△2018 China (Luohe) Food Marketing Innovation Summit and the 3rd Leisure Food Manufacturers and Distributors Precision Matchmaking Conference Free registration is in full swing; scan the QR code for details. On May 7, the day after Moutai's personnel changes, Moutai Sauce-flavored Wine Company issued a notice regarding penalties for distributors who breached contracts. In the notice, a total of 17 distributors were heavily fined for violations, and more than ten provincial managers were held jointly accountable. Industry insiders pointed out that this is the new official's first fire! What signal does it send? 01 The New Official's First Fire: Heavy Penalties for 17 Violating Distributors, Provincial Managers Held Jointly Accountable First, let's look at the background of this penalty notice. On the evening of May 6, Moutai Group's major personnel reshuffle was finalized, ushering in the "Li Baofang era." The next day, May 7, the industry closely watched how Moutai would proceed beyond expanding its Moutai liquor market share. At 10:36 AM on May 7, the official Guizhou Moutai WeChat account published an article titled "84%! Moutai Series Liquor Enters High-Quality Development Era, 8 Billion Within Reach, Sales Volume and Revenue Soar, Moutai Series Liquor Performance Hits New High." Later that evening, Moutai Sauce-flavored Wine Company issued this penalty notice. From the document itself, this is a heavy blow to rectify the Moutai sauce-flavored liquor market. An analyst noted: "The penalties cover a wide range of violating distributors, including some major ones; moreover, 15 provincial managers were held jointly accountable." "Regarding the violating distributors, measures include quota reductions, fines, and rectification... Judging from the severity of the penalties, Moutai Sauce-flavored Wine Company is determined," the analyst added, saying this can be considered the "first fire" of the new official. 02 Clear Signal: Run Fast, but Also High Quality As is well known, in 2018, with the deepening of the "Nine-Character Project" for sauce-flavored liquor, the brand value of Moutai series liquor continued to surge, and the Moutai sauce-flavored craze became the biggest highlight in the baijiu industry. Regarding this incident, an industry insider said: "This is a very necessary rectification." On the reasons behind it, a distributor candidly stated: "For sauce-flavored liquor, it has developed rapidly in the past two years; precisely because of the rapid growth, there are some shortcomings in the market, channels, and consumers. If we further solidify the foundation in these aspects, sauce-flavored liquor can achieve sustainable high-quality development in the future." "Many non-compliant distributors have disrupted Moutai's market, and ultimately the victim is Moutai itself," the insider said. This is a very clear signal that, while Moutai liquor maintains a good momentum, Li Baofang will focus on sauce-flavored liquor. Industry insiders also pointed out that this move by the Sauce-flavored Wine Company is not surprising. At the 2017 distributor conference, Moutai Sauce-flavored Wine leaders announced that after April 30, they would no longer recruit distributors, and the 2018 goal was to achieve a new leap from 6.5 billion to 8 billion without increasing volume. Furthermore, among the three major goals broken down this year, the complete price alignment of products and the sustained surge in brand value were placed first. The other two are introducing zodiac liquor to the market and continuously improving per-ton value. This penalty document is undoubtedly a thunderous measure to achieve complete price alignment. Public data shows that the leapfrog development of sauce-flavored liquor in recent years has become a new growth pole for the "trillion-yuan Moutai." When Li Baofang first joined Moutai, he had already taken "heavy measures" to combat malicious price increases and was furious with inefficient distributors. As a result, the reputation and profitability of Moutai sauce-flavored series liquor both rose significantly, and last year the scale expanded to 6.5 billion yuan. More notably, as of May 3, 2018, Moutai series liquor sales exceeded 10,000 tons, with sales revenue reaching 2.77 billion yuan. The most distinctive feature of the marketing data is quality-based growth: although sales volume grew only 48%, sales revenue grew 84%, with per-ton value increasing by 23.2%. Looking at the sales of major products, three brands exceeded 1,000 tons: Moutai Prince Wine, Moutai Welcome Wine, and Lai Mao Wine. In terms of sales growth, three brands saw growth exceeding 100%: Lai Mao Wine, Moutai Prince Wine, and Han Sauce Wine, with Lai Mao Wine growing by as much as 184%. The most eye-catching sales data is for Moutai Prince Wine. As the second-largest product of Moutai Group, its sales volume exceeded 4,500 tons, sales revenue exceeded 1.2 billion yuan, accounting for over 40% of total sales, with sales growth as high as 153%. Clearly, from the data, Moutai series liquor has maintained high compound growth, but the biggest highlight this time is achieving quality-based growth, with sales revenue growth nearly double that of sales volume growth. In other words, while running fast, sauce-flavored liquor not only needs scale expansion but also pays more attention to healthy market development. In this regard, industry insiders pointed out: "The penalties are thunderous measures, from distributors to regional managers, effectively purifying the market environment; accelerating while occasionally braking, high-quality growth allows sauce-flavored liquor to run further." From the two events on the 7th, we can see that under the dual-wheel drive, Moutai Sauce-flavored Wine will unswervingly advance toward its set goals in 2018 without hesitation! The sauce-flavored market atmosphere will be even better! Competition in regional markets will be more intense! Source: Wei Jiu