Introduction:

In 2017, Langjiu Group established a new positioning for Qinghua Lang as 'one of China's two major sauce-flavor baijiu', officially launching its high-end strategy. In 2018, facing soaring prices of Feitian Moutai, Langjiu Group explicitly stated that Qinghua Lang's transaction price should stabilize above 1,000 yuan. In 2019, Qinghua Lang implemented a planned quota system, planning to raise the retail price to 1,500 yuan per bottle through six price increases over three years. In September 2020, the retail price of Qinghua Lang was raised to 1,499 yuan per bottle, but due to insufficient brand momentum, Qinghua Lang has long faced price inversion and inventory backlog issues. In 2023, the actual purchase price of Qinghua Lang on Langjiu's JD self-operated store was only 1,014 yuan, already below the ex-factory price; some distributors' purchase prices were as low as 860 yuan, nearly half the market retail price. Even Mr. Wang of Langjiu had to admit in an interview that Qinghua Lang's brand momentum is insufficient, and consumption in high-end occasions requires explanation. Meanwhile, Xijiu, whose scale was far behind Langjiu ten years ago, has now become equal to Langjiu Group and is poised to surpass it.

Missing the Mainstream Price Band Best Strategic Opportunity Handed to Competitors Mainstream price bands give rise to mainstream brands and build mainstream brand momentum. Langjiu devoted its corporate resources to the high-end product Qinghua Lang, leaving the sub-high-end product Honghua Lang without adequate resource allocation, ultimately allowing brands like Xijiu to occupy the sub-high-end market. Looking at the development of sub-high-end baijiu over the past decade, driven by consumption upgrades and restrictions on high-end government consumption scenarios, sub-high-end baijiu has become the fastest-growing price segment in the industry. From 2016 to 2021, the compound annual growth rate exceeded 20%, with market size surpassing 100 billion yuan. It is expected that by 2025, the sub-high-end baijiu market will expand to 180 billion yuan, with a compound annual growth rate of 12%, still the fastest-growing price segment in the baijiu industry.

Sub-high-end baijiu revenue and growth rate from 2011 to 2021 Sub-high-end baijiu sales volume and growth rate from 2011 to 2021 Data source: Zhongjin Securities

At the same time, driven by the consumer perception of 'sauce-flavor superior to strong-flavor', sauce-flavor baijiu is expected to catch up with strong-flavor baijiu. According to data from the '14th Five-Year Development Guidance for China's Alcohol Industry', by 2025, sauce-flavor baijiu will account for 44% of industry sales, and sub-high-end sauce-flavor baijiu is expected to occupy half of the sauce-flavor market.

Driven by large-scale advertising, Qinghua Lang's sales share rose from 25.88% in 2018 to 45.41% in 2020, achieving a switch to the high-end track. However, regrettably, while entering the high-end baijiu market, the original sub-high-end market was not defended, giving Xijiu the opportunity to counterattack in the sub-high-end market.

In 2010, Xijiu shifted its marketing focus from strong-flavor to sauce-flavor, launching the sub-high-end sauce-flavor baijiu Xijiu Jiaocang 1988. In 2011, when Langjiu's sales first exceeded 10 billion yuan, Xijiu's sales were less than 2 billion yuan; by 2020, Xijiu's sales scale had reached 10.3 billion yuan, with Xijiu Jiaocang 1988 sales close to 5.8 billion yuan, a year-on-year increase of 45%, accounting for 56% of total revenue. Langjiu Group's sales scale in 2020 was only 9.337 billion yuan, illustrating the strategic choice of price band and corporate development.

After Bosideng shifted to high-end down jackets above 1,000 yuan, its original mass market was not taken over by Xuezhongfei, giving Yaya a huge development opportunity. In 2019, Yaya's sales scale was only 90 million yuan; by 2022, Yaya's revenue had exceeded 10 billion yuan, and it is expected to exceed 15 billion yuan in 2023. The growth of more than a hundredfold in five years was caused by competitors' market selection mistakes.

It is worth mentioning that in Bosideng's 2023 interim report, sales scale was only 7.5 billion yuan, and its leadership in down jackets may be shaken by Yaya.

Large-Scale Advertising Creates Cognitive Advantage But Brand Momentum and Value Perception Are Seriously Insufficient According to research reports from Zhongtai Securities, Langjiu's advertising expenses in 2018 reached as high as 3 billion yuan, on par with first-tier liquor companies like Wuliangye, expecting to achieve 20 billion yuan in revenue and A-share listing by 2020.

At that time, the advertisement 'Qinghua Lang, one of China's two major sauce-flavor baijiu' was everywhere, from CCTV, buildings, elevators, outdoor, and shopping malls.

The huge advertising expenditure significantly enhanced Qinghua Lang's awareness, and associating with Moutai made Qinghua Lang stand out among sauce-flavor brands, establishing a cognitive advantage as the second sauce-flavor brand. But behind Qinghua Lang's price inversion, the essence is insufficient brand momentum and core value.

1. What is brand momentum, and why is it more important than cognitive advantage? The essence of a strong brand is momentum; strong brands are the foundation for winning competition and user preference. Although the business and consulting circles talk about brand momentum, there are various definitions. Even most books on brand momentum explain it as cognitive advantage, user emotion, brand awareness, and brand loyalty. Consulting companies represented by positioning consulting even understand brand momentum as the positive difference between user cognition and brand tone.

In Best's view, brand momentum is the relative difference between consumers' cognitive expectations of brand value before purchase and their experiential perception after purchase, reflecting the level of brand value in consumers' minds that the enterprise's brand assets possess.

The stronger the brand momentum, the stronger the superiority and competitiveness the brand enjoys in consumers' minds, and the greater the influence on consumers' purchase preferences. Brands with only cognitive advantage will find it difficult to become users' preferred choice in the high-end market due to brand momentum issues.

2. Large-scale advertising launch, lacking PR to build momentum, Qinghua Lang struggles to gain consumer recognition When brand momentum gaps are small, associative positioning can leverage communication. But when brand momentum differs by multiple orders of magnitude, so-called associative positioning becomes forced name-dropping.

Just like Borgward associating with BMW to claim 'one of the top four German cars', consumers simply don't take it seriously. In mass consumer perception, Xijiu and Lai Mao, which have historical origins and craft heritage with Moutai, are closer to the position of the second sauce-flavor brand.

On this basis, Langjiu's large-scale advertising promotion of Qinghua Lang is essentially enhancing awareness, but does little to help value perception.

At that time, it was unclear whether Langjiu Estate had published scientific research results in top international journals, could host the International Distilled Spirits Brand Conference, won Brussels International Spirits Awards, gained favor from business elites through top summits, created cultural landmarks as an industry-revered visiting base, or could quickly spread its unique sauce-flavor value.

In contrast, Lidujiu, from near bankruptcy to breaking the record of no new liquor company listing in the industry for nearly seven years, built strong brand momentum and gained consumer recognition through public relations activities such as international double gold medal quality endorsement, development of Yuan Dynasty cellars, immersive cultural marketing experiences, and national treasure-level quality promotion. It became a classic case at Tsinghua University and Harvard Business Review, and formed the 'Seven Sons of Baijiu' with Moutai, Wuliangye, and other six leading companies for world heritage application.

Looking at the baijiu industry, only three brands have retail prices stable above 1,000 yuan and sales scale exceeding 10 billion yuan: Moutai, Wuliangye, and Guojiao 1573. Behind their price increases lies the value accumulation of time, high-end users, and public relations activities. A single cognitive advantage promotion is difficult to build strong brand momentum.

3. Failure to follow up on Honghua Lang's success, starting from scratch with Qinghua Lang is a great loss of Langjiu's momentum Honghua Lang is the source of consumer momentum and consumption foundation for Langjiu.

In 1997, Langjiu launched Langjiu·Aged 10 Years, pioneering aged baijiu, becoming the predecessor of Honghua Lang. In 2003, Honghua Lang attracted widespread attention in the sauce-flavor field upon launch. In 2009, Honghua Lang sponsored CCTV Spring Festival Gala for three consecutive years, becoming a standard for family joy, firmly occupying the cognition of sub-high-end sauce-flavor brand. At that time, the sauce-flavor category was still small, and Moutai had established its national liquor status; in mass consumer perception, there were only Moutai and Honghua Lang in sauce-flavor baijiu. In 2011, Langjiu Group's revenue first exceeded 10 billion yuan, with Honghua Lang contributing half of sales.

In 2016, Honghua Lang seized the perfect opportunity of the Chinese women's volleyball team's miracle at the Rio Olympics and the rise of national confidence, signing Lang Ping, and proposed the slogan 'Drink Langjiu, win battles, spirited Chinese man.'

Driven by market sales and the momentum of fighting culture, Honghua Lang's brand momentum was at its peak, becoming a strong representative among baijiu brands after the 'Eight National Regulations'. However, with the release of Qinghua Lang's strategic positioning, Honghua Lang retreated to the second tier in 2017, rarely appearing in TV or media reports.

Starting from scratch, Qinghua Lang needed to cultivate high-end customers anew and rebuild brand momentum, slowing down Langjiu Group's development.

Estate Sauce-Flavor Baijiu is Langjiu's Successful Strategic Transformation But Brand Momentum Still Lags Behind

1. Langjiu Qinghua Lang's strategic positioning upgraded to estate sauce-flavor baijiu, restarting growth with cultural strategy In March 2021, Qinghua Lang's strategic positioning was upgraded to estate sauce-flavor baijiu, and the same year, corporate revenue surged to 15 billion yuan; in 2022, Langjiu Group's revenue exceeded 20 billion yuan, catching up with Xijiu's revenue scale. Why did Langjiu Group carry out a strategic upgrade? Why are baijiu companies adopting cultural strategies to enhance brand momentum and open the path to upward growth?

Since 2016, the baijiu industry has entered the 'Silver Age' of volume reduction and price stability, with baijiu production dropping from 13.584 million tons to 6.712 million tons. The halving of baijiu production and significant increase in industry concentration have driven the industry towards branding, famous liquor, high-end, and quality development.

Competition among famous baijiu enterprises, while maintaining the mass basic consumption market, uses higher quality and higher value baijiu to compete for high-end users. The original large-scale brand communication and channel penetration are no longer the strategic core of famous baijiu. Under the high-end luxury attribute, reshaping brand image, rebuilding consumer relationships, and enhancing value perception through cultural strategy have become the strategic path for famous baijiu enterprises.

Moutai's aesthetic culture strategy, Wuliangye's harmony culture strategy, and Yanghe's dream culture strategy lead the industry's transformation.

Langjiu Group invested 20 billion yuan to build a world-class estate, using estate sauce-flavor baijiu as the source point to construct an ultimate three-product strategy to lead group development and form an estate culture system. The core is to create estate-centered Sanpin Festival activities, systematically build the world-class estate experience perception, and become a representative cultural landmark and cultural activity in the baijiu industry.

It held the International Distilled Spirits Conference, standing on the same stage as world-renowned distilled spirits brands to build international quality perception of baijiu; simultaneously released the 'Langjiu Sauce-Flavor Product Enterprise Internal Control Standards' to enhance product quality values and credibility. It has partnered with the Wuzhen Summit for five consecutive years, leveraging the summit's momentum to promote the fifth-generation Qinghua Lang products.

It uses city landmark advertising to enhance brand momentum and cultural communication, and uses 'National Geographic' to showcase the world-class estate's ecological environment and brand communication. It establishes the peak experience of baijiu tasting with Qinghua Feast, innovatively creates the 818 Cloud Wine Tasting Festival, and enhances cultural communication and experience.

It co-brands with Biemlfdlkk to develop the golf elite circle. It sponsors 'People's Literature' to gain cultural celebrity endorsement, thereby developing high-end users... Through a series of public relations activities centered on estate culture, consumers' value perception of Qinghua Lang has significantly improved, restarting the enterprise's growth path with brand momentum.

2. Primary product-feature cultural positioning, Langjiu's estate culture needs repositioning to enhance momentum Brand assets are an important component of brand core value, and brand value is also the source of brand momentum, the main force driving consumer recognition, liking, and even worship of the brand.

The stronger the perceptibility of brand core value, the stronger the corresponding brand momentum, and the higher the preference for the brand, even reaching religious brand worship. The core value of a brand can be functional physical benefits or emotional, self-expressive, and social value-expressive spiritual benefits.

When a brand's core value becomes the spiritual value for consumers to express personal values, it possesses strong momentum beyond product functional attributes, becoming a strategic cultural expression that guides related marketing communication systems, builds consumer value perception chains, and innovates brand-user relationships.

The higher the brand, the more it should focus on emotional and value-based spiritual benefits for brand cultural expression. Staying at the level of product functional benefits, brand momentum is insufficient to support a 20-billion-yuan enterprise leaping to 50 billion or 100 billion.

China Red Bull, starting from product culture, has long appealed to the refreshing product feature of 'tired and sleepy, drink Red Bull', with sales scale hovering around 20 billion yuan; Austria Red Bull, starting from the scene of adventure-loving people and the spirit of challenge, has a market scale of over 60 billion yuan in Europe and the US, achieving the global functional drink dominance.

Coca-Cola has hardly promoted its refreshing product culture for a century, focusing on spreading joy and humanistic care globally, with a market scale of over 40 billion yuan in China; while Wanglaoji has always promoted the product feature culture of preventing heatiness, and after briefly reaching 20 billion yuan, fell back to 10 billion due to insufficient brand momentum, and the entire herbal tea category is shrinking.

Compared to carbonated drinks, herbal tea is a healthier herbal plant beverage, but due to insufficient momentum, it failed to expand consumption scenarios and user groups, allowing coffee and tea drinks to seize market share.

In the alcoholic beverage industry, French Giraud wine is one of the most popular red wine brands in France, winning multiple international awards and having a good reputation and awareness worldwide. But compared to Remy Martin and Martell, also from France, its performance in the Chinese market is vastly different.

The core reason is that French Giraud has long stayed at the product culture level, and the product benefits shared by world-famous wines, such as origin, craftsmanship, and masters, are difficult to stimulate consumers' unique value perception of the brand, lacking the shaping of a stronger value culture for brand momentum, resulting in Giraud's unsatisfactory performance in the Chinese market.

Langjiu's estate culture has injected great product culture momentum into Qinghua Lang. Whether it's the Sanpin Festival, the world-class estate environment, the cellar environment of Tianbao Cave and Dibao Cave, strict product internal control standards, and industry-benchmark return-to-factory tours, all demonstrate Langjiu's world-class quality value perception.

But how can Langjiu avoid repeating the detour of French Giraud, and how can it learn from Jägermeister, which turned an ordinary liqueur into a world brand through passion culture? It urgently needs to elevate momentum at the level of ethnic culture and cross-ethnic civilization culture, creating new popular culture and value propositions.

3. Langjiu's strategic opportunity lies in redefining drinking culture and attacking Moutai's negative perceptions The construction of cultural strategy is not a value proposition defined unilaterally by the enterprise; it also needs to find cognitive weaknesses that mainstream culture cannot avoid from changes in consumer groups and consumption awareness, and then combine the enterprise's unique resources and core values to shape differentiated brand culture.

Associating with Moutai to form a two-strong sauce-flavor category, enhancing product feature value is only the first step. Attacking Moutai's negative perceptions and forming new cultural propositions and values, thereby reshaping consumer relationships, is the real way to turn Moutai's strong brand momentum of 2 trillion yuan market value into one's own use.

Moutai vigorously advocates aesthetic culture, the core reason being to eliminate original negative perceptions and transform from high-end political and business consumption scenarios to high-end business banquets with aesthetic value. For entrepreneur groups born in the 1950s and 1960s, Moutai has a noble positive value perception.

But with the rise of a new generation of entrepreneurs born in the 1970s and 1980s, I ask colleagues at Langjiu Group: have you seen changes in Moutai's brand perception during the shift in mainstream consumer groups? When Moutai needs to be served in plastic bottles on many occasions, when Moutai changes its leadership three times in four years, what negative perceptions and bad brand associations do these represent for Feitian Moutai? And can they be converted into brand momentum for Qinghua Lang?

Conclusion One who does not plan for the whole cannot plan for a part; one who does not plan for the long term cannot plan for the moment. Qinghua Lang's brand momentum will be enhanced as its core value is greatly improved through user activities like the Fan Festival, PR activities like the Sanpin Festival, and estate experiences.

But for the new generation of target customers, what image should Qinghua Lang represent and what additional brand benefits should it convey, to distinguish itself from the older generation's Feitian Moutai? This will be key to whether Qinghua Lang can win the choice of the new generation of customers in the market!

The succession of entrepreneurs born in the 1970s and 1980s is both a crisis and an opportunity for Moutai. How to build new value propositions and drinking culture for new people, new consumption scenarios, and new consumer relationships will be a strategic opportunity for Langjiu Group to comprehensively enhance brand momentum, from 20 billion to 50 billion, and from the top ten in the baijiu industry to the top three.

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