For industry insiders, the winter of the baijiu industry seems to have lasted a bit too long. It is almost a consensus within the circle that the industry hit bottom in 2016. Adapting to and leveraging the trend of 'channel transformation' to adjust industry development is the current situation. So, will traditional distributors and new channels replace each other, or can they integrate during the transformation, each taking on different roles in the new development pattern?

  1. Channel (distributor) transformation is the final act of industry adjustment

Qin Ke once proposed: "The last act of industry adjustment will inevitably be a drama of personnel. Only when the vested interest chain formed by the leading figures in the core links of the industry is broken can the industry rationally construct a new logic."

In my view, if we consider only the production enterprises, this statement is correct. But this viewpoint still reflects the supply-chain-dominated thinking of the previous historical stage. We must realize that in the next stage of industrial development, this traditional state may be completely broken.

With the advent of the consumerism era, those closer to consumers have more say, so the downward shift of industrial power is inevitable. From this logic, the transformation of channels, or more precisely, the transformation driven by distributors, is the final act of this round of industry adjustment.

  1. Bottoming out in 2016 is expected, but channel transformation has just begun

I am very certain that 2016 is the year the liquor industry hit bottom.

We need to be wary: in recent years, mentioning 'bottoming out' seems to imply a rebound, as if hitting bottom has become a positive term. But that's not the case. Hitting bottom is just hitting bottom; it has no necessary or direct relationship with a rebound. The liquor industry may need to oscillate at the bottom for a considerable period. For now, moving along the bottom is its so-called 'new normal.'

Channel transformation has just begun, and it is coming on strong with different motivations. Subjectively, it needs to continuously achieve self-perfection during implementation, improving and solving model defects; objectively, competition among different approaches is extremely direct. We have a basic judgment on how this process will develop, but it is hard to say how long it will last.

  1. Channel transformation will promote industry integration and division of labor

There are many arguments about disintermediation now. I believe disintermediation itself is not wrong, but misreading it will affect our judgment.

We must understand that the technological revolution represented by the Internet makes disintermediation possible, but what can be removed are the intermediate links, not the intermediate value! The value of intermediate services, professional value, and efficiency value from production to consumption cannot ultimately be removed. The leading force of channel transformation must come from the channel itself; the value of distributors has been seriously underestimated by the entire industry.

Traditional distributors and new channel models are only a stage-specific concept. The process of channel transformation is the process of their integration. The advantages of traditional distributors are irreplaceable. In the supply chain, at the terminal, and even among consumer groups, traditional distributors have accumulated deep resources and commercial credibility through years of business efforts. However, if they are complacent and fail to leverage new commercial technology tools to improve business efficiency, they will inevitably face stagnation, regression, or even elimination under the impact of the times. Similarly, new business models that enter the industry relying on new commercial technology, without the support of industrial chain resource accumulation and professional service capabilities, are at best opportunists who disrupt the market, unable to build a stable and sustainable business.

So far, it is impossible to say which of these channel transformation explorations and achievements is better or worse, or perhaps there is no inherent superiority. At least, this channel transformation and integration has not yet formed a mainstream model that demonstrates clear value to gain the trust of enterprises, core consumers, and the entire industrial chain. Enterprises' observation and acceptance of them will still take a considerable period.

Production enterprises directly participating in channel transformation out of their own interests is another layer of pressure for the industry to move along the bottom. We must accept and recognize that the essence of business, besides games and control, also includes integration and division of labor. If the industry is to escape the 'L-shaped' predicament mentioned by Mr. Ma Guangyuan and enter a 'U-shaped' trajectory, integration and division of labor must become the most important components of our industry strategy.

Author: Fu Zhong Born in 1970, CEO of Jinyi Jiuda, once known as the 'Young Marshal of the Liquor Industry' due to his career at Dynasty, Xintian, and Wuliangye. Source: Jiushishan 679 Viewpoint Club (ID: new-food)

At the request of many distributor friends, the fourth B-end e-commerce inspection class of this public platform will visit Nanjing and Hangzhou from August 15-18 to inspect two platforms: Qianmi.com and Alibaba Retail Link. Distributor friends interested in transformation can join us for on-site inspections:

Activity schedule: Time: August 15-18

August 15-18

Nanjing · Hangzhou 15th: Check in at designated hotel in Nanjing; 16th: On-site inspection of Qianmi.com, then high-speed rail to Hangzhou in the afternoon; 17th: Participate in the 'FMCG Distributor B2B Transformation Exchange Summit'; 18th: On-site inspection of Alibaba Retail Link in Hangzhou;

Distributor friends interested in transformation are welcome to join us to learn and inspect on-site:

Organization format 1. Company visit 2. Actual market case visit 3. On-site explanation 4. One-on-one communication

Participating distributor friends only need to pay a registration fee of 200 yuan. Other expenses are self-covered. Note: This inspection is limited to distributors only.

Distributor friends interested can register by long-pressing the QR code below. When adding, please note: 'Fourth Class Registration'.

Non-participants, please do not disturb

Photos from previous inspections:

Group photo of the 3rd B-end e-commerce inspection, from top to bottom: Yunbao Shangmeng, Weijie City Distribution, Wanshang Yizhan.

Group photo of the 2nd B-end e-commerce inspection, from top to bottom: Jinhuobao, Caiba, Yishang.

Group photo of the 1st B-end e-commerce inspection, from top to bottom: Piduoduo, Beiquan, Yishang.

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