Background: RIO sparked a pre-mixed cocktail craze in the first half of last year, with annual sales peaking at 2.516 billion yuan, but sales subsequently went quiet. Recently, Baorun Co., Ltd. disclosed its 2016 semi-annual report, showing revenue of 420 million yuan, a year-on-year decline of 75%; net loss of 145 million yuan, down 123% year-on-year. The direct reason for Baorun's performance decline is the sharp drop in RIO sales, with pre-mixed cocktail revenue in the first half of the year at 348 million yuan, down about 78%.
Other pre-mixed cocktail brands: Wuliangye's Dracula pre-mixed cocktail is selling poorly, though specific figures were not disclosed. Another baijiu company, Yanghe, has repeatedly announced plans to enter the pre-mixed cocktail market but has remained silent so far. Gujing Gongjiu, which launched Bese pre-mixed cocktails in the Anhui market and established Baiweilujiu Co., Ltd., lost 2 million yuan last year, making it the only loss-making subsidiary of Gujing Gongjiu. Meanwhile, FMCG companies like Huiyuan and Heiniu Food have halted their pre-mixed cocktail operations after a period of entry. For example, Heiniu Food had to sell off its pre-mixed cocktail production line due to severe losses.
Borrowing the words of the Stark family from Game of Thrones:
Winter is coming!
The pre-mixed cocktail winter is coming!
When a storm rages, no one pays attention to the deep-seated problems of the industry. Only when the storm passes and calm returns do we think about what to do next.
To answer this question, we first need to answer another:
In the past, what did consumers treat pre-mixed cocktails as?
The answer reflects the purchase motivation. Some might say it's simple: they drink it as a beverage, enjoying the taste without getting drunk easily, especially as a tool in KTVs and bars to get girls drunk, or as the first alcoholic drink for students. But the answer is not that obvious!
In 2015, we conducted a random quantitative survey both on the street and online in Beijing, Shanghai, Guangzhou, and Shenzhen, collecting 836 samples (about 200 per city) from consumers born in the 1980s and 1990s who drink pre-mixed cocktails.
Let's analyze the data:
Table 1: Pre-mixed cocktail brand selection rate Table 2: Pre-mixed cocktail brand preference ranking Table 3: RIO brand reputation
In both brand selection and product preference, RIO leads by far, so analyzing RIO is essential to understanding the pre-mixed cocktail market.
For those who criticize RIO's quality and reputation, Table 3 strongly refutes them: a 95.22% repurchase rate clearly shows the problem is not quality or reputation.
So where is the problem? Let's look at consumers' first encounter with pre-mixed cocktails:
Q: What is your impression of pre-mixed cocktails? Table 4: Impression of pre-mixed cocktails
Q: Why did you first try pre-mixed cocktails? Table 5: Reasons for first trying pre-mixed cocktails
Q: How do you find the taste of pre-mixed cocktails? Table 6: Taste experience of pre-mixed cocktails
From these tables, it's clear that consumers' initial purchase motivation is mostly curiosity about the colorful appearance, attractive packaging, and diverse flavors. In short, consumers treat pre-mixed cocktails as a trendy, fashionable drink!
In any industry, this might be seen as a brand success. But there's a big contradiction hidden here:
Fashion is fleeting; it always passes. The hallmark of fashion is fickleness. When consumers encounter newer, trendier alcoholic drinks, pre-mixed cocktails become unfashionable.
When pre-mixed cocktails are no longer fashionable, consumers naturally stop choosing them. That is the real problem for RIO and the pre-mixed cocktail industry today.
Because your only competitive advantage is fashion!
How to solve this problem?
In my view, a mature category is like a romance, going through three stages:
Exploration Stage: During this period, the product and consumers are testing each other. The product adjusts based on consumer feedback. The market is driven by curiosity, with most purchases being trial. Consumption frequency is low, brand choices are few, category size is small, growth is slow, and it lasts 5-10 years. Example: From 2002 to 2012, pre-mixed cocktails were in the exploration stage in China, with brands like Bacardi Breezer and RIO. From 1995 to 2004, functional drinks were in the exploration stage, with Red Bull as a representative.
Honeymoon Stage: The product and consumers establish a relationship but lack stability. Most consumers follow trends blindly, category size expands rapidly, possibly forming a fashion trend, but it lasts only 1-3 years. Many brands exist, but consumers prefer leading brands. Example: Pre-mixed cocktails from 2012 to 2015; functional drinks from 2005 to 2008.
Marriage Stage: The product and consumers reach a tacit understanding and become dependent on each other. Consumers become rational, have clear consumption scenario associations, high repurchase rates, large and stable market size, slow growth, high entry barriers for small brands, and the market is mostly oligopolistic. Example: Functional drinks from 2008 to the present; pre-mixed cocktails have not yet reached this stage.
Now you understand why RIO's performance fell off a cliff this year. It's not because of poor market operations, distributor inventory issues, or advertising problems, but because RIO got the stage-specific strategic goals wrong.
So what should RIO do in the marriage stage?
RIO only needs to do one thing:
Set consumption scenario associations and expand the cake.
In the past, people drank RIO because it was trendy, fashionable, fun, and cool, so they only thought of RIO in KTVs. As other alcoholic drinks and beverages invest in KTVs, pre-mixed cocktails have been beaten badly.
How to set this consumption scenario association?
Let me dare to give an example:
"Drink freely, choose RIO"
What consumption scenarios does this evoke?
One scenario summarizes it:
All informal drinking occasions!
Make RIO a cultural symbol of free and casual drinking. As long as it's not a formal occasion—whether it's a friend gathering, a girls' night out, KTV singing, or a family party—drinking RIO is a challenge to traditional drinking culture by young people, and an attitude of civilized drinking that respects personal choice.
With this consumption scenario association, RIO only needs to do two things well:
Better product experience: How to let consumers enjoy the taste of juice without burden while feeling the stimulation of alcohol.
More stable channels and services: Let consumers feel the joy of casual drinking with RIO anytime, anywhere, making this sustained value a dependency.
Conclusion
So you ask me, does the pre-mixed cocktail market still have a future?
My answer is,
Yes, absolutely!
But no matter what pre-mixed cocktail brand you are,
if you can't find the right consumption scenario association, you still have no future.
If you haven't entered the pre-mixed cocktail market yet, forget it!
If you've already entered, then pray!
Whether pre-mixed cocktails live or die, we'll know in three years!
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