Click 'Read Original' for details Review: Asher When it comes to low-alcohol drinks, RIO, as a very mature brand, is almost directly associated with 'low-alcohol' in the minds of consumers. Years of market education have turned 'tipsy' from a scene into a need for young people. As the scenes and demands for low-alcohol tipsy drinks have increased, this has provided a good entry opportunity for many new brands, such as Mike Rice Wine, Berry Sweetheart, Meijian, and other emerging low-alcohol brands that are increasingly popular among young people. This is a good start and a good hand of cards, but how to discern a suitable strategic direction from the complex business environment and invest limited early resources into the most effective strategic actions is a current challenge for many emerging brands. Observing from the sidelines won't reveal the truth. Recently, New Distribution interviewed Ms. Jiang Xiaoyun of Mike Rice Wine. Through in-depth communication, we learned what is happening in the low-alcohol industry and how Mike Rice Wine makes key decisions at critical moments, seeing more truths from Mike's way of thinking and practical experience. Why did Mike choose 'rice wine'? Unlike innovative consumer brands founded in the past two years, Mike Rice Wine was established in September 2014, focusing on Chinese-style fermented rice wine. At that time, RIO was also entering the public eye with high-profile marketing. Subsequently, fruit wine and premixed drinks entered a rapid development phase. According to Tmall's beverage data, low-alcohol drinks are growing at an annual rate of about 300%. As the first to see the low-alcohol trend, Mike Rice Wine did not choose the more 'flashy' fruit wine or premixed drinks but instead chose the seemingly more traditional rice wine category. Why? Jiang Xiaoyun mentioned that all Mike Rice Wine products are inseparable from rice. Mike focuses on product innovation around 'rice', designing different product forms to meet different user needs. There are three core logics behind Mike's persistence on 'rice' and choosing 'rice wine' as the foothold in the low-alcohol industry: 1. The Chinese gene of 'rice wine' Wine is closely related to the ethnic cultures of various regions. Budweiser beer represents the passionate and unrestrained American culture; Dassai sake represents Japanese izakaya dining culture; wine represents European gentleman or knight culture. Each culture represents a lifestyle, a habit, and a cognition. In China, 'rice wine' and 'tea' are both common and long-standing traditional beverages. Products with Chinese genes have profound cultural origins. If a brand can find a cultural anchor and view from a higher perspective, it will make the brand's power more enduring. This is cultural confidence. China has reached a point where cultural confidence is gradually becoming evident. In the past, we were always importing other cultures, but now with China's rising international influence, Chinese culture is gradually being exported. This is an inevitable trend. So when a brand looks from a global perspective, the 'cultural' attribute becomes more important. Among low-alcohol drinks, Chinese rice wine may have higher uniqueness and differentiation. 2. The product attributes of 'rice wine' Mike Rice Wine's core consumption scenario is light drinking with meals: one person dining, two people drinking, or small gatherings of three to five. This increasingly light scenario is very common among young consumer groups. In China, offline immediate consumption is the most frequent and essential scenario for alcoholic beverages. Therefore, meeting consumers' immediate drinking needs is key to market layout. For today's young people, their demand for drinks at gatherings is more about 'accompanying meals' than 'getting tipsy' or 'heavy drinking'. Asian stomachs are raised on rice and noodles. In terms of stomach compatibility, rice wine, as a brewed beverage, is the most suitable. We often say 'original soup transforms original food', which represents our dietary habits. From a product perspective, the acidity and sweetness of 'rice wine' are most suitable for accompanying meals. What is needed for meals is 'refreshment' and appetite stimulation, not like hotpot where you need a stronger high-alcohol drink for a thrilling sensation. In comparison, 'rice wine' can meet broader needs and consumption scenarios. Therefore, offline home scenarios and catering channels are very important for 'Mike Rice Wine'. Even though catering channels are difficult, they are core consumption scenarios that complete the consumer's entire cognitive loop, thereby building a stronger moat. 3. High tolerance for innovation in 'rice wine' The rice wine category has good tolerance in terms of product innovation expandability. It can produce products from 0.5% to 20% alcohol by volume while maintaining excellent taste and quality, meeting different people and scenarios. From this point, companies must continuously innovate because users and markets are changing. In today's market environment, selling the same product for decades is impossible. From this perspective, choosing this category gives us a good space in terms of its attributes. Compared to the complexity of baijiu's craftsmanship, aroma, and alcohol content, 'rice wine' is simpler and can incorporate more elements than baijiu or beer, so it is more inclusive. This is the core reason Mike chose the rice wine category. Of course, in this era of highly changeable and unstable demand, product innovation tolerance is gradually becoming a core competitive barrier. No matter how rich the gameplay, it must return to the essence Today, Mike has entered over 40,000 offline retail and restaurant outlets, becoming a best-selling rice wine brand in retail and catering channels such as Hema, Miss Fresh, KKV, FamilyMart, Bingobox, Tan Duck Blood, and Fengmao Skewers. It has also become the top recommended drink by over 300 food influencers on Dianping. Unlike other innovative consumer brands, Mike Rice Wine does not burn money on traffic, rankings, or livestreams. In Jiang Xiaoyun's understanding, the liquor business is a long-term business, and brand building is also a long-term process. It is impossible to establish a brand just through traffic tactics, seeding, harvesting, and a wave of traffic. Liquor is a strong brand rather than a strong category attribute. Therefore, Mike Rice Wine's overall market layout is divided into two core parts: First, build brand awareness online, do brand publicity well, and interact better with consumers. For example, Douyin now has 400 million daily active users, a super-large traffic platform. Mike will deeply cultivate content, traffic, and operations to seize opportunities. Jiang Xiaoyun admitted that platforms like Douyin and Xiaohongshu may not bring profits, but Mike will still operate deeply because they are communication carriers to impress Generation Z. Second, offline, Mike Rice Wine places great emphasis on new retail platforms such as Hema, Miss Fresh, and Dingdong Maicai. Behind these new formats are very precise consumer groups. Of course, in addition to new retail, convenience stores and some KA hypermarkets are also key targets. In the catering sector, Mike has also invested considerable effort, even developing the Mike Home APP. Catering staff scan QR codes inside bottle caps to receive red packet rewards, which fully mobilizes sales enthusiasm and obtains relevant sales and movement data. Based on the data, they formulate consumer acquisition and activation plans. Now, Mike has entered over 5,000 internet-famous restaurants in Shanghai, becoming a best-selling rice wine brand for chains like Tan Duck Blood and Fengmao Skewers, and the top recommended drink by over 300 Dianping food influencers. In supermarket retail channels, it has entered offline channels such as Hema Fresh, Miss Fresh, KKV, FamilyMart, 7-Eleven, Bingobox, RT-Mart, Walmart, and Metro, covering over 40,000 outlets in core systems nationwide as of now. Mike underwent three rounds of financing in 2017, 2018, and 2020. Currently, Mike is valued at 200 million yuan, and its Series A has just begun. For a startup that has gone through pitfalls and accumulated experience, whether it can break through in the low-alcohol track with capital support is highly anticipated. Looking at the low-alcohol industry from RIO's success Looking at RIO's development, it was very slow before 2011. In 2012, the national market size was only 100-200 million yuan. It peaked in 2014, exceeding 1 billion yuan and becoming the industry leader. After 2015, when various emerging brands entered the low-alcohol market, RIO was somewhat impacted. Many media outlets exaggerated that RIO was failing, but they only saw the sudden short-term explosion of new brands and did not see the essence of a brand's long-term sustainability. In Jiang Xiaoyun's view, RIO's development actually grasped three essences of the low-alcohol industry: 1. Brand RIO's overall brand strategy is high-profile, relying mainly on high-end celebrity endorsements and 'land, sea, and air' media bombardment. This is not only the essence of the liquor industry; the entire food and beverage industry must rely on effective marketing to increase brand awareness, especially for impulse consumer goods like beverages. If the brand attribute is not strong, consumers cannot think of you or choose you first. At the same time, liquor must possess a trait: culture. Whether it's traditional drinking culture or modern youth social culture, losing culture easily loses the connection between the product and consumers. Many new brands can indeed be quickly promoted in a short time, but if they do not start building their brand culture and product attributes from the beginning, decline is inevitable. 2. Scale The scale mentioned here refers to preparing for 'scale effects', which ultimately solve the 'cost' problem. Low-alcohol drinks are similar to beer; to make a profit, you must rely on volume. This is different from baijiu, which has high gross margins to support high channel costs. But you will find that in beer and beverage categories, between retail price and cost, saving just one cent in cost can already make a significant profit difference. So RIO started building its supply chain early, with five production bases nationwide. In the early days, it used these five factories to cover national production and logistics, thereby reducing costs. The packaging and logistics costs for alcoholic beverages are very high. Nongfu Spring provides a basic demonstration: using water sources as the core marketing strategy and also covering the country with production and logistics bases through water sources, maximizing the solution to logistics costs. Essentially, it solves the 'cost' problem after scale expansion. 3. Channels Nowadays, most discussions focus on online channels, as most new brands appear through online channels. But many people do not know that online alcohol penetration is less than 2%. Tmall currently has 800 million users, but only 80 million have bought alcohol, and online sales of baijiu are the largest, followed by beer. So online channels largely play a role in shaping brand image. For the liquor category itself, first, to increase purchase frequency, online traffic generation cannot have too high a unit price, but after accounting for secondary packaging, high-appearance packaging design, and express costs, there is basically no profit. Second, to achieve user scale growth, if you cannot reach a certain volume and create an explosion, then you are purely burning money on traffic online. Even RIO, with a scale of nearly 2 billion yuan today, has very little online sales. So the essence of the low-alcohol category is somewhat similar to Genki Forest: online sales are not high, and ultimately, sales are made through convenience store outlets. Do not put all resources and attention online; instead, value the closed loop of business. Online, have enough insight to create content that fits consumer groups, let online data and user feedback flow back, and prepare for more precise decisions later. At the same time, offline must have the ability to cover mainstream channels, and even special channels that fit the brand and product attributes. In summary, although low-alcohol drinks are hot today, with capital flocking in and new products emerging, all entrepreneurs must recognize the essence of their industry. Based on category, consumers, and consumption scenarios, find what suits you, find your leverage, and make the most appropriate decisions. Note: Ms. Jiang Xiaoyun, founder of Mike Rice Wine, will be a speaker at the 2021 (4th) China FMCG Conference held by New Distribution in Shanghai from August 24-26. She will share more insights on the low-alcohol field and Mike's practical exploration. Interested friends should not miss this conference! PS: From August 24-26, 2021, the 2021 (4th) China FMCG Conference hosted by 'New Distribution' will open in Shanghai. Centered on 'Industry Frontier Hub' + 'Practical Exploration Cases' + 'Industry Connection for New Growth', with 100+ big-name guests and 10 thematic forums, it will bring an ideological feast on industry trends for FMCG practitioners! Some of the confirmed heavyweight guests include: 1. Tao Shiquan, Founder of Jiangxiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings; 3. Joanna Lu, Global Expert Partner at Bain and former VP of Marketing for Coca-Cola China; 4. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 5. Yang Hongbin, Vice President of Junlebao Dairy Group; 6. Guo Xulin, Assistant to the President of Hema Fresh; 7. Li Zhihong, Senior VP and Director of Xibei Catering; 8. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center ... 3000+ industry attendees, 1500+ top brand executives, 1000+ new e-commerce platforms & regional leading distributors, 3 full days. Everything you want to know about the latest industry trends, changes, models, and business opportunities is here! Are you 'watching' me?