"In this unprecedented market adjustment, what should brands and distributors do?"

On October 9, the 5th China FMCG Conference and the 1st China FMCG Distributor Conference opened in Shenzhen.

As a bellwether event for China's consumer goods industry, the forum gathered top leaders from domestic consumer goods companies such as China Resources, Mengniu, and Qiaqia.

Tao Shiquan, founder of Jiangxiaobai and a special guest who had not appeared in public for a long time, also showed up at the forum. In past years, almost every entrepreneur in the new consumption sector had studied Jiangxiaobai at some point.

2023 marks the 12th year since Tao Shiquan founded Jiangxiaobai. How will he navigate the cycle amid the current complex market upheaval? After experiencing the previous cyclical boom where many competed, the consumer goods industry now stands at a critical window where strategic opportunities and risks coexist. How will this generation of Chinese consumer goods leaders break new ground in the deep waters?

This is a crucial battle for consumer goods companies, including Jiangxiaobai, over the next five years.

Abandon Illusions and Cross the Long Cycle

In the past few years, amid the market clamor that every consumer goods category is worth redoing, new consumption entrepreneurship has seen a boom. But at the same time, according to relevant data, the average lifespan of various new consumer goods startups is only one and a half years.

Currently, the 'people, goods, and places' in the consumer market are undergoing drastic changes. Both the market and consumption structures are facing adjustments, and the era of quantity growth in the industry has ended. In this unprecedented market change, what should brands and distributors do? This is a question posed by the market, the industry, and the times.

Take the alcoholic beverage market as an example. According to the '2023 Mid-Year Research Report on China's Baijiu Market' released by the China Alcoholic Drinks Association, this year, the baijiu industry has seen high channel inventory and slow sales, with first- and second-tier baijiu brands experiencing varying degrees of price drops or even price inversions.

Clearly, the liquor industry has entered a new round of industrial adjustment. In his forum speech, Tao Shiquan proposed, "Operators should not have habitual illusions. They should remind themselves several times a day that the current difficulties are not short-term fluctuations but a long cycle."

And 'Jiangxiaobai's first strategy to cross the long cycle is high-quality operational improvement.'

"For the next five years, Jiangxiaobai's most important strategic and tactical issues are two sentences: strategically, use differentiated new alcoholic beverages to become a rising star; tactically, comprehensively improve operations with high quality."

Jiangxiaobai was the first company to propose the 'new alcoholic beverage concept.' Holding the phenomenal brand Jiangxiaobai, known as the 'King of Small Bottles,' Jiangxiaobai Liquor has been laying out its new alcoholic beverage genes for years, and in recent years has successfully launched trendsetting brands like 'Meijian' and 'Guolifang.' Among them, Meijian has become the first 1-billion-yuan brand in the new alcoholic beverage track and a synonym for Chinese plum wine.

"Don't chase today's stars; wait for tomorrow's stars to take off," Tao Shiquan firmly believes. Especially in a long cycle, every operator must constantly remind themselves to bid farewell to past success experiences and path dependence.

"Why do we suddenly feel so much pressure? Because we always benchmark against the best companies. How many Coca-Colas, Maotais, Snows, or Huaweis are there in the world or in China? Imitating and following the business models of giants will never lead to a way out. If you really want to learn, you should learn to deconstruct the underlying logic of their early and growth stages. Today's excellent companies were all once rising stars."

Rising Stars: Three Olds, Three News, Thirty Years

Looking at today's world-class consumer goods companies, they have all survived multiple industry cycles and emerged through survival of the fittest. 'Don't be superstitious about short-term growth, but have faith in long-term growth.'

Many people haven't realized that Jiangxiaobai has been established for 12 years. Although Tao Shiquan doesn't think Jiangxiaobai has escaped the firing range, over these 12 years, from deep channel cultivation to the construction of the entire industry chain, Jiangxiaobai is one of the few new consumer goods companies that has built its own moat.

In 12 years, Jiangxiaobai has transformed from a new generation to a middle generation. In this speech, Tao Shiquan also disclosed Jiangxiaobai's internal strategic judgment model for the first time:

"In the alcoholic beverage market, Jiangxiaobai has a 'Three Olds, Three News' positioning analysis. High, medium, and low proof traditional spirits, wine, and beer are the 'Three Olds.' Fashionable spirits represented by whiskey, liqueurs, and craft beer are the 'Three News.' The 'Three News' are our big opportunity.

Fully embracing the 'Three News,' new alcoholic beverages are our strategic opportunity to become a rising star. This strategic opportunity is measured in 'thirty years,' which can be broken down into three stages. After more than a decade of hard fighting, we have now entered the second stage."

China's alcoholic beverage market is indeed undergoing profound changes, starting with the rise of new consumer groups and new consumption demands. This is also the root cause why the growth logic of many liquor companies based on 'official drinking' and 'business drinking' scenarios has stopped working.

The 'old' and 'new' essentially represent generational changes in consumption concepts, lifestyles, and alcoholic beverage demands. When labels like self-pleasing, tipsy, sipping, and elegant drinking have become keywords for contemporary consumers' alcoholic beverage consumption, the explosion of the new alcoholic beverage market is inevitable.

Furthermore, the 'newness' of new alcoholic beverages means the newness of the times, trends, and industry, as well as matching product and brand innovation.

"New alcoholic beverages are our strategic opportunity to become a rising star." Tao Shiquan judges that for Jiangxiaobai Liquor, taking its own path to become a 'rising star' is a goal worth achieving with ten, twenty, or even a generation's effort.

Core Logic of High-Quality Operational Improvement

China's current economic development and industrial characteristics have shifted from pursuing scale to pursuing quality, from quantitative expansion to qualitative improvement, and from a stage of high-speed growth to a stage of high-quality development.

Enterprises must adapt to and follow this fundamental transformation. Therefore, Jiangxiaobai's high-quality operational improvement is both a passive requirement and an active choice.

Tao Shiquan anchored three origins for Jiangxiaobai Liquor's high-quality operational improvement: high-quality user operations, high-quality product operations, and high-quality organizational operations.

High-quality user operations means being 'user-centric' and using data-driven online capabilities to manage user relationships. At the forum, it was revealed that over the past six years, Jiangxiaobai Liquor has used digital systems to involve users in all stages of the product lifecycle, achieving value co-creation with users. It has also established a bC-integrated user operation system, conducting consumer operations around merchants to achieve two-way activation of online user rights and offline product circulation.

High-quality product operations, based on the concept of 'brewing natural wine from natural terroir,' after ten years of hard work, with a sorghum demonstration planting base as the industrial core, Jiangxiaobai Liquor has built a full industry chain from agricultural raw material planting, to brewing process upgrades, to cultural tourism development. This sorghum base, covering over 10,000 mu, is the core of Jiangxiaobai Liquor's natural ecological brewing area.

From 'farm' to 'distillery,' from 'raw grain' to 'raw liquor,' the solid supply chain construction is forming an efficient closed loop for high-quality product operations. The establishment of the aged plum wine standard, the completion of the world's largest tank-stored plum wine cellar, and the limited release of the first 'natural wine' from Jiangxiaobai Farm are all achievements of high-quality product operation improvement.

"High-quality operational improvement is Jiangxiaobai's first strategy to cross the long cycle," Tao Shiquan said. Jiangxiaobai Liquor plans to take five years to fully establish an organizational talent and operation system that matches high-quality operational capabilities, and to implement a corporate version of the 'High-Quality Operational Improvement Method.'

Through continuous innovation and creation, Jiangxiaobai Liquor has carved out new space in the deep waters of the traditional liquor industry over more than a decade of development. This core capability, deeply rooted in the company's genes, allows Jiangxiaobai Liquor to confidently embark on the path of high-quality operational improvement in its second decade, leading the new alcoholic beverage market.

PS: Friends interested in the on-site speech content can follow the recent posts on the WeChat official account of 'New Distribution.' We will compile and publish all guest speeches for readers.

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