Picture source @Visual China
text | Entrepreneurship forefront, author | Wu Xiaowei, editor | Danzong
Recently, news of partial price reductions came out in Luzhou Laojiao, causing public discussion: the price increase was only announced on November 1, 12 Will the price drop in the middle of the month?
Previously, under the general environment of the "Double 11" promotion and the price increase of top famous wines, the national liquor wholesale price rebounded rapidly. However, upon closer inspection, the products of Luzhou Laojiao and Yanghe's Shuanggou Liquor Industry increased their prices. It is not a core product, and Wuliangye, the “number two in the industry”, has not raised prices so far, which shows that the liquor industry is cautious about price adjustments.
Therefore, the news of partial price cuts in Luzhou Laojiao has attracted extra attention.
Luzhou Laojiao told the reporter of "Interface News·Entrepreneurship Frontier", "This is based on the good sales of Guojiao 1573 products in 2023, and a profit front-loading method is specially implemented for high-quality customers within the planned quota range, and the real settlement within the plan is The price has not been adjusted." However, according to people close to the company, the company does not want to be too high-profile about this news.
"Luzhou Laojiao's move to lower payment transaction conditions is a last resort and a helpless move to seek performance momentum at the end of the year." Xiao Zhuqing, an independent commentator on China's wine industry, said. Why did
buck the trend and cut prices?
The biggest hot spot in the wine industry this week is that Luzhou Laojiao just announced a price increase and then announced a price cut more than a month ago. In addition to Tequ, the price reduction products include Guojiao 1573, which was launched four months ago.
In August this year, Luzhou Laojiao issued a notice to dealers to increase the price of its core product 52-degree Guojiao 1573 Classic. The dealer settlement price of this product increased from the previous 960 yuan/bottle to 980 yuan. /bottle.
On December 11, according to the Securities Times, an organization said that Luzhou Laojiao notified dealers that Guojiao 1573 would be sold at 930 yuan/bottle by December 18 (the original price was 980 yuan). At the same time, each bottle The reward for scanning the code to ship out the warehouse is 10 yuan, which is 45% of the quantity shipped out of the warehouse in the previous fiscal year. In addition to Guojiao, the price of Tequda has also dropped from 340 yuan to 290 yuan.
People close to Luzhou Laojiao told reporters from "Interface News·Entrepreneurship Frontier" that the company did not want to be too high-profile about the news.
On November 29, the Luzhou Laojiao Board Secretary Office stated that the price "inversion" phenomenon was within the expected range. The company will actively pay attention to market trends and take countermeasures. There is currently no price adjustment plan for Guojiao 1573.
Regarding the price reduction news, a dealer told the reporter of "Interface News·Entrepreneurship Frontier": "It's impossible, Moutai is still rising. Now it is usually dealers who cut prices themselves because industry consumption is sluggish, but it is lower than 950 Yuan may have authenticity issues."
Subsequently, in response to this sudden price cut, Luzhou Laojiao told a reporter from "Interface News·Entrepreneurship Frontier" that recently some investors in the capital market reported that the company's Guojiao 1573 payment The price is reduced by 50 yuan. Based on the healthy sales of Guojiao 1573 products in 2023, will adopt a profit fronting method for high-quality customers within the planned quota range, and the actual settlement price within the plan has not been adjusted.
"This year, the company has fully introduced the 5-code related digital product system to strengthen the interaction between terminals and consumers and promote consumption of bottle openings. It has received positive responses from distribution customers and the sales market. The current sales situation is normal." Luzhou Laojiao said.
In other words, Luzhou Laojiao did not deny the move to reduce the payment price, but it stipulated that "high-quality users" and "within the planned quota" are a partial price reduction.
The above-mentioned dealer mentioned to reporters that the sales of Guojiao 1573 have declined since last year. The winery is not worried about inventory problems. What is really worried is the dealers.
In fact, this partial price reduction can be understood as an early start to the new fiscal year's repayment process. On the one hand, it will benefit dealers, relieve dealers' cash flow pressure, and reduce the apparent inversion. On the other hand, it will benefit consumers through scanning QR codes to reward customers. .
But there is a hidden meaning in this sentence: "Profit front-loading method for high-quality customers within the quota within the plan."
According to Xiao Zhuqing, an independent commentator on China's wine industry, Luzhou Laojiao's move to lower payment transaction conditions is a last resort and a helpless move to seek performance momentum at the end of the year.
He also mentioned that the current social inventory of the Guojiao 1573 series is huge. Many dealers have inventory for more than 7 months, and even large companies that have inventory for more than a year are gritting their teeth and waiting for the economy to pick up and for the day when social purchasing power recovers.
"The management of Luzhou Laojiao is still thinking of various ways to increase sales through channels in order to meet the performance evaluation targets during the term, making investors worried about the sustainable growth prospects of Luzhou Laojiao's performance next year." Xiao Zhuqing said.
When Luzhou Laojiao raised the price of Guojiao 1573 in August, a reporter from "Interface News·Entrepreneurship Frontier" visited the dealer and found that the notice of price increase of 980 yuan was not implemented for a period of time.
Xiao Zhuqing once analyzed that this notice is more like telling dealers that if they pay back before the specified date, they can enjoy the original ex-factory price, otherwise they will have to pay the new price.
This also means that between the increase and the decrease, Luzhou Laojiao may have received two advance payments, one for all dealers and one for high-quality dealers.
It is also worth noting that the time node mentioned in the price reduction news is December 18, which is also the day when Wuliangye will hold a dealer meeting.
When the news of partial price cuts came out, Luzhou Laojiao's stock price fluctuated significantly, triggering a collective decline in the liquor sector. Although the company announced that the controlling shareholder plans to increase its stake in the company by 200 million to 250 million yuan, the long-term impact of the price reduction on the company will be known when the 2023 annual report is disclosed.
Famous Liquor Prices Raise, Few Followers
The market attention caused by Luzhou Laojiao may also allow the outside world to further see that the domestic liquor industry still needs to recover.
public data shows that in the first half of this year, there were 983 liquor companies above designated size in the country, and 333 were loss-making companies. The loss rate reached 33.8%, and the loss exceeded 2 billion.
From the perspective of product prices, the China Liquor Industry Association released the "2023 China Liquor Market Mid-term Research Report" stating that after the Spring Festival this year, many liquor market transaction prices were lower than the distribution price, and the price inversion phenomenon was serious.
Data from the official website of Luzhou·China Liquor Wholesale Price Index shows that national liquor wholesale prices fell below the baseline in March, July, August, and September respectively. In November, the national liquor price index was 100.20, an increase of 0.20%, becoming the month with the fastest growth rate throughout the year.
The reason is, on the one hand, related to the "Double 11", and on the other hand, the price increase of some top famous wines, boosting industry confidence and driving up the price of liquor.
Specifically, the month-on-month price index for famous wines in November was 99.96, down 0.04%; the month-on-month price index for local wines was 100.33, up 0.33%. This was another rebound after falling for two consecutive months in September and October, and the increase reached the current level during the year. highest level.
November has become a critical month for the wine industry. Starting with Moutai's price increase, the industry's ex-factory price ceiling has been expanded to 1,000 yuan, but there are not many followers.
Luzhou Laojiao increased the ex-factory price of 60-version Tequ by 20 yuan. Jiangsu Shuanggou Liquor Industry, a subsidiary of Yanghe Co., Ltd., increased the ex-factory settlement price of 40.8% Sujiu and Toupai wine products by 30 yuan. Guyue Longshan, the leader of rice wine, simply raised the right part The price of ordinary products aged five years and below will increase by 2%-5%.
This also means that those who follow Moutai’s price increase are all famous liquor brands. Among these famous wines, the products that Yanghe and Luzhou Laojiao chose to raise prices are not core products. In addition, Wuliangye, the "number two in the industry", has not raised prices so far, showing the industry's cautious attitude towards price adjustments.
Xiao Zhuqing analyzed to the reporter of "Interface News·Entrepreneurship Frontier" that according to the laws of market economy, if supply exceeds demand, prices will rise, and if supply exceeds demand, prices will fall.
"Except for Moutai, all liquor channels in the entire liquor industry now have huge inventories, and there is more or less price inversion. In fact, this is the law of market economy at work, not individuals or distillery leaders. The subjective will is transferred." Xiao Zhuqing said.
Regarding the price increase, Wang Li, acting general manager of Kweichow Moutai, said that since Moutai adjusted the ex-factory price of some products on November 1, after various investigations, the market performance has been stable and prices have been stable.
A Beijing-area dealer told a reporter from "Interface News·Entrepreneurship Frontier" that after Luzhou Laojiao raised the ex-factory price of the 60-version Tequ, the price change of the product was not obvious, but the store has never sold this product. product. The dealer also mentioned that Sujiu·Toutaijiu is not sold in the Beijing market.
In 2024, the turning point of the wine industry has not yet reached
After a few wine companies raised their prices, more and more companies began to disclose their plans for 2024, including "speed control, volume control", "recovery" and "high-quality development" " becomes the key word.
Jinshiyuan stated in an institutional survey in November that it is expected to continue to be in the destocking stage in the fourth quarter of this year, and the overall channel inventory will remain healthy. Next year, we will pay more attention to the reasonable improvement of quality and reasonable growth of quantity, implement a quota system, and actively control speed and quantity to make volume and price more reasonable and price more stable. Zheng Yi, vice chairman and general manager of
Jiugui Liquor, said: "Our goal in 2024 is to achieve restorative growth of Jiugui." Zhang Yongyun, general manager of
Fenjiu Sales Company, mentioned that the focus in 2024 is to achieve high quality in development develop.
Starting from the beginning of 2023, “destocking” has become a top priority for the wine industry. Song Shuyu, chairman of the China Liquor Industry Association, said that under the situation of all-round and in-depth competition among industries and enterprises, the liquor industry will enter a period of adjustment and transformation, and digesting inventory is the primary task in 2023.
Shuijingfang takes the lead. The company mentioned that in the first quarter, due to lower than expected sales during the Spring Festival, the company's main task was to reduce social inventory and stabilize the value chain, so it decided to reduce shipments, resulting in a significant year-on-year decline in first-quarter performance; since the second quarter, distribution Commercial inventories have returned to healthy levels, store inventories have also been significantly reduced, returning to normal levels, and performance has resumed growth.
This move also caused Shuijingfang’s net profit to fall sharply by 45.15% in the first half of 2023, and net profit in the first three quarters still fell by 3.08%.
In the third quarter, the China Alcoholic Drinks Association’s survey mentioned that traditional alcohol dealers should not have that much inventory. Through digestion in the first two quarters of this year, it has been alleviated. The inventory is controlled within a reasonable range. The real inventory Mainly focus on some new channels.
These new channels are eager to remove inventory and monetize, and some newly entered channel vendors have gradually withdrawn after the epidemic, resulting in the market price inversion of many alcoholic products, especially high-end liquor, so "inventory" and "price inversion" have become high Frequency words.
However, a notice from the China Liquor Distribution Association exposed the truth about industry inventories. "Dealers and agents have too much backlog of inventory and cannot make normal purchases." The 2023 Hangzhou International Wine Expo, originally planned to be held from December 11 to 13, has been postponed and will be merged with the 2024 Beijing International Wine Expo.
So, will the liquor industry see a turnaround in terms of inventory and prices in 2024?
Huaan Securities Research Report mentioned that 2024 is a critical year for liquor, with support from the macro and demand levels, inventory is expected to enter an inflection point, and there is upward momentum in pricing, but at the same time, the industry's "differentiation and competition" will also become more serious, including The differentiation of high-end liquor due to the expectation of price increases, the intensification of competition in the mass price band due to the sinking of famous wines and the attack of real estate, the accelerated elimination of the tail end of Maotai Liquor due to the explosion of production capacity, etc.
In the view of Hou Hao, manager of China Merchants China Securities Liquor Index Fund, the turning point of the liquor industry is worth looking forward to. “However, macroeconomic disturbances and other factors will bring uncertainty to liquor investment in the short term. Now it is said that there is a clear turning point. It's still too early."
