The trend of baijiu consumption downgrading is unstoppable, and in this context, bottled wine (guangpingjiu) is riding the wave. This raises the question: can bottled wine, targeting mass consumers, hold the bottom for the liquor industry? In fact, the changes in the baijiu consumption market are not simply a reduction in price demand, but the result of an aging consumer base, users' pursuit of high cost-performance products, and the diversification of young people's needs. It should be noted that the 'pyramid structure' created by decades of baijiu marketization is not so easy to collapse. Whether bottled wine can support an important pole in the dumbbell-shaped structure remains uncertain. Bottled wine is rising against the trend Against the backdrop of baijiu consumption downgrading, bottled wine with 'low price + large capacity' has successfully attracted consumers' attention, leading to a hot market and driving performance growth for related companies. Shanxi Xinghuacun Fen Wine Factory (600809.SH) under its bottled Fenjiu brand has won the market with its affordable price and good product strength. In the first three quarters of this year, the company's revenue from other liquor products (mainly Bo Fen) increased by 26.87% year-on-year, generating 8.54 billion yuan in revenue for the company. The popularity of bottled wine has also created growth space for some regional liquor companies. Xifeng Liquor, one of the four famous liquors, is a beneficiary of the rise of bottled wine. In the first quarter of 2024, sales revenue of high-neck green bottle Xifeng in the Shaanxi market increased by about 34.6% compared to the same period last year. Laobaigan Liquor (600559.SH), which performed poorly in the high-end wave of baijiu, has also made a strong comeback in this round of adjustment. In the first three quarters of this year, the company's performance grew by 33%, ranking first in the A-share baijiu sector. Not only professional baijiu brands, but even some new players have suddenly felt the magic of bottled wine. In early June, German chain supermarket Aldi listed a 500ml bottled wine priced at 9.9 yuan, which quickly sold out and sparked heated discussion. Pangdonglai, a 'top influencer' in the retail circle, cooperated with Baofeng Liquor to launch a co-branded custom liquor - Baofeng Free Love at 70 yuan, with daily sales of 3,000-4,000 boxes on weekdays and 5,000-7,000 boxes on weekends and holidays. Hema's bottled wine sales in cooperation with baijiu companies have also performed well. In the first half of 2024, Hema's bottled wine sales, including branded and private label, grew by 60% overall. According to data from the China Alcoholic Drinks Association, from 2013 to 2021, the compound annual growth rate of the bottled wine market reached 14%, far exceeding the industry growth rate. It is estimated that the market size will exceed 150 billion yuan in 2024. Faced with a huge incremental market, the number of players planning to enter the bottled wine market will only increase, potentially further driving market expansion. Mid-to-high-end baijiu loses ground In stark contrast to the stable demand and rapid growth of the bottled wine market, mid-to-high-end baijiu is experiencing a painful period. The wholesale price of Feitian Moutai has fallen from 2,700 yuan per bottle two years ago to below 2,200 yuan; Wuliangye Puwu, with an ex-factory price of over 1,000 yuan, was discounted to 798 yuan per bottle during Double 11; Guojiao 1573, with an official guide price of 1,499 yuan per bottle, once fell below 900 yuan. Some sub-high-end liquor companies have performed even worse. Jiugui Liquor, once a dark horse in the industry, saw its high-end Neican series revenue only 173 million yuan in the first half of this year, a year-on-year decrease of 60.85%. In the first three quarters, the company's operating revenue plummeted by 44.41%, and net profit attributable to the parent company plunged by 88.20%, to only 56.49 million yuan. Shede Liquor, one of the 'Six Golden Flowers of Sichuan Liquor', saw its operating revenue decline by 15.03% year-on-year in the first three quarters of this year, with the third quarter down 30.92% year-on-year. The big winner in the baijiu industry this year is Shanxi Xinghuacun Fen Wine Factory, which has already locked in the top three in the industry ahead of schedule. Bottled wine has played an indispensable role in achieving this result. Financial reports show that in the first three quarters of this year, the revenue growth rate of Fenjiu's other liquor products (mainly Bo Fen) was almost twice that of mid-to-high-end liquor products (mainly Qinghua series, Laobaifen, Panama series). In recent years, high-end baijiu brands have also launched strategic large single products in bottled wine to tap the mass market. For example, Wuliangye's Jianzhuang·Rongguang, Luzhou Laojiao's 100-yuan-level large single product Heigai, and Gujing Gongjiu's nostalgic bottled wine. Can bottled wine hold the bottom? The traditional 'high-end + sub-high-end + mass' pyramid structure of the baijiu market is transforming, and the dumbbell-shaped structure with 'strong at both ends, high-end and mass' is the industry trend. Can bottled wine hold the bottom and support this important pole? Around 2015, the baijiu market entered a cold winter, high-end liquor companies were all struggling, and the value of the bottled wine track suddenly became prominent. But as the economy continued to rise, the mainstream trend of baijiu high-endization was confirmed, and bottled wine had to temporarily lower its profile. Now, with the obvious trend of consumption downgrading, bottled wine, which has a larger user base, should have great potential. It should be noted that the consumption scenario for bottled wine is daily self-drinking, but the core baijiu consumer group is aging, and young people's consumption habits are more diversified. Where will the increment for bottled wine come from? Baijiu removing complex outer packaging and returning to bottled form is not simply a matter of lowering prices; the core is the cost-performance of the product. Leading baijiu companies have comprehensive advantages in product, capacity, brand, and channels. When they lower their stance to compete for the market, they will deliver a dimensionality reduction strike to other players. Companies without the profit support of high-end liquor will, in the long run, bear performance pressure. Niulanshan, the 'King of Bottled Wine', is the most vivid example. In 2023, sales of its large single product 'Bai Niu Er' have declined from a peak of 840 million bottles to less than 500 million bottles. Facing risks, Niulanshan has also made efforts in the mid-to-high-end market, but due to brand positioning, its mid-to-high-end strategy has not achieved significant results. In 2023, mid-end and high-end liquor accounted for only 16.30% and 14.33% of Niulanshan's baijiu sales, respectively. How to balance the high-end and mass markets is the same question facing leading liquor companies. The foundation of Shanxi Xinghuacun Fen Wine Factory's revival is Bo Fen, but in order to further optimize the product structure, the company has been reducing and controlling the production capacity of low-end Bo Fen through reasonable internal quota planning, gradually increasing the proportion of mid-to-high-end Qinghua series and Panama series. In a complex market environment, consumer needs continue to change, and industry participants' mindsets remain contradictory. In the short term, the overall trend for bottled wine is still positive, but in the process of upward support, it will face pressure from all sides. Whether bottled wine can support one pole of the 'dumbbell-shaped' structure of the baijiu market remains a huge question mark.