On September 2, the third 'Celebrate Harvest, Promote Harmony: Jinsha Red 2023 Harvest Celebration' was held in Jinsha County, Guizhou Province. Since 2021, Jinsha Distillery has held this event for three consecutive years, and the 'Jinsha Red Sorghum Festival' has become a unique annual brand IP event for Jinsha Distillery. In the afternoon, Jinsha Distillery also held a 'Hundred Media Visit Jinsha Symposium'. This year, after China Resources Beer officially took over Jinsha Distillery, the baijiu industry and media have paid special attention, with various opinions circulating. At the symposium, Fan Shikai, Vice President of China Resources Beer and General Manager of Jinsha Distillery, also responded positively and in depth to many issues of common concern in the industry for the first time.

Several important tasks progressed smoothly in the first half of the year Fan Shikai stated that the core action in the first phase after China Resources Beer took over Jinsha Distillery was integration and sorting, with specific business actions only starting in June. Fan Shikai introduced that in the first half of the year, Jinsha Distillery mainly carried out the following important tasks.

1) The primary action was integration, completing core actions such as team adjustment, talent recruitment, and business process building. Fan Shikai said, 'China Resources Beer entering the baijiu industry and choosing Jinsha Distillery is based on long-termism, truly wanting to empower the entire industry and the Jinsha brand, not short-term speculation or simple investment.' After the acquisition, quickly completing organizational construction has always been a strength of China Resources Beer, which also laid a team foundation for coping with the adjustment period in the baijiu industry. In the past, Jinsha Distillery had strong market expansion capabilities, mainly in attracting distributors, but did not pay attention to basic construction. Therefore, during the rise of sauce-flavored baijiu, Jinsha Distillery quickly attracted many good distributors, but in the current environment of 'market cooling and price inversion', it is time to truly test the company's marketing and market management capabilities. In the first half of the year, Jinsha Distillery made great efforts in building and improving the marketing team, and the team's capabilities have changed and improved significantly.

2) Establish a technical system centered on 'quality improvement'. 'Jinsha's liquor is good, whether it's 'Zhaiyao' or 'Jinsha Huisha', which is recognized by everyone, and it is our greatest capital and advantage,' Fan Shikai said. 'Our focus is whether our liquor can maintain stable quality, continue to be good, and even get better.' Therefore, in terms of quality improvement, Jinsha began to gradually establish a technical system and organizational capability centered on 'quality improvement', while also accelerating production capacity construction. Specific actions include 'optimizing production center functions', establishing the 'Jinsha Distillery Technology Research Institute', and the listing of the 'Jinsha Production Area for Sauce-Flavored Baijiu'. 'After entering the baijiu industry, my biggest feeling is that the time cycle of baijiu is really long. Brand building, quality improvement, and new product development are all very difficult and require a long time to prepare and lay the foundation, which is the biggest difference from other FMCG products,' Fan Shikai described his feelings since joining Jinsha Distillery.

3) Market standardization and governance, reducing inventory and restoring prices. In the first half of the year, Jinsha Distillery reduced inventory by more than 1 billion yuan. Fan Shikai said, 'I visited many distributors, and those who did solid sales work have basically digested their inventory.' 'A small number of distributors who do not have the ability to sell liquor have large inventories, and we are adjusting, handling some of these distributors through returns and other closing actions, avoiding market price disruption.' 'Now, inventory digestion is basically complete, and market prices have been greatly restored. There may still be occasional price fluctuations, but we will continue to control and ensure stable and orderly channel prices.' 'Over the past six months, we have faced many problems and great pressure, but step by step, today we can confidently say that our confidence is growing, the growth space we see is expanding, and our expectations for the future are increasing,' Fan Shikai concluded. 'From now until the end of the year, there are four months left, and we will achieve this year's goals step by step according to the set plan.'

Jinsha Distillery will expand increment in three directions Fan Shikai said that while rectifying the market, reducing inventory, and restoring prices, Jinsha Distillery is also actively expanding increment. There are three main ways to increase increment: one is to use new products to expand new market segments; another is to expand original blank regional markets by accelerating coverage; the third is to focus on existing markets, create models, and increase share.

First, starting from July, Jinsha has the conditions to develop increment and gradually began recruiting distributors. In the first half of the year, Jinsha Distillery basically did not recruit distributors, first because new products had not yet been launched, and second because old products had not been upgraded, and due to price inversion, it was impossible to expand other blank markets. Jinsha Distillery's requirements for distributor quality are not low; unless they can truly do the market, it would rather have none than poor ones. 'Controlling the entry of distributors is very important, otherwise the previous problems will repeat, which is unnecessary,' Fan Shikai said. In the two months since starting recruitment, Jinsha Distillery added more than 80 new distributors. 'Our goal this year is to stabilize revenue. If we lack strategic focus and cannot stabilize the basic market before seeking development, then rapid growth next year will be impossible.'

Second, the two major brands 'Zhaiyao' and 'Jinsha Huisha' expand into new value segments. 'Zhaiyao' is Jinsha Distillery's largest single product, currently positioned in the 650 yuan price band, but there is still a lot of price space for high-end liquor to expand upward. 'Jinsha Huisha' does not yet have a truly formed large single product, which is the key to breakthrough; it is necessary to create a large single product for Jinsha Huisha. The largest price band for sauce-flavored baijiu is between 300 and 500 yuan. In addition, in the mass consumer price band of 100 yuan, it is predicted that there will be a very large increment. Therefore, the 100 yuan price band for bottle liquor will also be a focus for Jinsha. In the bottle liquor segment, it mainly relies on product quality-price ratio and terminal construction capability, in which Jinsha Distillery has considerable advantages, and it will be an important incremental segment. With the terminal capability and advantages of China Resources Beer, once Jinsha Distillery's 100 yuan bottle liquor is launched, it may achieve high coverage in many markets quickly.

Third, turn key markets into base markets and increase share. Provinces such as Shandong, Hubei, Henan, Guangdong, and Fujian are markets with good sauce-flavored baijiu consumption atmosphere and large baijiu capacity, and Jinsha Distillery has a good market foundation in Hubei, Shandong, Henan, and other places. Therefore, these regions will be markets where Jinsha Distillery will focus on increasing market share. Therefore, relying on important distributor customers in key markets and turning key markets into base markets is an important way for Jinsha Distillery to expand increment. Distributor Mr. Zhou is an excellent distributor of Jinsha in Wuhan, Hubei, and he highly recognizes the strategic thinking and tactics after China Resources Beer took over Jinsha Distillery. He said, 'The China Resources team is a team that truly understands how to do the market. I am confident that I will build Wuhan into a base market for Jinsha Distillery with high share, high reputation, and high returns.' At the end of the symposium, Fan Shikai said, 'Our positioning is as an explorer of the new world of baijiu. Jinsha Distillery will definitely, through exploration and learning, develop a new strategy, new method, and new measure for operating baijiu that belongs to China Resources Beer.'