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The competition among major brands in the baijiu industry is intense, and manufacturers' performance growth is more evident in seizing market share from competitors. Manufacturers of major brands in the industry's mature stage are already facing difficult times; a slight misstep could see mature brands and products replaced by new brands and products with superior operating models. At the same time, manufacturers in the market entry and expansion phase will face even tougher conditions, as increasingly mature, large-scale, and experienced terminal stores, secondary wholesalers, and other channel members gain stronger bargaining power, and their demands on manufacturers will rise accordingly.
Scarce advertising positions are becoming more expensive, core media resources are dwindling, hotel listing fees remain high, supermarket entry and promotional management costs are skyrocketing year after year, and joint investment in tobacco and alcohol stores is steadily increasing. These rising competitive barriers are quietly eroding manufacturers' profits.
Despite this, prepared distributors are still entering the battlefield with full enthusiasm and determination.
1. Choose a Potential Brand
Selecting a baijiu brand has always been a headache. Unknown brands often have quality issues and operational difficulties, while well-known brands' manufacturers can be difficult to deal with, with instances of bullying distributors. Distributors can adopt a "tiered operation" model when choosing brands. Ruan Ying, brand operations director of a well-known trading company in Wuhu, Anhui, has been operating baijiu for decades. The company handles first-tier well-known brands, strong provincial brands, and lesser-known small and medium baijiu brands. When selecting brands, Ruan Ying evaluates each brand's product quality, development potential, product strength, and manufacturer support, then compares brand momentum with local consumption preferences to find the optimal intersection point for brand agency.
2. Choose Strong Single Products
As the industry develops, competitive companies will develop a series of products. On one hand, this reduces communication costs, increases market competitiveness, and extends product life cycles; on the other hand, it lowers production costs. Distributors should focus on product serialization and combination when selecting single products. Additionally, different products should have different positioning: breakthrough products, volume products, cultivation products, and image products should be determined in advance.
The grade of baijiu products is divided into low, medium-low, medium, medium-high, sub-high, high, and ultra-high. Distributors should also refer to this standard when selecting products. The most mature distributors cover a wider range of products, but those just starting out need to gradually improve, often starting from low or medium-low grades. However, for distributors with strong resources, especially those focusing on group-buying channels, it may be meaningless to handle products below the medium grade. Of course, under the premise of ensuring product quality, the lower the price, the better.
Qiu Junyan, chairman of a well-known trading company in Bengbu, Anhui, once told me, "Manufacturers are very shrewd; buyers are never as smart as sellers. The prices and policies offered by manufacturers are definitely designed, sometimes even with traps. For products at the same price, the greater the manufacturer's promised support, the higher the product price you're getting. This requires you to understand the product cost and judge whether the price of the product you're handling is too high." Qiu Junyan added, "For me, I prefer the manufacturer to give me a naked price!"
Of course, Qiu Junyan is a large-scale distributor with years of experience, abundant cash flow, and a well-established sales network, so he prefers naked prices because they offer the lowest product prices. However, I believe that for distributors just starting out with limited experience, having manufacturer support is better than operating alone. The specific choice should be based on a detailed study of the manufacturer's recruitment brochure.
3. Be Clever in Distribution and Store Entry
Although terminal store owners cannot predict product sales, the pricing of products in the introduction stage is particularly important for distributors. Terminal stores have no concept of new product prices and rely more on packaging to differentiate price systems. At this time, store owners are not interested in regular promotional policies like "buy two get one free." Therefore, a suitable plan for product distribution is necessary.
The vast majority of baijiu brands sell on credit in hotels. The circulation channel performs better; in most markets nationwide, the circulation channel generally settles in cash. However, there are exceptions. In some markets, due to long-standing business practices, terminal stores only accept new products on credit. Most distributors fear credit sales. Credit sales not only carry high market risk but also, because they don't occupy terminal store funds, terminal stores often don't focus on credit products. Therefore, I suggest that new product distribution adopt a policy that attracts terminal stores, using policies to increase cash flow recovery.
Distributors can raise the wholesale price of terminal products, extract moderate profits from the higher price to purchase promotional items, and give terminal stores benefits in the form of purchase rewards, thereby lowering entry barriers and increasing product sales achievement.
Chen Cheng, a distributor in Ma'anshan, Anhui, gives terminal stores high-value promotional items when distributing new products. For example, he purchases well-known brand appliances or daily necessities from small commodity markets or acquaintances at lower prices and gives them to terminal stores. When new products first enter the market, Chen Cheng does not give promotional items whose prices are familiar to terminal store owners, such as well-known brand mineral water, beverages, beer, or cigarettes. If he did, terminal stores would easily calculate the promotional range and know the distributor's price space. Next time, if the promotion is not as strong, terminal stores would be unwilling to take the goods.
4. Innovative Display Methods
With manufacturer market support, most baijiu distributors aiming for long-term operation will use display as a way to enter stores. Display entry not only enhances product visualization but also seizes scarce shelf space and resources. Monthly display rewards increase the relationship between manufacturers/distributors and terminal stores and supplement terminal store profits.
Boss Li, a distributor of Kouzi liquor in Anhui, operates in a market where the mainstream consumer price for baijiu is 50-80 yuan per bottle. At that time, brand competition in this price segment was chaotic, with mainstream brands Gaolu Family and Zui Sanqiu competing fiercely, and Gujing not keeping up. Boss Li assessed the situation and quickly took on two Kouzi liquor products, priced at 68 yuan and 58 yuan. One product focused on channel push, giving terminal stores significantly higher profits after price and promotions than main competitors; the other focused on consumer pull, attracting consumers to buy independently through in-box prizes (with higher prize intensity than main competitors), increasing product sell-through speed. At the same time, based on the market atmosphere of Kouzi liquor, Boss Li took a risky step: for slightly larger terminal stores, he offered display entry where the amount displayed equaled the amount given free (as display fees). To reduce risk, terminal stores enjoying this policy had to pay in cash, and the display period was one year. Additionally, Boss Li assessed his sales staff's performance and increased their visit frequency to terminal stores.
5. Advanced Replacement Entry Method
The replacement method is a more innovative way to enter stores, allowing distributors to avoid high entry fees, rapidly increase the number of outlets, and boost sales in the short term.
Xie Ruibo, a Hebei distributor operating Luzhou Laojiao, designed a creative promotional method that is very popular among terminal store owners. Xie Ruibo adopted a "cigarettes for liquor" promotion, where he collects slow-moving cigarettes from terminal stores and offsets their value with liquor prices. This novel promotion is more beneficial than harmful for terminals, as it not only helps solve the capital occupation problem of slow-moving cigarettes but also turns slow-moving items into bestsellers.
This innovative promotion requires high capabilities from distributors: they need a sound cigarette sales channel to handle the slow-moving cigarettes and the ability to distinguish genuine from fake cigarettes. Therefore, although this promotion is novel, most distributors cannot adopt it. However, thinking from another angle, can distributors of other products use this model to exchange liquor for near-expiry dairy products, beverages, or food, and then quickly distribute these acquired products through channels they are familiar with?
6. Both "Prepare for Rain" and "Mend the Fold After the Sheep Is Lost"
I have visited city and county markets in Hebei, Shandong, Jiangsu, Anhui, and Tianjin. Some distributors' baijiu brands survive less than two years, and single product life cycles are even shorter, some dying in less than half a year. However, after studying distributors with good operations, I found that these distributors can "prepare for rain."
When products are selling well, they think about future sustainable development. By using old products to bring in new ones, they design promotional policies that use bestsellers' promotions to bring new products at other price points into the market. The sustained popularity of old products drives the rapid distribution and sell-through of new products, creating a continuous cycle of product operation, optimizing product structure, gradually replacing old products with new ones, and steadily securing the sales profits of core channel members.
When the market enters the mature stage, a series of problems arise, which is the most headache-inducing time for distributors. When sales of old products begin to decline, new products fail to follow up in time, and leading products are not successfully cultivated, the market is in its most difficult period. At this time, distributors face enormous pressure. Perhaps overnight, old product prices collapse, and terminal stores will "hide" or "be lazy" to sell, or even refuse to sell directly. If products don't make money, terminal owners will complain, and even products without problems may develop issues at terminals, invisibly affecting consumer purchases. Thus, market defection can happen in an instant.
In this crisis, distributors must take a long-term view and prepare for the worst. Market operations need to be maintained at all times, and channel member maintenance cannot be weakened. In times of crisis, upgrading old products is urgent, and following up with new products is mandatory. Even if it means losing money, maintaining old products is necessary to sustain the market's hot sales atmosphere, which can quickly activate the brand and drive the upgrade of old products and the follow-up of new products.
In summary, Guo Youchen insists that the rules for distributors to successfully operate baijiu are: choose the right brand, select good products, determine marketing strategies, manage the team well, ensure cash flow, and "give before you receive."
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