Introduction: Exploring the New World of Baijiu, China Resources Liquor is Gaining Momentum. Starting with its investment in Shanxi Fenjiu in 2018, China Resources Beer has embarked on a path from a beer-specialized company to a liquor group. Over the past four years, in addition to investing in Fenjiu, China Resources has successively entered or taken control of Jingzhi Baijiu, Golden Seed Liquor, and Jinsha Liquor, completing its initial layout in the baijiu industry. The three baijiu companies operate independently, with China Resources Liquor providing unified empowerment support. China Resources Beer's moves in the baijiu industry have attracted widespread industry attention from the very beginning. Without more information, the industry often speculates and spreads rumors about China Resources' operations in baijiu based on details. Why does China Resources Beer have the confidence to make the baijiu industry a strategic development pole? Is the proposed 'beer + baijiu' model viable, and what are the market effects in practice? These are the two questions this article focuses on and attempts to answer for the industry.
China Resources' Entry into Baijiu: A Strategic Move of 'Related Diversification' Any enterprise committed to long-term and sustainable growth will inevitably involve diversification, sooner or later. Therefore, for leading companies, diversification is often no longer a question of whether to do it, but how to do it. Diversification strategy is essentially about creating a 'second growth curve' for the enterprise's sustained growth. When the main business is developing well and talent reserves are ample, considering diversification is strategic foresight. Diversification is an opportunity to open a second battlefield, but it also carries significant risks. The same applies to China Resources Beer's diversification. Therefore, 'related diversification,' which can greatly increase the success rate, has become an inevitable choice for China Resources Beer. When multiple businesses of an enterprise have strong similarities and correlations, it is called related diversification, also known as concentric diversification. A beer company entering baijiu, where the 4Ps are somewhat similar, is related diversification. But if a soy sauce company develops real estate, which is completely unrelated, it is clearly not related diversification. The benefit of China Resources' development from beer to baijiu lies in the fact that its channel resources, talent pool, operational experience, and even corporate influence in the beer field theoretically have great potential for mutual synergy. The 'synergy effect theory' is the theoretical basis for the higher success rate of related diversification. The 'synergy effect' between beer and baijiu businesses has great imagination space, which is why Hou Xiaohai, Chairman of China Resources Beer, proposed 'dual empowerment of beer and baijiu, mutual growth of baijiu and baijiu' and made it the main methodology. In addition, China Resources is a group enterprise with extremely rich diversification experience. It fully possesses the process and experience to quickly complete the stages of entry, learning, and catching up in a completely new field. Even China Resources Beer itself is a result of China Resources Group's diversification. With rich diversification experience, ample talent reserves, sufficient channel strength and market appeal, sound and rapid development of the beer business, and strong correlation between beer and baijiu businesses, these are all the confidence and trump cards for China Resources Beer to do well in the baijiu business.
Beer + Baijiu: Where to Synergize and Empower? Creating synergy between two strategic businesses is not an easy task. The difficulty of synergy lies not in the business itself, but in the organization. In fact, it is easy to create cooperation between any two organizations, but creating synergy is the hardest. Because in cooperation or transactions, the rights, responsibilities, and interests of both parties are clear and equal; in synergy, they are vague, uncertain, or even nonexistent. China Resources Beer's 'dual empowerment of beer and baijiu' also faces this problem of 'logically valid but difficult to achieve.' Where does China Resources Beer synergize and empower its baijiu business?
1) First, significant organizational adjustments were made to ensure the baijiu business receives sufficient empowerment and support. In 2023, China Resources Beer adjusted the organizational structure of the listed company, separating management functions from operational functions. The listed company no longer handles specific business operations. Instead, it has set up two business units under it: China Resources Snow Breweries and China Resources Liquor, responsible for the operation and development of beer and non-beer businesses, respectively. China Resources Liquor Company is positioned as the empowerment platform for its non-beer businesses, currently empowering three baijiu companies: Jingzhi, Golden Seed, and Jinsha Liquor. This organizational design has extraordinary significance. China Resources Liquor is positioned as an empowerment platform, not responsible for specific operations, but responsible for integrating all resources and capabilities of the China Resources system, specifically providing empowerment and support to its baijiu companies in strategy, human resources, channel resources, marketing strategies, and other operational aspects. Only an organization at the high level of China Resources Liquor can effectively mobilize and integrate sufficient resources and capabilities to truly empower its baijiu business. The three baijiu companies are independently responsible for specific operations, with clear responsibility boundaries and business goals, and completely independent teams and channels. This helps achieve the business goals of each baijiu project and, in a sense, fosters a healthy competitive atmosphere of 'who does better' within the system.
2) Second, many strategies and methods for 'beer-baijiu integration' have been proposed and begun to be implemented. 'Dual empowerment of beer and baijiu, mutual growth of baijiu and baijiu' is the main methodology proposed by China Resources Beer. This methodology is essentially a guiding ideology and implementation policy for effectively achieving 'resource integration, complementary advantages, and efficient synergy.' 'Dual empowerment of beer and baijiu' refers to achieving interconnection and interoperability between beer and baijiu businesses in multiple aspects such as talent resources, management experience and systems, channels and market resources. 'Mutual growth of baijiu and baijiu' refers to the ability of baijiu businesses to share experiences, learn from each other's models, and promote each other. We can briefly list some of the 'beer + baijiu' empowerment measures that are currently visible:
Integrate talent resources, select from within the China Resources Beer system, and provide most management talent to the three major baijiu project companies;
Establish a key account empowerment platform 'Sanrunhui' to help its baijiu project companies train, cultivate, and develop excellent key accounts;
Establish the 'Baigujing' (Baijiu Backbone Elite) training program to cultivate and provide mid-to-senior elite talent for its baijiu project companies;
Organize management teams of the three major baijiu project companies to visit first-tier baijiu enterprises such as Luzhou Laojiao and Wuliangye for in-depth exchanges, quickly learning the development laws and experience of the baijiu industry... What we can see is that the 'beer-baijiu' integration and synergy at the non-direct sales business level are rapidly advancing under the promotion of China Resources Liquor and have achieved good results. Taking talent introduction as an example, many marketing talents from the original beer business, after entering the baijiu business, quickly learned and adapted to the competitive characteristics of baijiu, and market results have exceeded expectations. In some regional markets, sales have grown more than 2 times year-on-year, running much faster than the industry. But at the specific sales business level, such as sharing channel and terminal resources, and joint marketing in promotions and promotions, how is the implementation?
Channel Breakthrough: The First Step of Dual Empowerment of Beer and Baijiu Empowerment from resources, experience, and systems can be achieved through design. The real difficulty is achieving synergy and mutual empowerment between two independent business teams in the market and specific operations. Both the beer and baijiu teams have their own task goals and pressures. Why should they contribute to another team? How to coordinate in specific business? Will there be mutual constraints? Based on what has been achieved so far, China Resources Beer has fully estimated the difficulties and, through the methods of empowerment organization and goal specification, has successfully taken the first step of 'dual empowerment of beer and baijiu.' The three baijiu companies chosen by China Resources share a common characteristic: 'products, production, and brands are all good, some have had glory in history, but market operations are not good.' In such a situation, the effective first step is channels. As long as there is a rapid breakthrough in channel layout, and then efforts are made in consumer promotion and terminal pull, results will definitely be seen. It happens that in the market end, whether it is talent, experience, or market resources, these are China Resources Beer's advantages. Despite this, China Resources still made sufficient preparations. For example, the general managers of the three baijiu companies were selected from the most senior and meritorious regional company general managers of China Resources Beer, with rich frontline combat and management experience. In particular, for Golden Seed Liquor, General Manager He Xiuxia has long-term leadership experience in Snow Beer's Anhui market and has very high influence in both channels and teams. This can be said to be a very thoughtful and clever consideration and preparation. From market visits, under the strategy of 'dual empowerment of beer and baijiu,' the three baijiu companies under China Resources have achieved good results in 'internal cultivation of products and teams, and external channel breakthroughs.' In 2023, Jinsha Liquor successfully restored the price system of the Zhaoshang brand and restored channel confidence. Moreover, it achieved breakthroughs in high-quality channels in multiple markets such as Sichuan and Liaoning. Jingzhi Baijiu's Jingzhi Zhixiang Zhennian Series and Jingyangchun Huoli Hu successfully launched, with the latter achieving large-scale consumer pull through QR code marketing. Left: Jingzhi Zhixiang Zhennian / Right: Jingyangchun Huoli Hu Golden Seed Liquor achieved multiple successes in the provincial market and also achieved channel breakthroughs in Shanghai, Jiangsu, Guangdong, and other provinces. Take the Hefei market, where Golden Seed was once glorious. Previously, due to poor channel layout, Golden Seed could not successfully counterattack in the Hefei market. But with the empowerment of the beer team, in 2023, it quickly achieved high-quality channel breakthroughs for its mid-to-high-end Fuhexiang products and bottle wine products. Anhui Ruitai and Hefei Xingwu Commercial Trade are both high-quality distributors of Anhui Snow Beer. With the recommendation of the Snow Beer team, they both reached deep cooperation with Golden Seed Liquor. Song Yanbing, Deputy General Manager of Ruitai Commercial Trade, said, 'Through the introduction of Snow Beer, we reached cooperation with Golden Seed, and will leverage the company's channel advantages in mid-to-high-end restaurants to operate with beer-baijiu integration, mainly promoting mid-to-high-end Fuhexiang Golden Seed products.' In 2022, China Resources entered Golden Seed, and Xingwu Commercial Trade began cooperating with Golden Seed in October of that year. Its General Manager Liu Dejun said that although the beer channel foundation provides some advantages in store entry, doing the baijiu market still requires 'fighting with bayonets,' and ultimately, it is about conquering stores one by one, with no shortcuts. Especially in the highly competitive Anhui baijiu market, this is even more true. Based on the market performance of the three baijiu companies under China Resources Liquor, under the strategy of 'dual empowerment of beer and baijiu,' on the one hand, the management level of each company has rapidly improved, and team capabilities have gradually strengthened; on the other hand, the market situation has gradually opened up, with the increase of market share in key markets and channel breakthroughs in weak markets proceeding simultaneously. It should be said that the first phase of market operations of China Resources Liquor in the baijiu field is in line with expectations and laws, and it has taken the correct first step in solving the 'beer + baijiu' equation. We believe that after the further deepening and implementation of the dual empowerment strategy, China Resources Liquor, having adapted to the competitive characteristics of baijiu, will likely become the true second growth curve for China Resources Beer.