Click the image for details Text | Yunjiu Team (WeChat ID: YJTT2016) How is Wahaha's baijiu, which once shocked the industry, doing now? Three years ago, beverage giant Wahaha invested a claimed 15 billion yuan in the sauce-flavored liquor sector, unveiling an ambitious market plan. Over three years later, it falls far short of the 'glorious goals' set at the time. Lingjiang Guojiu has faded from public view, with even rumors of 'partners shifting focus.' So what has happened to Wahaha-branded baijiu? ❶ Wahaha's Baijiu with a '15 Billion' Investment In November 2013, Wahaha Group held a press conference in Beijing, where Chairman and General Manager Zong Qinghou officially unveiled its first sauce-flavored liquor, Lingjiang Guojiu, alongside reports of a 15 billion yuan investment plan to build a sauce-flavored liquor industry in Maotai Town, Guizhou. According to media reports, Zong Qinghou paid close attention to this investment. In July of that year, he personally visited Renhuai, Guizhou, to inspect the city's economic and social development and the production process of Renhuai sauce-flavored baijiu. He quickly signed a cooperation framework agreement with the Guizhou provincial government in September, and pushed for the launch of new products in November. At the press conference, Wahaha's massive investment plan attracted many industry figures to endorse it. Industry veterans, marketing experts, and liquor distributors all expressed optimism about the huge market space for sauce-flavored baijiu and the integration potential under Wahaha's extensive channel advantages. At that time, the baijiu industry was in deep adjustment, and Wahaha's entry into sauce-flavored baijiu could be seen as 'buying at a low point.' Moreover, the cooperation was not the large-scale acquisition that outsiders had speculated, but rather a joint launch of sauce-flavored products with Maotai Town distillery Jinjiang Distillery. Initially, it mainly involved 'selling existing sauce-flavored products from Jinjiang Distillery,' avoiding large capital outlays. Combined with the fact that Maotai Town's sauce-flavored baijiu had not been effectively integrated and Wahaha's strong channel advantages, industry optimism was not unfounded. However, some also expressed 'concerns' about Wahaha's cross-industry liquor sales. Whether outsiders supported or worried, the ultimate success depended on Wahaha's own marketing. After the press conference, Wahaha spared no effort in promoting Lingjiang Guojiu: Zong Qinghou personally mobilized beverage distributors from the old system to sell liquor, and introduced the 'joint sales system' model to recruit distributors as shareholders in Lingjiang Guojiu Company. Notably, Zong denied the 15 billion investment rumor, saying only that he had acquired a distillery for over 200 million yuan. However, three years later, sales of Lingjiang Guojiu seem to have made little progress. The product is rarely seen in the market, with few transactions on Taobao, and most news about it dates back to the original press conference. Finding a differentiated development path is a major test for Wang Hongbin, chairman of Jinjiang Distillery Co., Ltd. Wang saw significant business opportunities in tourism and began exploring how to combine liquor with tourism, breaking away from traditional liquor industry models. His boldest and most decisive step was investing heavily to build the Jinjiang Ecological Distillery, which integrates sauce-flavored liquor culture with tourism culture, combining tourism, tasting, collection, and personalized customization. This represents an organic fusion of the baijiu industry and cultural tourism, marking Jinjiang Distillery's new path of liquor-tourism ecological development. The Jinjiang Ecological Distillery includes tourism projects such as Wang Family Courtyard, Yungu Tower, Dianjiang Hall, Maotai Shua Ba Stand, Maotai Shua Ba Square and Paved Tourism Square, Ecological Slide, and Jungle Exploration, completed in May 2017. ❷ Quiet Shift: From 'Mid-to-High-End' Sauce to Strong-Flavored 'Minjiu', Achieving 10 Million in Sales Has Wahaha-branded baijiu, represented by Lingjiang Guojiu, gone quiet? No! It is understood that around market sales, Wahaha's liquor business team has been initially formed, hiring experienced liquor distribution professionals as heads of liquor sales business departments. At the same time, Wahaha's main liquor products have quietly shifted to strong-flavored types, with market sales achieving 'some success.' An unnamed Wahaha liquor sales business head told Yunjiu Toutiao that due to the limited consumer base for sauce-flavored baijiu, Lingjiang Guojiu has limited marketability in actual sales, mainly promoted in local markets, with market cultivation focused on the mid-to-high-end segment. However, market sales are still proceeding normally, with many orders placed in October 2016. The company's current focus is on promoting the Lingxiang Guojiu Yun series of strong-flavored baijiu, developed during the 2016 National Day holiday, including Xingyun, Caiyun, and Heyun, priced at 16-18 yuan, 50-70 yuan, and 90-120 yuan respectively. It is understood that each Lingxiang Guojiu Yun series product comes in 39, 42, and 52 degrees alcohol by volume, while the Qiyue series has 38, 42, and 50 degrees. Lingjiang Guojiu is divided into multiple series including Zong Shuai Jia Jiu, Tan Jiu, Zhen Cang, Guo Jiang, Zhen Jiang, Mi Jiang, Fu Jiang, as well as Maotai-style bottles and mixed-flavor types. 'Strong-flavored liquor has a good consumer base, and the three products are mainly positioned as 'minjiu' (popular-priced liquor). During the Spring Festival, sales momentum was very strong. Although we didn't promote much, we reached a scale of 10 million yuan,' the head said. 'Many of Wahaha's original distributors are very interested in the liquor business. Previously, liquor orders were placed alongside other products, but now provinces like Fujian and Sichuan can hold dedicated liquor ordering meetings. The company has tried small-scale liquor business recruitment, with good response and high attention; a single recruitment meeting can reach 400,000-500,000 yuan in scale.' Corresponding to the 'easy' recruitment, the terminal performance of Wahaha-branded baijiu is also improving. The head believes that originally, Wahaha distributors used the company's liquor products more as gifts, bundling them with sales of traditional water and beverages. Now, many distributors are starting to sell baijiu as a standalone product. The head also denied rumors of 'bundling baijiu with water and beverage sales.' He said the company does not have mandatory bundling rules; instead, some distributors in provinces like Shandong are proactively requesting bundling with baijiu because 'previously, distributors used the same product as gifts when selling water or beverages, with very transparent prices and profits. Switching to baijiu avoids this issue and increases pricing power.' For example, 'previously, buying 100 boxes of water got 2 boxes free; now it's replaced with 2 bottles of liquor,' with good results. Meanwhile, in the head's view, for Wahaha distributors with strong channel capabilities, distributing baijiu also broadens their business scope. 'The liquor business is indeed not Wahaha's strength, but developing this category meets market and distributor needs, expands the business scope of distributors primarily focused on beverages, and adds profit points. Therefore, the company established a liquor department independent of the beverage department to continue this exploration.' It is also understood that Wahaha's liquor business has a scale of several hundred distributors, with good performance in markets such as Anhui, Hunan, Shandong, Sichuan, and Liaoning. ❸ The Realistic 'Adaptation' of Wahaha-Branded Baijiu Sales of 10 million yuan are a negligible figure for both Wahaha and major liquor companies. Behind this number may lie Wahaha's realistic 'adaptation.' 'The company's special expenses for the liquor business are not high, especially compared to traditional liquor industry recruitment and market support costs, which are quite different,' the aforementioned head told Yunjiu Toutiao. A key reason limiting Wahaha's liquor development is the low support costs, making it difficult to motivate liquor distributors. Currently, Wahaha's liquor recruitment model mainly involves setting up full-time sales personnel in each province to handle market recruitment. The main targets: first, existing Wahaha market distributors, encouraging them to add baijiu as a new product for expansion; second, recruiting professional liquor distributors to distribute Wahaha's baijiu. Wahaha has also considered the overlap between these two recruitment targets, as among its distributor team, over 500 distributors also sell liquor. If they could replace the other baijiu products these distributors sell, it would be a significant market. For Wahaha's original distributors, cross-selling baijiu from traditional water and beverages certainly has some difficulty. For professional liquor distributors, the baijiu industry is already highly competitive, with industry rules where even 'a display position, who is on top and who is below' requires manufacturer financial support. Under such rules, Wahaha's liquor business with limited funds is clearly not very attractive. For Wahaha, limited investment in the liquor business may be a realistic 'adaptation.' On one hand, while first-tier famous liquor companies like Moutai, Wuliangye, and Yanghe have begun a 'weak recovery with strengthening,' the industry as a whole remains in a 'downturn.' Under such industry conditions, making large investments seems uneconomical. For example, media have reported that 30% of small and medium distilleries in Maotai Town have stopped production, indicating market oversupply. On the other hand, from a product perspective, whether it's mid-to-high-end sauce-flavored baijiu or mid-to-low-end strong-flavored baijiu, Wahaha faces competition from numerous baijiu brands. Therefore, given the expectation of huge market investment, promoting an uncertain liquor business at the expense of Wahaha's strong water and beverage main business's profits and vast space is indeed 'untimely.' Moreover, in Wahaha's traditional water and beverage business system, it's hard to find business models with large market-leading investments. Facing the company's realistic 'adaptation,' in the head's view, the Lingxiang Guojiu Yun series achieving 10 million in sales in the short term proves market space. Considering distributors' actual needs, Wahaha's liquor business still has strong prospects. As long as market investment is moderately increased in the future, this segment can develop rapidly. At the 2013 press conference, Zong Qinghou once said, 'Lingjiang Guojiu will be sold based on quantity, with sales not large this year; new products will come in 5 years.' Four years later, Lingjiang Guojiu sales are lukewarm, but the strong-flavored Lingxiang Guojiu has been launched with good market results, which is some comfort for Wahaha's cross-industry liquor venture. What do you think about Wahaha's cross-industry liquor sales? Leave a comment below! Click the image for details The Third (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017, focusing on the theme 'New Forces, New Ecology,' inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to explore new chapters of cross-industry integration! Core topics of this conference:
How can the FMCG industry leverage B2B for new growth opportunities
How to build the new supply chain behind new retail
How can intra-city logistics help B2B achieve leapfrog development
Highlights of this conference:
The industry's first '2017 China FMCG B2B Industry Competitiveness White Paper'
Case sharing of excellent transformation and upgrading distributors
Conference + exhibition upgrade, Hall 6 Internet Technology Exhibition strengthens connections
Alibaba Retail Link, ProLogis Finance, Eternal Asia Supply Chain, Best Dianjia, Yijiupi, Unilever, Haiding Technology, Yunmei Shares—leaders from various fields will deliver speeches and share pioneering views.
October 17-18, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click 'Read Original' to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend and note 'Conference Registration' Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 'FMCG + Internet' Summit Forum 2017 (Second) China FMCG + Internet Conference Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 'FMCG + Internet' Summit Forum -END-