Moutai Wuliangye "fell out of favor" and replaced the top?

Chief Business Review

2024-04-30 13:06Posted on the official account of Shanghai Chief Business Review

Wuliangye has released its financial report. According to Wuliangye's 2023 financial report, Wuliangye achieved revenue of 83.272 billion yuan and non-net profit attributable to the parent company of 30.116 billion yuan, an increase of 12.58% and 12.96% year-on-year respectively.

It is worth noting that although Wuliangye's revenue and net profit have increased, its net profit growth rate has hit a new low in the past three years. From 2021 to 2023, Wuliangye's net profit growth rate will show a downward trend year by year, with 16.67%, 14.3% and 12.96% respectively.

The capital market also reacted slightly coldly to Wuliangye's financial report. As of press time, Wuliangye's share price was 151.75 yuan, down 0.33%, with a market value of about 589 billion.

Although Wuliangye's financial report still looks good, the dark clouds of sluggish growth in the liquor industry are still hovering over.

In fact, not only Wuliangye, this year's liquor companies are having a hard time, the price of Feitian Moutai, which is known as "sauce technology", has dropped again and again, and the liquor faucets such as Xijiu Cellar and Fenjiu have been seriously upside down.

The ups and downs of the market and various unknown factors have sounded the alarm for liquor companies. Even the leaders in their industry are not immune to the unpredictable market environment. The spread of pessimism in the industry, coupled with international turmoil, the instability of the macro environment and the downturn in the consumer market, liquor companies are facing unprecedented challenges.

The price of Moutai has fallen, and it is only the dealers who suffer?

Since April, the price of Feitian Moutai has continued to fall, and there are rumors in the market that many bigwigs are selling Moutai, causing the price of loose bottles to drop from 2,800 yuan to less than 2,500 yuan, a drop of more than 10%.

In order to verify this situation, the author personally visited a number of offline cigarette hotels. The survey results show that although the price of Moutai in offline stores has indeed decreased, it is not as exaggerated as rumored on the Internet.

In a nearby Jieqiang tobacco hotel, the price of Moutai that day was 2,900 yuan. In several other stores, the price of Feitian Moutai is slightly different, with prices of 2,900 yuan, 2,850 yuan and 2,750 yuan respectively.

However, the price of Feitian Moutai on the online e-commerce platform is significantly lower than that of the offline. Among them, the lowest is Pinduoduo's official subsidy of 10 billion yuan, with a sales price as low as 4,900 yuan/2 bottles, which is equivalent to 2,450 yuan/bottle.

An interviewed cigarette hotel owner said that the current is the traditional off-season, and the impact of low-price subsidies for e-commerce has made it more difficult for traditional stores to operate. At the same time, he mentioned that due to the fluctuating price of Moutai, many small cigarette hotels do not dare to hoard inventory, and only transfer goods to their superiors when customers are clear about their needs.

In addition to seasonal factors and market conditions, there are two special reasons for the decline in Moutai prices this year.

First of all, at the end of last year, Kweichow Moutai launched a new variety - Xunfeng wine, 375ml Xunfeng wine was priced at 1,498 yuan per bottle, with a volume of 200,000 bottles, and began to pick up goods on April 7. According to the capacity conversion, this is equivalent to the price of about 2,000 yuan for 500ml of standard Feitian Moutai, which forms a direct competition with Feitian Moutai and impacts its price system.

Xunfeng wine

Secondly, the successive launch of low-value retail products has diluted Moutai's brand value and brand influence. In the past three years, in order to cater to the younger market trend, Moutai has tried various cross-border joint products, but this move has diluted the value of the original scarce and ultra-high-end brand Moutai.

However, the price drop of Feitian Moutai this time does not affect the core interests of Moutai and the interests of consumers, and it is only the dealers who suffer.

From Moutai's own point of view, although the price of Feitian Moutai has fallen, its market price is still much higher than the ex-factory price, and it will not have a significant impact on Moutai's performance in the short term. On the contrary, this price adjustment helps to reduce speculation and hoarding in the market, and brings the market back to rationality.

In the past three years, Moutai has actively adjusted its sales strategy, and the proportion of direct sales has increased significantly from 5% during the epidemic to more than 50% in 2023. Its core goal is to guide the market price of Feitian Moutai back to the official guide price of 1,499 yuan, so as to weaken the excessive influence of the agent-led secondary market structure on the market price.

However, this is undoubtedly a major shock for dealers. Because this greatly reduces their profit margins, it also explains the phenomenon of "panic selling" by dealers in the market. A dealer said: "In the past, the price fluctuation of Moutai was just a matter of making more and earning less for us, but now, some small dealers in the market are no longer willing to stock too much. ”

"Insured price" or "guaranteed quantity"?

As for whether Moutai's price reduction will continue in the future, industry insiders gave different views.

Some people believe that the price of Moutai will fall in the short term, but it will remain strong in the future. Because Moutai's attributes of people's livelihood in the banquet, business and gift markets have not changed, with the continuous recovery of social economy, Feitian Moutai's demand will also enter a recovery cycle in the third quarter, so as to stabilize and rebound.

However, some people believe that even if it recovers subsequently, it will be difficult to reach the original height. "500 ml Feitian Moutai is estimated not to be, because the price of Xunfeng wine is 375 ml, and the price of 500 ml has been reduced in disguise, so it is unlikely to go up. A dealer said to the author.

For a long time, Moutai was not only regarded as a consumer product, but also considered to have investment, collecting, and financial attributes, so it was widely believed that "Tibetan Moutai is better than gold". However, now Moutai's consumption attributes and financial attributes are showing a weakening trend.

On the one hand, due to the increasing pressure on the high-end consumer market, business dinners have gradually decreased, and the frequency of Moutai in high-end occasions has also decreased accordingly. At the same time, the downgrade of the mass consumer market has also led to those consumers who originally chose to drink Moutai to start looking for more cost-effective alternatives.

On the other hand, the large-scale hoarding of Moutai in previous years has also had an impact on the market. A large amount of Moutai has been hoarded, making the supply in the market far exceed the demand, which has had an impact on the financial attributes of Moutai. The dealer said, "Moutai's scarce categories are still worth investing in and have a certain financial value, but ordinary Moutai in large circulation will gradually lose its financial attributes." ”

It can only be said that the situation of Feitian Moutai is not optimistic. In 2024, the liquor industry will still face major contradictions such as high inventory, price inversion, and reduced consumption expectations. Many people in the industry are also pessimistic about the future. A dealer said frankly, "The C-end economic environment is not optimistic, the market is negative, there is no big driving force, and I personally feel that this year's liquor will fluctuate." ”

In this context, liquor companies have raised prices for ex-factory prices. From February 5, the ex-factory price of the eighth generation of Wuliangye increased by 50 yuan, from 969 yuan/bottle to 1019 yuan/bottle, an increase of about 5%; from March 1, the ex-factory price of Jiannanchun's core product crystal sword was increased by 15 yuan per bottle; from March 15, Shanxi Fenjiu's Qinghua Fenjiu 20 rose by 20 yuan per bottle; from April 1, the supply price of Honghualang's 10-year and 15-year channels was increased by 20 yuan and 30 yuan per bottle respectively......

Why is it so difficult in the terminal market, and the price of these liquors still has to rise? Western Securities mentioned in the research report that the price increase of liquor companies is mostly for the purpose of promoting payment collection, pulling up brand occupancy, reshaping channel profits, and thickening performance.

It is easy to understand that promoting payment collection is to enhance the operation ability and risk resistance of wine enterprises by increasing product prices, accelerating the speed of capital return, and improving the turnover rate of cash flow, and to increase brand occupancy, that is, to establish a high-end brand image in the hearts of consumers through price increases, so as to occupy a more advantageous position in the fierce market competition.

Channel profit reshaping refers to the redistribution of profit margins in the channel, the re-sorting of the channel, or even the reshuffle, so as to improve the efficiency of the entire sales network;

Taken together, these measures can help stabilize the price system. Price increases can stabilize market price expectations and reduce the risk of price fluctuations. Haitong International also said in the research report that the release of price increase signals by wine companies in the off-season will help seize channel resources and maintain market order.

However, price increases are not without risk. Wine companies must comprehensively consider factors such as market demand, competitive situation and consumer acceptance when implementing price increases to ensure the rationality and effectiveness of the price increase strategy.

In fact, no matter how liquor companies raise prices, it is becoming more and more difficult to sell in the market sales terminal. In addition to Moutai, the upside-down phenomenon of other liquors in the market is very serious.

Taking Wuliangye as an example, the latest ex-factory price of the eighth generation Wuliangye is 1019 yuan/bottle, and the recommended retail price remains at 1499 yuan/bottle. The author found in several stores randomly interviewed that the price of Wuliangye Puwu has fallen below 1,000 yuan. At present, on Taobao, the price of the eighth generation of Puwu is only 963 yuan / bottle, which is lower than the factory price.

And the phenomenon of other brands being upside down is even more serious. For example, the sales price of Xi Wine Cellar 1988 is 623 yuan/bottle, and the offline terminal is 500 yuan, while the price after Taobao's 10 billion subsidy is only 447 yuan/bottle. The "2023 China Liquor Market Interim Research Report" released by the China Liquor Industry Association also shows that due to the eagerness of distributors to realize, the transaction price of some famous liquor and second- and third-tier brands in the market is lower than the distribution price, and the price inversion phenomenon is serious.

Under the influence of high inventory and price inversion, wine companies are faced with the dilemma of "price or quantity". In response to the challenge, many wine companies have begun to reduce production capacity in the past two years. Specifically, China's baijiu production has continued to grow from 2012 to 2016, but has declined significantly since 2016. By 2022, liquor production fell to 6.712 million kiloliters, a figure that was even less than 50% of the 2016 production.

Entering 2023, the production capacity will continue to decrease, further declining to 6.29 million kiloliters, showing the determination of the liquor industry to destock.

Are there any new opportunities in the liquor market?

For the liquor industry, behind the challenges and risks, there are also many new opportunities and trends.

First of all, with the gradual subsidence of the sauce flavor craze, the light-flavored liquor has ushered in new development opportunities. In the past few years, the sauce-flavored liquor represented by Moutai has become a popular choice in the market. However, the next three to five years will be a critical period for the "fragrance revival".

Compared with sauce-flavored liquor, light-flavored liquor has a shorter brewing cycle and a relatively lower cost. In the context of the current economic downturn, this cost advantage enables light-flavored liquor to better meet consumers' expectations for the cost-effectiveness of liquor. In addition, the current concentration of the fragrant liquor market is not high, and in addition to Fenjiu, there is no second significant influential fragrant liquor brand that has emerged, which means that there is a certain development potential and opportunity in the market.

Secondly, under the general trend of consumption downgrading, "Wumart" and "cheap" ration wine has become the first choice of consumers, and wine companies can choose to broaden the price band and find new opportunities from it. For example, Health Liquor Co., Ltd., a subsidiary of Moutai Group, has begun to expand its product line in recent years to set foot in the affordable wine market.

In 2023, the company will launch the soy sauce wine brand "Taiyuan" with a price in the 100 yuan range, and during this year's sugar and wine fair, two new Moutai alcohol products will be released, covering the price range of 300 yuan to 500 yuan per bottle, and increase the consumption of banquet markets and business scenarios.

In addition, newly established liquor brands can use Internet marketing to achieve rapid breakthroughs and transcendence. Abstract: Wine is a good example. As a high-end soy sauce liquor brand under Jinsha Liquor, Abstract Liquor has rapidly emerged in the market in recent years, and its mellow taste and high cost performance have won wide praise from a new generation of wine lovers, and is known as "Kweichow Ermoutai".

In terms of marketing strategy, Abstract Liquor shows a strong tendency towards digitalization and precision. Through the implementation of the five-in-one digital marketing method, it ensures the traceability and anti-counterfeiting of products, and effectively improves consumers' trust in products. At the same time, Abstract Liquor attracts consumers' attention and participation through social media platforms such as Douyin, WeChat, and Weibo. Taking the Spring Festival of the Year of the Dragon in 2024 as an example, Abstract Liquor released a number of creative short videos through platforms such as Douyin and Channels, and cooperated with tens of millions of bloggers and high-quality KOLs, and finally achieved a total of 158 million views, 3.459 million likes, and a cumulative coverage of 169 million fans.

These internet marketing strategies make Abstract Liquor stand out in the highly competitive liquor market. According to the data, the number of online e-commerce fans of the brand increased by 1158.43% during the same period, and more than 110,000 people were attracted to the brand's live broadcast room.

Finally, being the favorite liquor of young people is also a new opportunity for the liquor industry. In the 2022 "Young People's Liquor - Research Report on China's Alcohol Category Innovation" written by Rees Consulting, 70% of young people in Generation Z and Generation Y believe that baijiu is not suitable for young people to drink.

It is true that young people do not like to drink liquor, which is a potential crisis in the liquor industry. In recent years, leading liquor companies such as Moutai, Wuliangye, Yanghe, Fenjiu, and Luzhou Laojiao have tried to reach and educate young consumers in all dimensions of brand, product, and marketing.

Taking products as an example, in view of the current situation that young people generally do not like to drink and are not good at drinking, wine companies have adopted diversified strategies in product development.

On the one hand, in order to cater to the spending power and taste preferences of young people, wine companies have launched a series of products at a more affordable price. For example, the aforementioned "Moutai alcohol", Moutai hopes to create high-quality liquor products that are affordable but of no loss in quality to attract the attention of young consumers.

On the other hand, wine companies have also noticed the need of young people to control the amount of alcohol they drink, and have begun to introduce smaller size wines. For example, Jinsha Sauce launched by Jinsha Liquor and Moutai's 375ml Xunfeng Liquor are designed for this market demand. These products are not only easy to carry and store, but also easier to control the amount of alcohol they drink, thus satisfying the young people's pursuit of healthy drinking.

Golden sand sauce

Times are changing, everything flows with its torrent, and even the once indestructible price of Moutai has continued to decline, however, all this is just a subtle sign of the eve of the turbulent undercurrent, hinting at greater volatility to come.

The downgrading of consumer purchasing power and the weakness of the premium liquor market continue to reflect a grim reality: the once-glorious baijiu empire is facing unprecedented challenges. The indifferent attitude of the younger generation towards baijiu is a wake-up call to the entire industry. The golden age is a thing of the past, and the liquor industry seems to be standing on the threshold of a long and cold winter, facing an uncertain future and an increasingly severe test of survival.

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Personal opinion, for reference only