On March 29, Guyue Longshan (600059. SH) released its 2023 annual report, the company's annual operating income was 1.784 billion yuan, a year-on-year increase of 10.11%, the net profit attributable to the parent company was 397 million yuan, a year-on-year increase of 96.47%, and the total profit increased by 107.61%. Gu Yue Longshan said that in 2023, the company will firmly implement the four strategies of "high-end, younger, globalization and digitalization", and achieve steady growth and comprehensive improvement of business performance.
On April 25, Guyue Longshan's latest financial report for the first quarter of 2024 was released, with the company achieving operating income of 567 million yuan, a year-on-year increase of 10.74%, and net profit attributable to the parent company of 62.0045 million yuan, a year-on-year increase of 5.34%. In particular, the revenue outside Jiangsu, Zhejiang and Shanghai was 230 million yuan, a year-on-year increase of 19.53%, and the sales of online channels were 72.2924 million yuan, a year-on-year increase of 25.56%, allowing the market to see the obvious results and gratifying changes of Guyue Longshan in the breakthrough of regional restrictions on rice wine and the expansion of young consumer groups.
The performance of the leading rice wine enterprises represented by Gu Yue Longshan has continued to rise, and the chronic diseases of the rice wine industry are being eliminated? Has the rice wine finally come out of the "base camp" of Jiangsu, Zhejiang, and Shanghai? Has the head liquor enterprises caused a significant squeeze on the rice wine? Can the high sales expenses "smash out" a higher brand value? Recently, Yin Persimmon Finance interviewed Bai Hong, director and deputy general manager of Gu Yue Longshan.
Break through regional restrictions and increase category competition
"In the past two years, the overall shrinkage of the rice wine industry is mainly limited by the shortcomings of the obvious regionalization characteristics of rice wine, and at the same time, due to the excessive social inventory of liquor and the greater pressure of dynamic sales, it is necessary to expand the market in Jiangsu, Zhejiang and Shanghai, especially the category of soy sauce liquor, through promotional activities, the penetration is more obvious. Bai Hong said frankly when analyzing the current rice wine industry environment with Silver Persimmon Finance.
According to the data of the National Bureau of Statistics, in 2023, the sales revenue of rice wine production enterprises across the country will be 21 billion yuan, a year-on-year increase of 2.1%, and the total profit will be 1.95 billion yuan, a year-on-year increase of 8.5%, and the cumulative sales revenue of rice wine production enterprises above designated size will be 8.547 billion yuan. It is worth noting that from 2016 to 2017, the annual industrial scale of rice wine enterprises above the scale was about 20 billion yuan, and since then, some rice wine used as cooking wine is no longer included in the statistics, and the data included in the statistics in 2023 only covers pure drinking rice wine.
At the same time, the entry of "foreign monks" has also put pressure on rice wine companies. In recent years, the leading liquor brands have achieved a scale of 10 billion yuan, and gradually penetrated into the heavy consumption area of rice wine. Gu Yue Longshan pointed out in the annual report that the current total amount of domestic liquor continues to decline, the industry's terminal demand is relatively weak, and other liquor types such as liquor and beer and first-line liquor companies are strong, which has caused a certain squeeze on rice wine categories and enterprises, and accelerated 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.
In this regard, Bai Hong explained, "Baijiu has a certain squeeze on rice wine, but it is not so serious, and the performance of the two listed rice wine companies in Shaoxing is relatively satisfactory, and revenue and profits continue to grow." Because rice wine itself is less likely to produce 'pressure storage', the best drinking period is indicated on the product, so the pressure of destocking is less, which is also an advantage from liquor. ”
However, Guyue Longshan also realized early that the market environment has undergone significant changes - as the "base camp" of rice wine, the market in Jiangsu, Zhejiang and Shanghai tends to be stable and saturated, and the head liquor brand has increased the penetration rate of other heavy consumption areas of alcohol. In 2020, the company shouted the slogan of "expanding north to west" and officially established the northern business department to increase investment coverage in the Beijing-Tianjin-Hebei region and Shaanxi, Liaoning, Inner Mongolia and other provinces. In 2023, the company will formulate and implement the "one place, one policy" investment promotion plan, add 263 new distributors throughout the year, form a sales network with 18 branches and 1 wine butler (online) as the core, fill the blank market in 24 prefecture-level cities in the north, and expand the northernmost distribution point to Mohe. In 2023, Guyue Longshan will achieve revenue of 660 million yuan in markets other than Jiangsu, Zhejiang and Shanghai, a year-on-year increase of 14.7%.
"If you only cultivate the market at the 'doorstep', it is difficult to avoid continuous 'involution'. At present, the sales revenue of Guyue Longshan in Jiangsu, Zhejiang and Shanghai accounts for about 60% of the total revenue, and the other 40% of the country's profits have created more than 50%. Generally speaking, the 'nationalization' of Guyue Longshan is relatively fast and hardworking, and the pattern has basically stabilized. In Bai Hong's view, although the current liquor and rice wine are still in an independent track, for the leading enterprises in the industry, the future competition pattern of the liquor market will no longer be a simple regional competition, but mainly category competition, and a breakthrough must be found under the "double pressure".
"In the future, the main competitors of rice wine should be light-flavored or sauce-flavored liquor, and these two categories are also developing well. The core of the company's strategy of 'expanding north to the west' is to aim at and cultivate the high-end market, and promote the mid-to-high-end product line represented by the 'national liquor' and 'blue and white drunk' series in areas where the economic development is stable or there is a habit of drinking rice wine, aiming at business banquets and other scenarios. According to Bai Hong, at present, Guyue Longshan in Baotou, Baoji, Shenyang, Dalian, Zhengzhou, Luoyang and other cities of the market expansion situation is good, and has played a significant role in radiation driving, Beijing-Tianjin-Hebei region has basically achieved a doubling of sales scale in three years.
Bai Hong believes that at present, the leading liquor companies are seizing the "high-end" market, relying on the economic strength of high-tier cities, the consumer market still has a lot of room for development. At the same time, in recent years, the national level and local governments have successively introduced relevant policies to guide the rice wine industry to further standardize and standardize, improve product quality, and strengthen the brand effect, which has a significant role in promoting the market competitiveness of the rice wine category.
Continue to increase investment and spread the culture of rice wine
In recent years, the company has successively carried out various themed marketing activities, such as the "Yue Liquor World" Overseas Rice Wine Promotion Conference, the "Chinese National Liquor Only This Green Jade" Tasting Meeting, etc., and continued to increase investment, and actively promote product research and development and market cultivation, In 2023, the company's R&D expenses increased by 45.36% year-on-year, and sales expenses increased by 37.37%, of which advertising and publicity expenses increased significantly. In this regard, Bai Hong said that in the next two years, the company will still increase investment in R&D and marketing, which is also the investment that enterprises must adhere to in the transformation and upgrading period.
At the beginning of this year, Guyue Longshan held the first tasting meeting of "Chinese National Brew Only This Green Jade" in Beijing in 2024, and officially announced the 2024 global "Millions" theme marketing activities, that is, "organize more than 1,000 marketing and promotion activities of different specifications in more than 100 cities in key countries (regions) and administrative regions above the county level in the country, and more than 10,000 people will participate in on-site activities". Increasing the scale of marketing also means that the investment will be further increased, but the purpose of expanding the scale of marketing is not only to increase sales.
"Holding a series of activities such as 'Yue Liquor Travels the World', which is essentially different from the logic and mode of 'pure wine selling' in the past, we try our best to skillfully transform the sales link, actively innovate the form, invite experts in different fields to give lectures on traditional Chinese medicine health, food appreciation, cultural exchanges and other themes, integrate food and wine, emphasize health preservation, and focus on strengthening the spread of rice wine culture. From this point of view, we do not hold enough events, the scale is not large enough, and the coverage is not wide enough, and we should continue to hold such cultural activities to deepen the brand value, which will play a long-term role in sales growth. Bai Hong said that actively promoting Shaoxing rice wine to "go out" is not only to spread Chinese culture, but also to produce a brand effect of "flowering inside the wall and fragrant outside the wall".
As a leading enterprise in the domestic rice wine industry, Guyue Longshan has advantageous brand resources such as "Guyue Longshan", "Daughter Red", "Zhuangyuanhong", "Shen Yonghe" and "Jianhu". In recent years, the company has anchored the "four modernizations" strategy, deepened quality improvement and brand building, and promoted the return of the value of rice wine with cultural innovation, product innovation and experience innovation. Bai Hong introduced to Silver Persimmon Finance that in 2019, when Guyue Longshan promoted the "National Liquor" series of products, it has gradually improved the marketing form for the purpose of sales, advocated cultural heritage to empower brand renewal and value return, and integrated more regional characteristics, customs and health concepts into the dissemination of rice wine culture, so as to stimulate the "new vitality" of the "time-honored brand".
At the same time, for brand building, the management of Guyue Longshan often regrets that "the investment is not early enough, and the response is not fast enough". "Our rice wine ice cream was launched much earlier than the ice cream that liquor companies began to make in the past two years, but when making rice wine ice cream, we did not highlight the brand logo, until the product has a market foundation, and then it is a little late to integrate with the brand. Bai Hong said with emotion. Regarding the continuous marketing investment in the first two years, he said, "I believe that we are about to usher in the harvest period, and the investment decision in the first two years is more difficult for the company than the continuous investment in the future." ”
Facing the young market, explore more possibilities
When it comes to the young consumer market, Bai Hong said that this is also one of the important topics in the current wine industry. "At present, the 'champion red' brand undertakes the main task of the company's rejuvenation strategy, and is innovating from the aspects of products and channels, and the company also has a fruit wine line, but to further develop the market of young people, we are still in the 'testing the waters' stage, and all brands can make useful attempts, mainly to see if they can find new market opportunities. "For the young market, the company pays more attention to product innovation, channel changes and brand interaction.
During the 110th National Sugar and Wine Fair, the "Zhuangyuanhong" brand brought two new products, "Yujian" plum wine and "Brown Tengda" coffee and rice wine, which were widely praised by consumers. In recent years, the company has focused on diversified needs and rejuvenation goals, strengthened product packaging upgrades and liquor body design, and successively released new products such as oligosaccharide rice wine, new rice wine, fruit wine, and the world's first glutinous rice whisky, and relying on the cooperation with the "Guyue Longshan-Jiangnan University Brewing Innovation Laboratory", it has gradually developed a product matrix with the theme of health, science and technology, and innovation, as well as special products for female consumer groups.
"The young consumer market also has corresponding outlets, coffee, lemon and other tracks are very popular, and we also have relevant layouts and plan to develop more reserve products. Bai Hong believes that in addition to the innovation of the product itself, the improvement of brand value is also a key. "The 'Champion Red' company launched the 'Brown Tengda' coffee rice wine during the sugar and wine fair, and the publicity focus was not the coffee rice wine category, but the 'Brown Tengda' brand. Last year, Guyue Longshan and Jiang Xiaobai, Meijian and other young brands jointly launched new products, which also emphasized the brand value. Bai Hong explained.
On the other hand, Guyue Longshan is innovating and developing more drinking scenes. In 2023, the company has successively established "Slow Tavern", Daughter Red "Wendu Tavern", Zhuangyuanhong "Tavern", Rice Wine Town "Slightly Drunk House", Jiujia Tavern, etc. "This is also considering that the current catering market is recovering and growing rapidly, and it is a relatively 'warm' consumer market, and there are more development opportunities. Bai Hong explained that in the past year, the company has transformed and upgraded some of the tasting halls, and created several iconic "flagship" taverns, from the actual feedback, the service model, product matrix is more diversified store operation is more stable, the future Guyue Longshan will also consider bringing live broadcast and other forms into the tavern operation, and gradually explore the creation of the tavern version 2.0 and 3.0.
In terms of e-commerce channels, in 2021, Guyue Longshan became the first rice wine brand to enter the Douyin platform, and at present, the company has reached perennial cooperation with Jiuxian.com, Make a Friend, Three Sheep and other institutions, and added 9 live broadcast rooms in 2023, exceeding the annual live broadcast sales target;In 2023, Guyue Longshan's online sales increased by 48.61% year-on-year, and the sales of the whole network increased by 64% year-on-year in "Double 11", winning the sales champion of rice wine on the six major e-commerce platforms.
For online channels, Bai Hong mentioned, "We laid out online relatively early, Douyin, Station B are the first in the industry, the current online channels account for 16% of the company's total sales, and it is also quite leading in the wine industry, but there are some irregularities in the online channels before, which has had a negative impact on the wine industry." As the supervision of the platform continues to increase, online sales will also usher in long-term benefits. ”