Yang Menghan, chief reporter of "Huaxia Wine News".
When the consumer market enters the era of personalized demand, will those liquors that occupy the advantage of the category rise one by one? When the industry enters an era of strong differentiation, how should regional wine companies develop?
What will be the development path of those enterprises that have both category advantages and the characteristics of regional wine companies? The development status of Qinghai Mutual Aid Tianyoude Qingli Liquor Co., Ltd. (hereinafter referred to as Tianyoude) may be a good example to provide reference for the development of such enterprises.
With several ups and downs, is it difficult for the barley category to become the mainstream?
The latest news shows that in the first quarter of this year, Tianyoude achieved operating income of 526 million yuan, a year-on-year increase of 32.77%; The net profit was 108 million yuan, a year-on-year increase of 40.43%.
Both revenue and net profit have achieved substantial growth, with an increase of more than 30%, which is very impressive at a time when industry uncertainties are increasing.
According to Tianyoude's own statement, such growth comes from "actively promoting the construction of the ecological and true vintage expression system in the production area", implementing the business policy of "maintaining strategic concentration, gathering endogenous power, stimulating market vitality, and carrying forward Qinghai-Tibet endurance", and highly practicing "qualityism, spiritualism, and long-termism". With the product characteristics of "good and different", we will further increase the core market share.
In fact, such a state of high growth has occurred in the history of Tianyoude's development, but on the other hand, this distinctive wine company has been in a state of fluctuation. Judging from the past three years, the development of Tianyoude has also shown an undulating curve, rather than always upward.
In 2023, Tianyoude will achieve operating income of 1.21 billion yuan, a year-on-year increase of 23.50%; net profit attributable to shareholders of listed companies was 90 million yuan, a year-on-year increase of 18.36%.
In 2022, Tianyoude will be in a state of year-on-year decline in revenue and rising net profit - Tianyoude achieved revenue of 980 million yuan that year, a year-on-year decrease of 7.04%; net profit was 75 million yuan, a year-on-year increase of 19.05%.
In 2021, Tianyoude achieved revenue of 1.054 billion yuan, a year-on-year increase of 38%; Net profit reached 63 million yuan, an increase of 154.9%.
It can be seen that Tianyoude's revenue has increased as a whole in the past three years, but it will decline significantly in 2022, and the overall situation will fluctuate; In terms of net profit, it has been growing, but it is hovering below 100 million yuan.
Extending the time, it can be found that the overall fluctuation of Tianyoude is even greater, and its revenue (then known as Qingqing Barley Liquor) in 2017 has reached as much as 1.3 billion yuan, which is very close to Jinhui Liquor, another listed liquor company in the northwest market region. However, after 6 years, Tianyoude's total revenue did not increase but declined.
In terms of horizontal comparison, the revenue scale of 2017 is similar to that of Jinhui Liquor, but the gap between the two sides will be widened in 2020. The revenue of Qingqing barley liquor in the current year was 764 million yuan, a year-on-year decrease of 39%; Net profit was -115 million yuan, a decrease of 418%. In the same year, the revenue of Jinhui Liquor reached 1.731 billion yuan, an increase of 5.89%; net profit was 331 million yuan, an increase of more than 22%.
That is, in 2020, the revenue gap between the two sides will reach nearly 1 billion yuan, and the net profit gap will reach 400 million yuan.
By 2023, the gap between the two sides in revenue will widen to 1.338 billion yuan, and the net profit gap will narrow to 239 million yuan.
The performance of the two listed liquor companies in the northwest is very different, the annual growth rate of Jinhui Liquor is not too high, but it does not fluctuate too much, and it is a stable enterprise, while Tianyoude fluctuates a lot, and the decline and increase are very obvious. What is the reason for this difference, is it related to the category characteristics of Tianyoude?
Category breakthrough, but subject to the regional environment?
In China's liquor industry, Tianyoude is unique and has attracted much attention as a leader in the field of highland barley liquor. "After the wine industry has passed the period of large-scale development and brand development, it has entered a period of category development. For example, in the past few years, there has been a soy sauce craze, and in recent years, there has been a fragrance craze and a fragrance craze. Industry insiders said that the period of categorization differentiated by fragrance type has provided development opportunities for leading brands or unique brands in various fields.
Tianyoude is obviously good at "raw materials", using the special barley produced in the alpine and high-altitude areas, the unique brewing raw materials, unique Daqu ingredients, and the traditional national intangible cultural heritage brewing technology have achieved a unique flavor. It has a certain distinction from other liquor products with sorghum as the main ingredient, making it a representative product of the "barley" category.
The scarcity and health attributes of highland barley liquor have strengthened the unique attributes of Tianyoude liquor, and the enterprise has also continuously strengthened its category characteristics and quality advantages. The group standard of "Highland Barley Flavor Liquor" led by Tianyoude will be implemented in 2020, and the production process and quality and safety of highland barley wine will be included in the scope of standard management, which is not only conducive to the development of the entire highland barley wine industry, but also puts Tianyoude itself in the position of the creator of highland barley wine, so that it has a greater advantage in the category competition.
Even if it occupies the category advantage, Tianyoude's products are still mainly local.
According to the data of 2023, Tianyoude's sales revenue in the province in the current year was 810 million yuan, a year-on-year increase of 27.3%. Compared with the national sales level of 1.2 billion yuan, the province can be said to occupy the vast majority of the share; The sales revenue outside the province was 370 million yuan, a year-on-year increase of 20.6%, and the revenue outside the province accounted for 31% in the current year. Compared with the previous data, in 2018, the revenue of Tianyoude Province was 1.02 billion yuan, and the total income was 1.349 billion yuan. It can be seen that at present, the market in the province has declined, and although the market outside the province has expanded, it still accounts for a small enough proportion.
The industry believes that Qinghai Province is sparsely populated and has limited consumption power, which means that there is limited room for growth. In contrast, Gansu's Jinhui Liquor began to deploy on a large scale in other provinces and cities in Northwest China as early as five or six years ago, providing an inexhaustible impetus for the steady growth of the enterprise.
Relevant research reports show that the gross profit margin of Tianyoude's market revenue in the province is 68% to 78%, and the gross profit margin of income outside the province is 31% to 57%.
The reason for such a large gap in the gross profit margin of the market in the province and outside the province lies in the difference in sales channels: there are a large number of direct sales income in the province, such as enterprise direct sales group purchase, dealer group purchase, direct stores, large supermarkets, rural franchise stores, dealers, etc.; Outside the province, the distribution channels are the mainstay, counting the profit margins reserved for dealers, and the gross profit margin of sales in the market outside the province is much smaller than that in the province.
This also means that although the proportion of the market outside the province has increased, its gross profit is not enough to make up for the lack caused by the decline in the provincial market.
Judging from the data in 2023, the gross profit margin of Tianyoude in the province is 69.43%, and the gross profit margin outside the province is 50.64%, and the gross profit margin outside the province has improved. However, its extraterritorial expansion is still insufficient - at present, its out-of-province markets are still dominated by neighboring provinces close to Qinghai, such as Gansu, Ningxia, Shaanxi and other places.
Walking high is the best way to break through?
For a wine company based in the region and occupying the advantage of the category, the horizontal expansion has not seen obvious results at present, so is it a feasible path to move higher?
Tianyoude's strategic mistakes after 2016 once made it miss a good opportunity, and also widened the gap with other wine companies in the northwest region.
"Under the tide of the revival of famous wines, famous wines are generally moving high, rushing to the thousand-yuan stalls. Tianyoude focuses on the barley category, focusing on products with prices below 100 yuan to compete with other enterprises, and misses the opportunity to upgrade the product structure. Some industry insiders said that this is an important reason why Tianyoude cannot go out of the northwest.
In 2016, in order to adapt to the trend of small bottles, Tianyoude launched "Little Black", with sales reaching 5 million bottles in the first year; Subsequently, Tianyoude strengthened the layout of "Xiaohei" in the northwest market and first-tier cities outside the province, but perhaps due to the low repurchase rate before, or due to the lack of market investment later, the performance of "Xiaohei" began to decline in 2019.
Zhu Danpeng, an analyst of China's food industry, believes that the lack of national operations has also made it difficult for the company to find markets to support its growth.
After 2019, Tianyoude focused on the upgrading of product structure, focusing on the layout of 100-200 yuan price, and striving to create a G6 single product at a price of 500 yuan, and the product structure was significantly optimized. According to the data, the operating income of Tianyoude medium and high-end high-end high-end barley liquor in 2019 was 870 million yuan, and from 2020 to 2022, due to the impact of the epidemic, the revenue will be 500 million to 700 million yuan, and the gross profit margin will be stable at 72% to 76%.
It is worth noting that in 2023, Tianyoude will change the disclosure caliber: according to the disclosure of highland barley liquor above 100 yuan (inclusive)/500ml, highland barley liquor below 100 yuan/500ml, and other highland barley liquor.
In 2023, the sales volume of Tianyoude barley liquor above 100 yuan (inclusive)/500ml will be 577 million yuan, a year-on-year increase of 45.97%, and the revenue will account for 48%; the sales of barley liquor below 100 yuan/500ml were 489 million yuan, a year-on-year increase of 14.31%, and the revenue accounted for 40%; The sales of other barley liquor were smaller, only 100 million yuan.
From the price point of view, the average price of highland barley wine has continued to rise since 2020, and as of the first half of 2023, the average price is 62.9 yuan per bottle, a year-on-year increase of 1.2%. From the perspective of gross profit level, in the first half of 2023, the gross profit margin of Tianyoude ordinary highland barley wine (products with a retail price of 60 yuan/500ml or less) will be 56.42%. This means that in the upward trend year by year, the future profitability of Tianyoude may improve.