---
title: "The Transformation Pain of Traditional Liquor Distributors"
description: "Since 2012, the liquor industry has entered a new round of deep adjustment, and traditional large distributors are facing unprecedented challenges. This article analyzes the development and classification of traditional liquor distributors, the impact of market evolution, and the necessity of transformation."
author: "云酒"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-01-22"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-transformation-pain-of-traditional-liquor-distributors-7d29d1d1/"
markdown: "https://xinjignxiao.com/en/articles/the-transformation-pain-of-traditional-liquor-distributors-7d29d1d1.md"
original_source: "https://mp.weixin.qq.com/s/PuwzBSHqH5f2oy5Y2bdfwA"
translation: "https://xinjignxiao.com/zh/articles/%E4%BC%A0%E7%BB%9F%E7%99%BD%E9%85%92%E5%A4%A7%E5%95%86%E7%9A%84%E8%BD%AC%E5%9E%8B%E4%B9%8B%E7%97%9B-7d29d1d1.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-transformation-pain-of-traditional-liquor-distributors-7d29d1d1/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Transformation Pain of Traditional Liquor Distributors

> Since 2012, the liquor industry has entered a new round of deep adjustment, and traditional large distributors are facing unprecedented challenges. This article analyzes the development and classification of traditional liquor distributors, the impact of market evolution, and the necessity of transformation.

Source: Yunjiu Toutiao (ID: YJTT2016)
**Adjustment, reform, and transformation have become the main topics of discussion among traditional liquor distributors.**
*Zhang Jian is a senior researcher at Yunjiu·China Liquor Industry Brand Research Institute and chairman of Zhibangda Consulting; Zhang Xuan is a project director at Zhibangda Consulting.
Since 2012, the liquor industry ended its previous golden period of development and entered a new round of deep adjustment. Affected by various factors such as strategic adjustments by upstream manufacturers, changes in sales channels, and shifts in consumer habits, the role of traditional liquor distributors seems increasingly "awkward."
For example, first- and second-tier liquor companies are accelerating channel flattening, shrinking product lines, fully implementing big single-product strategies, and initiating price adjustments.
New forces in the liquor distribution sector are quickly seizing community resources. Vertically integrated super distributors like Huazhi Liquor Store, Jiuxian.com, and 1919 are leveraging their professional expertise, networks, and capital advantages to expand their offline chain store layouts.
Industry giants such as Alibaba and JD.com are using their internet and capital advantages to accelerate the layout of new retail channels for liquor. The rise of content e-commerce platforms like Douyin, live streaming, and Xiaohongshu is rapidly innovating sales channels.
With the upgrading of consumption structure, continuous price increases of market flow products, and squeezing of channel profits, the survival space and market challenges faced by traditional distributors are different from before. Adjustment, reform, and transformation have become the main topics of discussion among traditional liquor distributors.
**Development and Classification of Liquor Distributors**
The "rise history" of liquor distributors can be traced back to 1992 when the prices of famous liquors were liberalized, marking the beginning of the liquor industry's move toward a fully market-oriented process.
In the early stages of development, most liquor distributors came from institutional restructuring, typically local sugar and liquor companies and liquor trading companies.
They made significant contributions to promoting the marketization process of the industry, were pioneers and major participants in the market economy of liquor, accumulated substantial wealth, and built extensive marketing networks.
However, over the past 30 years of development, the industry has undergone several adjustments, and a group of new-era distributors has emerged. Based on the different driving factors behind their growth, the author classifies the existing distributor groups as follows.
**1. Channel Distributors**
Channel distributors are the earliest form of distributors, mostly formed through the restructuring of state-owned enterprises or individuals from within the system venturing into business. They are mostly distributed in local markets (a county or prefecture-level city), control the traditional four major channels in the region, have well-organized and flexible structures, and rely on early popular brands or big single products to gradually become the controllers of local sales channels.
**2. Famous Liquor Distributors**
Famous liquor distributors are the quota holders of leading brands such as Moutai and Wuliangye. With the gradual growth of brand market share and value enhancement, they have become controllers of famous liquor resources in the region.
Most famous liquor distributors are products of history, with a small number completing the upgrade from "civil liquor distributors" to famous liquor distributors during the last "golden decade of the liquor industry."
**3. Chain Distributors**
Chain distributors operate chain terminal models nationwide, rapidly expanding through model and capital advantages, building their own sales channels while developing franchise businesses.
**4. Internet Distributors**
Internet distributors rely on the internet development and changes in consumer habits in recent years, using internet advantages to quickly break channel boundaries and regional restrictions.
**Market Evolution and Industry Development: Traditional Advantages Gradually Replaced**
Channel distributors and famous liquor distributors are the focus of our discussion, i.e., "traditional liquor distributors."
From 1992 to 2012, over more than 20 years, liquor channels transitioned from state-owned to private. Distributors were the first to connect with the market, accumulating market operation experience superior to that of distilleries, and also formed a distinctive OEM brand operation model. During this period, these two types of distributors gained enormous wealth accumulation and built marketing networks.
**In the process of changes in the order of famous liquor brands, channel distributors played an extremely important role.** Distributors have always been active on the liquor stage, and for a period, tactics such as "channel is king," core opinion leader public relations, trunk engineering, and consumer cultivation were once regarded as winning formulas in the circulation industry.
What challenges will this important force face in the current industry context?
It can be said that **in the nearly 30 years of development of the liquor industry, the first 20 years were the "era of distributors,"** where the manufacturer-distributor relationship was that upstream was "only good at brewing, not marketing," relying on channel distributors to develop the market. Therefore, buyout brands were prevalent at that time, with sales volume once accounting for half of the entire liquor industry.
During this period, distributors made significant contributions to promoting the marketization process of the industry and were pioneers and major participants in the market economy of liquor.
**The last decade has been called the "era of manufacturers," with the market gradually developing toward manufacturer-distributor integration.**
A prominent manifestation is the doubling of famous liquor scale, significant improvement in brand influence, and greatly strengthened market control. Typical representatives include Yanghe, Luzhou Laojiao, Langjiu, Gujing, and Kouzijiao. These distilleries strengthened their own marketing capabilities and sales system construction, gained the initiative in marketing, which inevitably brought changes in channels and sales models.
**Traditional Advantages No Longer Exist: Transformation Becomes a Necessary Path for Survival**
Based on my more than ten years of experience in the liquor industry and consulting, I will discuss the impacts and challenges faced by traditional liquor distributors as their channel advantages fade.
**First, the acceleration of industry concentration, the sinking of famous liquor channels, and the need for head enterprises to expand by increasing the number and density of agents greatly affect traditional distributors.**
The expansion of head enterprises and the significant increase in their industry share, although more than 10 years later than other consumer goods industries (such as beverages), the concentration of the industry toward advantageous enterprises has been accelerating.
Ten years ago, the top ten liquor enterprises (mainly famous liquor enterprises) accounted for about 18% of industry sales; by 2020, the industry share had exceeded 42%, and all were famous liquor enterprises.
In 2020, the top 10 of the 19 listed liquor companies accounted for more than 55% of the entire industry's profits. The consumption side of liquor shows a state of fewer consumers, lower consumption frequency, and lower consumption per occasion, with overall consumption volume declining for several consecutive years.
**The growth of famous liquor is brought about by squeezing the share of regional liquor enterprises and structural growth.** To maintain their growth, the market will inevitably sink further, the number of distributors will increase, and the coverage of traditional distributors will be further compressed.
**Second, from channel flattening to direct control of terminals, head liquor companies are increasingly determined to "de-distributorize."**
Alongside the expansion of famous liquor scale is the flattening of famous liquor channels. Over the past decade, the number of channels for first-tier famous liquor enterprises has increased by an average of 4 times, more than twice that of the previous decade. The construction of famous liquor sales networks is more than half complete, with the direction being direct control of terminals, and distributors will continue to be flattened.
Industrial concentration brings the Matthew effect, and the scale expansion of state-owned enterprises is an accelerator of the Matthew effect.
State-owned enterprises and local leading enterprises face both the pressure of maintaining and increasing the value of state-owned assets and the pressure of contributing to the local economy as pillar industries. This "dual pressure" makes them place great importance on scale expansion.
**In the process of pursuing scale, the subdivision of channels and higher market share and penetration in regional markets will greatly weaken the role of distributors.**
**Third, famous liquor strengthens the operation of sub-brands, squeezing the survival foundation of distributors' OEM brands.**
Famous liquor factories have improved their own marketing capabilities, increased the operation of sub-brands, which conflicts with buyout brands. Famous liquor factories have adjusted and changed their buyout policies, increased the cleanup of buyout brands, and greatly squeezed the market for distributors' buyout products.
Compared with the peak period of buyout prevalence in the early 2000s, the industry share of buyout brands has now fallen below 20%.
In stark contrast, as the decline of buyout brands becomes more apparent, famous liquor sub-brands such as Moutai series liquor and Wuliangye series liquor have seen significant growth year after year in recent years. **The growth of self-operated products of famous liquor sub-brands is itself a crushing of buyout brands, and famous liquor enterprises have more prominent resource advantages.**
They have more advantages in production capacity, brand, capital, and price, and have more resources to invest.
**Fourth, changes in channel structure, the rise of chain liquor stores, core cigarette and liquor stores, various e-commerce platforms, and communities have attracted attention, and the advantages of traditional distributors are diminishing.**
Vertically integrated super distributors such as Huazhi Liquor Store, Jiuxian.com, and 1919 are accelerating the layout of online and offline channels with their professional, network, and capital advantages.
The rise of e-commerce platforms such as JD.com, Alibaba, and Pinduoduo, as well as content platforms like Douyin and Kuaishou, has had a huge impact on the distribution channel system that traditional liquor distributors have relied on for years, continuously undermining the foundation of distributors.
The differentiation, reorganization, and co-opetition within the channel structure have greatly squeezed the living space of distributors.
**Fifth, the development of internet and big data technology provides technical support for deep direct distribution, and direct sales are widely emerging, further compressing the living space of distributors.**
On the one hand, the emergence of the internet has changed information gaps and knowledge gaps, providing technical possibilities for deep distribution centered on central cities. **Upstream enterprises and super distributors are accelerating their alliance with internet giants, accelerating the implementation and deepening of deep direct distribution.**
On the other hand, the development and application of internet and big data technologies have profoundly changed the way brands are communicated and promoted. **Especially the rise and development of new media in the new consumption era have completely overturned the past methods of brand communication and promotion for liquor.** The fragmentation of the market after the disintegration of traditional mass media has made promotion more difficult. In these aspects, traditional distributors do not have the conditions and advantages.
**Sixth, new organizations, new ideas from upstream, and new-type distributor teams are crushing traditional distributor teams.**
The success of traditional distributors is basically the result of the first generation of liquor industry people. Now they face the situation of the second generation taking over, and most second-generation successors have problems such as insufficient fighting spirit and different lifestyles. At the same time, team aging and inertial thinking from past market operations limit the innovation and transformation of distributor teams.
The construction of teams in distilleries and new-type distributors is mostly dominated by young people with higher education, who are more innovative and energetic. **Market operations in the new era place more emphasis on service value, and in comparison, traditional distributors are at a clear disadvantage.**
Trends create success. In the new market environment, only with the right direction and efforts can one survive and develop. If traditional liquor distributors want to develop under the industry transformation, they must undergo transformation, and this process is close to subversion, inevitably bringing deep pain.
With the entry of capital, the liquor sales channel will inevitably enter a process of concentration, and retail terminals will exist for a long time to meet consumers' convenience of purchase. In the future, the distribution system will see a phenomenon of "big fish eating small fish."
What do you think about the necessity of transformation for traditional distributors? Leave a comment below to share!
**Are you "watching" me?**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671