As Mid-Autumn Festival and National Day approach, the baijiu industry's September is unusually busy. By mid-month, liquor companies are launching various promotions, distributors are paying for goods, and the online-offline sales battle for baijiu has begun. First, looking at online channels, JD.com recently released its "919" JD Fine Wine Super Category Day report, showing baijiu transaction volume up 180% year-on-year, with brands like Jiannanchun, Jiugui Liquor, Jing Brand, Langjiu, and Xifeng all seeing increases exceeding 300%. JD's Fine Wine Festival is a liquor category promotion tailored for the Mid-Autumn Festival in September, and this data reflects the hot online sales of baijiu to some extent. But offline is completely the opposite: as the "double festival" approaches, terminal expectations continue to decline. A recent visit to Chengdu found that offline terminals are cold. The reasons trace back to high baijiu inventory and price inversion shadows that are hard to dispel, coupled with insufficient consumer demand, directly leading to the reality of no price increases during the "double festival," poor sales, terminal pressure, and a cold peak season.
Online and Offline Promotions
Competing for the Traditional Peak Season
Some institutions say that this Mid-Autumn and National Day is the first truly normalized baijiu peak season after three years of the pandemic, and a better rebound is expected. Many brokerages also believe that baijiu pre-holiday stocking is progressing steadily, and the atmosphere is warming up. Industry expectations for the "double festival" are equally high. Recently, the China Chain Store & Franchise Association's Procurement Committee conducted a survey of 59 supermarket chains nationwide to predict sales data for various product categories during the 2023 double festival (Mid-Autumn Festival and National Day). For liquor sales, the survey showed: 80% of companies predicted sales increases, 20% predicted declines, with the median and mode of predicted growth at 10%, and an average of 6.89%. Liquor has strong holiday attributes and is essential during festivals; most companies are firmly expecting 5%-10% growth, with some potentially seeing higher gains. In fact, as early as July and August, liquor companies were already actively preparing for the "double festival," using various tactics to boost sales and bottle-opening rates. For example, Wuliangye launched an integrated marketing campaign around "Harmonious Wuliangye, Happy Chinese Festival," increasing bottle-opening rewards for some products at banquets, and will invest over 50 million yuan in "Harmonious Good Gifts" to reward consumers during the live interaction segment of this year's CCTV Mid-Autumn Gala in Yibin. Yanghe launched its "Mid-Autumn Reunion Dream, Good Luck on the Draw" campaign on September 1, increasing bottle-opening rewards for products like Sea Blue (22nd edition), Sky Blue (21st edition), Yanghe Dream Blue Crystal Edition, and Yanghe Dream Blue M6+. Jiannanchun adopted a low-threshold policy with cash red packets and free liquor gifts, targeting banquet consumption. Moutai's sauce-flavored series lowered the threshold for its "banquet gift liquor" activity, allowing any banquet to participate. The "Moutai Family" budget sauce-flavored brand "Taiyuan" added a 100% winning rate red packet activity for bottle opening... From the offline terminal perspective, a recent visit to several Chengdu supermarkets found that except for Moutai, almost all baijiu products have promotions. Supermarkets like Yonghui, RT-Mart, and Hongqi are offering significant liquor promotions, such as buy-one-get-one-free on 52-degree Fenggu Jinzhi liquor, running until October 15; some brands offer discounts like 228 yuan per bottle with a 20-yuan discount for purchases over 228 yuan. Online promotions are even more aggressive than offline. JD's Fine Wine Festival offers liquor at 20% off for two items, 25 yuan off for purchases over 199 yuan; Taobao's 10-billion subsidy program, e-commerce buy-one-get-one-free, and buying liquor with free mooncakes, etc. Whether online or offline, including famous brands, the more you buy, the more you save. Industry analysts believe that in this year's environment of huge baijiu inventory, whoever can capture more consumption scenarios will win next year's opening.
Terminal Sales Cool
In stark contrast to the various online and offline promotions, terminal sales are cold, and market expectations continue to decline. Our reporter found that the promotional enthusiasm in supermarkets has not spread to famous liquor specialty stores and tobacco and liquor shops. A staff member at a famous liquor specialty store, Xiao Jiang (pseudonym), told our reporter, "We sell as usual, with no promotions or discounts." When asked why, Xiao Jiang said, "We are a direct supply store for famous liquor, and the head office hasn't notified us to do promotions." She added, "Business was very difficult in the first half of the year, and monthly sales have indeed picked up in the second half, but the change isn't significant. Compared to previous Mid-Autumn and National Day periods, our customer traffic has decreased a lot. Normally, this is the peak time for buying liquor, but we have very few customers; sometimes we sit all day without anyone." Another tobacco and liquor shop owner frankly said, "Fewer and fewer people are buying liquor now. Customers who need liquor usually don't care about our promotions; they just ask the price and take the goods." It's worth noting that famous liquors in supermarkets, specialty stores, and tobacco and liquor shops are basically selling at market prices, and even with some promotions, the discounts are not significant. Wuliangye, Guojiao 1573, Qinghua Lang, etc., are all priced above 1,000 yuan. Xiao Jiang said, "Some small vendors might sell famous liquor at low prices, but our store doesn't have price inversion. Because the profit margin for famous liquor is already small, we can't afford to lower prices further." The tobacco and liquor shop owner said, "This year's business is worse than the previous two years. It's good enough to survive this year. Price increases are impossible; the store's inventory situation determines prices, and sometimes we have to lower prices to clear inventory." In the industry's view, with the sluggish market and cold sales, the situation for famous liquors is a survival battle for non-famous brands. Because consumers don't buy baijiu without brand recognition, baijiu is stuck in a dilemma: "good-selling products don't make money, and profitable products don't sell well." A liquor sales guide at a Yonghui supermarket in Chengdu told our reporter, "Famous liquor prices haven't changed much; the buy-one-get-one-free items are all OEM brands." A staff member at a 1919 store also said, "Wuliangye and Guojiao 1573 were out of stock before the holiday and haven't been replenished yet. Sales of most other non-famous liquors haven't changed much." Some believe that the decline in baijiu purchasing power is partly due to the overall environment and partly because baijiu faces price inversion, making it impossible to raise prices before the peak season as before, meaning there's a "buy on rising, not falling" phenomenon in baijiu consumption. Looking at the situation, compared to previous years when there was a wave of price increases before Mid-Autumn, this year baijiu has indeed not seen collective price increases, and even before the peak season, few companies raised prices. On August 15, Luzhou Laojiao Guojiao Liquor Sales Co., Ltd. issued a notice on adjusting the price of 52-degree Guojiao 1573 Classic, raising the distributor settlement price to 980 yuan per bottle from that day. However, according to industry insiders, this price increase strategy ultimately did not reflect in the market. Additionally, on June 28, Chengdu Shuijingfang High-end Liquor Sales Co., Ltd. issued a notice that from August 18, the distributor settlement price for Shuijingfang Diancang 38-degree 500ml*6 would increase by 15 yuan per bottle. Not only is it difficult to raise prices, but baijiu prices are also falling. According to national baijiu price survey data, in mid-September, the national baijiu month-on-month price index was 99.95, down 0.05%. By category, the famous liquor month-on-month price index was 99.95, down 0.05%; local liquor was 99.92, down 0.08%.
Inventory Shadow Lingers
In the first half of this year, baijiu consumption was weak, and market sales have been below expectations since the Spring Festival, which also dimmed the half-year reports of many listed baijiu companies. China's independent liquor critic Xiao Zhuqing believes, "The entire peak consumption season for baijiu is in the second half of the year, because there are many business activities, year-end summary meetings, annual visits and appreciation events among clients. For all listed liquor companies and regional distilleries, competing for consumption scenarios like Mid-Autumn Festival, National Day, and Spring Festival is a key battle for annual profit and loss." From this perspective, the cold sales during Mid-Autumn and National Day will directly affect liquor companies' second-half performance, and behind this lies a more serious problem: baijiu inventory destocking is not ideal. Since the beginning of this year, high inventory has been a common industry problem, and many listed baijiu companies have explicitly stated they want to seize the Mid-Autumn and National Day opportunity to accelerate inventory destocking. After releasing half-year reports, many companies said their inventory is at a healthy level, and the main task for the second half is to boost sales. For example, Shanxi Fenjiu and Jiugui Liquor, which have high inventory levels, both stated that their inventory is reasonable. However, the overall industry situation may not be so optimistic. An industry insider told our reporter, "Currently, the destocking effect for famous liquors is somewhat evident, with good pre-holiday terminal stocking and payment collection. However, inventory for sub-premium and non-famous brands remains generally high, and terminal sales have not seen significant improvement." Similarly, the terminal store staff mentioned earlier all told our reporter, "We are very cautious about stocking this year; we don't hoard inventory, and sometimes we only pick up goods when there's an order." Recently, Song Shuyu, chairman of the China Alcoholic Drinks Association, pointed out at a symposium on modern liquor circulation system construction that this year, the circulation side has been under great pressure from inventory backlog, declining consumption, and weakening expectations, manifested in: first, high inventory and slow sales; second, consumption downgrading and differentiation; third, small and medium liquor distributors are in a survival crisis, while leading companies see revenue growth but not profit growth. Regarding baijiu inventory, our publication previously explored this in depth in "Baijiu Waiting for the Wind: Deep Adjustment and Strategic Changes under Weak Recovery," and the industry does not hold high hopes for short-term destocking. Many insiders believe that this round of destocking will last at least three to five years. Indeed, Mid-Autumn and National Day will kick off the traditional peak consumption season for baijiu in the second half, making it a key node for destocking tasks. But based on current market feedback, the actual effect of the "double festival" on baijiu destocking remains to be seen. Xiao Zhuqing bluntly said, "The 'barrier lake' of social channel baijiu inventory has reduced terminal stocking willingness, forcing distilleries to compete in promotional spending. China's liquor industry has entered an era of vicious competition." Huaxin Securities also stated in a research report that the sales side is still in a weak recovery phase, and it is expected that before the peak season, the focus will be on destocking and supporting wholesale prices. In the second half, we still need to observe the sales during the Mid-Autumn and National Day double festival and the recovery of business scenarios.