Baijiu is now selling for 9.9 yuan. Recently, amid the dual decline of Moutai's price and stock value, a 9.9-yuan baijiu newly launched by German supermarket ALDI was snapped up by young consumers. This 52-degree baijiu, reportedly made from five grains using traditional solid-state fermentation, sells for just 9.9 yuan per 500ml. According to Aldi, selling at this price still turns a profit. Not only baijiu, but a bottle of yellow wine at Aldi costs only 5.9 yuan. Since the beginning of this year, Aldi has been promoting low-priced private labels, such as its own milk brand "Youbai" with a low-temperature pasteurized fresh milk at just 8.5 yuan. Market feedback shows that the low-price-focused private labels have brought Aldi certain success. So what is the strategy behind Aldi's low-priced baijiu? How can a non-blended brewed baijiu be sold at 9.9 yuan and still be profitable? At a time when high-end baijiu is frequently cutting prices, how is Aldi shaking up the industry with its sold-out low-priced baijiu? Aldi's value-for-money strong-flavor pure-grain 52-degree baijiu. Image source: Internet "Poor Man's Baijiu" Sells Out: Who's Hurt? A 9.9-yuan baijiu has sold out, and recently most social media content about Aldi revolves around this baijiu. In fact, this baijiu went viral for two main reasons. First, the price stimulates consumers' sensitive nerves; in the context of 9.9-yuan tea drinks and coffee, no one expected baijiu to also sell at 9.9 yuan. Second, while achieving a low price, the quality also exceeds expectations. This 52-degree baijiu is not even blended; its ingredient list shows it as multi-grain strong-flavor baijiu, using solid-state fermentation, meaning it is brewed from multiple grains through traditional processes like fermentation and distillation. On social media, this baijiu has attracted many young people to try it, and reviews are mostly positive, mainly due to the price and craftsmanship, which make it hard to find fault. Some even call it "Jiang Xiaobai Pro." Just as the public is more tolerant of Mixue Bingcheng than other tea brands, because the low price lowers expectations, as one netizen joked: "It doesn't mind my poverty, and I don't mind its dirtiness." The psychology is the same. While Aldi's "poor man's baijiu" sells out, high-end baijiu is struggling to sell. In 2024, the wholesale reference price for loose-bottle Feitian Moutai fell below 2,100 yuan, reaching a historical low of 2,080 yuan, triggering a sharp drop in Kweichow Moutai's stock price. In fact, throughout June, Moutai's stock price rose on only a few days. Not only did Feitian Moutai's price drop, but its market value also fell below 2 trillion yuan. As of the close on June 28, Kweichow Moutai was at 1,467.39 yuan per share, with a market value of 1,843.3 billion yuan. At the same time, driven by the baijiu leader, prices of products like Wuliangye, Guojiao, and Jiannanchun also fell, and the story of high-end baijiu seems unsustainable. Low-priced baijiu contrasts sharply with high-end baijiu. In fact, Aldi has long valued the liquor category, and the purpose of launching its private-label baijiu is simple: the market is huge. Data shows that China's baijiu market size reached 621.1 billion yuan in 2022 and is expected to grow to 769.5 billion yuan by 2026, with a compound annual growth rate of 5.5%. There are few tracks with a hundred-billion scale and relatively high CAGR. It's worth noting that many baijiu brands have been trying to attract young consumers through youth-oriented strategies, launching new products and spending heavily on advertising, but with little success. Unexpectedly, a "foreign monk" from Germany has easily captured the hearts of young Chinese consumers. What will domestic baijiu brands think when they see this? Aldi's 9.9-yuan "poor man's baijiu" Image source: Internet Will Low-Priced Baijiu Crush the "Moutais"? Aldi currently has nearly 60 stores, all in Shanghai. So who are the target consumers of its low-priced liquor? They can be roughly divided into several groups: One group is young consumers, who are typically price-sensitive and seek high cost-performance. Low-priced baijiu can attract them to try and gradually develop a baijiu drinking habit. Second are price-sensitive consumers, not limited to young people; cheap, large quantity, and good taste can attract these drinkers. Additionally, there are novelty seekers who are curious about new things and willing to try new brands and products. After being "planted" by low-priced baijiu, these consumers may become long-term drinkers. Therefore, Aldi's baijiu pricing strategy can attract more non-traditional baijiu consumers and may also change some traditional consumer groups. Against the backdrop of falling high-end baijiu prices, the emergence of "poor man's baijiu" may accelerate the trend of consumption downgrading, and may also lead to further differentiation in the baijiu market. High-end and mass markets will have different development paths; the high-end market may shrink, while the mass market may expand. The reason for Moutai's price cuts is simple: shrinking demand and oversupply. However, those who drink Moutai and those who drink low-priced baijiu are largely not the same group. Although many want to bring down Moutai's price, Aldi's "poor man's baijiu" is unlikely to compete with Moutai. Nevertheless, in the current consumption downgrade, the pricing strategy of low-priced baijiu will significantly impact mid-to-low-end baijiu, but this depends on how long the "poor man's baijiu" craze lasts. This phenomenon is certainly worth industry attention. Left: Aldi's 9.9-yuan baijiu in short supply; Right: Netizens' review of Aldi's 9.9-yuan baijiu Image source: Xiaohongshu Don't Underestimate the Ambitions of "Aldis" According to Aldi, selling baijiu at 9.9 yuan not only doesn't lose money but also makes a profit. That's worth studying. How do they do it? In fact, the strategy is simple: low prices come from two main points: private labels and direct sourcing. Direct sourcing is easy to understand: every intermediary takes a cut, so sourcing directly from the source bypasses intermediaries and reduces procurement costs. Supermarkets do private labels mainly because they are profitable, contributing higher gross margins, and also create differentiation, as they carry the supermarket's own brand. For example, at Sam's Club, the most talked-about items are its private labels, which are often bestsellers. Sam's private label share is relatively low, while Aldi's private label share reaches about 90%. In fact, the development of private labels is related to the stage of retail development. To achieve lower prices and better services, centralization and scale are needed. According to the Matthew effect, the larger the scale, the lower the procurement cost, and thus the lower the front-end price while maintaining gross margins. Aldi's logic for private labels can be summarized in two sentences: First, "low prices without cost advantages are unsustainable." Second, "products that do not restructure the value chain are hard to change consumer habits." The first sentence is easy to understand: losing money to fight a price war is not advisable; it hurts yourself first, then others. If you gain a cost advantage through centralized procurement and upstream bargaining, then a price war can be fought, and low prices can be sustained. The second sentence essentially means redistributing benefits. In the past, for a brand's product to enter the shelves of large retail stores, it had to negotiate with retailers on how to split the margins, including front-end and back-end margins, and use certain costs and resources to secure shelf space, larger displays, and more end caps. When supermarkets make their own products, there are no such extra costs or barriers to getting on shelves. At the same time, compared to other brands spending a lot on marketing, supermarket brands like Aldi can achieve the same effect with very little money, making it relatively more efficient. By restructuring the original supply chain through private labels, benefits are redistributed among producers, retailers, and consumers. Lower prices allow producers to make money, retailers operate without needing to take a cut and just control profits, and the reduced prices benefit consumers. Not just Aldi, the logic for supermarket brands doing private labels is basically the same. However, the main reason private labels are popular now is value for money: ensuring quality at low prices. In the current consumption downgrade, private labels are naturally more attractive than traditional big brands. In this situation, supermarkets earn traffic and money through private labels. So what should brands think about? A sense of crisis might be the top priority. From milk, bakery, to liquor, what will be the next category for private labels? From August 20-22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Era of Shrinkage," along with the "3rd China FMCG Hard Discount Conference" and the "3rd China FMCG Distributor Conference," will be grandly held in Shanghai. At this conference, all roles in the FMCG industry chain will gather, allowing you to grasp industry trends at a glance, understand hot track directions, penetrate industry resources, and precisely connect with leading brands, top retail platforms, and national excellent distributors with over 100 million in sales. It provides you with precise decision-making, efficient cooperation opportunities, and on-site learning of exclusive methodologies from FMCG giants! Keynote speeches, roundtable dialogues, report interpretations, closed-door salons, and networking dinners—this thousand-person event is sure to have something for you!