The rapid development of the internet, China's economic downturn, restrictions on official consumption, drunk driving laws, a generational gap in baijiu consumption, and various industry malpractices have collectively plunged China's liquor industry into a state of panic and confusion. Many liquor companies and distributors are struggling to define their future direction and path, unsure whether the road ahead holds opportunities or pitfalls, and whether they will still be standing tomorrow. Hesitation, exploration, and experimentation are crowding the Chinese baijiu sector. So, what phenomena will emerge in 2016? What are the future development trends?
Trend 1: Return to the Essence of Business. In the future, a large number of enterprises will return to the essence of business and build a path of sustainable development.
The uncertainty of the business environment will be the new normal for future marketing. This requires both enterprises and distributors to grasp the essence of business, so that they can use their own certainty to respond to environmental uncertainty and achieve sustainable development.
In the future, a large number of enterprises in China's liquor industry will return to the essence. During opportunistic periods, they will abandon opportunistic thinking and behavior, and in times of greater environmental uncertainty, they will do more certain things.
The essence of business operation is to create benefits, but behind benefits lies value creation. Benefits are results, not goals; what value we can create for others is the goal. Value exchange is also the essence of business.
Value creation stems from a rational grasp of customer and user needs.
What are customer needs? Profit (reasonable profit) + Three Sells (sellable, fast-selling, high-volume) + Assistance with customer business problems.
What are user needs? Good quality (material function) + Face (identity preference or trend influence) + True convenience (easy purchase, one-click purchase, few steps, lazy) + Getting a bargain (having something to gain) + Being noticed and loved.
Value and benefits must come from the outside, not from within. We must be market-building oriented, take product sell-through as the starting point, and base our efforts on consumer interaction and brand promotion, serving our regional markets well. Only then can our value and benefits be continuously presented and possessed.
In reality, many of our markets and brands are sold to death because we prefer promotional selling and net-casting, rather than building markets bit by bit, engaging consumers, and promoting brands. This leads to shrinking markets, worsening performance, and less satisfactory benefits.
Trend 2: Brand Proximity Era. The closer your company or brand is to consumers, the greater your influence and the stronger your sales power.
In fact, a brand is a result, not a resource. The value of a brand has three aspects: awareness, trust, and influence. We often talk about brands in terms of awareness and trust, but we neglect influence.
Whether a brand is truly a brand is not determined by the industry or the company's self-perception, but by consumer purchasing behavior. This is the main reason why many well-known brands have awareness but lack sales power.
Awareness and trust can only solve the problem of sales resistance, but they cannot solve the problem of consumption motivation. Consumption power stems from influence, and influence stems from activity.
A brand with true sales power is built in the market and drunk up by consumers.
Influence is sales power and consumption power. The key is to get consumers involved and create strong influence over them. Core: atmosphere momentum, interactive experience, letting consumers participate, and influencing each other.
Trend 3: Product Portfolio Era. In the future, products will see the coexistence and integration of super single products and segmented products, but without a super single product, there will be no market position.
1. Understand the laws of product operation:
The business logic of product operation is: first product, then brand, then product. Products shape brands, and brands elevate products. A super single product is a must for every brand; without it, there is no brand, and the company is unsuccessful and unstable.
2. Only with a super single product can you have market position.
Portfolio products are an inevitable trend for future development, but they are not suitable for all enterprises. There is an important prerequisite: the enterprise must first create a super single product that can build a brand, and only then can it enter the product portfolio era. Only after having a super single product or successfully building one can an enterprise qualify to consider products for multi-level segmented markets.
3. Only with segmentation can diverse needs be met.
Whether now or in the future, creating exclusive products to meet segmented channels (e-commerce, micro-commerce, customization, etc.), segmented media, segmented consumer groups, and segmented regions is an inevitable trend. Because in the future, needs, populations, channels, and media will become increasingly fragmented and segmented.
Trend 4: Channel Integration Era. The fragmentation of consumption drives the diversification and compounding of future channels. Only through high integration of old and new channels can the entire commercial value chain be truly connected and jointly focus on consumers.
1. The status of traditional baijiu channels will never be erased: Although consumer demand is increasingly fragmented and new channels are emerging, fragmented and personalized demand is still in the long tail stage and cannot become the mainstream market demand. Because new channels have not yet solved the problems of purchase randomness, convenience, trust, habitual purchasing, and on-site negotiability (price, discounts for quantity), they are unlikely to become mainstream consumer channels in the short term. However, in the future, they must integrate with the internet. If online and offline are truly connected, they could potentially account for 80% of retail market share. It is precisely because of the natural characteristics of Chinese baijiu consumption that channel efforts focus on the B-end, making it easier to develop. However, C-end models such as crowdfunding, customization, and e-commerce can only serve as a supplement and cannot form a mainstream in the short term.
This is why in the B2B track of the liquor industry, there are platforms like Yijiupi, JiuXian.com's Zhongniang Liquor Group Buying, Lianduan, Danlu.com, and FMCG e-commerce platforms entering the liquor industry like Zhanghe Tianxia and Huimin Wang. These B2B models are developing faster than B2C e-commerce.
2. Recognize the three core channels for liquor sales: First, the catering channel; second, community old stores in circulation (including community supermarkets and some tobacco and liquor stores); third, professional liquor sales chains.
Catering channel: The catering channel has an inherent advantage in convenience. As long as the catering channel invests in branding and parity pricing, it can meet the convenience needs of most consumer groups, as the catering channel is ultimately the final consumption channel for alcoholic beverages. According to human consumption logic, in addition to value and price being satisfied, convenience is also a major factor. Therefore, the catering channel will not only be a place to educate and cultivate products but also the best place to consume and sell liquor.
Community circulation stores: This type of terminal will inevitably become a super terminal and a target for both online and offline competition. Because these stores naturally meet the needs of random consumption, convenient consumption, strong trust, habitual purchasing, emotional connection with regular customers, communication, and service advantages.
Professional liquor chain stores: Professionalization (storefront, products, brand, personnel, customers, service, information, data, profitability) + Branding (consumer branding formed by service, reputation, and word-of-mouth; commercial branding formed by status, reputation, strength, and value) + Convenience + Integration (vertical integration of manufacturers and consumers + horizontal integration of employees and competitors + online and offline integration of O2O full-matrix marketing).
Any terminal can be destroyed, but catering channels, community old stores in circulation, and professional chains will not be destroyed, and their role will become stronger in the future because they will eventually integrate with online and offline.
Trend 5: Organizational Marketization Era. In the future, organizations will undergo two significant changes: first, the transformation from sales-oriented to market-oriented; second, the transformation from manufacturer-distributor separation to manufacturer-distributor integration.
Sales-oriented organizational characteristics: Continuously pushing inventory and selling goods, using resources and promotions to exchange for sales volume, without paying attention to whether the market is healthy, channels are smooth, or customers are overstocked. Their goal is simple: to find every way to push inventory, never considering market or terminal digestion, and to complete the sales targets set by the company. In the previous era of expansion and incremental growth, this type of organization was very suitable and conducive to rapid enterprise development.
Market-oriented organizational characteristics: Now in an era of squeezing and competing for existing market share, the original sales-oriented organization can no longer adapt to market demands. Only by transforming into a market-oriented organization that is guided by healthy market development, solves consumption and sell-through problems, and is based on channel, market, and customer growth, ensuring both brand and sales growth, can an enterprise maintain healthy development. A market-oriented organization focuses on market operation capability, corporate market operation models and strategies, market sell-through, and product consumption, and is committed to solving market problems to achieve the company's sales and market targets.
Manufacturer-distributor integration: Cooperation between manufacturers and distributors must be based on common goals, clear division of labor, and development toward integration to quickly achieve mutual success. For example, the manufacturer is responsible for product development or customization, market strategy formulation, market promotion, market development guidance or assault, as well as distributor team guidance and service, and resource investment, while the distributor is responsible for sales, distribution, maintenance, and other basic duties.
If the two sides are in a state of checks and balances, each with their own agenda, not only will they fail to maximize resources and benefits, but they will also fail to achieve rapid market breakthroughs and mutual success.
Trend 6: Lean Management Era. Future marketing management will not only win on "refinement" but also on "leanness"; only management that can generate performance and solve problems is efficient management.
Although refinement and leanness differ by only one character, they have essential differences in marketing models and key elements: refinement is a means, leanness is the goal. The purpose of operation is benefit, and the purpose of management is performance and problem-solving.
1. Marketing management: Strategy + resources. The success of market operations depends on the most critical elements: strategy and resources. How to find market breakthroughs, focus matching resources, and create one victory after another can usher in rapid enterprise development and team ambition.
Always remember: In marketing, we do not manage targets or plans; we manage the precision and effectiveness of strategies, as well as the matching of resource investment. Otherwise, targets and plans will always be slogans, and the result will be blamed on poor team execution.
2. Customer relationship management: Customers + users. A company's success is not about its scale or market share, but how many customers and users it has, how many core customers and loyal users, how to turn competitors' core customers into your own, and how to shift competitors' loyal users. This will become the key work of future marketing management. Therefore, whether you are a distributor or a terminal operator, managing customer relationships well is the foundation of survival and marketing. (Customer and user information data is scattered across markets and outlets; as long as you are willing to discover and mine it, you can create unlimited value.)
3. Performance incentive management: Performance + commission + other rewards. The essence of performance management is setting correct goals + building the ability to achieve goals + incentives to achieve goals. It is both a goal and a standard, and a source of motivation.
Variability of performance assessment: It should be variable, not constant. What the company development or market needs is what is assessed; what is assessed is what is rewarded or punished. Different stages have different assessments; different people have different assessments.
Core focus of performance assessment: Monthly indicators should not exceed two, focusing assessment weight on core important goal work, allowing the sales team to do a single important thing well with high quality and high effect. This is the best assessment method.
4. Talent management: The core of management is to activate people, allowing each individual to develop or grow in the organization, create value, and gain a sense of value. So, making your employees feel valuable is the key to talent management. Why is recruitment difficult? Because you don't have momentum yet. Why is retention difficult? Because you can't let others earn money easily and happily. Why can't you keep excellent talent? Because they can't see hope and security.
Trend 7: Embrace the Cash Flow Era. Many enterprises or distributors decline not because they are small or large, but because they are not strong enough. The skinny and sickly or the bloated and weak often die from cash flow not keeping up.
Business has no size; making money is the key. A profitable business must grasp three elements:
Cash flow: Can your business generate cash, and can it generate cash quickly? Many companies boast about their future and imminent IPO, but suddenly the boss runs away at night due to a broken capital chain. How many such stories have you seen around you?
Return on assets: Return on assets = profit margin × turnover rate. Sometimes profit margin is not the most frightening thing; the frightening thing is low capital turnover, which drags many distributors to death.
Sustainable growth: Seize the core breakthrough point, strengthen your core competitiveness, and have new changes, new growth, and new increases every day. This is the path to sustainability.
Always remember: Success is achieved through endurance. Don't have unrealistic ideas or daydreams in business. No one succeeds easily; such success often ends badly. Only by being customer-centric, treating strivers as the foundation, and persisting in hard work over the long term is the foundation of victory and sustainability for every enterprise.
In business, cash flow is always first, profit second, and scale third.
However, the current situation seems reversed: scale first, no profit, cash relies on financing, increasing market value, and raising money from the stock market. They don't understand the fundamental purpose of a company going down the capital path: to use capital support to further consolidate the company's unique core competitiveness and boost rapid development.
Trend 8: Super Regional Era. In the future, the survival space for enterprises will be: those who win super regional markets win the world. In small markets, be the local snake; in large markets, be the strong dragon. Only with regional blocks can you achieve national presence.
- Status determines power.
Future competition is not only about scale but also about status, not the so-called industry status, but absolute status in the market. Any enterprise or commercial organization must truly be the local snake in a small market and the strong dragon in a large regional market, achieving a leading position in every market. Only then can we have a voice in every market and remain invincible.
- Foundation determines resistance.
Whether you are an enterprise or a distributor, don't be proud of your current achievements or scale. Instead, calmly consider and plan where your current sales performance comes from, and how many leading regional markets or areas you can count. If there are none or few, then your growth is only from aggregate growth, which is performance without a foundation. Once you encounter an opponent's attack or environmental changes, market decline or difficulty is common sense.
Our enterprises or distributors must have a strong sense of crisis. Only by building one super market after another with absolute status and strong resistance as the fundamental starting point can we truly achieve sustainable development and harvest markets.
Trend 9: Capital Economy Era. Whether it's mixed-ownership reform of state-owned enterprises, mergers and acquisitions, or entering the New Third Board, the liquor industry is sending a signal that the future has entered an era of transition to a capital economy.
Let's look at capital-related events in the liquor industry in 2015:
In August 2015, Shanghai Jinyi Jiuda Liquor Company officially announced its listing on the New Third Board, becoming the first traditional liquor distribution enterprise to list on the New Third Board. Subsequently, 1919, JiuXian.com, Yanlou Guojiu, and others officially listed on the New Third Board.
In the future, regardless of size, as long as an enterprise has an internet model or a unique business model, it will basically hope to use capital power for valuation, financing, and New Third Board listing, to obtain relatively abundant funds to adjust and consolidate internal and external development needs, enabling the enterprise to achieve scale growth.
Laobaigan Liquor, as the first landed baijiu state-owned enterprise reform plan, raised no more than 825 million yuan and also launched an employee stock ownership plan for 830 employees. Moutai introduced strategic investors in multiple subsidiaries, with Moutai Group retaining controlling status. Moutai Group will introduce strategic investors at the subsidiary level, develop mixed-ownership economy, vigorously promote diversification of related industries, and actively promote the listing of subsidiaries such as Xijiu. Wuliangye's mixed-ownership reform involved a private placement of 100 million shares, raising a total of 2.334 billion yuan. Tuopai is also actively planning a second mixed-ownership reform.
Whether it's activating internal and external organizational vitality or raising funds to meet enterprise development needs, the purpose is to find ways to gain rapid development momentum in this uncertain environment, thereby achieving the intention of scale development.
The M&A wave will be the most mainstream behavior in the future. Examples include Qingke Liquor acquiring Zhongjiu Wang, Tianyang Holdings acquiring Tuopai Shede, Beijing Sugar and Tobacco acquiring Huadu Liquor, 1919 acquiring Goujiu Wang, Geder Xiangying acquiring Yemai Jiu and liquor chain enterprises, and Anhui Baichuan acquiring multiple distributors.
In the future, whether it's M&A between enterprises, manufacturers acquiring distributors, or distributors acquiring each other, if you want to quickly gain scale, status, market, and development, capital operation is the simplest and most effective path, though it may also be the highest cost and highest risk behavior. However, it is a path that many enterprises and businesses will have to take in the future. The biggest trap behind the integration of capital and industry is often relying on scale growth to gain benefits, ultimately falling into an awkward state of diseconomies of scale. Therefore, whether you are an enterprise or a capital provider, the key issue to grasp is how to use capital power to solve the core competitiveness for sustainable development, enabling the enterprise to achieve sustainable development and sustainable benefits. Only then can it be a win-win or multi-win situation.
Trend 10: Community Economy Era. Whether you are an individual or an organization, as long as you have enough users, the values to sustain user operations, and matching resources and capabilities, you can achieve scale or even sustainable development.
The internet and mobile internet provide the shortest and most convenient path for every person and brand to connect with consumers. As long as you have enough highlights, attractiveness, charisma, or even gimmicks, you can quickly gather a group of followers. If you can operate these communities, you may find opportunities for new brands in a highly competitive new business world, by exploring the extended needs of the community to create products, such as crowdfunding or customization.
Simply put, enterprises deeply communicate and connect with users online and offline, truly discover, create, and realize user (customer) needs, establish deeper connections and relationships, continuously gain user (customer) recognition and dependence, build loyal fan groups, establish a business community system for the enterprise or brand, and thus achieve supply-demand integration among enterprises, merchants, and users, contributing continuous economic benefits to the entire value chain.
Currently, community economy is often done well by people or organizations with communication and promotion capabilities, as well as media professionals or organizations with media or advertising backgrounds, forming benchmarks or influence. However, for many traditional institutions, due to the lack of promotion and operation talent or incomplete promotion systems, they are still in the exploratory stage.
But the community model will be one of the main business models for enterprise development in the future.
Zhu Zhiming: