The annual profit is not as good as the income from demolition, how should the rice wine industry develop?
Recently, three listed rice wine companies have disclosed their 2023 annual reports.
On the evening of March 28, Guyue Longshan released its 2023 financial report, with operating income of 1.784 billion yuan in the previous year, an increase of 10.11% year-on-year, and net profit attributable to the parent company of 397 million yuan, an increase of 96.47% year-on-year.
On March 29, Huijishan disclosed its 2023 annual report, with an operating income of 1.411 billion yuan in 2023, a year-on-year increase of 15.01%, and a net profit of 168 million yuan, a year-on-year increase of 18.96%. On the same day, Jinfeng Liquor disclosed its 2023 annual report, achieving operating income of 573 million yuan, a year-on-year decrease of 13.42%, and net profit attributable to the parent company of 105 million yuan, a year-on-year increase of 1927.5%.
At first glance, rice wine seems to have ushered in a rare spring in 2023, with the year-on-year growth of the three companies' performance all bottoming in double digits. However, when dismantled from the annual report, the source of the profit growth is intriguing.
Profits have increased dramatically by demolition
In terms of quarters, Guyue Longshan's profit increased unusually significantly in the fourth quarter.
The financial report shows that in the fourth quarter of 2023, Guyue Longshan will achieve a net profit attributable to the parent company of 263 million yuan, a year-on-year increase of 263.85%, and the total net profit attributable to the parent company in the first three quarters is only 133 million yuan.
In fact, the performance of Guyue Longshan has soared, which is inseparable from non-main income such as demolition and equity transfer.
According to the financial report, the Donghu Sub-district Office of Yuecheng District, Shaoxing City plans to pay 740 million yuan to Guyue Longshan for the demolition and relocation of the houses and appurtenances of Shen Yonghe Distillery in Guyue Longshan in the form of monetary compensation. Among them, the compensation for the first phase of demolition is 288 million yuan, and the compensation for the second phase of demolition is 453 million yuan. During the reporting period, 350 million yuan of expropriation compensation has been received in advance.
In addition, Guyue Longshan also transferred 49% of the equity of Guyue Longshan Electronics Co., Ltd. to Xinyuxin Technology (Shaoxing) Partnership (Limited Partnership), and the equity transaction was publicly tendered and the equity transfer price was determined to be 71,230 yuan.
After deducting the above-mentioned non-main business income, Guyue Longshan will actually achieve a net profit of 191 million yuan in 2023, a year-on-year increase of only 5.15%. In 2022, Guyue Longshan also set a performance target of "striving for a sales increase of more than 12% and a profit growth of more than 12%", but it still failed to reach it after efforts throughout 2023.
The situation of Jinfeng Liquor is the same as that of Guyue Longshan.
According to the financial report, in 2023, Jinfeng Liquor will achieve operating income of 573 million yuan, a year-on-year decrease of 13.42%, and net profit attributable to shareholders of listed companies of 105 million yuan, a year-on-year increase of 1927.5%.
The significant increase in profit was mainly due to the receipt of approximately RMB200 million in compensation for the expropriation of houses on Sichuan Middle Road during the reporting period. After deducting non-recurring profits and losses, Jinfeng Liquor lost 52.97 million yuan last year.
In recent years, the performance of Jinfeng Liquor has shown a downward trend as a whole. Compared with the performance of 7 years ago, the performance of Jinfeng Liquor last year was almost halved. According to the financial report, from 2016 to 2023, Jinfeng Liquor will achieve operating income of 1.075 billion yuan, 987 million yuan, 898 million yuan, 944 million yuan, 608 million yuan, 649 million yuan, 662 million yuan, and 573 million yuan respectively.
Among the three rice wine companies, only Huijishan achieved double-digit growth in performance in the previous year. According to the financial report, Huijishan will achieve operating income of 1.411 billion yuan in 2023, a year-on-year increase of 15.01%, and net profit attributable to the parent company of 167 million yuan, a year-on-year increase of 15.11%.
In terms of products, the two companies that maintain revenue growth, Guyue Longshan and Huijishan, for which medium and high-end liquor contribute a large proportion of revenue.
According to the 2023 financial report data of Huijishan, the operating income of medium and high-end liquor was 811 million yuan, accounting for 59.03%, a year-on-year increase of 12.22%, while the operating income of ordinary rice wine and other liquor was 563 million yuan, accounting for 40.97%, a year-on-year increase of 16.75%.
According to the financial report data of Guyue Longshan, in 2023, the revenue of medium and high-end liquor will be 1.243 billion yuan, accounting for 72.02%, a year-on-year increase of 12.42%, and the revenue of ordinary liquor will be 483 million yuan, accounting for 27.98%, a year-on-year increase of 5.90%.
A hard-to-cross "free shipping area"
In the consumption scene of rice wine, the most well-known is to pair it with crabs. Huadiao wine with crab is a common pairing for residents in the Yangtze River and Pearl River Delta region during the Mid-Autumn Festival. And once out of the "free shipping area", the sense of existence of rice wine is much weaker.
Reflected in the financial data, the vast majority of rice wine consumption is still covered in Jiangsu, Zhejiang and Shanghai. According to the latest disclosed financial report data, in terms of sales volume, the total sales revenue of Guyue Longshan in Shanghai, Zhejiang, and Jiangsu in 2023 will be 1.021 billion yuan, accounting for 59.17%, and the sales revenue in other regions other than Shanghai, Zhejiang, and Jiangsu (excluding international sales) will be 662 million yuan, accounting for 38.35%.
The nationalization of the other two rice wine enterprises is still in its initial stages. According to the financial report, Huijishan will achieve sales revenue of 1.256 billion yuan in Shanghai, Zhejiang, and Jiangsu in 2023, accounting for 91.4%, and sales revenue of 109 million yuan in other regions (excluding international sales), accounting for only 0.67%. In 2023, Jinfeng Liquor will achieve sales revenue of 625 million yuan in Shanghai, Zhejiang, and Jiangsu, accounting for only 4.46%.
It is not that rice wine companies have not thought about promoting rice wine to more consumers.
In order to popularize the culture of rice wine, the rice wine enterprises represented by Guyue Longshan actively layout the tavern format. In recent years, the "Slow Tavern" and "Jiujia Tavern" opened in Guyue Longshan have opened one after another. It is understood that in the Guyue Longshan Slow Tavern, you can experience the main products of Guyue Longshan, and taste special products such as green plum wine, rice wine ice cream, and rice wine coffee.
New rice wine products aimed at young people have appeared frequently in recent years. In March this year, Guyue Longshan combined coffee and rice wine to launch a new youthful champion red "Brown Tengda Coffee Rice Wine" at the Guyue Longshan booth of the Sugar and Wine Fair.
It's just that the younger action doesn't seem to meet expectations.
At present, the business of Guyue Longshan tavern seems to be still mainly limited to Jiangsu, Zhejiang and Shanghai. A search on a life platform with the keywords "Slow Tavern" and "Jiujia Tavern" showed that one "Guyue Longshan Slow Tavern" in Shaoxing, Zhejiang Province and two "Jiujia Tavern" in Hangzhou, Zhejiang.
The channel laying of new products for the rejuvenation of rice wine also needs to be improved and sufficient. Recently, the reporter of "Consumer Reports" visited a number of supermarkets in Guangzhou, but did not see the product on display.
Regarding the laying of new coffee and rice wine products, the future younger layout of the enterprise, etc., "Consumer Reports" recently sent an interview letter to Guyue Longshan.
Guyue Longshan replied that the launch of new coffee rice wine products is first based on the Shaoxing tourism market, leveraging other markets through scenic spots, penetrating new channels such as convenience stores, pubs, and bookstores.
Regarding the layout of the tavern, Guyue Longshan responded that it has opened 54 tasting halls including "slow taverns" across the country, including 4 slow taverns, and the main area is still in Jiangsu, Zhejiang and Shanghai, which has basically covered the whole country, and has the layout of tasting halls in the peripheral market.
Rice wine is looking forward to a new story
Rice wine, which has a long history, is under pressure from the market, consumers, products and other aspects. In the eyes of most consumers, rice wine is a fast-moving consumer goods category with a low unit price. On the rice wine product page of the e-commerce platform, there are many consumers who mention the use of cooking wine for cooking.
Looking at the liquor market, rice wine is inevitably facing competition and squeeze from liquor and beer categories. The price has risen from 100 yuan, which is strongly occupied by liquor, and the price has been downward on the basis of tens of yuan, while beer has shown a wider competitiveness.
According to the data of the China Liquor Industry Association, in January ~ December 2023, 81 rice wine production enterprises above designated size included in the scope of the National Bureau of Statistics have achieved a cumulative sales revenue of 8.547 billion yuan, and the overall revenue scale of the industry has gradually decreased from 19.585 billion yuan in 2017 to 8.547 billion yuan in 2023, with a six-year compound growth rate of 12.91%.
Gu Yue Longshan also said in the annual report that in the current stage when the total amount of liquor continues to decline and the overall terminal demand of the industry is relatively weak, the strength of liquor, beer and other liquor types and first-line liquor companies has caused a certain squeeze on the rice wine category and enterprises, accelerating the differentiation of the industry, which currently accounts for less than 2% of the total liquor market, and the number and scale of enterprises on the scale have declined in recent years.
Cai Xuefei, a wine analyst, believes that fundamentally, the rice wine enterprises themselves are small in scale and lack of category leadership from leading enterprises, resulting in slow upgrading of the industry structure and low category value, which has led to the low-end and "cooking wine" of rice wine, which cannot adapt to the social value of Chinese wine consumption.
He further analyzed and said, "Considering the category characteristics of rice wine and the development of domestic wine, it should be said that the overall market of rice wine still needs the joint efforts of everyone, and there is a long way to go." ”