---
title: "Six Major Pain Points, Ten Ways Out... How Can Alcohol Distributors Break Through in the Era of Polarization?"
description: "Alcohol distributors enjoyed comfortable days during the golden decade of baijiu, but as the industry entered a deep adjustment period, only those associated with national famous brands like Moutai and Wuliangye or strong regional brands are doing well, while the vast majority are struggling. The industry is now experiencing severe polarization among distributors, leading to a lack of vitality and a widening Matthew effect."
author: "唐江华"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-11-24"
language: "en"
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# Six Major Pain Points, Ten Ways Out... How Can Alcohol Distributors Break Through in the Era of Polarization?

> Alcohol distributors enjoyed comfortable days during the golden decade of baijiu, but as the industry entered a deep adjustment period, only those associated with national famous brands like Moutai and Wuliangye or strong regional brands are doing well, while the vast majority are struggling. The industry is now experiencing severe polarization among distributors, leading to a lack of vitality and a widening Matthew effect.

Alcohol distributors enjoyed comfortable days during the golden decade of baijiu, but as the industry entered a deep adjustment period, **only those associated with national famous brands like Moutai and Wuliangye or strong regional brands are doing well, while the vast majority are struggling.** Let's take a look at the current situation of alcohol distributors and see if they are indeed living such good lives.

**Polarization**

Since the baijiu industry itself has entered a state of polarization, it's no surprise that distributors are also polarizing. Distributors of famous brands like Moutai and Wuliangye have indeed been counting money while lying down in recent years, as everyone knows. Of course, distributors of strong regional brands are not doing badly either, still earning millions in profit annually, though they find it harder than before, but without too much disappointment. Meanwhile, distributors not associated with these brands are having a tough time—exhausted and at risk of losing the small profits they made in previous years. "Back to square one" is a true portrayal for many alcohol distributors.

**The severe polarization among distributors has drained vitality from the alcohol distribution sector. Everyone wants a piece of the hot famous brands, and the Matthew effect is becoming increasingly evident.** The indifference of distributors towards small and medium-sized liquor enterprises and small brands has also exacerbated their own profit shrinkage, significantly reducing operational efficiency.

**Restructuring**

Some distributor restructuring is led by manufacturers, hoping that the union of distributors can form a relative monopoly in the market, thereby increasing bargaining power with terminals and reducing operating expenses. There are also distributors' own restructuring and mergers, conducting share reform and joint ventures in a market-oriented manner, with similar goals. Same-city mergers and cross-regional equity participation and joint ventures are particularly prevalent.

Distributors who can do this generally understand their own strengths and weaknesses, know what they want and don't want, and thus make decisions most beneficial to themselves.

**Alliance**

These alliances are usually loose, where distributors each have their own stores or agency products. To increase their say in the market for a hot product, these distributors often form alliances to place orders collectively, hunting for existing target bestsellers in the market to maximize their own interests.

Of course, there are also tight alliances leveraging each other's network advantages, usually by jointly distributing a manufacturer's product or brand, or jointly customizing products from manufacturers of popular brands in their own markets. Through joint promotion, they capture the marginal benefits of mainstream products and counter the profit decline caused by price erosion of main products.

**Cross-industry**

**This type of distributor is quite common. As wealth accumulates, pure alcohol operations no longer satisfy their appetite, so cross-industry distribution of other categories becomes a natural choice.** Typically, many cross into beverages and food, leveraging their network advantages to enter industries with similar network needs, such as beverages, food, or condiments, integrating team and channel resources.

Some also cross into infant formula or alcohol chain stores, setting up independent teams to try new distribution fields.

**Transformation**

Some distributors rose with a particular brand, and as that brand shrank or disappeared in their market, they failed to adjust in time. After hitting walls with several other brands, they became disheartened with the baijiu industry and exited, transforming into other businesses.

**This type of distributor has been increasing in recent years. They once thought they were strong, using previously earned money as capital, readily taking provincial or prefectural agency rights for unknown baijiu brands. After a flurry of activity, they found the game completely different from their old ways and lost money. Eventually, they lost all confidence in alcohol distribution and transformed.**

**Retirement**

Many distributors born in the 1950s and 1960s are retiring. They were the first generation to bask in the spring of the alcohol industry after reform and opening up. Having earned enough money, and with their children not interested in the alcohol business, they have no suitable successors. As they age and their energy wanes, they naturally choose to retire.

They either transfer their brands to relatives or friends, or the manufacturers take back the rights and recruit new distributors.

**Under the changing landscape, ten ways out for distributors**

Since the second half of 2012, the alcohol industry has entered a new round of change, and distributors have experienced many upheavals and reshuffles. Many distributors are confused about the future. So, for most alcohol distributors, is there still opportunity and future? Where is the way out? After comprehensive consideration, we offer the following thoughts:

**1. Attach to big brands**

This is an unassailable truth. In the era of famous brands, if a distributor can find a way to obtain distribution rights, exclusive store opening rights, or group purchase customer qualifications for famous liquors, they should take it without hesitation, not intimidated by immediate difficulties. Of course, the accounts must be clear; it's a matter of short-term vs. long-term gains. Long-term doesn't mean unlimited; a three-year perspective is generally reliable.

If you can't get national famous brands, settle for regional strong brands or local specialty distillery distribution rights. Don't imitate Stephen Chow's "A Chinese Odyssey"—regretting for ten thousand years is useless. Stephen Chow is telling a story; we are looking for a meal.

Attach to any big brand you can!

**2. Select new products**

**Successful new products in the alcohol industry account for less than 1%, but even that 1% represents a huge opportunity for distributors, given that baijiu brands launch thousands of new products annually.** Selecting new products tests the distributor's vision the most, because a misstep not only wastes money but, most importantly, wastes time and energy, ending in failure. A few years ago, many clients asked my opinion on Jiangxiaobai, hoping for advice. **In fact, in earlier articles, I repeatedly responded: if you want to make money immediately, don't distribute Jiangxiaobai for now, because you really can't; but if you can hold on, as long as the Jiangxiaobai brand survives, you will eventually have your day.**

So, selecting new products tests not only vision but also patience and resolve. My advice is that impatient distributors should not rush into so-called new hot products when they launch; wait a year or two, especially in non-key markets. But if you understand the manufacturer or the operator in the key market, don't be afraid; decisively take it on, or you'll miss the chance. Why? Because some new products start with thunder but little rain, especially when investors have short-sighted goals of raising money. If you enter such new products first and are careless, you'll fall into a pit.

So far, no baijiu new product has built its market within a year or two. So, the early stage tests the distributor's vision and also the strength of the manufacturer and brand operator. Therefore, **if you see a new product with a trend or after it has been operating for a year or two, taking it on won't be far wrong.**

Another type is internet-famous new products like "Jinliufu·A Jar of Good Wine." The manufacturer is strong, the product has characteristics, and the key is that distributors are entering faster. If you are a distributor looking to supplement your network with new products, you can't hesitate. Since it has been on the market for over a year and the trend is emerging, if you hesitate, others will grab the first-mover advantage and territory.

**3. Join communities**

**Nowadays, if a distributor hasn't joined any community, they'd be embarrassed to say they sell alcohol, because communities are where you sell.** For example, fellow-townsman associations, chambers of commerce, fishing associations, basketball associations, mountaineering associations, badminton associations, catering associations, etc. If you can become the leader in these communities, whose alcohol will they drink if not yours?

Distributors joining communities for sponsorship is different from manufacturers sponsoring community activities. Distributors typically sponsor with a few cases of alcohol for meals. If it's a manufacturer, it involves naming rights, meal wine, gift wine, community atmosphere, etc., basically covering everything. So, we require distributors to do these things in their own name, ensuring effectiveness and influence, and crucially, through follow-up, they can sell alcohol.

**Therefore, distributors must find ways to join more local community organizations, actively participate in activities, and act as the liaison between manufacturers and communities.**

**4. Build circles**

Circle marketing has been prevalent in recent years. Many celebrities have leveraged their influence to start selling alcohol, such as Zhao Wei and Huang Xiaoming's wine business; Liu Jun and Du Zijian's Siba Wine Workshop, Moutai Town sauce liquor, and Wu Gang's crowdfunding wine, all typical examples of circle selling.

Celebrities have their circles. Distributors, through years of hard work, have also formed their own niche circles. This circle should be cultivated well, turning them into loyal fans and "die-hard followers."

**5. Seek alliances**

**If you are not the top distributor locally, or even in the top three or four, then you should seek alliances, as one person's strength is limited.**

How to ally? First, build a loose alliance, using product exchange to leverage each other's markets. Same-city clients can do it, and cross-regional clients are even better. The key is to open your mind, have a big vision, and not be limited by your small business circle. Second, join a big team, follow the aircraft carrier, and your ability to withstand storms naturally strengthens. For example, join national big brands like 1919 or Huazhi Wine Depot, or cooperate with regional players. The goal is to broaden channels and resources. Look at taxi drivers who do well—they are not only Didi drivers but also drivers on platforms like Shenzhou and Yidao. The principle is the same: use others' resources and platforms to expand your customer base.

Seeking alliances requires an open and inclusive mindset, thinking from a win-win perspective, not always considering self-interest, as such cooperation won't last.

**6. Control terminals**

"He who controls the terminals wins the world" is still true. As a distributor, if you neglect terminals and lose control over them, how can you bargain with manufacturers? It's like your tool for eating. Manufacturers focus on brand-level work, communicating with consumers, and eliminating C-end barriers. You are the bridge between C-end and the manufacturer, making it convenient for consumers to buy products in your area. That is your greatest value.

So, controlling terminals and doing terminal work well is not just a slogan; for distributors, it requires concrete action. Look at those clients who dominate the market—don't they all have strong terminal control? Of course, if your capital is insufficient, that's okay; build a terminal network that matches your role, do your best, and don't avoid difficulties.

**7. Differentiate**

Without differentiation, there is no huge profit! Except for Moutai agents, no brand offers huge profits on products everyone sells. What to do? Distributors need to create differentiated products. Differentiation doesn't mean racking your brains to create a new brand to operate the market; that might backfire.

**The best way is to collaborate with other clients to customize products for existing best-selling brands, solving both basic sell-through and profit insufficiency in one go.** Of course, this requires strong negotiation skills or good relationships with manufacturers. Actually, if you can demonstrate strong network control and selling ability, manufacturers will be tempted. No manufacturer is against money; even Moutai has loopholes, let alone ordinary manufacturers.

**Another approach is to target niche markets**, which is the most commonly used and skilled tactic among distributors.

**8. Build platforms**

Ma Yun once ambitiously wanted to make a mark in entertainment, manufacturing, biology, etc., but after hitting walls everywhere, he found he was best at platforms and returned. Even someone as powerful as Ma Yun can only do what he's best at. We distributors must learn to focus on our strengths.

**Building a platform means creating an integrated online-offline alcohol selling platform in your region.** Offline, have physical stores for experience and display; online, have a platform for one-click ordering, meeting consumers' convenience needs. **Integrating online and offline is not only the manufacturer's dream but also something distributors must implement**, because manufacturers do this with a single brand, unable to meet consumers' diverse needs, while you can offer many brands for customers to choose. Don't wait until JD's unbounded retail or Ma Yun's Tmall convenience stores open at your doorstep to wake up.

If you do well, even if Ma Yun comes, you can sell at a high price or happily hold shares and join.

**9. Strong penetration**

**This penetration refers to distributors penetrating upstream to manufacturers and downstream to terminals, connecting the entire industry chain.** It's not only national distributors who can do this; regional distributors can too. State-owned enterprise mixed reform, small distillery restructuring, etc., are good opportunities for equity participation or acquisition. As long as you can effectively integrate resources and think clearly about what to do next, don't be afraid.

Downstream penetration is easier. Take equity in local restaurants or chains; you don't have to be the controlling shareholder, but having a seat is definitely helpful for selling alcohol. That's enough. Establish joint ventures or crowdfunding companies to unite team strength and leverage social resources to sell alcohol.

Strong penetration means not having a mindset of monopolizing; learn to share and win-win, letting others and the team make money with you. Then social forces will gravitate toward you. The saying "When wealth gathers, people scatter; when wealth scatters, people gather" captures this.

**10. Cross-industry play**

This is the easiest to understand. Your alcohol sales channels are so good; the road is built, whether one car or ten cars run on it. So, leveraging your network and resources to cross into beverages, food, infant formula, condiments, grain and oil, and other related industries is natural.

**However, different industries, despite similar channels, face completely different consumer groups. Therefore, it's necessary to set up different teams to handle them, especially consumer communication teams, which should be separated. Don't force commonality for resource integration.**

I think everyone has seen such clients; it's also the path to winner-take-all.

There is no road in the world that can't be walked; only people who don't want to walk! Lu Xun said, "There is no road in the world; when many people walk, it becomes a road." Alcohol distributors face many bottlenecks and even difficulties, but as long as they are willing to work hard, find solutions, and persist, the dawn will come as they walk.

That's the meaning of this article. It's not that my methods are particularly good; it's just to provide a reference and a way of thinking. More importantly, distributors should combine these with their actual market conditions for comprehensive application and consideration. What fits is best.

**As the saying goes, a change of thinking opens up a new world!**

Introduction: Tang Jianghua, industry veteran, contributing writer for multiple industry media, author of "The First Book on Baijiu Marketing" and "The First Book for Baijiu Distributors," always practicing the creed of "write what I do, do what I write," currently serving Jindong Group.

Source: Wine Industry

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