As the Spring Festival approaches, many industries suffered heavy losses in the challenging year of 2020. However, in the stock market and consumer market, only baijiu saw its market value rise continuously, and its consumption performance was far better than other consumer goods. This proves that the baijiu industry, as the most representative industry of traditional Chinese culture, has strong counter-cyclical capabilities. Looking at all FMCG products, only baijiu is a 'friend of time'—and a good friend at that—the longer it ages, the more valuable it becomes. For other FMCG products, time is the biggest enemy, and distributors suffer from product expiration dates. Therefore, in 2020, almost all investments were focused on the baijiu sector; all consumer goods distributors began to pay unprecedented attention to the baijiu business, and many food and beverage distributors are considering entering the baijiu market in 2021. In the baijiu industry, the focus is on famous liquors, and among famous liquors, the leaders are the key. In the pattern of 'three aromas standing tall'—strong aroma, sauce aroma, and light aroma—Wuliangye represents strong aroma, Moutai represents sauce aroma, and Fenjiu represents light aroma. The actions of these three aroma leaders, to some extent, represent the main moves of their respective aroma types in the coming year. Analyzing the actions of the three aroma leaders helps us understand the changes in famous baijiu in 2021 and may reveal opportunities for distributors. Based on the strategic plans released by the three major aroma leaders at the end of 2020, New Distribution provides a simple analysis to see what these famous liquor companies will do in 2021, where their key tasks will focus, and whether new opportunities are hidden. -01- Moutai says 'stability', but can it hold? Moutai's status in the industry is almost deified, no need to elaborate. In a sense, sauce-aroma liquors are divided into two types: Moutai and others. First, from the strategy announced at the Moutai distributor association meeting, it can be highly summarized as 'stability'. This stability mainly revolves around price stability, mainly meaning to control prices and strive towards the so-called suggested retail price of 1499 yuan. But can it really 'hold'? In my view, the so-called multiple stability strategies proposed by Moutai at the distributor conference—the five 'stabilities' of foundation, quality, policy, market, and development—are all clichés. Look at today's Feitian Moutai, has its price come down? The answer is known nationwide. Moutai Chairman Gao Weidong emphasized two key tasks: first, normalizing price control and market stabilization; second, doing a good job in New Year and Spring Festival sales, serving consumers precisely, and ensuring a 'good start' in the first quarter. On the surface, Moutai's strategic core for 2021, besides current peak season sales, is still price control. But we must understand that the high price of Moutai is market-driven. Moutai's market value is high, and its scale is large, but this does not mean Moutai can truly reverse market trends on its own. In other words, when it comes to price control, Moutai's words only have effect at the distributor level. At the meeting, Gao Weidong led distributors in a pledge: no price increases, no hoarding. But this is undoubtedly a modern version of 'The Emperor's New Clothes' and 'covering one's ears while stealing a bell'. Some in the industry view this pledge as: 'Let a group of robbers swear in front of gold that we won't rob.' Besides repeatedly emphasizing distributor cooperation and strict execution, Moutai also proposed in terms of channels to promote supermarket and e-commerce channels as important components of precise sales, market stabilization, and balancing supply and demand. But frankly, Moutai can control prices as much as it wants; if the retail price really comes down, I'll admit defeat. Market demand is there, and Moutai's scarcity is there. As long as these two points remain unchanged, it is a fantasy for Moutai's price to drop. Even if scalpers don't speculate, with today's brand status and consumer perception, the price cannot come down. For Moutai itself, is it a bad thing that its products are sought after and its price is unmatched? This price control is more about showing an attitude and giving an answer to public opinion. Price control will be a routine task for Moutai, but it will have little impact on market prices. -02- Finding a second growth point is the core No matter what Moutai says, as a company, its New Year strategy is definitely to make more money—no one will refute that. So how to make money? Feitian Moutai is already in short supply and won't change in the short term. To make money in this regard, it's just a matter of how much Moutai releases; the more it releases, the more it earns, no need to discuss. Besides that, does Moutai have a second growth point? Yes, it does. Most friends who follow baijiu know that on December 12, 2020, at the 2021 National Distributor Conference of Xijiu, Chairman Zhong Fangda announced that Xijiu had achieved its set goals ahead of schedule, realizing the dream of 10 billion yuan! The conference disclosed: In 2020, Xijiu achieved sales of 10.3 billion yuan, a year-on-year increase of 31.29%, with a target completion rate of 103%. Subsequently, on January 8, 2021, at the conference on Xishui County supporting Xijiu Company's accelerated development, Gao Weidong proposed that, in addition to cooperation with Xishui County, the Moutai Group will provide maximum support, with the core being to vigorously promote capacity expansion and supporting project construction. From the current industry situation, the baijiu industry as a whole is in a trend of declining volume but rising prices. However, looking at sauce-aroma liquor alone, it is actually a golden period of simultaneous volume and price increases. Among sauce-aroma brands, the pattern of Moutai (or Moutai system) + other brands will continue and even intensify. In this way, with Feitian not needing to worry, Moutai's best growth point is actually sub-brands like Xijiu. In fact, not only Xijiu, but in the future, brands like Lai Mao, Wang Mao, and Prince Wine may also receive policy support from the Moutai Group. In the context of the overall popularity of the sauce-aroma category, these brand products cannot be ignored and may become new growth points for the Moutai Group in the new year, possibly accelerating development in 2021. Of course, Xijiu, as the second brand that has already exceeded 10 billion, clearly carries more weight. For distributors, the agency for Feitian Moutai is basically hopeless, but if they can obtain the agency for Xijiu, it may be a development opportunity. Summary: Although Moutai shouts the slogan of price control, in reality, the price of Feitian Moutai, driven by the market, is no longer something the Moutai Group can control. Under the premise that the sauce-aroma craze continues, Moutai's strong brand power is sufficient to radiate to its other sub-brands. This is evident from Xijiu easily exceeding 10 billion in 2020 despite the pandemic. Moutai's sub-brands and sauce-aroma series will definitely be the focus of future development. Combined with trends, distributors who can obtain these brand resources will have a stable development opportunity compared to representing other sauce-aroma brands. -03- Wuliangye—'Seeking progress while maintaining stability', embracing a close-quarters battle "Next year, we will continue to maintain the development speed of the industry's backbone enterprises at an average advanced level, ensuring that the company's development operates within a reasonable range of steady and sustainable growth," said Li Shuguang, Chairman of Wuliangye Group, at the 1218 Conference, describing the 2021 development goals. In 2020, Wuliangye's sales revenue from January to November exceeded 110 billion yuan, with double-digit growth in both sales revenue and profit. Its economic indicators grew at a rate leading the industry, and the market value of the listed company exceeded one trillion yuan. Although Wuliangye's performance is also quite good, maintaining high growth and its market value exceeding one trillion after Moutai in 2020, in my view, Wuliangye faces severe challenges. First, from a category perspective, the rapid expansion of sauce-aroma liquor is actually taking away share from the strong-aroma category, which originally accounted for over 70% of the market. As the leader of strong-aroma baijiu, how could Wuliangye not worry about its impact? Looking at the competitive landscape, although Wuliangye sits on the throne of strong-aroma leader, unlike the sauce-aroma situation where Moutai dominates alone, competition in strong-aroma baijiu is the fiercest. Not to mention that in Sichuan province alone, there are Luzhou Laojiao, Jiannanchun, Shuijingfang, Langjiu, Shede, and other famous liquors. Anhui's Gujing, Jiangsu's Yanghe and Jinshiyuan are also strong, and there are many regional strong enterprises at the provincial level. In this pattern, if the market share of strong-aroma baijiu further shrinks, it will inevitably lead to a white-hot war with every cut drawing blood. Once entering such a situation, even a strong player like Wuliangye has not formed an absolute advantage over other brands like Moutai has in the sauce-aroma category. In the past, when baijiu was continuously expanding and growing, strong-aroma baijiu, as the first aroma type, had moderate competition among players. But now that the cake may shrink, various strong players will inevitably enter the battle for channels and major customers. This may be why Wuliangye will focus on high-quality market share improvement next year, with 'seeking progress while maintaining stability' continuing as the overall tone of Wuliangye's work, and 'stability' running through the entire New Year strategy. So don't be fooled by Wuliangye's steady growth in product prices, channel profits, business performance, brand value, and company market value in 2020; planning ahead is inevitable. Seeking progress while maintaining stability is the overall tone. Unlike Moutai, Wuliangye's stability is truly about maintaining stability on the basis of comprehensive development, seeking a reasonable range of sustainable development, and market share improvement is the core of the new year's development. Wuliangye clearly knows that in the current economic environment, China is in a critical period of transforming development modes, optimizing economic structures, and converting growth drivers. Structural, institutional, and cyclical problems are intertwined. Under the premise of 'stability', achieving comprehensive development and market share improvement is particularly important. Next, Wuliangye will definitely vigorously build highland markets and key markets, creating a demonstration zone for Wuliangye market development. For distributors who hope to grow stronger and achieve further leapfrog development, this will be an opportunity to obtain resource tilt. Of course, it also requires higher requirements for distributors' own innovation and organizational management capabilities, especially in the digital field. Only with a high degree of digitalization can they achieve scale while maintaining excellent organizational management. Since Wuliangye requires market share improvement, for distributors with many quality customers and strong financial strength, this is a good time to seize. In addition, in the era of famous liquor concentration, besides developing the brand itself, Wuliangye needs capable distributors to cooperate in attacking regional markets for its mid- and low-end products. Therefore, among its series liquor brands, those with strong product power, consumer recognition, and good performance in the previous year, such as Mianrou Jianzhuang, are worth attention from distributors with good channel resources and certain brand operation capabilities. -04- Fenjiu—Dual-wheel drive to seize the market If you bought Fenjiu's stock this year, you would have multiplied your money several times with your eyes closed. Fenjiu, as the former 'Fen boss', has shown amazing explosive power in its second entrepreneurship after mixed-ownership reform, which is also related to its brand heritage. Relatively speaking, Fenjiu, which is on the path of second entrepreneurship and recovery, is in a backward position among the three aroma giants. To support its leading position as one of the 'three aromas standing tall' and keep up with the Moutai and Wuliangye tier, its strategy needs to be relatively aggressive. In fact, Fenjiu has always been one of the underestimated brands. According to the 2020 third-quarter report, the company achieved operating revenue of 10.374 billion yuan, breaking the 10 billion mark for the first time in the first three quarters, a year-on-year increase of 13.05%. Net profit reached 2.461 billion yuan, an increase of 765 million yuan from 1.696 billion yuan in the same period last year, a growth of 43.78%. For many consecutive years, Fenjiu has been laying out capacity, especially improving the upstream raw material chain, which provides a guarantee for Fenjiu's explosive growth over the past several years. It is understood that as early as 2019, Fenjiu had over 150,000 mu of sorghum bases, over 20,000 mu of barley bases, and over 20,000 mu of pea bases nationwide, with a total base scale close to 200,000 mu. Now it has comfortably exceeded 200,000 mu. With these, Fenjiu has the foundation for further development. In 2020, thanks to its strong fundamentals (Fenjiu's market share in Shanxi Province is higher than many other famous liquors) and a series of measures such as promoting the Zhu Yeqing health industry, Fenjiu achieved counter-trend growth despite the pandemic. At the end of 2020, Chairman Li Qiuxi proposed at the distributor conference to summarize the five elements of Fenjiu's next stage of development with the character '赢' (win): 亡, 口, 月, 贝, 凡. First, it emphasizes crisis awareness, stressing that reform and development cannot stop, and requires continuous goal- and result-oriented, reshaping reforms. Second, it talks about communication, creatively transforming and developing Fenjiu's traditional culture. Third, it mentions time, requiring strengthening management and promoting digital transformation to improve efficiency. Fourth, it is wealth, i.e., performance, adhering to the mid-to-high-end development route, continuously optimizing product structure, and launching two major projects: restructuring the brand management framework and the 'Qinghua Fenjiu' brand upgrade. Fifth, it is '凡' (all), referring to quality: ensuring every bottle is of high quality, strengthening production operations and capacity supporting construction, and empowering product value through quality, thereby achieving price empowerment. Fenjiu proposed to launch offensives, positional battles, and close-quarters battles at the brand, market, and product levels, which means that in 2021, Fenjiu will still aim for high-speed development and continue to make large-span progress in brand, market, product, and other aspects. In terms of market and channels, to seize market share, the current big single product Bo Fen is almost 'invincible' at the same price point, growing at a rate of 1 billion yuan per year for several consecutive years, and is known as the 'first light bottle liquor'. Fenjiu will inevitably leverage the strength of Bo Fen to continue the broad layout of channels. From the layout of Fenjiu in recent years, the growth rate outside the province has accelerated significantly, and now its share outside the province has exceeded that within the province. This is a good opportunity for distributors with good channel operations. Bo Fen itself has strong product power, and given Fenjiu's current state, as long as distributors can help it seize more market, the profits allocated by the manufacturer will not be too low. On the high-end side, the Zhu Yeqing health business is included in the 'dual-wheel drive', but Qinghua Fenjiu remains the core of brand building. Therefore, distributors with high-circle resources and group purchase channel capabilities will also be valued by Fenjiu. In terms of brand, it is foreseeable that Fenjiu will continue to increase communication investment and also tilt resources towards consumer cultivation activities. Final Thoughts: **Baijiu is currently still one of the consumer goods categories most favored by capital. As for the market, it has entered a stage of deep centralized reshuffling. Compared to other consumer goods categories, the baijiu industry is relatively traditional, and in recent years, the only new brand that consumers are familiar with is Jiang Xiaobai. It can be seen that if distributors want to increase their stake in the baijiu industry at this time, the core brands of famous liquor companies are still the best choice. Moutai itself is in a state where the market drives its development. As long as there are no major external factors, it will continue to develop well. For distributors, Feitian Moutai is a scarce resource and not easily obtained. Capable distributors can try to prioritize looking at Moutai's better-performing sub-brands, such as Xijiu, which has already exceeded 10 billion; only then consider other sauce-aroma brands. Wuliangye's development trend is also good. As the leading enterprise of the 'largest aroma type' strong-aroma baijiu, the dividend of brand concentration still exists. Its series liquor products have performed well in the past two years with rapid growth, but if you have strong financial strength and customer resources, prioritize Wuliangye's own brand, followed by Wuliangye series liquor company's mass-market brand Mianrou Jianzhuang. Choosing the latter requires good channel operation capabilities, and you also need to consider possible competition from strong local brands. Fenjiu may have missed some development opportunities, but its heritage as the former 'Fen boss' remains. After years of supply chain and infrastructure layout, its capacity and quality are not inferior to the other two major leaders. From the development in the past two years, after strengthening brand building and channel construction, it has shown a trend of rapid development with excellent reputation and quality accumulation. From its market performance and stock price, Fenjiu's potential is still worth further exploration, and its relatively aggressive strategy has some confidence. Once the tip is adopted, a reward of 400-2000 yuan will be paid.