Article | Yunjiu Toutiao (ID: YJTT2016) This article is republished with permission from Yunjiu Toutiao. Wanglaoji is crossing over to seek a new chapter, but crossing into beer is clearly a long and arduous road. Brand crossover doesn't always mean getting a piece of the pie; sometimes it means getting a glass of beer. Recently, it was noticed that a beer product bearing the Wanglaoji trademark, named "Jipi," has been continuously promoting franchise recruitment on various platforms since last September. As a household name, Wanglaoji has long been known nationwide for its "non-spicy" herbal tea category. Its years-long war of words with JDB has also sparked extensive discussions in the industry and society. Now, is the herbal tea giant also entering the beer business? -01- Drink this beer and avoid a beer belly? Typing "Wanglaoji beer" into a search bar reveals numerous advertisements on forums and websites recruiting agents for Jipi. The posters highlight the beer's ingredients and brewing process. The ingredients listed include water, barley malt, wheat malt, hops, and yeast. The process emphasizes that Wanglaoji beer originates from the 1516 Bavarian Purity Law in Germany, brewed with a single original concentration and a 28-day extended aging period. It also stresses that it is not diluted with water, not filtered, and retains yeast nutrients as a natural, healthy beer. Other promotional articles describe what sets this beer apart: "Wanglaoji Jipi beer, unlike other beers, does not add starch, corn, syrup, or other adjuncts. It ferments with mellow malt, leaving a lingering aftertaste and rich nutrition. Both brand strength and quality are guaranteed, giving consumers peace of mind." Beyond emphasizing differences in ingredients and taste, this beer may also offer functions that other beers lack. In a market analysis document obtained for Wanglaoji beer, multiple benefits are detailed, including not inducing gout, not causing a beer belly, not causing hangovers, not causing frequent urination, beautifying the skin, and being nutritious. The document also shows that Wanglaoji beer is primarily packaged in cans and bottles, with net contents ranging from 320ml to 500ml. The retail price for bottled craft beer is 8-15 yuan per bottle, canned original pulp is 5-12 yuan per can, and slim cans (craft beer) are 15-18 yuan per can. A price list circulating online shows "Wanglaoji Beer (Craft) 8 yuan/bottle, Wanglaoji Beer (Original Pulp) 6 yuan/bottle," which aligns with the above prices. -02- Produced in Shandong, Shipped from Northeast Although various promotional materials mention that this beer is produced by Guangzhou Pharmaceutical Group (GP Group), no information about the product can be found on the official websites of GP Group or Wanglaoji. Subsequently, a call was made to its Heilongjiang operations center using the agent recruitment phone number. The relevant person in charge stated that Jipi is the first beer launched by GP Group in mid-October last year and is currently in the market distribution stage. The Heilongjiang operations center is responsible for agency promotion in the three northeastern provinces and Inner Mongolia. According to this person, there are currently not many operations centers nationwide for Jipi, "and I remember there is also one in Hainan in the southern cities." It is worth mentioning that the above person also claimed that the Jipi sold in the Northeast is not locally produced or canned but is produced and transported by a company in Shandong. On e-commerce platforms, it was found that this beer has only a small number of orders on Taobao. The product specifications show that the shipping location is Harbin, and the manufacturer is Shandong Hande Brewery Co., Ltd., which matches the Shandong company mentioned by the person in charge. According to Qichacha, Shandong Hande Brewery Co., Ltd. was established in August 2011, with legal representative Ma Weiguo and a registered capital of 15 million yuan. The company is located in Encheng Economic Development Zone, Pingyuan County, Shandong Province, and belongs to the wine, beverage, and refined tea manufacturing industry, with business scope including liquor production, liquor sales, and beverage production. Notably, information shows that the company was penalized twice by relevant departments in Pingyuan County in July 2016 and February 2018. The first penalty was for "product labels not conforming to the relevant provisions of the Food Safety Law of the People's Republic of China"; the second was because "during an inspection, it was found that the company was producing in the canning workshop during a Level II heavy pollution weather emergency response, failing to stop production as required, and emergency measures were not in place." According to the above person in charge, regarding pricing, the regular 500ml Jipi sells for 8 yuan per bottle in the Northeast market, higher than Tsingtao Beer's 6 yuan per bottle. In terms of channels, the canned version of Jipi, with its festive red packaging, sells well in wedding banquets and gift-giving scenarios, and is also somewhat popular in KTVs. However, due to the impact of the pandemic, promotion in restaurants is currently not going well. "There are currently over 20 agents in the Northeast, and a few in Inner Mongolia. In the Northeast, we mainly focus on the Heilongjiang market." Regarding Jipi's sales in the Northeast, the person in charge said that because the promotion period in the Northeast is short, it is still too early to see significant results. -03- How Will Wanglaoji Play in the Beer Market? In the fiercely competitive beer market, whether Wanglaoji beer can successfully stand out is a big question mark for many. After all, the beer track and the herbal tea track differ greatly in many aspects, including marketing. Once, Wanglaoji went from a regional brand to being famous across China, with sales surging from less than 200 million yuan to over 10 billion yuan, even surpassing the sales of beverage giant Coca-Cola (canned) in mainland China at one point, firmly holding the throne of "China's No.1 beverage can." Therefore, Wanglaoji's success is often analyzed as a classic case study across industries. What exactly made Wanglaoji successful? Reasonable positioning, good marketing slogans, successful market segmentation, and creating a new functional beverage category are all answers discussed in the industry. Additionally, the blank space in the mainland herbal tea market at the time may have been an important condition for its success. As is well known, herbal tea, as a daily product, was mainly popular in Guangdong, Hong Kong, and other regions in the early days. Mainland consumers did not know much about herbal tea, which meant there was huge market potential in the mainland. At the same time, Guangdong was at the forefront of China's reform and opening up, and Hong Kong was a typical representative of developed economy and trendy lifestyle. People naturally developed a pursuit and attachment to products with these regional characteristics. As the most famous brand among time-honored herbal tea brands, Wanglaoji's later market position is not unrelated to this. But today's beer market environment is completely different from the herbal tea market back then. After years of land grabbing, the domestic beer market has formed an industry pattern dominated by AB InBev, Tsingtao Beer, China Resources Beer, Yanjing Beer, and Carlsberg. The combined market share of the top five brands exceeds 70%, indicating a high industry concentration. The difficulty of trying to get a share among them is imaginable. From a brewing process perspective, craft beer is no longer a rare term. Especially since 2016, craft beer has flourished under the monopoly of beer giants, becoming an effective means for companies to break through. On last year's Double 11, JD.com's liquor category sales reached 200 million yuan in 2 minutes, a year-on-year increase of 15 times, with craft beer growing 20 times year-on-year. From the broader industry environment, domestic beer production has declined for seven consecutive years, and industry concentration has further increased. With the advent of consumption upgrading and diversified demand, "premiumization" has become the general trend. He Yong, Secretary-General of the China Alcoholic Drinks Association and Chairman of the Beer Branch, once stated that the consumption level of the beer market is gradually improving, and China's beer market has entered a new era of structural upgrading and brand development. In contrast, the market size growth rate of the herbal tea industry has gradually slowed. Data shows that from 2011 to 2015, the market size of China's herbal tea industry maintained double-digit expansion, but growth slowed after 2016. As penetration in key regions becomes saturated and various herbal tea brands cancel low-price strategies, the market size is expected to continue growing at a low rate. Against this backdrop, Wanglaoji has been exploring new paths, with successive product launches moving towards more fashionable and youthful directions. In March 2019, Wanglaoji's Ciningji series products made their debut, successfully exploring non-herbal tea products. Since then, the Ciningji brand family has expanded, including the launch of Ciningji sparkling wine. The Ciningji series also received praise from Zhong Nanshan last year. A Wanglaoji insider once said that launching "Ciningji" was to further enrich the diversified layout of Wanglaoji's big health industry, and in the future, it will develop based on the category strategy of "single product diversification and category diversification." From herbal tea to non-herbal tea categories is a crossover in Wanglaoji's product strategy, but clearly, crossing into beer is a long and arduous road. Moutai briefly ventured into beer with the launch of Moutai Beer, which targeted the high-end market, but eventually entrusted it to China Resources Snow due to unsuitable production and sales methods. Of course, from a positive perspective, Wanglaoji Jipi offers multiple packaging options, including slim cans, cans, and bottles, to meet the diverse needs of different consumers. In terms of scenarios and channels, beer and herbal tea both focus on restaurants, supermarkets, convenience stores, etc., with high overlap. Most importantly, Wanglaoji's own brand influence and the strong endorsement of GP Group bring more possibilities for this beer. In short, this young beer may still have a long way to go. Tips will be paid 400-2000 yuan once adopted.