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Fast-moving consumer goods, commonly referred to as FMCG in the industry, are products that sell and turn over quickly in the market, such as food, soft drinks, and daily chemicals. The marketing model for FMCG differs significantly from that of luxury goods and durable consumer goods, thus forming its own unique marketing model, known in the industry as the FMCG model. FMCG products have four characteristics: rapid product update cycles, broad target consumer groups and geographic reach, random purchasing behavior, and high product substitutability.

FMCG products possess three major attributes: regionality, rapid turnover, and price sensitivity. Baijiu also exhibits these basic FMCG characteristics. Tian Zhen, a marketing expert at the Win at the Terminal Strategy Research Institute, analyzes:

  1. Typical FMCG products like Coca-Cola have production facilities in various regions, ensuring rapid radiation to regional markets. Baijiu cannot set up factories in different locations due to flavor and aroma types, but it often has agents and operators in every region, conforming to the regional attribute.
  2. Ordinary FMCG products are high-volume circulation products; the higher the price, the lower the turnover rate, and the lower the price, the higher the turnover. Baijiu also conforms to this characteristic.
  3. Price sensitivity was not obvious in baijiu in the past, but with the arrival of the adjustment period, this will gradually become apparent.

In addition, baijiu, as a mass consumer product, has composite characteristics such as scarcity and luxury. It is both an FMCG and has characteristics of other categories. Zhu Zhiming, a columnist for Tangjiu Kuaixun.com, analyzes:

  1. Baijiu is an FMCG with Chinese culture, and it carries mainstream culture. In this regard, the greater the culture, the greater the industry; if culture is lost, the industry declines.
  2. The culture of Chinese baijiu does not need innovation; it only needs to excavate and find these cultural treasures and promote them from their shoulders to form true value culture. Baijiu is currently too self-important.
  3. Other FMCG products often have relatively shallow cultural foundations, but the culture they create can form cultural trends and lead consumption.
  4. Baijiu currently has too many chaotic phenomena, too many marketing methods and models. In essence, it has lost its essence—what baijiu really is.

In fact, any brand that can become popular or sustain development must represent a cultural or functional symbol. Baijiu is most capable of differentiation and cultural symbols, but it has not exerted effort in this area. Instead, foreign liquor and wine cultures are rampant in China.

Interpreting Baijiu's Special FMCG Attributes

FMCG Operation Case Analysis

  • Case: Coca-Cola China Terminal Channel FMCG Model

The Coca-Cola system is a vast system, including not only the Coca-Cola Company itself but also the bottling plant system. Therefore, to improve internal communication efficiency, enhance research and management of marketing channels, and establish a comprehensive channel coding system, Coca-Cola has unified classification and division of various marketing channels.

Based on channel division, Coca-Cola also classified and organized specialized channel collections from the customer's perspective, according to the characteristics of each channel. To date, Coca-Cola products have achieved a distribution rate of up to 100% in some Chinese cities!

Coca-Cola's channel system in China is shown in the table below:

From this figure, it can be seen that the classification of channels starts with traditional and modern channels, with traditional channels and 101 accounting for a considerable proportion. Although there are many channels, they can still be summarized into four main channels: wholesale, KA (Key Account) (CSS), and direct sales. The operation of these four main channels constitutes the main framework of Coca-Cola's channel system.

Modern channels, i.e., the KA system: products are directly sold by the bottling plant to modern retail terminals that have significant influence in modern channels, with high sales shares in local or even national retail, and are the development trend replacing traditional terminals. In this model, although Coca-Cola has sales representatives maintaining communication with customers at all times, the effort is insufficient; Coca-Cola only handles production and does not understand the specific needs of customers.

The 101 model: "1" means "one-body alliance," integrating wholesale and secondary wholesale links to directly face retail terminals. The so-called "101" customers are considered part of Coca-Cola; "0" means retail target; "1" means "one bottle in hand, endless joy." These 101 customers are mainly transformed from large wholesalers and original regional distribution centers. After becoming 101 customers, Coca-Cola's official sales representatives take orders directly from terminals and hand them to 101 customers, who then deliver products to each terminal customer in the shortest time according to the order.

The KA distribution system: Based on merchandising, Coca-Cola focuses on consumers, always providing personalized services, and conducts joint promotions with merchants in stores, ensuring that these KA customers with huge monthly sales must sell every box to consumers and do not radiate to other channels or divert goods to circulation channels.

In the Chinese market, Coca-Cola divides product sales channels according to the "consumer activity type" method, roughly summarized into the following 7 types:

Additionally, Coca-Cola has also divided channel categories suitable for itself based on consumers' shopping activities at different locations.

  1. Supermarket channel outlet types: independent supermarkets, chain supermarkets, other supermarkets.
  2. Traditional food store channel outlet types: stores selling food, non-staple food, beverages, tobacco, alcohol, or non-staple goods and vegetables.
  3. Grocery store channel outlet types: grocery stores, mom-and-pop stores.
  4. Street vendor channel outlet types: individual cold drink stalls, store cold drink stalls, various cold drink shops and carts.
  5. Chinese restaurant channel outlet types: various restaurants, beer houses, restaurants, Chinese restaurants, Chinese restaurant chains, home-style restaurants.
  6. Western fast-food restaurant channel outlet types: Western restaurants, Western chain restaurants, Western coffee shops.
  7. School channel outlet types: campus stores in universities, technical secondary schools, middle schools, primary schools, etc.

Case: Coca-Cola China Terminal Channel FMCG Model

  • Case: JDB FMCG Operation Channel - Precise Positioning

When JDB operated herbal tea, it was originally sold in Guangdong and Guangxi, with a scale of about 100 million yuan. Starting in 2002, through positioning by Trout & Partners China, because it contained heat-clearing substances like honeysuckle, and based on Chinese consumer habits, it was positioned as a "beverage to prevent getting heaty."

JDB started its market operations from the catering industry, especially hot pot restaurants, because eating hot pot causes heatiness. Secondly, their terminal execution was excellent, with intensive advertising, so from 2007 to 2008, they suddenly stood out nationwide. Moreover, JDB learned from Pepsi's regional management and Master Kong's deep distribution model.

In summary, there are several aspects they did well:

  1. Large market space: many Chinese people are prone to heatiness, especially in winter.
  2. Precise positioning: helped people who fear heatiness solve the problem.
  3. Created a new category: there was no such beverage before; people took medicines like Niuhuang when heaty, but now they can prevent it by drinking a beverage.
  4. Brand positioning and brand image are simple, easy to remember, and easy to spread.
  5. Intensive and focused advertising.
  6. Marketing channels were very well executed.
  7. Many creative PR activities. For example, the "Wanted Wang Laoji" campaign. Also, during a football match, Li Jinyu hit the referee; the next day, a soft article titled "Who secretly drank Li Jinyu's Wang Laoji?" was published on online media. Their PR activities and promotional campaigns also mainly utilized sports marketing, sponsoring sports events. This is Trout's positioning philosophy: concentrate money to hit a single point in consumers' minds. Their impression on consumers is simple and striking: only a red 310ml canned beverage that prevents heatiness, and all promotions were equally simple. Once Trout positioning is accurate, they intensify promotion to make consumers remember.
  8. Used the hot pot restaurant consumer group, who are prone to heatiness, as a breakthrough point.

Case: JDB FMCG Operation Channel - Precise Positioning

Baijiu Brands Walking in the FMCG Ranks

  • Baijiu FMCG Model: Tianhao Chen's Sales Promotion in Meishan

Since its launch at the end of 2012, Tianhao Chen directly targeted the supermarket channel in Chengdu, quickly forming a consumption atmosphere. However, Meishan, one of Tianhao Chen's model markets, did not focus on the supermarket channel but chose to start with banquets, thereby driving consumption in the catering channel. When operating the catering channel, Tianhao Chen advocated flat pricing, with a unified retail price across the Meishan market.

Seizing Opportunity Points to Enter the Market

Since 2011, the Meishan market had formed a "two-tiger battle" between Wuliangchun and Honghua Lang. Last year, Langjiu withdrew its Meishan office for certain reasons, leaving an opportunity for Tianhao Chen to enter the Meishan market in March this year.

When Tianhao Chen began laying out the Meishan market, Luzhou Laojiao Tequ and its Bainian series were aggressively promoting with "buy one case get four bottles" and "buy one get one free" promotions. After entering summer, baijiu entered a consumption off-season, and the market efforts of Luzhou Laojiao Tequ and Bainian series weakened. Tianhao Chen then launched intensive market promotion activities in summer. Tianhao Chen's efforts directly dropped the prices of Luzhou Laojiao Tequ and Bainian series from over 200 yuan to over 100 yuan.

Flat Pricing in the Catering Channel

It is reported that unlike traditional methods focusing on distribution, display, and pricing, Tianhao Chen first focused on distribution; only by letting consumers see the product first can the later market operation effects be maximized.

First, while other manufacturers had not yet focused on terminal displays, Tianhao Chen began large-scale empty box and empty case displays in street-facing shops, covering about 130 shops.

Second, after completing displays, they entered restaurants to let consumers taste Tianhao Chen for free.

At the same time, they conducted tastings at famous liquor stores.

Finally, after consumers learned about the quality, they began promotions in restaurants.

Due to the overall low consumption activity in Meishan, coupled with the adjustment in the baijiu industry, restaurants were also greatly affected. Therefore, Tianhao Chen made the catering channel a priority, unifying catering channel prices with market terminal prices. The price of Tianhao Chen bought in restaurants was the same as in other channels, thus boosting sales.

Intensive Promotions to Stabilize the Foundation

Promotion 1: Starting in June, Tianhao Chen launched a "Drink All You Want" activity in restaurants. Any customer consuming 3-10 tables at a restaurant who buys one case of Tianhao Chen products gets unlimited drinks for the main meal that day.

Promotion 2: Consumers who buy a case themselves can take it home, and the Tianhao Chen consumed in restaurants is paid for by Shuijingfang Company.

To date, Tianhao Chen has conducted about 400 banquet activities in Meishan, from initial free tastings to the current "Drink All You Want" activity. These intensive promotions have ensured that 100,000 people have tasted Tianhao Chen products.

Promotion 3: A four-star hotel in Meishan, Dongpo Celebrity Hotel, even made a large billboard for Tianhao Chen for free, leveraging Tianhao Chen's consumption base in the Meishan market to promote the hotel's own banquets. This billboard was placed in the central location of Meishan.

Baijiu FMCG Model: Tianhao Chen's Sales Promotion in Meishan

  • Baijiu FMCG Model: Jingjiu Case

Jingjiu is the earliest and closest enterprise to the FMCG model in the liquor industry. In the first half of this year, Jingjiu maintained an 18% sales growth rate despite the industry downturn, with annual sales exceeding 6 billion yuan. Analyzing Jingjiu's marketing model has significant reference value for many enterprises developing mid-to-low-end circulating baijiu products.

Jingjiu has long established a high-quality health liquor brand image through advertising on CCTV. Jingjiu established the marketing concept and brand connotation of "healthy drinking," inviting famous crosstalk actor Jiang Kun to film the classic advertisement "Jingjiu is good, but don't overindulge," whose friendly and concerned slogan left a deep impression on audiences.

Looking at Jingjiu from Five Aspects

From a product positioning perspective, Jingjiu chose the segmented product positioning of health liquor.

From a product quality perspective, good product quality is the foundation and guarantee for long-term brand sustainability.

From a price perspective, Jingpai Company has always followed the people-friendly route of health liquor that ordinary people can afford. Since 1996, Jingjiu has successively launched 125ml and 250ml small bottles, and since then, small bottles have become popular nationwide.

From a channel perspective, Jingjiu does not follow the trend of the "disk-in-disk model," abandoning A-class high-end restaurants. Through cooperation between sales teams and distributors, it has occupied a large number of B-class and C-class small catering terminals.

From a promotion perspective, various advertisements, gifts, tastings, and other promotional activities are adopted.

Jingjiu's Three-Level Marketing Management System and Information System

  1. To effectively manage the nationwide channel network covering urban and rural areas, Jingjiu established a three-level marketing management model consisting of provincial marketing managers, prefecture-level marketing managers, and county-level sales representatives, as well as a harmonious win-win cooperation model between manufacturers and distributors. It built a marketing team of up to 8,000 people to help distributors do market and channel management.
  2. Jingjiu has built four marketing management systems: market investment system, marketing investment management system, goods flow management system, and sales housekeeper system. Among them, the market investment system monitors Jingpai Company's brand marketing and promotion expenses, while the marketing investment system monitors sales managers and representatives helping distributors with market and channel work. The goods flow management system allows Jingpai headquarters to monitor distributor sales and inventory at any time, and the sales housekeeper system allows Jingpai headquarters to monitor marketing managers and sales representatives sent nationwide.
  3. Jingpai Company will also change the practice of having only one distributor in prefecture-level cities, recruiting several new distributors in counties under large prefecture-level cities; at the same time, it will promote Maopu Kuqiao liquor in five key provincial markets nationwide: Hubei, Henan, Fujian, Zhejiang, and Guangdong.

Jingjiu Online and Offline Distribution and Promotion

Promotion 1: Jingjiu's main sales channels are restaurants and supermarkets. On July 9 this year, Jingpai Company's four-yearly summer distribution marketing activity kicked off simultaneously in twelve key cities nationwide, including Guangzhou, Hangzhou, Changsha, and Wenzhou. Sales personnel from Jingpai headquarters, along with local sales representatives and distributor sales personnel, visited customers and distributed products in batches and by region, mainly to restaurants. Products distributed included Blue Label Shenrong Jingjiu and others.

Promotion 2: Jingjiu's sales teams in each city are divided into many small groups with clear job responsibilities, each equipped with two dedicated vehicles. In addition to product displays and promotional posters in restaurants and retail stores, the distribution activities also included gifts, tastings, and other promotional activities.

Promotion 3: In addition to offline distribution and promotion, Jingpai Company has also begun developing online e-commerce channels and promotions. During the 2013 "Double 11" festival, Jingpai Company obtained a ticket to the Tmall liquor main venue and also displayed and promoted in the food and beverage venues.

Promotion 4: Jingjiu also proactively conducted joint promotions with well-known enterprises in Hubei Province, Liangpin Puzi and Zhou Hei Ya, achieving brand effect expansion and traffic sharing through centralized page displays and traffic guidance.

Baijiu FMCG Model: Jingjiu Case

How to Do "FMCG-like" Operations

  • How Can Baijiu Adopt an FMCG Operation Model Suitable for Itself?

With the tightening of the "three public consumption" policy, baijiu is gradually returning to rationality, and channels are continuously sinking. The attributes of FMCG are also fully reflected. However, compared with ordinary FMCG, baijiu has composite attributes such as scarcity and luxury, and it carries the attribute of Chinese culture.

Through analysis of successful FMCG products like Coca-Cola and JDB, as well as baijiu products at the forefront of the industry, we see that baijiu's advantages in FMCG are no high logistics pressure and no shelf-life pressure. But its disadvantages in FMCG are also obvious: baijiu's weakness in deep distribution is a soft spot. Deep distribution seems to be the patent of FMCG, represented by Coca-Cola and Master Kong, which deeply cultivate the market. The liquor industry mostly still uses the old model—customer agency wholesale model.

In this regard, marketing expert Fang Gang believes that baijiu should learn from FMCG's intensive cultivation and sinking, including channel sinking.

  1. Mid-to-low-end products adopt intensive distribution or distribution systems, sinking from prefecture-level agents to county-level agents, and from county-level agents to township-level agents or distributors.
  2. Product sinking, management sinking, and expense sinking. Strengthen terminal sales representatives and distribution sales representatives, comprehensively establishing deep distribution and deep co-marketing models.
  3. For baijiu brands under 300 yuan, implement channel flattening and increase distribution rate. Intensive cultivation and maximizing distribution rate are basic requirements for FMCG.
  4. Achieve detailed channel segmentation. In the context of deep industry adjustment, channel reform, and terminal reform, channel segmentation is necessary.

Additionally, Fang Gang stated that baijiu is too "floating" and lacks the solid foundation of FMCG! Baijiu must undergo several trials to learn from FMCG tactics:

  1. Price war baptism. High profits will make baijiu obese and unable to move fast!
  2. Raising the threshold. Bad money exits, good money competes.
  3. Improve sales management level, rather than focusing on so-called planning, packaging, and advertising. Without a solid marketing team and systematic sales management foundation, attempting to take the fast-moving route is impossible.

How Can Baijiu Adopt an FMCG Operation Model Suitable for Itself?

Editor's Note: Making Baijiu "Fast"

Baijiu has the mass attributes of ordinary FMCG, but also its own special FMCG attributes: cultural connotation, resource scarcity, unrestricted logistics, etc., constituting baijiu's special FMCG nature. As baijiu gradually returns to rationality and channels begin to sink deeply, the "FMCG-like" operation model has become a choice for enterprises and distributors. Especially after Wahaha entered the baijiu industry, discussions on how to apply the FMCG model to baijiu have increased. The editor believes that baijiu should learn from FMCG in deep channel sinking, strive to achieve deep distribution, learn from FMCG experience, and innovate. For baijiu products of different levels, adopt different distribution models to truly make baijiu "fast."

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