan is committed to high-end, positioning China's new generation of high-end liquor, focusing on achieving provincial transcendence and national breakthroughs, Jinshiyuan is committed to popularization, focusing on wedding banquets, Gaogou is committed to personalization, and adheres to the main line of medium and high-line light bottle liquor.
At the meeting, Gu Xiangyue clarified for the first time the positioning of the national margin as a "first-echelon brand below 1,000 yuan", and this product will focus on the price band of 300-800 yuan.
In the view of today's Shiyuan, "the competition pattern of the price track of more than 1,000 yuan has been basically formed, and the 'Mao Wu' occupies more than 80% of the share, but the situation of the leader under the 1,000 yuan has not yet been formed, especially in the price track of 500 yuan -800 yuan within 1,000 yuan." ”
Now it seems that under this new top-level design, Jinshiyuan seems to have some permission to create a national mid-to-high-end brand image.
In addition, Jinshiyuan is also emphasizing the importance of the national strategy, making it clear that the national strategy is the space for the future growth and development of the enterprise, and the proposition of crossing the national must be challenged in the post-10 billion era.
A few years ago, Jinshiyuan had planned to acquire Jingzhi Liquor, hoping to take advantage of the opportunity to conquer the neighboring Shandong market, but unfortunately it did not succeed in the end. At present, on the road of extension mergers and acquisitions, Jinshiyuan may be completely dead.
For nationalization, Jinshiyuan said that the next 3 to 5 years will be a critical period for the company to nationalize and enter the first-line liquor camp, implement the concept of "the current nationalization is periphery, plate", and make it clear that nationalization is to give priority to the nationalization of national brands, gather national brands, focus on plate building, and focus on customer creation.
For the development outside the province, Jinshiyuan will plan the market investment outside the province with a budget of "no profit for three years and 3 billion yuan for three years", gather human, financial and marketing resources, focus on the "10+N" key prefecture-level plates, continuously accumulate brand potential energy, and accelerate the process of attacking the city.
This brings another possibility to the fate of this world.
At present, this "cold air" of the liquor industry is blowing to everyone. Many people still think that the cold in the liquor industry is only due to the economic cycle, and when the spring flowers bloom next year, the king will continue to return.
As everyone knows, the underlying logic of this industry has been quietly deteriorating.
During the Chengdu Spring Sugar Fair in April last year, a big man in the wine consulting circle said a sentence: the wine industry as a whole will enter the era of negative sales growth, low or zero revenue growth, and low profit growth for a long time, and it is likely to have just begun.
From an objective point of view, there are still problems such as too single main market, excessive competition in the base market, and serious involution. But in the face of adversity, this second-tier wine company that is constantly running, taking the initiative to change, and unwilling to fall behind deserves encouragement.