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The adjustment in the baijiu industry continues, and the transformation of liquor enterprises and distributors is intensifying. Especially under the influence of the “three public consumption” policy, major liquor enterprises and distributors are considering new strategies to survive the “winter”!
The main approaches of major liquor enterprises or distributors are reflected in two aspects:
First, regional strong liquor enterprises represented by Anhui Seed Liquor and Xuan Liquor continue to adopt the strategy of “focusing on strategic single products and intensively cultivating regional markets.” Seed Liquor focuses its main resources on the “single product with sales exceeding 100 million bottles” – the Rouhe and Xianghe series of Seed Liquor single products. Xuan Liquor focuses on the single product Xuan Liquor Five-Year in some regional markets in Anhui. Both have achieved significant success, with sales rapidly increasing!
Second, major distributors represented by Yinji and Huazhi Liquor Store are optimizing their product structures to resist the “winter.” Yinji Group, the former largest distributor of Wuliangye, launched the Guizhou Yaxi Cellar series, aiming to fill the mid-to-low price segment and flatten existing channels to third- and fourth-tier cities to support the sales strategy of mid-to-low-end products. In addition, Huazhi Liquor Store has accelerated its transformation pace. It signed a 30-year long-term cooperation agreement with Constellation Brands, the largest U.S. manufacturer, to jointly develop the business of “Montafi,” the world’s No.1 wine brand, in China. This is another move by Huazhi Liquor Store in the imported wine field, following its earlier partnership with a world wine master to launch the “Allen’s Choice · Wine” brand on JD.com.
We can see that the above cases of liquor enterprises and distributors have attracted the attention of industry insiders and outsiders, especially distributors who want to transform. Everyone is discussing: during the industry adjustment period, which model should be chosen to achieve success?
Against this backdrop, many single-product distributors have transformed into multi-product distributors. This is also related to the difficulties encountered by single-product distributors. On the one hand, due to the intense market competition, distributors are dissatisfied with the strong control from upstream enterprises and lack confidence in manufacturers. On the other hand, some single-product distributors seek their own development and hope to break free from the restrictions imposed by upstream manufacturers in single-product operations.
However, the author believes that in such an industry environment, whether single-product distributors should enrich their product lines and move from single to multiple products depends on their own specific circumstances!
The author believes that every distributor will enrich their product structure. Many distributors who originally only handled single products have achieved great success. But in the current industry downturn, with difficult markets and media propaganda of “multi-product salvation,” distributors have become confused and their strategies chaotic, leading them to enrich product lines one after another. This is the result of market pressure, and distributors have completely failed to consider their own specific situations.
In such cases, single-product distributors need to examine the following points: Has the current product or brand accumulated successful experience and a mature, complete operation management system? Has the market been fully penetrated? Is the relationship with the manufacturer stable enough? Are the current channel systems and personal connections solid enough to be fully utilized at any time?
If channels do not match, organizational structure and division of labor are unclear, and personnel cannot keep up, the more brands, the faster the death. Conversely, single-product distributors who can match their own resources may do better! Some people say, look at Kangshifu and Wahaha – aren’t they all multi-category promoters with prosperous families? These people only see the today of well-known enterprises, forgetting that their yesterday was built product by product. Unless invested by God, no enterprise is born big. Big enterprises all grow from small ones. When you are still weak, the key to enterprise growth and transformation is only one: do subtraction. Focus! Focus! Focus again! Focus and specialization, create a star single product, establish a professional image with a single product, from specialization to strength, from strength to size – this is the only correct path. If an enterprise has many products but not refined, business scattered but not strong, and resources cannot be concentrated on one product and one market, then it will be weak everywhere in the market. The result will inevitably be: if the east is not bright, the west will definitely not be bright either. It seems the products are dazzling, but in fact it is all false bustle. The strategic “star” product that represents the enterprise and on which the enterprise relies for survival has never been established.
Secondly, the survival space for single-product distributors is still large. Although multi-product distribution seems to have more market opportunities, in essence, the advantages of single-product distributors still exist, reflected in the following two points:
The industry is changing, and the traditional manufacturer-distributor relationship is also changing. In the traditional manufacturer relationship, manufacturers always occupy an absolute dominant position. As the industry changes and enters a deep adjustment stage, although production enterprises are still strong, we can see that the relationship between distributors and manufacturers is also changing. Production enterprises have become more restrained than before. More liquor enterprises are also trying to form a community of interests with distributors. Many industry insiders in the baijiu industry generally believe that the relationship between production enterprises and distributors will change with changes in consumer demand. In the future, distributors will become the owners of product discourse power, not production enterprises.
Through past service experience, we found that about 20% of manufacturers favor distributors conducting multi-brand operations, 10% hold an indifferent attitude, and 70% oppose it. In this round of industry adjustment, regional strong manufacturers are, to a certain extent, willing to be more attentive and caring in seeking single-product distributors, willing to invest great effort to support them and develop together. Because single-product distributors are actually the distributors who can best protect the brand.
In fact, the so-called single-product distributor does not literally mean a distributor who only operates one single product; it generally refers to a distributor whose product line is relatively single, with only one single product as the main sales or main profit product.
As we all know, the brand has a great impact on distributors, especially for single-product distributors. Single-product distributors with famous liquor resources or regional best-selling brands have a relatively comfortable life and good development prospects; however, single-product distributors with only third- or fourth-tier brands have a hard time.
So under the new situation, how can single-product distributors seek development?
A reasonable operation approach is the best way to highlight the core competitiveness of single-product distributors. This is also an important means to enhance channel protection and stabilize sales profits.
Brand is the symbol of product value recognition and identification. The extent to which brand propositions can cover regions and groups determines the scale a product can achieve. Therefore, single-product distributors must choose brands with high visibility to cooperate with. For example, many enterprises will open brand image stores to endow their products with brand connotation, while extending downward to distributors at all levels. In this way, the vitality of products and brands complement each other, gaining very good reputation and consumer discourse power in the market.
Operate multiple products under the same brand, forming “point-to-face.” This turns their “point profit” into “surface profit” and maximizes their own profits. For example, if the brand is widely recognized by consumers for a certain single product, then on this basis, we can acquire other brands and operate them by flavor type, channel, and price!
Strive to broaden the breadth and depth of channels. Single-product distributors easily stay on single-channel operations, and product sales volume depends on the breadth and depth of that channel. Therefore, to increase sales and stabilize sales, single-product distributors must work hard on channels.
Regarding the creation of a big single product. The failure to make a single product big is the direct reason why distributors cannot grow. This requires not only the efforts of distributors but also strong support from manufacturers, with both parties cooperating. There is a common phenomenon: many powerful distributors have few products, while weaker distributors or those facing transformation have many products. Walking into the showrooms and warehouses of small and medium distributors, the variety of products is dazzling, ranging from dozens to hundreds, even cross-industry products. A product may sell only hundreds of thousands or tens of thousands a year, and in its regional market, it cannot even be considered as fighting for the market or building a brand, with no status. So I say, if the single product is not big, the problem is big!
How big is a big single product? The market decides. How big should a product be? There are at least two standards: first, it must be among the top three in the market. Being first in the market share of this category is of course the best. If it is second or third, the gap with the first should not be too large, should be comparable, and the sales growth trend in the past three years should be obvious and steady. Second, the category market must be large enough and close to maturity.
To create a big single product, it needs to be ignited. Creating momentum and promotion are two important means.
Large distributors and enterprises can create momentum by arousing media and public interest, such as advertising, press conferences, major events, social controversies, etc. Small and medium enterprises may not have the resources or ability to create momentum, but they can implement explosive distribution (with certain risks, easy to overstock) – return goods – terminal promotion. It should be noted that the critical point of explosive distribution is 30% terminal coverage rate. Once this critical point is reached, natural coverage will form without distribution. And terminal promotion methods are through wonderful promotional activities, making terminal bosses and consumers “unforgettable,” thus allowing the big single product to enter the list of 10 big single products that consumers remember without thinking.
- Expansion and coverage of other markets. A single brand often concentrates on a certain price band, and both market capacity and consumer demand are quite limited. Therefore, single-product distributors should expand outward to other markets. There is a premise: when the local market capacity and consumer demand are solidified.
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