---
title: "Baijiu Inventory Pressure Mounts: After Reaching 10 Billion Scale, 1919 Unveils Two Retail Innovations to Disrupt the Industry"
description: "1919's 'Kuaihe' and 'Chihe' digital empowerment of tobacco and liquor stores and restaurants aims to solve the challenge of baijiu sales. As the industry faces inventory pressure and internal competition, these innovations represent a significant opportunity for local FMCG distributors to transform and upgrade."
author: "陈思廷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-01-24"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/baijiu-inventory-pressure-mounts-after-reaching-10-billion-scale-1919-un-e2a1e6e1/"
markdown: "https://xinjignxiao.com/en/articles/baijiu-inventory-pressure-mounts-after-reaching-10-billion-scale-1919-un-e2a1e6e1.md"
original_source: "https://mp.weixin.qq.com/s/Sz9BT-zfBEL3sJcFppPKMA"
translation: "https://xinjignxiao.com/zh/articles/%E7%99%BD%E9%85%92%E5%8E%BB%E5%BA%93%E5%AD%98%E5%8E%8B%E5%8A%9B%E5%B1%B1%E5%A4%A7-%E7%99%BE%E4%BA%BF%E8%A7%84%E6%A8%A1%E4%B9%8B%E5%90%8E-1919%E7%A5%AD%E5%87%BA%E4%B8%A4%E5%A4%A7%E9%9B%B6%E5%94%AE%E5%88%9B%E6%96%B0%E6%90%85%E5%8A%A8%E8%A1%8C%E4%B8%9A%E5%8F%98%E9%9D%A9-e2a1e6e1.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/baijiu-inventory-pressure-mounts-after-reaching-10-billion-scale-1919-un-e2a1e6e1/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Baijiu Inventory Pressure Mounts: After Reaching 10 Billion Scale, 1919 Unveils Two Retail Innovations to Disrupt the Industry

> 1919's 'Kuaihe' and 'Chihe' digital empowerment of tobacco and liquor stores and restaurants aims to solve the challenge of baijiu sales. As the industry faces inventory pressure and internal competition, these innovations represent a significant opportunity for local FMCG distributors to transform and upgrade.

**Introduction: 1919's 'Kuaihe' and 'Chihe' digitally empower tobacco and liquor stores and restaurants to solve the challenge of baijiu sales.**

**Baijiu 'Inventory Reduction'**
**Industry involution will inevitably 'force' major innovations**

**1) Baijiu inventory reduction will continue in 2024.**
2023 was the year of inventory reduction for baijiu. If expectations hold, 2024 will see continued inventory reduction in the baijiu industry.
According to data from the National Bureau of Statistics, from January to October 2023, the output of baijiu enterprises above designated size was 3.478 million kiloliters, a year-on-year decrease of 7.7%.
In the first three quarters, the total inventory of 20 listed baijiu companies on the A-share market reached 136.354 billion yuan. In 2020, this figure was only 98.546 billion yuan, an increase of 38% today.
Among them, five liquor companies—Kweichow Moutai, Wuliangye, Yanghe, Shanxi Fenjiu, and Luzhou Laojiao—each had inventory exceeding 10 billion yuan.
If even the top tier of the industry is in this state, it's no wonder the entire baijiu industry was lamenting in 2023.
With stagnant growth and high inventory, the entire FMCG sector faces similar conditions, but the baijiu industry faces a more severe 'shrinking' situation.

**2) 'Involution' breeds giants and innovation.**
Historical experience tells us that when industry capacity stagnates or declines, the industry enters an inevitable era of involution, which will only ease when the next growth phase arrives.
From factories to distributors to retail ends, competition intensity at every level will greatly increase, and channel management and price chaos are no longer news.
But from another perspective, every round of industry involution brings overall brand, product, and channel transformation and upgrading.
The milk war produced two world-class brands, Yili and Mengniu; the air conditioner war produced Midea and Gree; the mobile phone war produced Huawei.
The same applies to the consumer retail end. During involution, Taobao and JD.com emerged online, and today Douyin and Pinduoduo have risen; offline, China Resources Vanguard, Meiyijia, and Furong XingSheng have risen, causing Walmart and Carrefour to retreat.
Within three to five years, the entire upstream and downstream of the baijiu industry will be in a major involution era, with inventory pressure transmitted to every level of the industry. But in the involution era, revolutionary brand and retail innovations will certainly emerge, creating the giants of the next era.

**3) Alcohol retail terminals are consolidating and innovating.**
Two keys to resolving the pressure on the baijiu industry are upstream brand innovation and concentration, and downstream consumer-facing retail innovation and upgrading.
Over the past decade, the number of tobacco and liquor terminals grew at double-digit rates for seven consecutive years, but in the past four years, there has been a significant increase in store closures.
Even among leading chain retail brands, 90% of stores have seen profit declines. Therefore, in 2024, the consolidation of alcohol retail terminals through closures, suspensions, mergers, and transformations will remain a theme.
Traditional in-store scenarios and group-buying models are far less effective and efficient than before. 'Don't look at how much is produced, look at how much is consumed.' Ultimately, baijiu 'inventory reduction' depends on sales innovation.
In fact, the baijiu retail sector has been exploring and innovating in recent years, such as 1919, the long-time 'pioneer of liquor industry innovation,' as well as internet-based companies like Meituan and Jiuxiaoer.
The actions and innovations of leading chains are often highly representative. This article focuses on 1919, a leading alcohol retail enterprise, and attempts to interpret its latest 'Kuaihe' and 'Chihe' models launched in 2023, exploring changes in alcohol retail and transformation paths for FMCG distributors.

**18 Years of Entrepreneurship**
**1919 Transforms from Dark Horse to Industry White Horse**
In 2006, Yang Lingjiang opened the first 1919 store on Yulin Road in Chengdu. It was the first professional chain company in the liquor industry.
1919 initially entered the liquor retail market with an innovative 'dedicated phone line' approach, giving consumers a new way to 'order wine by phone, delivered to your door.'
Throughout its 18 years of entrepreneurship, 1919 has always liked to be the first to try new things. For example, it was the first to do 'CEO Live' sales in livestreaming, the first in the industry to adopt a direct-managed franchise store model, and in 2023, it transformed all its direct-operated stores into contracted and franchise models, fully launching a partner model.
In the eyes of outsiders, the biggest change in 1919 over the past four or five years is its increasingly moderate attitude and more harmonious relationships with upstream manufacturers. This is not hard to understand.
During its growth phase, 1919 had to appear as an 'industry challenger' to gain attention and resources. Even amid market skepticism and criticism, it could still become a rapidly growing dark horse.
But in recent years, after launching its platform strategy, its stores have multiplied. The latest data shows that 1919's stores have exceeded 5,000, making it undoubtedly the largest liquor chain in the industry. At this point, it no longer needs a challenging stance to gain attention, nor does it need to be unconventional to demonstrate strength, so it naturally becomes more open and moderate.
Based on 2023 operating data, 1919 still leads the alcohol retail sector.

**First, look at online.**
During the 618 shopping festival, 1919 set new sales records, becoming a 'four-time champion.'
Among these, 1919's Tmall GMV reached 248 million yuan, ranking first in Tmall's food industry and first in the liquor category; 1919's Douyin GMV reached 203 million yuan, and 1919's Kuaishou GMV reached 126 million yuan, making it the dual champion in the liquor industry on Douyin and Kuaishou.
During the Double 11 period, 1919's cumulative GMV across e-commerce platforms exceeded 1.8 billion yuan, a year-on-year increase of 400%, ranking first in the liquor category on Tmall and Douyin.
Beyond major promotions like 618 and Double 11, 1919 was also the top liquor seller on various platforms throughout the year, with 1919 e-commerce GMV exceeding 6.6 billion yuan in 2023.

**Next, look at offline.**
In 2023, 1919 continued to optimize and adjust existing stores, completing the contracting and transfer of direct-operated stores, while opening over 2,000 franchise stores through the partner model.
As of the end of 2023, 1919's legacy chain brand '1919 Liquor Direct Supply' had over 3,000 stores, 1919 Chihe stores exceeded 1,000, and 1919 Kuaihe stores exceeded 1,000, covering over 90% of prefecture-level markets.
According to 1919, in 2023, against the backdrop of industry inventory reduction, 1919's overall transaction volume exceeded 10 billion yuan, breaking into the '10 billion club' against the trend.
Clearly, after 18 years of entrepreneurship, 1919 has completely transformed from a dark horse to an industry white horse, with significant market influence.
For 1919, the 10 billion in 2023 is already a thing of the past. Facing the industry's shrinking backdrop, relying solely on traditional store expansion is unlikely to sustain growth in the future.
This is where its two innovative models from 2023 come into play—'1919 Kuaihe' and '1919 Chihe.' These are the two innovations that 1919 Chairman Yang Lingjiang has the highest hopes for.
From a business model perspective, the launch of 'Kuaihe' and 'Chihe' adds a key stroke to 1919's all-scenario retail format.
With this stroke, the all-scenario retail centered on liquor products, covering all consumer purchase and usage scenarios, is now closed-loop.

**'Kuaihe' and 'Chihe'**
**How Do They Integrate and Mobilize Tobacco and Liquor Stores and Restaurants?**

**1) What are 'Kuaihe' and 'Chihe'?**
All effective business models are innovations that maximize the exploration and satisfaction of consumer needs.
**For liquor products, who is closest to consumers? Online, it's e-commerce and livestreaming; offline, it's restaurants and tobacco and liquor stores.**
No matter how many stores 1919 opens, there is always a limit. Whether direct-operated or franchised, it remains just a channel, not an ecosystem.
So, simply put, 1919's 'Kuaihe' and 'Chihe' are business models that mobilize and integrate countless offline tobacco and liquor stores, convenience stores, and restaurants.
Among them, 'Kuaihe' targets tobacco and liquor stores and convenience stores, as they are the main force for instant retail '19-minute delivery'; 'Chihe' targets restaurants, as over 80% of liquor products are consumed in restaurants.

**2) 'Kuaihe' provides two core values to tobacco and liquor stores and convenience stores: orders and supply chain.**
1919 Kuaihe is an innovative instant retail project under the 1919 Group. Leveraging 1919's brand, operations, and supply chain advantages, it abandons the traditional heavy-asset store model, focuses on full-domain digital online operations, provides one-stop fully managed digital upgrade services for terminals, and offers consumers quality products, competitive prices, and instant liquor purchase with delivery in as fast as 19 minutes.
After terminals join the 1919 'Kuaihe' system, they can, first, receive a continuous influx of online orders from 1919, gaining customers and broader sales; second, 1919 opens its supply chain platform 'Jiumama' to them, allowing terminals to purchase a wider variety of liquor products at lower prices with better margins.
Through 'Kuaihe,' 1919 has built a win-win model for customers, tobacco and liquor stores/convenience stores, and 1919:
> Customers can access the ultimate '19-minute delivery' service experience in more places;
> Tobacco and liquor stores/convenience stores provide delivery services, gaining additional orders and profits, and access to stronger supply chain products;
> 1919, through the Kuaihe network, achieves '19-minute delivery' in more places, gaining more customers and sales scale.
It is understood that 1919 Kuaihe launched in August 2023, and by the end of 2023, it had completed digital transformation of over 1,000 physical liquor stores, with a target of over 10,000 stores by 2024. In terms of recruitment, since launching national regional partner recruitment in November 2023, 1919 Kuaihe has signed agreements for over 300 cities, counties, and districts.

**3) 'Chihe' uses 'Chihe Cards' to attract customers to partner restaurants and conducts joint marketing.**
1919 Chihe focuses on restaurant consumption scenarios, using a new 'online transaction, scenario delivery' format for multiple connections, directing 1919 users to restaurants, returning the business of bringing your own liquor to restaurants, and sharing liquor profits with restaurants, creating a new local life platform integrating dining and alcohol.
Backed by upstream shareholder Tianmu International Wine, 1919 has its own supply chain products across categories such as baijiu, beer, red wine, and sake.
**1919 Chihe, based on users' 'dining + liquor purchase' needs, targets restaurant scenarios and builds an online-offline mutually penetrating consumption loop through two main tools: 'Chihe Cards' and 'Chihe Stores'**—through the 1919 Chihe Card's 'buy liquor coupons, get meal coupons' approach, it strongly drives traffic to restaurants on the 1919 Chihe platform; through partner restaurants opening 1919 Chihe Stores in-store, it returns liquor profits to restaurants. Restaurants thus gain dual benefits from users' 'dining' and 'picking up liquor.'
Simply put, when consumers top up liquor coupons, the platform gives meal coupons for free. Currently, it's a 1:1 match: buy 500 yuan in liquor coupons, get 500 yuan in meal coupons; buy 1,000 yuan in liquor coupons, get 1,000 yuan in meal coupons; buy any amount, get the same amount. Consumers can use this card to dine at any 'Chihe' partner restaurant in any city nationwide.
**Such a generous offer is highly attractive to increasingly cost-conscious consumers. And with self-owned supply chain products, costs are easily covered since they are only calculated based on production.**
Once a large number of Chihe Card users are acquired, 1919 can continuously direct customers to partner restaurants.
At the same time, because the 'Chihe Card' contains huge benefits, partner restaurants can also choose to recommend the 'Chihe Card' to in-store customers, earning corresponding sales profits.
Through the 'Chihe Card,' 1919 has built a win-win ecosystem for customers, restaurants, and 1919:
> Chihe Card customers receive super benefits and better dining qualifications and experiences at high-rated restaurants nationwide;
> Restaurants gain additional customers and orders, and can also purchase liquor products from 1919 at low prices;
> 1919 gains a larger scale of liquor consumers, turning them into loyal, even lifelong, customers;
> Additionally, through 'Chihe,' 1919 successfully gets its self-owned supply chain products into partner restaurants and consumed by customers.
According to 1919, **1919 Chihe officially launched national recruitment of district and county partners in December 2023. As of early January 2024, over 200 cities, counties, and districts have signed agreements.**

**1919 Kuaihe and Chihe**
**A Huge Opportunity for Local Distributor Transformation and Upgrading**
1919's 'Kuaihe' and 'Chihe' are not something anyone can do.
Integrating and mobilizing tobacco and liquor stores and restaurants is very difficult. Why would they cooperate with you, and why would they integrate into your ecosystem?

**First, you need a sufficiently strong liquor supply chain, including sufficiently strong self-owned liquor supply chain products.**
If the supply chain is not strong enough, you cannot provide sufficiently rich and competitive products to partner restaurants and tobacco and liquor stores, nor attract more consumers to join. Without this supply chain, the logical foundation of 1919 Kuaihe and Chihe would not exist.

**Second, you need sufficiently strong online operational capabilities and a sufficiently large customer base.** Without operational capability, you can't achieve what you want; if the customer base is too small, there will be no orders for either Kuaihe or Chihe, and you won't be able to integrate restaurants and tobacco and liquor stores.

**Third, you need sufficiently strong digital system capabilities.** Without a sufficiently powerful and intelligent digital system, the various business entities in this ecosystem cannot be connected. If a strong supply chain is the foundation, then this digital system is the foundation of foundations.

**Fourth, you need sufficiently strong brand appeal.** If the brand endorsement is weak and the signboard lacks appeal, why would others join you?
A business model with such high barriers is hard to find in the liquor industry, and 1919 happens to be one of the few that meets the conditions.
But for 1919 to develop rapidly, it still needs to fill the 'regional service provider or partner' link in its business model.
Whether it's 'Kuaihe' or 'Chihe,' they face a massive number of non-chain retail terminals, totaling over 10 million nationwide.
How to reach these 10 million restaurants and tobacco and liquor stores, who will communicate and negotiate, who will select the most suitable 100,000, and who will serve them? This is a huge and complex project.
Relying on 1919's existing retail management team to do this is neither realistic nor scientific or economical. And the vast number of FMCG distributors are precisely the most ideal people to undertake this project.
Traditional FMCG distributors are also experiencing the pain of involution today. How to maintain competitiveness in local business, and how to find a second growth curve with high relevance, high success rate, and low risk on top of their original business? These are the questions that many FMCG distributors think about and seek answers to every day.

**Local FMCG distributors joining the 1919 'Kuaihe' and 'Chihe' system have unique, complementary advantages.**
Distributors better understand local terminal characteristics, have expansion teams, and have customer relationship foundations, enabling rapid and effective implementation of 'Kuaihe' and 'Chihe.'
Conversely, the implementation of these two models is a powerful supplement to the distributor's main business, strengthening terminal relationships and networks, enhancing local competitiveness, and creating a second growth curve with great potential.
From this perspective, 1919, as a liquor specialty enterprise, will for the first time have a deep connection with FMCG distributors, forming a symbiotic, mutually reinforcing partnership.
1919's 'Kuaihe' and 'Chihe' may be a huge opportunity for local FMCG distributors to transform and upgrade; and the speed at which local FMCG distributors join and integrate may determine whether 1919's 'Kuaihe' and 'Chihe' can achieve rocket-like growth.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671