---
title: "Survival Strategies for Small Wine Distributors: Product Selection"
description: "As the baijiu industry rapidly develops, distributors face increasing pressure from upstream and downstream, leaving limited room for growth. Large distributors leverage resources and capital to transform, but small and medium distributors must follow survival rules to avoid risks. When asked what they lack most, small distributors often say: people and good products. This article outlines nine principles for selecting products to mitigate risks."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2015-09-30"
language: "en"
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# Survival Strategies for Small Wine Distributors: Product Selection

> As the baijiu industry rapidly develops, distributors face increasing pressure from upstream and downstream, leaving limited room for growth. Large distributors leverage resources and capital to transform, but small and medium distributors must follow survival rules to avoid risks. When asked what they lack most, small distributors often say: people and good products. This article outlines nine principles for selecting products to mitigate risks.

However, as the baijiu industry has developed rapidly in recent years, the squeeze from upstream and downstream in the industry chain has left distributors with very limited space and development opportunities. Large distributors, leveraging advantages in resources and capital, have transformed one after another, moving from exclusive distribution of products, co-branded products with manufacturers, to even brand customization, venturing into blue ocean areas. But for the vast number of small and medium distributors, how to avoid operational risks requires adhering to survival rules.

If you ask a small distributor what they lack most, the usual answer is: people! And good products!

From a product perspective alone, distributors often "make bad friends" and choose incorrectly, not only failing to enjoy the success brought by product growth but also being dragged down by it, gradually showing signs of decline.

Especially for small and medium distributors, we have few opportunities to make up for operational losses. How small and medium distributors choose products with potential and avoid product risks is a lesson that business owners should frequently review.

**1. Stay away from products with excessive hype.** Every spring, the Chengdu Sugar and Wine Fair is aptly compared to the main battlefield for recruiting distributors for Chinese beverages. Numerous beverage brands emerge each year. Slogans like "Zero investment, zero risk, big returns!" and "10万元独享市场专营, low investment, high returns" are everywhere on promotional materials. It seems like gold is everywhere and money is flying. As long as you are willing to become an agent, your dream of overnight wealth can come true. But looking back, all of this is an illusion! Large enterprises and strong brands, due to their strength and abundant channel distributor resources, basically do not need to use such grandiose and empty propaganda to deceive people. Those who use such propaganda are mostly small enterprises and small brands whose products have not been validated by the market and whose brands have not yet been cultivated. Moreover, some brands are new in everything except the boss: a newly emerged idea, a hastily assembled recruitment plan, a hastily processed product sample, and promotional materials just off the printing press.

In a normal market environment, "profit is proportional to risk, and investment is proportional to output" is a law of the market economy. Products that violate this economic law are rare. Products with such grandiose and empty propaganda may have inherent defects from the start, being "disabled children" from the beginning, and it is impossible to expect them to grow into market "favorites."

Therefore, the more tempting the product concept, the more it seems like a myth of wealth creation, the more you should stay away from it.

**2. Stay away from products with no selling points.** In today's world of abundant goods, a product must have inherent advantages to survive and continue growing in market competition, whether in price, technology, design, or quality.

Of course, with thousands of individual products competing in the market, it is obviously difficult for a product to have many advantages and selling points. High-end baijiu relies on digging into ancestors to sell history; mid-range baijiu relies on digging into intrinsic quality to sell quality; low-end baijiu relies on value for money to sell cost-effectiveness. Finding corresponding selling points for different products naturally gives each its own value.

Often, a distinct selling point can make a product sell well. Products with all advantages and value for money are very rare in the baijiu industry.

In short, a product must not only look good but also have selling points to have the genes to survive.

**3. Stay away from overly advanced products.** Overly advanced products (especially those with overly advanced concepts), even if they are not epoch-making, often exceed consumer needs and usually take longer to gain market acceptance.

Changing consumer perceptions not only takes a long time but also requires significant resources. This is not something that small enterprises and small and medium distributors can accomplish independently. It is possible that before the product is accepted by the market, we have already become glorious, serving as experimental fields for the product.

On the battlefield of business competition, we should choose innovative products to be pioneers; but we must also avoid being dragged down by overly advanced products and become martyrs. Examples abound: Wanyan first developed VCD, but the beneficiaries were later entrants like BBK, Aido, and Shinco. Where is Wanyan now? Where are novel beverages like 5th Season and Explosive Fruit Soda now?

**4. Products with false prosperity should not be touched.** When many products are being recruited, manufacturers invite customers to inspect so-called model markets to be more tempting. Precisely because they are model markets, they are largely a "false" market of superficial prosperity deliberately created by the manufacturer for recruitment. The manufacturer will offer on-site signing with more discounts or market support and other generous conditions, making you sign a contract, even paying a deposit on the spot and arranging shipment.

This is a strong dose, a stimulant for hesitant customers, to make you make an impulsive decision. Many customers are shocked by the "hot" scene of the model market, and in a moment of heat, they place an order and sign. Of course, this deliberately created model market may have sales of only 200,000 but costs 500,000. If you follow this approach, the market will surely give you an "impulsive punishment"!

When inspecting a model market, you can identify its authenticity with three simple tricks: First, plan your own itinerary and go by yourself, avoiding traveling with the recruitment company's staff; second, communicate more with ordinary terminal consumers to understand their awareness of the product, and most importantly, communicate with residents around model stores to understand the real situation of business, service, and reputation; third, it is best to inspect multiple times with a certain time interval between two inspections, and based on the difference before and after, you can judge whether there are problems.

**5. Be cautious with products in segmented markets.** Product innovation is becoming increasingly difficult, and segmentation of markets, due to clear positioning and easy achievement of precise marketing to specific consumers, is gradually becoming a magic weapon for corporate product innovation.

However, product strategy in segmented markets is a complex project that requires sufficient strength from the enterprise to research and explore. It is not necessarily true that products meeting a single segmented market can survive. Enterprises need to treat them differently. The key is whether the market size of the segment is large enough, whether there is an obvious consumption tendency, and whether it can meet the basic requirements for product survival.

In fact, many products in segmented markets have succeeded. This has made Jing Brand lead in health wine, and once made Jin Liufu dominate in wedding wine. Many other brands' "exclusive supply" wines have also benefited from industry-specific or regional monopoly sales. But more segmented market products, due to lack of deep market research and wrong positioning, serve an unsuitable segment and thus flash in the pan, disappearing without a trace.

Seeing the consumption performance of baijiu in the male market, some naturally thought of another segment: the female market. A few years ago, some manufacturers actually launched female baijiu. Such an idea is certainly good. But in reality, women who drink baijiu mostly share it with men on the same occasion, driven by a desire to show off or out of necessity. Even if dedicated female baijiu can gain psychological recognition from women, how much choice do they have? This is a clear segment, but its overly obvious uniqueness is a trap. Under current consumption habits, it cannot provide a soil for product survival.

The consumption capacity of baijiu in the wedding market is unquestionable. The wedding market segment concept has also inspired creative minds, and some have proposed a more classic segmentation concept: mourning wine. I applaud the innovative spirit of trying to discover unique concepts, but reckless innovation can be fatal. I really cannot imagine, if this product were actually launched, where would the hope of success be? Let me ask weakly: after seeing this name, would you drink it?

**6. Be cautious with new products requiring large investment.** These are usually cross-category extension products of well-known brands. Because they are backed by the halo of a well-known brand, they are worth a hundred times more, and such products will surely become favorites fought over by distributors. For small distributors, such products require special vigilance. Manufacturers usually think that as long as they have the golden signboard of the brand, even if it is filled with plain boiled water, it will sell well. This idea is not unreasonable, but it leads manufacturers to underestimate the difficulties in the early market and be overly optimistic about market prospects. Market tasks and the requirements for distributor personnel, finances, and materials are very high, and market goals and sales tasks are relatively advanced.

In fact, all brand cross-category extensions require a process of market recognition, especially for consumers, where the acceptance of new products will have a lagging process, possibly forming an "hourglass effect." When a new product is launched, distribution goes smoothly, but consumer trial is slow, and the pressure of subsequent tasks is relatively high. Moreover, during the product introduction period, the greater the manufacturer's investment, the greater the corresponding investment required from the distributor. Because at this time, there is no effective sales turnover, and this period has only input and no output. If the manufacturer's set goals cannot be achieved, the manufacturer will feel that the distributor lacks strength, cooperation, and operational flexibility. The distributor will inevitably face the fate of being "stripped of fiefdom," and the previous investment will be lost.

**7. Stay away from products with troubled backyards.** Due to the demonstration effect of famous brand products, there will certainly be some small factories around famous liquor factories that survive by riding on the coattails of famous brands. This is also a major feature of China's market economy. If these small brands have their own independent brands and merely imitate somewhat, it is understandable.

But there are some small workshops that, in addition to packaging and naming, also start from the root, making their brands infinitely close to famous brands. "Dukang" next to "Linkang," "Luzhou Laojiao" next to "Luzhou Hongjiao," "Yanghe" next to "Yanghai," "Mianzhu Daqu" next to "Jinzhu Daqu"... These products have low costs and high profits, and can leverage the sales atmosphere of famous liquors to achieve economic returns in a short time. However, such products are constantly under the crackdown of market supervision and administrative law enforcement departments. They are undoubtedly "birds sticking their heads out," and at any time they may receive "shock therapy" and suddenly die in the light.

In addition, some small workshops and blending factories, due to insufficient quality control, have no guarantee of product quality, and may even produce products not allowed by laws and regulations.

If you are greedy for small gains and introduce these products to the market, in today's increasingly strengthened food safety environment, at best, goods will be confiscated, and you will lose money to avoid disaster; at worst, you will lose your business qualification and have to start over; even more unfortunate, you will become a "scapegoat" to warn others! Such results will make distributors "cry to heaven but get no answer, and cry to earth but get no response." If distributors are unfortunately caught, they can only resign to fate!

Wasn't the disaster of Changli wine triggered by some small factories, almost causing the total collapse of Changli wine? How many distributors suffered losses and were left speechless with tears.

**8. Distinguish products from troubled owners.** Many small distributors, because they lack resources to compete for some well-known brands, will turn to take over "exclusive products" or "distribution products" of well-known brands. Looking at market development in recent years, "exclusive products" and "distribution products" benefit from the endorsement of well-known brands, with quality far exceeding that of ordinary small factories. In addition, leveraging the sales atmosphere of big brands, they can quickly achieve market returns.

In fact, this should be the first choice for small distributors. However, as "exclusive products" and "distribution products" have become popular, more and more capital from outside the industry has entered this field. Especially, much capital flows from traditional short-term wealth industries, basically with a strong "speculative mentality." But the baijiu industry, which requires refined operations, is vastly different from the "speculation" models of stock trading, real estate speculation, coal speculation, and garlic speculation, where individual capital gathers. The return cycle is relatively long, and although the profit rate is much higher than traditional industries, it still has a large gap compared to the "get rich overnight" trades. Therefore, if the "wealth creation myth" does not meet initial expectations, some cooperative capital comes in quickly and leaves quickly. Shareholder infighting and capital withdrawal and division are common. When the capital chain is interrupted, the companies operating these products become troubled owners. Products lack continuous investment, and subsequent operations are weak, either collapsing or disappearing quickly. Worse, similar to the "Luzhou Wine Demon" and "Anhui Zhong Kui" from years ago, they may vanish into thin air, leaving distributor customers with neither money nor goods.

From the company's address, phone number, business scope on the business license, and registered capital, you can still find clues of a troubled owner.

Recently, I saw a beverage product selling very well in the market, reportedly with national sales of several hundred million yuan. But after in-depth contact, I found that their business license shows a registered capital of only a few tens of thousands of yuan. In this commercial society where strength and creditworthiness are shown by capital, if there is no other motive, how can such a practice be explained?

**9. Be cautious with products that do not fit your business positioning.** Manufacturers have their own business positioning, and distributors are no exception. Focusing on your own advantageous resources is the foundation for survival and development opportunities. The smaller the distributor, the more attention should be paid to this. Large distributors, due to strong financial resources and extensive resources, can withstand setbacks and troubles. Even if one or two new projects or products fail, the loss is only the initial investment, but it will not shake their survival foundation. Small distributors are small because they are limited in financial resources, resources, channels, and products. If a new project suffers setbacks, it may affect the operation of the original project.

Many small distributors, because they lack influence, find it difficult to find new products. Therefore, they blindly add new products: if they hear beverage products have high traffic, they do beverages; if they hear red wine products have high profits, they do red wine; if they hear yellow wine products have good prospects, they do yellow wine. They want to do all products, have done all products, but have not done any well, and have also dispersed the original funds and manpower. A single product does not have economies of scale, so it cannot form influence in channels, brands, and customers. The result is like "the bear breaking corn cobs," the more they do, the harder it gets.

Small distributors should have a clear analysis and positioning of themselves. Identify your advantageous channels, advantageous resources, and high-quality customers. Clarify what products customers need, which ones you can satisfy, and which ones you cannot. New products taken on should fit your own business positioning, first meeting the needs of existing resources, existing channels, and existing customers. By prioritizing complementary products to make up for operational shortcomings, combine all products you operate into a joint force to "fight the world together," providing better products and services to existing customers to meet more of their needs. First establish a clear comparative advantage in the channels you operate. Develop and strengthen yourself, then consider adding more products.

In this world, money cannot be earned to the end; first earn the money you can earn. This is a rule that small distributors must remember.

In short, as long as you grasp the principles of product selection and distinguish confidently, with a little less luck and a little more security, even if you cannot get star products that quickly create wealth, you can still stay away from risky products and avoid losses.

**-END-**

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