"Our future development goal is to do industry integration, and the way to integrate is to continuously acquire liquor companies and copy such a model, just like KFC stores, after the first and second stores are opened, the third and fourth stores are opened, and continue to replicate." On September 29, at the 2021 Fifth China Wine Exhibition (Jinan) First China Wine Industry Young Entrepreneur Summit, Zhu Wei, chairman and general manager of Guizhou Alcohol, chairman and general manager of Zhijiang Wine, expressed the above views.
From the acquisition of Guizhou Alcohol in 2019, to the acquisition of Zhijiang Wine in 2020, and then to the acquisition of Linlang Wine and Guizhou Green Wine in 2021, Zhu Wei and his team have rapidly advanced on the road of industry integration, and the prototype of a "real vintage" wine group has emerged. In Zhu Wei's view, participating in and promoting the integration of the liquor industry is the trend of the times, and it is also the biggest strategic opportunity for enterprises in the next decade.
Can he seize this opportunity?
01
The liquor industry is integrated, a virgin land to be reclaimed
In China's consumer goods sector, the liquor industry is probably one of the few places to be integrated (except for special reasons in the tobacco industry). In the 40 years of reform and opening up, most of the domestic industries have gone from dispersion to concentration, but this process is slightly slow in the liquor industry. In 2012, the China Economic Times said in a research article: "To this day, the concentration of the liquor industry is still not high, and basically every region and even county has its own distillery and brand." ”
Full market competition brings full industry integration, and the lag in the concentration of the liquor industry is related to weak industry competition. On the one hand, liquor, as China's spirits, is not facing sufficient international competition; on the other hand, the market-oriented transformation of the liquor industry is relatively late, and it is one of the few industries dominated by state-owned enterprises, and it is difficult to have a fierce competition between private enterprises.
However, the integration of the liquor industry may be slow, but it will never be absent, and changes in the economic situation and development cycle will exacerbate and accelerate this integration. Looking back at the 2012 report of the China Economic Times, the situation that "each county has its own winery and brand" no longer exists.
According to the statistics of the China Liquor Industry Association, there are 1040 liquor companies above designated size in the country in 2020, and this data is 1573, 1445 and 1176 respectively in 2017-2019. At the same time, the proportion of sales and profits of leading enterprises in the whole industry is also expanding. These two points illustrate a harsh reality: China's liquor industry has entered a period of deep integration, and its concentration is constantly increasing.
It is foreseeable that with the continuous intensification of the integration of the liquor industry, a small number of oligopolies will eventually form in the market.
02
From Guizhou alcohol to green wine, Zhu Wei's road to industry integration
In this tide of industry integration that determines the survival of enterprises, are the current strong people destined to be strong? not necessarily.
According to the positioning theory in marketing, although the leading enterprise in a category must be large enough and the product force is strong enough, the most important thing is to know deep enough in the consumer's mind, and this cognition is not enough to solidify decades of accumulation, and even change. This also explains why the liquor industry has a change of status in the kingship of Fenjiu, Wuliangye and Maotai.
In addition, the integration of the liquor industry is a "big article", in this integration, the existing system of large enterprises will participate, they also have undeniable advantages, but for small and medium-sized enterprises, the same can be flexible to win opportunities. In particular, the advent of the era of mobile Internet has provided a very fertile and rich soil for business model innovation, and the possibility of some second- and third-tier wine companies to achieve curve overtaking has greatly increased.
It is also from the above level that Zhu Wei sees the hope for the future. In a media interview at the beginning of his new guizhou alcohol, Zhu Wei frankly said that the next 10-20 years will be a key stage of industry integration, "do not want to miss this opportunity, want to participate in and promote this round of industry integration."
At the beginning of 2020, Zhu Wei traded Guizhou alcohol. With the "true year" as the core strategy, through product, management, market, channel and other levels of innovation, the company turned a loss into a profit in June 2020, with an annual profit and tax of 100 million. Since 2021, Guizhou alcohol has maintained a sales growth rate of 200%.
After Guizhou Alcohol, Zhu Wei acquired the second wine company, Hubei Zhijiang Wine, in July 2020, and continued to take root in the vintage wine market, launching a "true vintage" series of high-end new products featuring "zero additive, aged, grain wine", and the ex-factory price of the new product reached 140 million yuan in 12 months.
In September 2021, Zhu Wei announced the opening of the "merger and acquisition model" and acquired the third liquor company, Sichuan Linlang Liquor. Located in Gulin, Sichuan, the "hometown of China's sauce wine" on the Chishui River, this liquor company is a sauce liquor company with a winemaking capacity of 10,000 tons, of which more than 6,000 tons of 5 to 12 years old wine are stored. The acquisition of Lin Lang Liquor industry not only enriched the base wine reserves of Guizhou alcohol, but also made Guizhou alcohol the third largest sauce wine production capacity enterprise in the country.
On September 28, Zhu Wei announced the launch of the guizhou green wine acquisition plan. As a famous wine in Guizhou for three consecutive years, Qingjiu was the second largest enterprise in Guizhou in terms of sales after Moutai in sales in 2012, and also has deep brand roots and rich reserves of old wine. At present, the acquisition of green wine has basically landed.
After a series of mergers and acquisitions, under zhu Wei's operation, a "real vintage" liquor group has begun to take shape.
03
Diageo-style Chinese liquor group
Where is the end point of Zhu Wei's industry integration? Perhaps it was the time when a Diageo-style Chinese liquor group took shape. For the sake of understanding, let's start by introducing the topic to the beer space.
Unlike the slow-moving consolidation of the liquor industry, the consolidation of the beer industry has been completed. At this stage when the integration is about to fail, many people have speculated about the future.
In 2009, the national journal "China Liquor", sponsored by the China Brewing Industry Association, published an article entitled "Difficult Integration of the Beer Industry", which believed that after the end of the integration of the beer industry, from the perspective of capital, how to use strong beer resources to integrate liquor, wine, rice wine and other liquor water resources, from a single beer supplier to an integrated liquor distributor", will become a major direction. If there are oligarchs in the beer industry who achieve this transformation, other companies "once they encounter this kind of integrated wine distributor has no way to compete with it, the integrated wine distributor can easily suppress a single beer supplier." He also predicted that "the future competition will be a competition between integrated wine distributors and integrated wine distributors, from another point of view, it is the competition between the oligarchy of integrated wine distributors." ”
The prediction of "China Liquor" may be ahead of its time, so far, the leading companies in the beer field have not yet been able to take over the baton of liquor, wine and rice wine, and super integrated liquor distributors have not yet appeared in China. But from a world perspective, such giants exist, such as Diageo.
As the world's largest foreign liquor company, Diageo owns a series of top liquor brands spanning distilled spirits, wine and beer, and Diageo has also entered the Chinese liquor field through joint venture cooperation.
In the industry open letter issued by Zhu Wei at the beginning of his new Guizhou alcohol, he clearly put forward the future development plan. At the level of industry integration, Zhu Wei said that "to build a Chinese liquor group similar to Diageo".
That is to say, some of Zhu Wei's acquisitions are aimed at promoting industry integration, and what he ultimately wants to build is a liquor group involved in multiple brands and even multiple categories. At the capital level, the different brands and different categories of liquor companies acquired by the liquor group are unified, but their operations and markets are relatively independent. Zhu Wei believes that "this is a more feasible and realistic way to integrate the industry in the future, and we will also take such a path."
04
Zhu Wei's dream of industry integration, what are the odds of winning?
Regardless of the final "Diageo-style Chinese Liquor Group", from the perspective of the liquor field alone, Zhu Wei's industry integration dream is big enough, and its road will be full of hardships.
First of all, "mergers and acquisitions" is only the beginning of the industry integration action, although "mergers and acquisitions" have strengthened the strength of enterprises, but after "mergers and acquisitions", various enterprises must also be integrated, including the integration of internal management and the integration of external markets. If there is no such operation, no matter how good or large the previous mergers and acquisitions, many companies will become a burden.
Nowadays, although Zhu Wei has won Guizhou Alcohol, Zhijiang, Lin Lang and Qingjiu, but the group operation has not yet landed, how to complete the group management of the enterprise after the acquisition (there will be more and more enterprises to join in the future), to ensure the coordination of the overall action, will be a problem that must be solved.
Secondly, under the strong differentiation of the industry, the "Matthew effect" is becoming more and more significant, compared with the integration of the industry level, the integration of the capital side is more important, and it also tests the wisdom of managers. Of course, compared with other industries that have achieved a high degree of concentration, the liquor industry is still in the initial stage of industry development, and the market is highly dispersed.
However, with the acceleration of the industry integration process, famous wine enterprises will surely attract more high-quality resources and external capital to enter. It can be imagined that the capital advantage of the head enterprise will be more obvious in the future, and the high-quality M&A target may have to rely on grabbing. How to attract more attention from the capital level, so as to help integrate the great cause, is also a "big topic" for Guizhou Alcohol and Zhu Wei.
Of course, under the general trend of industry integration, if enterprises still hold the idea of a corner of security, it is not advisable in itself. Zhu Wei has taken a key step in promoting industry integration with the "dual-core" tool of "industry + capital integration". Does his strategy work, and can it support the big dream of industry consolidation? At present, there is no ancient person in the industry, and we can only wait for those who come.