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1. Is choosing famous liquor brands always the best way out for growing distributors? Although first-tier famous brands have inherent brand advantages, their marketing models (from EMKT.com.cn) can easily put many developing regional distributors in an awkward dilemma.

During the golden decade of Chinese baijiu, many famous brands soared, so every distributor hoped to secure a famous brand. However, these brands are either scarce or in a high-speed development stage, and they often choose distributors based on strength. If your resources, capital, relationships, or network advantages are not favored by these manufacturers, it is generally not easy to distribute such brands. Alternatively, you might be caught by opportunistic recruitment, trapped by sub-brands or OEM products dressed in fancy coats, leaving some local distributors in a dilemma. Although famous brands have inherent brand momentum, their marketing methods are still largely hollow. If your market is not the manufacturer's core market, and if the manufacturer's flattening has not truly reached you, the manufacturer's support and attention to distributors are low, and distributors are mostly left to fend for themselves.

The growth path of famous liquor generally falls into three main models: first, advertising and PR in parallel to continuously add value to the brand; second, continuously raising prices of core leading products to enhance brand height and value; third, continuously developing products or brands to achieve scale and volume growth. During the golden decade of Chinese baijiu, baijiu became a hot commodity in many industries, and selling liquor became a trend for everyone. Chaos was rampant, from officials to enterprises, and even ordinary people with a bit of relationship resources joined this strange circle of selling liquor, becoming distributors or opening specialty stores. For these layman distributors, and even seasoned old distributors, the first choice of brand was naturally those influential famous brands, or brands with strong advertising and PR, or high-profit edge brands. When the market was good, product circulation was not greatly affected. Facing many manufacturers' inventory pressure and inaction, distributors did not feel much crisis, dreaming that storing liquor was like storing gold. More frighteningly, many manufacturers, in order to achieve scale growth, had sales personnel who, to complete tasks, would threaten to revoke distribution qualifications if customers did not pay or take inventory. Many distributors fell into a dilemma, especially after the end of 2012, when the economic and political environment underwent major changes, leaving many distributors in an awkward situation of life and death.

2. For a growing distributor, what kind of brand layout is relatively safe, stable, and sustainable? For distributors who aspire to develop but have not yet achieved a competitive advantage, there are essentially two paths. First, become a distributor of the leading products of these famous brands, achieve results through hard work to gain the manufacturer's favor, and gradually upgrade from a mistress to a wife, though this path is generally difficult. Second, leverage the geographical advantages of local brands to achieve rapid development and timely transformation. After doing well with local liquor, gradually expand the channel, which not only gains the attention of local liquor manufacturers but also attracts other manufacturers who want to enter this market. Therefore, allying with regional brands and growing with them is a good way to achieve your own development. Many distributors of Hui liquor (Anhui liquor) have ridden the fast track of rapid growth along with the rise of Hui liquor. However, these distributors who ally with regional liquor generally encounter bottlenecks at a certain stage, such as limited growth, and must transform by allying with external liquor and first- and second-tier famous brands to break through. For example, among Hui liquor distributors, there has not emerged a major or super distributor like Beijing Chaopi, Zhejiang Shangyuan, Yinji Trade, or Hebei Qiaoxi.

In the industry, there is a '211 brand layout' rule: the '2' means that a distributor must have a mainstream hard-currency brand that can create scale, circulate quickly, and build or consolidate the network. This brand is often a regional brand or a provincial strong brand. The first '1' means that the distributor should have a brand with differentiated competitive advantages, which can be a flavor-differentiated brand, such as Hengshui Laobaigan or Niulanshan Erguotou, or a different category brand, such as Jingjiu. The other '1' means that, if conditions permit, operate a first- or second-tier famous liquor brand. This '121' brand structure is not only the product layout model that best ensures stable profits, but also the safest, most stable, most competitive, and most sustainable brand structure.

Therefore, a regional distributor, especially one below the ten-million-yuan level, should follow a rule in brand distribution: in the early stage of company development, it is best to choose local regional brands for distribution. As scale, strength, network, and other comprehensive competitiveness gradually strengthen, then expand to include external first- and second-tier famous liquors to supplement, thereby combining product structure, consolidating the operating structure, and shaping commercial status.

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3. Why should distributors, whether in the initial development stage or with considerable scale, not detach from alliances with local regional brands in their brand layout? In the baijiu industry, for a distributor to truly become the regional king, it is generally inseparable from the foundation laid by local liquor or regional strong brands. Local liquor is relatively a product with regional cultural characteristics, strongly supported by the government, and manufacturers attach great importance to the manufacturer-distributor relationship. More valuably, the mass base is very deep, especially for mid-range and mid-to-low-end local liquor, which is the foundation of people's basic consumption and the survival basis of local distilleries. These mass-priced local liquors are generally not subject to sudden blows to enterprises or distributors due to external factors such as policy changes or economic adjustments.

In 2013, the industry environment was not very prosperous, and the era of 'three declines and one rise' arrived—prices declined, sales declined, profits declined, and marketing costs increased. As a result, many external brands began strategic contraction, focusing on their home markets. The reason is that many external brands relied on distributors' rough management. Under the drive of the macro environment and the strong attack of local brands, consumer market circulation slowed, sales declined, distributor profitability decreased, and they eventually exited, causing sales fluctuations in the region and leaving some captured markets unstable. The large-scale recruitment model faced unprecedented tests, and the low-price recruitment method of regional brands in remote markets will gradually fade. The market operation method of relying solely on distributor resources and casting a wide net but reaping little will have less and less survival space. The size and wealth of the base market will directly affect the quality of enterprise survival. Regional brands began to fully utilize local advantages, building base markets with production locations as the core, and adopting exclusive methods such as terminal blockade and channel monopoly to create channel barriers.

In industry changes, distributors are often the most confused. In the next few years, there will definitely be a process of survival of the fittest among liquor trading enterprises. In such a process, it is the right way to clarify and continuously highlight your own advantages. Even for regional strong trading enterprises that started with famous liquor, continuing to consolidate their regional dominance faces major choices and transformations. Famous liquor distributors have certain advantages in the high-end market in terms of resources, relationships, brands, and capital, but the only shortcoming is the lack of market-oriented operation. The comfortable days of 'the emperor's daughter doesn't worry about marriage' have encountered bottlenecks. Although famous liquors are all making efforts in the waist (mid-range) market, their price positioning is still high, and their marketing models are still hollow and difficult to implement. In contrast, regional strong brands in various regions have price positioning that closely follows mass consumption needs, and their deep distribution and channel sinking work is being promoted vigorously.

In this environment, the choice faced by famous liquor distributors is to distribute certain mid-to-high-priced local regional famous liquors, cooperate with manufacturers, implement deep distribution models in the region, and open up new channels to truly embark on the path of market-oriented operation. For mid-to-low-priced products, it is also necessary to achieve coverage through alliances with local regional brands, cultivate the market meticulously, develop steadily, and achieve deep control of the regional market to truly realize regional hegemony.

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