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Entering the bulk goods section of a Fuzhou hypermarket, you'll see three major bulk goods counters: “Hsu Fu Chi,” “Changsheng,” and “Strong Group.” Many people can't help but ask: which manufacturer is “Changsheng”? In fact, “Changsheng” is the own retail brand of Fuzhou Changsheng Food Company. The products sold include candies, jellies, preserved fruits, pastries, and more, sourced from dozens of manufacturers. These products are carefully selected from various manufacturers for their distinctive features and popularity, and are sold uniformly under the “Changsheng” brand at different price points. Their unified CI (Corporate Identity) bulk goods counters have covered all local and suburban hypermarkets, including Walmart, Trust-Mart, Century Mart, Yonghui, and New Huadu, with over a hundred dedicated counters.

The operational features and advantages of “Changsheng” are as follows: first, a rich variety offers consumers the widest choice; second, rapid response ensures trendy and novel products hit the shelves promptly; third, product structure and items are adjusted seasonally to maximize consumer satisfaction; fourth, proactive control over pricing creates higher gross margins; fifth, the leverage of over a hundred counters secures exceptional support from upstream manufacturers.

The success of “Changsheng” is mainly built on creating a private brand. This is also common in the baijiu (Chinese liquor) industry, such as Wuliangye's Jinliufu and Jinshang Tianhua.

The golden decade of the baijiu industry gave rise to a large number of distributors, breaking the potential balance between many baijiu manufacturers and distributors. Because private brands can bring distributors more profits and win customer loyalty, they are increasingly favored by distributors.

Similar to the food industry's approach to building private brands, distributors favor creating private brands mainly for the following purposes:

  1. Successfully transforming from a mere distributor to a brand operator, thereby enhancing the distributor's corporate brand value;
  2. Under the integrated model of strategic alliance between manufacturers and distributors, and the resource integration model driven by brand cluster strategy, distributors building a brand is a win-win for both parties. Distributors also undertake functions such as brand strategy promotion and market layout planning, ultimately achieving a win-win situation.
  3. By building a private brand, distributors can construct an influential marketing value chain with discourse control. Upstream, they can influence manufacturers' key resources; downstream, they can control the distribution system and terminal networks. More importantly, distributors can establish their own core resources, network resources, and marketing team resources in the vast market through private brands.

So how can baijiu distributors build private brands?

I. Ways to Build Private Brands There are mainly three ways: one is to establish their own retail brand like “Changsheng”; the second is to customize products through OEM to gain pricing power; the third is to produce and process themselves, which requires more resources and is more difficult for distributors. Generally, baijiu companies choose the first two models to build private brands.

II. Avoiding Risks in Building Private Brands On one hand, a distributor's private brand must avoid direct conflict with the manufacturer's leading brand; otherwise, the private brand will have no dominant advantage in terms of channels and pricing policies, or even no advantage at all. On the other hand, distributors should negotiate with suppliers on issues such as manufacturer policies and brand usage restrictions to prevent unilateral changes by the manufacturer later, which could increase costs.

III. Suggestions for Building Private Brands First: Control product quality. Quality is one of the core connotations of a private brand, directly related to the distributor's sales volume and brand image. When cultivating a private brand, distributors must put quality first and not lower quality standards in pursuit of low prices. If a distributor chooses to cooperate with a general manufacturer, they must clearly define quality standards in the product order contract and strictly implement them; or jointly establish a quality monitoring system with the other party, sending their own quality inspection team to the production site for on-site inspection and supervision to prevent low-quality products from entering the market.

Before that, distributors should have an evaluation standard for the strength of the baijiu manufacturing enterprise:

  • The quality of the distillery's liquor body. This is the core of future brand development, and distributors must have professional personnel for tasting and testing;
  • The technical skill of the brewer. The brewer must not only know how to brew good liquor but also understand “shared joy,” capturing consumers' taste needs. Here, the brewer belongs to the manufacturer; capable distributors can also find one or two brewers as quality inspection consultants, specializing in product tasting;
  • Public feedback. Conduct surveys and evaluations among consumers in the main sales areas of the production enterprise.

Of course, capable distributors prefer to cooperate with leading manufacturers in the industry, relying on their established quality systems to ensure the quality of OEM products, such as Huaze choosing Jinliufu for OEM, etc.

Therefore, some distributors who successfully build private brands succeed because they give up short-term interests and lay a solid foundation for the long-term competitiveness of their private brands—this is indeed a wise move.

Second: Do market positioning and channel integration. Private brands bring many benefits to distributors, but they are not achieved overnight. It is necessary to plan several important issues from a long-term and systematic perspective, including: What is the positioning of the private brand? Which categories are suitable for private brands? How many private brands should there be? This requires detailed market research on the main regions where the private brand will operate, seizing market opportunities. Only then can we clarify what kind of brand and what price points we should develop.

For example, Watsons' successful experience can serve as a reference. In terms of positioning, Watsons targets the white-collar demographic, capitalizing on modern people's needs for health and beauty, positioning its brand as “Health and Beauty,” featuring quality and affordability, and developing, customizing, and selling private brand products. In terms of categories, the health theme focuses on health supplements and vitamins, while the beauty theme includes cosmetics and daily care series. In terms of product expansion, Watsons analyzes sales data, grasps consumer preferences, selects promising items for a 2-3 year brand blueprint, then selects qualified manufacturers through competition to produce and supply according to private brand standards. In this way, the number of private brand products grew from few to many and then to scale. Over 8 years, Watsons developed over 2,000 private brand products, accounting for 20% of the total in-store items, 34% of market share, and 15% of total sales.

After market positioning and product determination, integrate existing channel networks, select channels suitable for the private brand, and appropriately expand related channels. This is a necessary guarantee for building a private brand. Integrate channels, occupy terminals, form a broad channel system, expand sales scale, and accumulate and introduce development funds. Push products to the market through a huge sales network. In this regard, retail enterprises can fully utilize opportunities in the environment.

Third: Packaging that suits the market without losing differentiation. The packaging of private brand baijiu, including the design of the bottle and outer packaging, should not only match its own style but also be recognized by the market and align with the product's price positioning. Otherwise, pursuing only the quality and novelty of packaging while ignoring costs would be putting the cart before the horse.

Fourth: Prudent brand operation techniques. Generally, distributors directly extend their brand to private label products, fully leveraging the distributor's existing brand awareness to drive private brand sales. However, at different stages, distributors should consider specific circumstances to choose the optimal brand strategy. During the introduction and growth stages of a private brand, there are many uncertainties. If the distributor immediately uses its own brand to sell private label products, the risk is high. For example, whether the quality of products supplied by OEM enterprises is reliable, whether after-sales service is in place, and whether the distributor's brand image is sufficient to support consumer recognition of the product. At this time, adopting a new brand strategy is relatively more reasonable, as it facilitates market testing and experience accumulation.

Fifth: Efficient communication. As a new brand, even with the distributor's existing network channels, to attract consumers to buy private brand products, effective communication of brand information and strengthening communication with consumers are essential.

Since private brands are attached to the distributor's own brand, it is particularly important to establish the distributor's brand image through communication. For growing distributors, on one hand, they should vigorously increase visibility, using opportunities such as festivals, terminal store anniversaries, and new store openings to conduct large-scale themed promotional activities, expanding influence on consumers and enhancing reputation.

Sixth: Coordinate the relationship between retailers and suppliers. Many distributors, when their private brands just start to show promise, fail to handle the relationship with manufacturers properly, causing manufacturers to stop production, which greatly impacts the private brand. Therefore, for the supplier—the manufacturer—distributors should not overly squeeze them to highlight their private brand. Instead, they should adopt a cooperative and symbiotic approach, fully respecting the manufacturer's interests. In return, distributors will receive their support, obtain high-quality products at reasonable prices, and form a stable upstream and downstream value chain, which is highly beneficial for developing private brands. Otherwise, the situation may go in the opposite direction.

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