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I. A channel overlord not only accounts for a very considerable proportion of total local market sales but also controls more product and brand resources. In channel operations, terminal operations, and business rules, they have an unspoken voice and irreplaceable service value, even able to set and decide the rules of the game, clearly occupying a dominant position in the channel.
Case: Shanghai Jiesheng Wine Industry, for example, relies on professional deep cultivation of the catering channel, becoming one of the few leading trading companies in Shanghai's wine industry catering channel. Saying the entire Pudong New Area's catering channel is their domain might be a stretch, but claiming they hold half the market is not an exaggeration. From first-tier brands like Moutai, Wuliangye, and Jiannanchun, to old famous liquors like Luzhou Laojiao and Quanxing series; from local strong brands like Suntory and Shikumen to the rising Budweiser and Huangxuan Dry Red, Jiesheng's products can be seen in hotels large and small across Shanghai.
Case: Beijing Chaopi relies on professional operation of supermarkets and circulation channels, generating over 4 billion yuan in sales. According to a Beijing distributor friend: If Chaopi withdrew their distributed products from the market, retail terminals in Beijing would have 60% of their shelves empty—regardless of the actual situation, this shows Chaopi's influence on the Beijing market. Beijing Chaopi Trading Co., Ltd. is the largest FMCG wholesale agency in North China, mainly dealing in food, beverages, daily cosmetics, and washing products. Chaopi has established cooperative relationships with over 300 famous domestic and international manufacturers, including Nestlé, Moutai, Wuliangye, Jiannanchun, Arawana, Lotte, Wahaha, and Nivea, and has become the general distributor, general agent, or largest distributor for over 70 of them in Beijing. Its network covers over 140 large and medium-sized retail chain enterprises in Beijing (including over 1,000 branches of chain supermarkets, hypermarkets, and department stores) and over 6,000 small shops, and has established a sales network centered on Beijing, covering the Bohai Rim region.
II. A channel overlord is not necessarily a regional king with multi-channel operations, but they absolutely have a certain say in a specific type of channel. A regional king may have absolute say in a certain regional market, but a channel overlord is not necessarily limited by territory; they can even be a leader in a certain type of channel nationwide.
For example, in the home appliance industry, Gome and Suning can be called channel overlords in the home appliance chain sector.
Case: The Growth Path of a County-Level Distributor.
Brands and networks are the fulcrum for wine distributors to establish themselves. If the fulcrum is solid, even a county-level distributor can dominate the province or even the whole country.
Ten years ago, Qingdao Yixingyuan Trading Co., Ltd. was restructured from Laoshan Sugar and Wine Company. From the beginning, Yixingyuan abandoned the familiar agency and distribution path and opened a new path of building its own brands. At the same time, they set aside traditional channels and focused on supermarkets. After ten years of hard work, they achieved success. Today, Yixingyuan not only occupies the supermarket network in Qingdao but also radiates to the entire Shandong province, setting up six overseas offices in Jinan, Zibo, Dongying, Weifang, Linyi, Yantai, and Weihai. Now, they have expanded beyond Shandong, entering markets like Shenyang and Dalian. With the development of Yixingyuan, more markets will be incorporated in the future.
1. Brand Development, Closely Linked to Supermarkets
At its inception, Yixingyuan established a development strategy of basing itself in Qingdao, radiating to Shandong, and focusing on supermarkets. The company's product development fully follows this guiding principle. Therefore, the products they develop first meet the consumption characteristics of the entire Shandong province while also catering to supermarket consumption features. Adhering to this philosophy, they successfully carved out a unique development path.
2. Rooted in the Region, Developing New Products
Yixingyuan's general manager, Li Bo, was previously the head of the liquor department at Laoshan Sugar and Wine Company, with connections to major liquor companies and a good network. In just a few years, they successfully developed brands such as Moutai Town Guibin Banquet, Moutai Jiachang Fu, and Langyatai Yangfan Qingdao. At the same time, Moutai Hanjiang Liquor has just been launched, and Kongfujia Vintage Liquor is about to be released. By leveraging national and local well-known brands, they formed a community of own brands, perfecting a product structure spanning high, medium, and low grades.
Qingdao consumers' loyalty to local brands is rare nationwide. In such a market environment, Yixingyuan has managed to develop foreign brands successfully one after another, demonstrating their product development prowess. Not only have they successfully introduced multiple external brands into Qingdao's supermarket channels, but their sales also rank among the top in major supermarkets.
Shandong hotels favor low-alcohol liquor, but family consumption and gifting prefer high-alcohol liquor. These two segments are precisely the focus of supermarkets. After extensive market research, Yixingyuan established a route of promoting high-alcohol liquor. In product development, they first choose well-known brands, creating a pattern where national and local brands complement each other. In product creation, they avoid the common mindset of overemphasizing packaging while neglecting quality, putting liquor quality first. For each product developed, they conduct thorough market research, not only having company executives taste it but also inviting consumers to experience it, ensuring the product meets consumer preferences. In promotion, they downplay advertising and emphasize experiential consumption, using free tastings and buy-one-get-one offers, leveraging excellent quality and good taste to encourage word-of-mouth. A series of effective measures ensures the success of their product development.
3. Agency for Well-Known Brands, Perfecting Product Structure
On the basis of own brands, Yixingyuan also acts as an agent for brands with high visibility and operational space to perfect and enrich the product structure.
Once, Wuliangye's Bai Niao Chao Feng was not performing well in the Shandong market. Later, the brand operator approached Yixingyuan to be the general agent for Shandong. At that time, products under Wuliangye like Bainian Laodian, Zun Jiu, and Wangzhe Fengfan were all active in the Shandong market, making it difficult to operate this brand. After careful consideration, Yixingyuan resolutely took on Bai Niao Chao Feng and, using the supermarket network foundation built by its own brands, quickly launched promotional activities across the province. Through buy-one-get-one offers and promoter promotions, they leveraged the established network advantage to achieve a 60% sales increase in just five months, gradually forming a competitive stance against other hot-selling brands.
4. Network Construction, Radiating in All Directions
Yixingyuan established a strategy of using brands to drive network construction, opening the doors of supermarkets with products that cater to supermarket consumption characteristics, and quickly expanding from Qingdao to the entire Shandong province. Since 2000, Yixingyuan has targeted the emerging supermarket hypermarkets, using the pure quality and mid-to-low-priced Guibin Banquet as the vanguard to enter supermarkets, creating a whirlwind of free tastings and buy-one-get-one offers. Within six months, led by Guibin Banquet, Yixingyuan's series products successfully entered over 80 supermarkets in Qingdao and surrounding areas, taking the first step to success. Subsequently, Yixingyuan focused on stimulating consumption, setting up permanent full-time promoters in each supermarket, conducting face-to-face sales, and launching buy-one-get-one activities, with very obvious results. Not only did product influence rise, but the company's visibility also greatly improved. Over the years, Yixingyuan's products have almost always ranked among the top in major supermarkets, with monthly sales of a single product in a single Carrefour store reaching 190,000 yuan. Starting in 2002, Yixingyuan gradually increased development efforts in other Shandong markets, replicating the Qingdao model, using Guibin Banquet to open the way and other series brands to follow. In over a year, they occupied Jinan, Zibo, Dongying, Weifang, Linyi, Yantai, and Weihai, seizing over 200 hypermarket outlets. After steady development across Shandong, Yixingyuan began its journey to other provinces. Starting last June, they successively established offices in Dalian and Shenyang, beginning to attack local large hypermarkets. Li Bo said, "This is an experiment. Once successful, we will march into larger markets."
5. Management: "Central" Monitoring, "Local" Autonomy.
With over 200 supermarkets spread across the province, Yixingyuan's battle line has been stretched many times over. How to implement effective management is key to the company's healthy development. Yixingyuan has set up six overseas offices, adopting a regional manager responsibility system. The office manager is the local highest "official," fully responsible for the operation and management of all supermarkets in the jurisdiction. The company fully delegates authority while setting tasks and goals for assessment. Each regional manager leads a team to charge forward, implementing a management model where regional managers, salespeople, and promoters are interlocked, benefits are bundled, and levels are layered, tightly binding people in the same region together to form strong cohesion. Therefore, each office is a highly effective team. Yixingyuan does an excellent job in logistics and warehouse management. Each office has a warehouse; the company delivers goods to the office warehouse, and then the office completes distribution to supermarkets in its jurisdiction. Yixingyuan's warehouse management is very strict, strengthening employee responsibility while establishing reward and punishment systems: lower breakage rates earn rewards, higher rates incur penalties. Under this management, Yixingyuan's product breakage rate is controlled; generally, companies have a breakage rate of about 5%, but Yixingyuan has consistently kept it at 1%–2%. Through successful replication of the Qingdao market and effective management of hypermarkets, Yixingyuan's supermarket network construction is steady and fast, with sales performance ranking among the top for similar products. By seizing brand and network construction, Yixingyuan has developed two "fast legs" for rapid development. General Manager Li Bo told reporters, "We use brand building to drive supermarket network development, and the expansion of the supermarket network promotes and optimizes the brand building path. Now, we are developing smoothly in both aspects, and company performance has grown nearly tenfold compared to ten years ago."
III. A channel overlord's products must not be focused solely on one brand or category; otherwise, it wastes channel resources and makes it easy for competitors to find opportunities to dismantle them. A channel overlord must integrate the types of channels served and provide comprehensive services to ensure their dominant position remains unshaken.
If a distributor cannot provide comprehensive services in a certain channel, they not only face weakened channel control but also may suffer from channel singularity, leading to declining profits.
Case: Lao Cui is a liquor distributor in Changzhi, a prefecture-level city in Shanxi, with channels concentrated in hotels. Recently, Lao Cui sighs every day when looking at sales reports because after deducting business expenses, warehousing, logistics, and store entry fees, there is little left, and some hotels even show negative numbers. Frustrated, Lao Cui suddenly thought of his days farming in the countryside: cornfields could also grow peanuts, potatoes, radishes, etc., which not only didn't affect the corn harvest but also increased income at low cost—this is the "intercropping" commonly used by farmers. Connecting this to his company's situation, wasn't it just like farming? Lao Cui began to organize his thoughts, subdividing the entire channel. He found that in his buyout stores, besides liquor, wine, red wine, beer, dairy products, and beverages were all supplied by others, and after the strict drunk-driving checks, business was actually good. Lao Cui then looked at other markets and saw many liquor distributors seeking beverage products, all taking the "intercropping" route. So, with a friend's introduction, Lao Cui found several products to represent, quickly distributed them to the market, and within just one month, he turned the situation around.
"Intercropping" is a common farming practice: in the same field, based on the growth habits of different crops and the principle that different varieties do not compete for fertilizer or sunlight, different varieties are "intercropped" to increase yield and income. This principle is well-suited to changing the operational difficulties of single-channel distributors. Recently, due to factors such as liquor price increases and strict drunk-driving checks, the catering channel, once a fertile field, has shown reduced yields and deficits. For a distributor like Lao Cui, who has operated liquor for many years, his network, personnel, warehousing, logistics, and customer relationship maintenance are all sound. The fundamental problem is finding comprehensive products to serve the channel. As long as suitable products are found and a few more staff added, the existing channel can be activated. It is worth emphasizing that product selection should seek differentiation; do not do products already mature in the local market. Instead, do products that are rare and valuable, and be the "leader" in the market. The key role of intercropping management is to solve category management. Market research shows that poor sales are not due to channel issues or lack of team combat effectiveness; the root cause is unresolved product issues, or unresolved basic issues. Intercropping management solves the integration of category management and channel resources, and its greatest value lies in maximizing the marginal effect of the channel. From this perspective, liquor distributors introducing beverages, food, or services that align with channel needs can maximize channel benefits.
IV. To achieve the path of a channel overlord, not only are advanced marketing ideas and business strategies needed, but also the drive of opportunity, resources, and model. With such fierce competition today, leaders in various channels have basically taken shape. To establish your channel position in this environment, you must seize opportunities, build models, integrate resources, and carve out a differentiated competitive path to have a chance to win.
Case: Xiqingfang Wedding Wine and Candy Specialty Chain
Zhang Zhichun, general manager of Hefei Xiqingfang, is an outsider. When creating Xiqingfang, he had limited financial resources and limited connections. He focused on a market others were unwilling to invest in: the wedding banquet channel became his core entry point. To do well in wedding liquor, he first collected resources from hotels, then from wedding photography studios, then from wedding planning companies, and published information on websites. In just one year, Zhang Zhichun achieved that in the Hefei market, any newlywed couple knew that buying wine at Xiqingfang was convenient, reliable, cheap, and service-oriented. To date, daily sales of liquor products from his stores are around 100,000 yuan. Zhang Zhichun said that due to effective preliminary work, he is now very relaxed. To facilitate delivery, Xiqingfang has opened three stores in Hefei, and in his plan, five stores will be enough. Zhang Zhichun is very clear that his target is the 50,000 couples who marry in Hefei each year, so attracting their attention is what he focuses on.
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