Produced by | Bullet Finance
Author | Wu Xiaowei
Edit | Feng Yu
American Editor | Qianqian
Audit | Ode
Wuliangye, the "second liquor leader", has handed over an annual report with double-digit growth in revenue and net profit for seven consecutive years, of which revenue jumped from 70 billion yuan to 80 billion yuan.
This achievement follows the general tone of Wuliangye's "stability first, seeking progress in stability", but the hidden problems such as declining tonnage prices, exchanging prices with volume, and gross profit margins are not as good as Luzhou Laojiao and Shuijingfang inevitably make Wuliangye appear to be lacking in momentum.
Even though Wuliangye has taken action to control the quantity and ensure the price, the core major single products are still in the price inversion, the channel profit is difficult to guarantee for a while, and the contract liabilities of Wuliangye have also decreased significantly.
Why is the "second liquor player" going slower and slower?
1. The growth of net profit has slowed down, and products are exchanged for price
In 2023, the company will achieve operating income of 83.272 billion yuan, a year-on-year increase of 12.58%; The net profit attributable to shareholders of listed companies was 30.211 billion yuan, a year-on-year increase of 13.19%.
(Photo / Wuliangye 2023 Annual Report)
By 2023, Wuliangye has maintained double-digit growth in revenue and net profit for seven consecutive years. Although Wuliangye's revenue increased by 12.58%, due to the huge base, such growth made the company's revenue jump from more than 70 billion yuan last year to more than 80 billion yuan.
Although compared with Moutai's revenue of 147.694 billion yuan, Wuliangye is out of reach, it still leaves the wine companies behind it very far. In fact, Wuliangye also dominated the industry many years ago, but since it was surpassed by Moutai in 2013, it has not kept up with the pace, and can only sit firmly in the position of "second".
"Stability" is the policy of Wuliangye's development in recent years, and the annual report also mentions that the company has always adhered to the general tone of "taking the lead in stability, seeking progress while maintaining stability, improving quality and efficiency, and making more contributions", and put forward the business goal of consolidating and strengthening the steady development trend in 2024 and continuing to maintain double-digit steady growth in total operating income.
Behind the emphasis on the word "stability", it is difficult to hide the fact that the development of Wuliangye is slowing down.
Looking back on 2022, at that time, Wuliangye's net profit attributable to the parent company and net profit deducted from non-attributable to the parent increased by 14.17% and 14.30% respectively, and in 2023, the two data will drop to 13.19% and 12.96%. The growth rate of Wuliangye's total profit decreased from 14.34% in 2022 to 12.96%, a year-on-year decrease of 1.38 percentage points.
The problem that affects profits is the price of the tonnage. In 2023, the tonnage price of both grades, including Wuliangye products and other liquor products, will decline, and the decline in tonnage price will affect corporate profits.
Among them, the tonnage price of Wuliangye products will decrease from 1.69 million yuan in 2022 to 1.6246 million yuan in 2023, a year-on-year decrease of 3.87%; The tonnage price of other wine products decreased from 130,000 yuan in 2022 to 113,300 yuan in 2023, a year-on-year decrease of 12.56%.
(Figure / 2023 revenue by product)
In terms of sales volume, the two grades of products increased by 17.98% and 27.60% respectively, which shows that Wuliangye's performance growth in 2023 is mainly driven by increased sales. In 2022, Wuliangye is still in the stage of rising volume and price, which is also the best state of liquor sales.
(Photo / Production and sales in 2023)
Soon, the situation changed, and at the same time that Wuliangye saw a volume increase and a price decrease, the company was still increasing its production at full capacity.
According to the data, in 2023, the output of Wuliangye products and other liquor products increased by 18.77% and 50.69% year-on-year, both of which exceeded the sales volume, and also led to a large increase in inventory of 49.85% and 115.47%, respectively. In this regard, Wuliangye said that the main products of the company were sold well, and at the same time, in order to actively seize the sales of the Spring Festival peak season, the production volume and ending inventory increased.
One of the reasons for this change in Wuliangye is that it is due to the change in product structure.
A number of brokerage research reports pointed out that the decline in the tonnage price of Wuliangye in 2023 may be due to the increase in the promotion of 1618 and low-alcohol liquor. Tianfeng Securities research report further mentioned that it is expected that the tonnage price of Wuliangye products will decline year-on-year or due to the company's increase in 1618, low-alcohol wine and other products, and high-priced products are still in the cultivation period, and the high sales of other alcohol products are mainly due to the obvious volume of series of wines.
It is not difficult to see from last year's semi-annual report of Wuliangye that in the first half of the year, the company continued to open the bottle and scan the code, increasing 1618 and low-level dynamic sales. In the second half of the year, Wuliangye said that low-degree Wuliangye will focus on product culture promotion, high-quality market share improvement and high-end product listing promotion, including low-degree Wuliangye bottle opening and scanning code and banquet activities, so as to quickly increase market share. In November, Jiang Wenge, vice chairman and general manager of Wuliangye Co., Ltd., said that Wuliangye was vigorously developing low-alcohol wine.
On the official website of Wuliangye, you can see that in the Wuliangye series, the products named after the degree are 39 degrees, 45 degrees, 48 degrees, 52 degrees, 55 degrees, 60 degrees and 68 degrees, etc., but the products that have been put into operation are mainly 39 degrees and 52 degrees Wuliangye, the former is currently in the stage of rapid expansion, and the latter is the flagship product of China's high-end liquor. According to the latest news in the market, the new and upgraded versions of 45 degrees and 68 degrees Wuliangye will be officially launched in May, which shows that Wuliangye is vigorously deploying low-alcohol wine products.
However, judging from the sales volume and revenue of the two products, the revenue growth rate is not as good as the sales growth rate, so there is also the possibility that the product has made price reductions and concessions.
2. The gross profit margin growth is slow, not as good as Luzhou Laojiao and Shuijingfang
What is more noteworthy is that Wuliangye, which seeks stability, still fails to match the second position in the industry in terms of gross profit margin.
In 2023, the overall gross profit margin of Wuliangye's liquor products will be 81.92%, a slight increase of 0.04 percentage points year-on-year. Among them, the gross profit margin of Wuliangye products was 86.64%, a slight increase of 0.08 percentage points year-on-year, and the gross profit margin of other wine products was 60.16%, a year-on-year decrease of 0.51 percentage points.
Compared with the wine companies that have been "pulled up" by Wuliangye, such gross profit margins and growth are still slow.
For example, in 2023, the overall gross profit margin of Luzhou Laojiao liquor will reach 88.41%, an increase of 1.39 percentage points year-on-year, and the overall gross profit margin of Shuijingfang liquor will reach 84.05%.
From the perspective of high-end products, the core source of liquor revenue, the gross profit margin of Shanxi Fenjiu increased by 0.11 percentage points, and the gross profit margin of Luzhou Laojiao increased by 1.22 percentage points, reaching 92.27%, which has exceeded the overall gross profit margin of Moutai of 92.11%, second only to the gross profit margin of Moutai products of 94.12%.
In contrast, the gross profit margin of Wuliangye's higher-end Wuliangye products only increased by 0.08 percentage points year-on-year, which seems to be too stable.
(Photo / Luzhou Laojiao 2023 Annual Report)
In the past three years, Wuliangye's gross profit margin has maintained a slight growth, which is low compared with Luzhou Laojiao.
According to the data, from 2021 to 2023, the gross profit margin of Wuliangye liquor increased by 0.01 percentage points, 1.59 percentage points and 0.04 percentage points respectively, reaching 80.29%, 81.88% and 81.92%. During the same period, the gross profit margin of Luzhou Laojiao liquor increased by 2.34 percentage points, 1.16 percentage points and 1.39 percentage points, reaching 85.86%, 87.02% and 88.41%.
Therefore, taking into account the decline in tonnage price and the increase in volume will exacerbate the price inversion, Wuliangye, which has been used to stability, finally raised the price and increased the ex-factory price of the core product of the eighth generation of Wuliangye from 969 yuan to 1019 yuan, an increase of 50 yuan, a price increase of about 5%, which is also the first time that the ex-factory price of the eighth generation Wuliangye has been increased in two years.
From the perspective of distribution channels, the company has made significant efforts in the eastern and central regions, with the number of dealers increasing by 56 and 24 respectively, and the revenue increasing by 17.92% and 16.30% respectively, while the revenue in the southern and northern regions decreased by 8.97% and 4.04% year-on-year. However, from the perspective of gross profit margin, the gross profit margin of the eastern, western and northern regions decreased by 0.12, 1.1 and 0.18 percentage points respectively.
In addition, in the direct sales channel, which includes three modes of group buying, specialty stores and e-commerce, the revenue growth rate is not as fast as the cost growth rate, and its gross profit margin also decreased by 0.17 percentage points year-on-year. However, from an objective point of view, the gross profit margin of Wuliangye's direct sales model has reached 86.75%, although it is not as good as Kweichow Moutai's 95.46%, but it is still more advanced than Yanghe and Luzhou Laojiao.
(Photo / Revenue breakdown by different sales model)
As a sales method that directly reaches consumers, direct sales can not only increase the gross profit of products, but also help to enhance brand recognition and strengthen the control of the supply chain and market channels of wine companies. In recent years, the construction of "i Moutai" has added a lot to Moutai's performance, and many liquor companies such as Yanghe Co., Ltd. and Luzhou Laojiao have built direct sales channels.
However, it is not difficult to see from the 2023 annual report that the year-on-year decline in the gross profit margin of direct sales channels also appears in the performance of Kweichow Moutai, Yanghe and Luzhou Laojiao, which shows that even liquor giants still need to continue to increase investment when building direct sales channels.
3. The inventory of finished wine has doubled, and the contract liabilities have decreased significantly
While exchanging volume for price and gross profit margin growing slowly, Wuliangye's inventory has also risen sharply.
According to the data, by the end of 2023, Wuliangye's inventory will reach 17.388 billion yuan, an increase of 8.81% compared with the same period last year, ranking third among listed liquor companies.
Among these inventories, Wuliangye's finished liquor inventory reached 48,322 tons, a significant increase of 107.14% compared to 23,328 tons in 2022.
Although the liquor industry is different from other consumer goods, a large enough inventory means that there is enough high-end production capacity that can be released in the future, but from the beginning of 2023, the inventory problems exposed by the entire industry continue to plague liquor companies. The total inventory of 21 listed liquor companies has reached 153.285 billion yuan, an increase of 21.2 billion yuan from 2022.
Shengang Securities believes that the industry to inventory, price pressure is still there, the market quickly digested the first quarter of the report results, inventory and price is still an important indicator for investors.
Although Wuliangye mentioned in its annual report that the increase in inventory was due to the good sales of major products and the early stocking, it seems that this is not the case from the perspective of the willingness of channel providers to make payments.
The contract liabilities in the annual report are the pre-receivables of liquor enterprises to distributors, and the scale of contract liabilities reflects the willingness of distributors to make payments and their expectations for the market.
According to the data, Wuliangye's contract liabilities at the end of 2023 were 6.864 billion yuan, which was a significant decrease of 44.55% compared with 12.379 billion yuan at the beginning of the year. At the same time, Wuliangye's contract liabilities are also inferior to Yanghe's 11.105 billion yuan and Shanxi Fenjiu's 7.029 billion yuan.
By the end of the first quarter of 2024, Wuliangye's contract liabilities that had experienced price increases were 5.047 billion yuan, a decrease of 8.82% compared with the same period last year, continuing the downward trend in 2023. Similarly, the company's contract liabilities are not as good as the 5.815 billion yuan and 5.59 billion yuan of Yanghe shares and Shanxi Fenjiu in the same period.
Zeng Congqin, chairman of Wuliangye, once said that in 2024, the company's marketing work will focus on enhancing the brand value of Wuliangye, continue to strengthen quality brands, consumer cultivation, and channel profits, and promote the reasonable return of prices to brand value; Choosing the opportunity to appropriately adjust the ex-factory price of the eighth generation Wuliangye will not make dealers suffer.
From the perspective of the market situation, the WeChat account of "Today's Wine Price" shows that the wholesale price of the eighth generation of Wuliangye's core product is 965 yuan, which is inverted compared with the ex-factory price of 1019 yuan.
(Picture / Screenshot of "Today's Wine Price" WeChat account)
For the above problems, Wuliangye has taken action to control the quantity and ensure the price, and the specific effect still needs time to test, and "Jiemian News Bullet Finance" will continue to pay attention.
*The title picture in the article is from: Wuliangye official website.