The historical turning point of Chinese baijiu
From "Drinking Culture" to "Wine Tasting Civilization"
Li Houqiang
After fluctuations in recent years, industry insiders highly agree that Chinese baijiu is currently facing a huge adjustment. However, the perception of this adjustment varies, and some even the opposite. If we want to reveal the truth, we must analyze and think from the laws of society, economy, and science, and cannot judge them entirely by feelings and emotions.
We believe that this adjustment is not external, but endogenous, and the core is the promotion of new quality productivity, from high speed to high quality, the emergence of new quality laborers, new quality labor tools, new quality labor objects, new production relations and new consumer groups, so it is an inevitable long-term trend of no return. In other words, Chinese liquor can never go back, the new quality brings about a new qualitative change and leap in liquor, the total amount can only go lower and lower, and there is no possibility to return to the peak glory of the past! The new consumer group regards health, happiness, fashion, taste, and technology as more important, and they have knowledge, culture, vision, and insights, and will not be easily fooled by advertising and public opinion. Although this judgment is a bit pessimistic, it is so, and we cannot but say it, and we cannot but warmly remind people in the industry to make psychological preparations and strategic reserves in advance.
Data from the National Bureau of Statistics
When we look back at history, we will be sober. Several major adjustments in the history of China's liquor development, such as the prohibition of liquor, the rectification of work styles, and the economic cycle, were caused by factors other than baijiu, so they were able to recover quickly. However, the current adjustment is caused by internal factors, which is an inevitable trend of social, economic, and technological development, and there is almost no internal motivation and signs of improvement, so do not expect a new peak in liquor. It is an iron law that the production and sales of liquor are declining year by year.
Just look at the data and you'll understand. From 2016 to 2021, the sales volume of mainland liquor decreased year by year. In 2016, the sales volume was 13,057,100 kiloliters (1 liter of water weighs 1 kg, and 1,000 liters of wine weighs about 0.93 tons, which is related to the degree of alcohol), which is considered a peak. In 2018, sales fell to 8,546,500 kiloliters, and in 2019 sales have dropped to 7,555,300 kiloliters. According to comprehensive estimates, in 2021, the national liquor sales volume will be 7,034,300 kiloliters. According to the calculations of relevant institutions, it can be generally said that the national liquor production in 2022 will be 6.71 million kiloliters, and the sales volume will be less than 5.2 million kiloliters. In 2023, the total output of liquor in the country will be 6.29 million kiloliters, a year-on-year decrease of 5.1%, due to poor sales and a large number of inventories, the sales volume will be less than 4 million kiloliters, but the sales revenue will reach 756.3 billion yuan, a year-on-year increase of 9.7%, and the total profit will be 232.8 billion yuan, a year-on-year increase of 7.5%. It can be seen that the output and sales volume have declined, but the revenue and profit have increased, mainly driven by the leading enterprises of famous wines, and the trend of high-end market is obvious. From 13.05 million kiloliters in 2016 to less than 4 million kiloliters in 2023, a decrease of almost 10 million kiloliters in just 7 years, a decrease of more than 1 million kiloliters per year, and it is estimated that sales will remain at 4 million kiloliters in 2024, bottoming out at around 3.6 million kiloliters.
China's total liquor sales are declining in steps, and 2023 may be a turning point, a "volcanic eruption" of cyclical and structural contradictions. At present, China's liquor is characterized by centralized market share, fierce brand competition, fierce price competition, and large-scale development of production areas. The situation will be even more severe in 2024, with liquor inventory, price inversion, and small factory closures becoming major problems. In addition to a few famous liquors, the national liquor companies will lose money or close down in a large area, liquor merchants will dump goods at low prices or close their doors directly, and it is expected that 70% of small liquor factories will leave the liquor field and find another way. But sales of other beverages such as rice wine, beer, wine, etc. will increase.
Data from the National Bureau of Statistics
Mainland liquor production has gone through five stages of development.
First, from the founding of the People's Republic of China to the end of the "Cultural Revolution" (1978). At the time of the founding of the People's Republic of China, the total output of liquor in mainland China was only 108,000 kiloliters, and by the end of the "Cultural Revolution", the output of liquor had reached 1.44 million kiloliters.
The second is the reform and opening up (1979) to 1997 to develop and grow. At the end of 1997, the mainland's liquor production reached 8.013 million kiloliters, and in just 18 years, the output of liquor increased nearly sixfold.
The third is the adjustment period from 1998 to 2004. In 2004, production fell to 3,117,000 kiloliters.
Fourth, it recovered from 2005 to 2012. In 2012, the production reached 11.53 million kiloliters.
Fifth, in 2013, there was a cliff-like decline due to the impact of policies. The negative growth rate of -71.07% was achieved throughout the year, because 45%-49% of the liquor consumption in mainland China before 2013 was excluded. In 2014, the mainland liquor market recovered, with sales reaching 12.026 million kiloliters, and in 2016, sales reached 13.0571 million kiloliters, and in 2017, it began to decline, and in 2018, the national liquor sales volume reached 8.5465 million kiloliters.
From the perspective of power source, the sales volume of mainland liquor mainly comes from non-listed companies (low-end liquor), the main consumption force comes from rural areas, and the drinking scene is mainly non-business and non-official occasions (friends or family gatherings). The consumption of high-end liquor is almost not affected by policies such as taxation and drunk driving, while the consumption of low-end liquor is greatly affected by prices and policies, resulting in the total sales volume of liquor in mainland China being greatly affected by policies. This is why while the sales of liquor in the country are declining, the sales of high-end liquor brands have increased, and the revenue and profit have risen sharply.
From the perspective of drinkers, the post-80s generation has become the main force over the post-70s, accounting for 42.1% and 29.4% respectively, and the post-90s generation accounting for 23%. Due to the impact of the family planning policy in the 80s, the number of births continued to decrease, resulting in a decrease in the total population of the main group of people who drink alcohol in the 80s and 90s, which is also the reason for the decline in the growth rate of liquor consumption since 2013.
There is a high correlation between the sales volume of liquor and the total population aged 15-64. After 2017, with the decline of the main consumer population, the sales of liquor fell sharply. On the other hand, the rise in the price of liquor also constrained sales. The current liquor production capacity is far more than demand, and there are many liquors that may still be in the distillery but not sold, or in the warehouses of distributors and wine speculators, and there are many liquors in the homes of wine friends.
Data from the National Bureau of Statistics
In addition to the decline in the total number of consumers, there is also a more important factor is that consumers' tastes and habits have changed dramatically, the essence of which is to change from "drinking culture" to "wine tasting civilization", which is a historic change in Chinese liquor.
What is "drinking"? Swallowing liquid or liquid food directly is called "drinking", such as drinking water, tea, and alcohol. There is also shouting, such as shouting, cheering, and shouting. At the same time, "drinking" also expresses surprise. It can be seen that drinking is just culture, there are not too many processes and scenes, it is more intense, direct and bold.
What is "product"? The word "product" was first seen in the oracle bone inscription, and the ancient character form is from three mouths, and the original meaning means numerous, and by extension, it refers to the category and grade of things, that is, the difference between the quality of things, and then refers to the difference in people's moral cultivation, that is, their character. Pin, when further extended as a verb, refers to distinguishing between high and low, distinguishing grades, and specifically refers to tasting, such as tea tasting and wine tasting. In addition, the article also refers to things, that is, objects, objects. It can be seen that wine tasting is civilization, called "wine civilization". Civilization is an advanced, positive, upward, and benevolent part of culture, and a positive energy that promotes the progress of human society, which is worth advocating and encouraging.
"Taste" is to have enough time and mood, and "drink" is more for social and life needs, or in other words, "taste" is more in pursuit of spiritual enjoyment, focusing on the cultural heritage and taste of wine, while "drinking" is more down-to-earth, more is the confession of feelings and the pursuit of life. Of course, the difference between "wine tasting" and "drinking" may be felt differently by different people. It has been said, "The difference between wine tasting and drinking is thinking and self-cultivation." "Drinking is a "barbaric" act, and tasting wine is a "refined" act. Drinking is culture, reflecting the willful and vulgar nature. Drinking is a kind of mood, drinking is laughter, drinking is sorrow, drinking is moving, drinking is pride. Wine tasting is civilization, tasting is character, conduct, morality, character, taste, reflecting the practice, upbringing, identity, knowledge, skill, to have a keen sense and spirituality, need to pay patience and time, need to appreciate the subtlety and leisure. Tasting Chinese liquor is to taste the taste of China!
The era of drinking is coming to an end, and the era of wine tasting has arrived. Chinese liquor is facing a historic turning point - "drinking culture" to "wine tasting civilization", followed by quality improvement, production decline, concentration of advantages, price decline, aroma weakening, production area prominence, concentration down, mood highlight, "Matthew effect" is more prominent.
From "drinking" to "tasting", promoting the transformation of sensibility into rationality, quantity into quality, and returning to science, truth, goodwill, and health, will help establish a normal drinking atmosphere, and at the same time derive a "new type of appeal" - taste appeal, quality appeal, character appeal, brand appeal, and health appeal. Therefore, if you want to fly high and go far, there is only one way - to embrace new quality productivity and achieve high-quality development!
Written on April 18, 2024
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Please indicate: "Source: Fang Zhi Sichuan"
Source: Sichuan Provincial Office of Local Chronicles
Text/Photo: Li Houqiang (Deputy Director of the Decision-making Advisory Committee of the Sichuan Provincial Committee of the Communist Party of China and the Sichuan Provincial People's Government, Chairman of the Chengdu Federation of Social Sciences, Second-level Professor and Doctoral Supervisor of the Sichuan Academy of Social Sciences)