Professional Consulting and Management for FMCG Distributors: kxpjxszyzxgl ------------------------ While reducing the number of products, baijiu distributors must also optimize their product structure, skillfully design product portfolios, absorb marketing costs, and build a product structure framework suitable for their future development. During the industry transition, high-end and sub-high-end baijiu distributors face internal inventory backlogs, high pressure from upstream sales targets, nearly stagnant downstream sales, and external threats from e-commerce platforms like Jiuxian.com. Under such competitive conditions, the operational risks for high-end and sub-high-end baijiu distributors are gradually increasing. Distributor Zhang, based in a prefecture-level city in Hebei, operates a sub-high-end baijiu brand. Last year, the manufacturer assigned a sales target of 10 million yuan, but this year's target has risen to 12 million. Although the company reduced its growth rate this year, due to slow product turnover, Zhang's inventory currently exceeds 7 million yuan (1.2 million from this year's payments and shipments, and about 6 million from last year's remaining inventory), putting the company in a difficult position. To adapt to the current situation, Zhang is preparing to divert funds into mid-to-high-end and mid-to-low-end products. Currently, across the entire baijiu market, distributors operating mid-to-low-end products undoubtedly have the strongest resilience to market risks. Baijiu distributors understand that strengthening mid-to-low-end baijiu development is the most stable, as the sales base for mid-to-low-end products is always the largest in their product structure. However, due to relatively lower profits for mid-to-low-end products, as their market value gradually becomes prominent, competition intensifies, and sales costs rise sharply, making profits from mid-to-low-end baijiu less attractive. Consequently, many mid-to-low-end distributors are preparing to operate mid-to-high-end products to enhance profitability. Against this industry backdrop, how should baijiu distributors adjust their product structure to adapt to the current situation? How can they quickly adjust their company's product structure to find their own survival path amid the widespread rebranding and reshuffling among baijiu companies? Structure Determines Function The renowned scholar Blackie once said: Well-organized stones can become architecture, well-organized social rules can become constitutions, well-organized words can become beautiful articles, and well-organized imagination and passion can become exquisite poetry. In short, structure determines function. This principle also applies to baijiu distributors. A well-developed baijiu distributor is composed of three basic elements: First, building a sales team that is hardworking and motivated; the team need not be large but must be elite. Untrained staff going out to run business not only fail to achieve results but can also disrupt the market. Second, products: a good product structure is a scientific arrangement, an optimized combination, not a simple listing or stacking of products. Systems science tells us that each unit can only express its performance through an orderly system structure, and "the whole is greater than the sum of its parts," with system function depending on system structure. High-quality liquor distributors achieve the best combination effect of their product structure by fully utilizing the "law of structural qualitative change." Third, the organizational form that connects people and products, namely good rules and regulations, good corporate culture, and good sales policies, because a good organizational form can achieve the optimal combination of people and products. In this industry context, how should baijiu distributors balance their product structure? Optimizing Product Structure The core of a distributor's path to streamlining products is the word "refined." Refined is both a requirement for "quantity" and a requirement for "quality." For baijiu distributors, while reducing the number of products, they must also focus on selecting quality wines, optimizing the company's product structure, increasing the sales proportion of high-performing products, and strengthening the combination effect of the best products. Only then can they achieve product portfolios that absorb marketing costs, ultimately securing more territory and living space, and building a product structure suitable for their survival and development. Distributor Li, based in a prefecture-level market in Shandong, has been operating baijiu for many years. He has 30 employees, 10 delivery vehicles, and a warehouse of over 2,000 square meters. He operates 8 baijiu brands with more than 40 varieties, priced from 5 to 300 yuan, covering all grades from low-end to mid-to-high-end. Moreover, the price bands of different brands overlap significantly, giving a "hodgepodge" impression. Li said he is the distributor with the most baijiu brands in the market, but after many years, his sales have never exceeded 50 million yuan. Especially since the second half of last year, his company's sales have not only failed to grow compared to the same period but have declined significantly, and profitability has worsened. Li was puzzled: where was the problem? After the Chinese New Year, Li visited well-run companies and discovered that the main reasons for the decline in sales and profits were the excessive, chaotic, and mixed product lines without a leading product. Although he had many products, they were numerous but not refined, with unclear classification, no prominent focus, and unclear strategic direction, mainly reflected in unreasonable product line structure and promotion models for "volume without profit," "profit without volume," and "volume with profit." To address the unreasonable product structure, Li decisively adjusted his product structure. He conducted profit analysis on his products, distinguishing them based on sales volume, profit level, and brand influence. He determined which products were "volume without profit" to build sales networks and stabilize customers, which were "profit without volume" sunrise products, and which were "volume with profit" golden products. For products with high sales volume, low profit, and high capital occupation, Li appropriately controlled sales. Some products with low sales volume but high profit were made key promotion targets. Products with very low sales volume, low profit, and no future were resolutely eliminated. After more than half a year of adjustment, Li's company's sales increased by 40% compared to previous years, and profits increased by over 20%. Extending Product Structure "Structure determines function, and function reflects the state of structure." From a technical perspective, structure refers to the orderly arrangement of various components of a thing. The function of any thing is determined by its structure; whatever the structure, so is the function. Product structure generally refers to the arrangement of various products, and the combination effect of the product structure determines the company's development. So, what does structure determine function mean? It means that once the structure changes, the function will definitely change. During the "golden decade" of the baijiu industry, many high-end and sub-high-end distributors focused on government, business, and large enterprise group-buying markets. However, with the introduction of strict controls on "three public consumption" and "alcohol bans," the consumption environment for government and business markets was greatly impacted and disrupted, leading to a cliff-like decline in high-end and sub-high-end baijiu sales. Today, daily banquets and business consumption have become the main consumption drivers. To adapt to mass consumption, major famous liquor companies have adjusted their product structures, focusing on "waist" products. For example, Moutai launched Hanjiang, and Wuliangye launched Touqu and Tequ, with the "waist revolution" in full swing. High-end and sub-high-end distributors must extend their product lines downward for the survival and development of their companies. Distributor Wang, based in Hebei, is an agent for high-end and sub-high-end baijiu. He has strong financial resources and strong local connections, and operates 8 self-run stores. In previous years, he focused on government, business, and large enterprise group purchases. During this industry transition, in addition to his agency for Moutai and Wuliangye high-end and sub-high-end brands, Wang extended his product line after the New Year by adding two products priced between 100 and 300 yuan (one strong local brand and one waist product from a first-tier famous liquor brand) to meet the needs of original unit group purchases and famous tobacco and liquor store channels. In extending his product line, Wang fully considered the advantages of strong local brands and first-tier famous liquor brands. Strong local baijiu brands have advantages in locality, channels, government support, and service. First-tier famous liquor "waist" products have certain brand and scale advantages. Therefore, in the short term, these two brands' products will not form a confrontation, and they will complement each other in sales. From the beginning of the year to now, Wang's company has achieved good results. "Structure determines function." During this industry transition, competition in the baijiu industry will become increasingly fierce, and the survival environment will become harsher. Baijiu distributors must re-optimize and enrich their product structure, as this is an urgent need for industry adjustment and an inevitable outcome for driving company reform and development, enabling survival and good growth. -------------------------------------- Like this article? Feel free to click the top right corner to share to your circle of friends; About us: WeChat ID: Professional Consulting and Management for FMCG Distributors Account introduction: 20 years of internal management experience in FMCG distribution, specializing in distributor internal enterprise database establishment, financial sorting, organizational system construction, marketing team training, company management planning, performance evaluation system setup, etc. Senior marketing teachers help your business grow. Learning and exchange QQ group: 344257092 -----------------------------------------