The high-end baijiu market at 1,000 yuan is hard to innovate further, so Wuliangye has turned its new battle to the 50-yuan bottled liquor market. This bottled liquor market, with a total size of over 100 billion yuan, has become a new battleground for baijiu companies in recent years.
Wuliangye Launches 59-Yuan Bottled Liquor
Moutai and Wuliangye are the undisputed kings of the baijiu market. Their flagship products, Feitian Moutai and Pu Wu, lead the high-end baijiu market. Driven by these two main products, their revenues have exceeded 100 billion yuan and 60 billion yuan respectively. However, in recent years, both Moutai and Wuliangye have been trying to find a second growth curve. Guizhou Moutai's series liquor products, such as Moutai Prince, Han Sauce, and Lai Mao, have gained high attention amid the popularity of sauce-flavor baijiu. In contrast, Wuliangye's series liquors have received less attention. From a revenue perspective, Guizhou Moutai's series liquors and Wuliangye's series liquors are actually at the same level, with revenues of 12.6 billion yuan each in 2021. But in terms of revenue share, series liquors are more important to Wuliangye. Wuliangye's series liquors mainly include four national strategic brands: Wuliangchun, Wuliangchun, Wuliangtequ, and Jianzhuang. Among them, Jianzhuang targets the low-end market in Wuliangye's product system, with most products being bottled liquors without outer packaging boxes. (Image source: Visual China) In 2023, it was Jianzhuang that first launched new products. Wuliangye has begun to make efforts in the bottled liquor market. Not long ago, Wuliangye held a press conference in Shenzhen, launching a new single product "Jianzhuang • Rongguang" in its series liquors, available in 500ml and 100ml sizes, with suggested retail prices of 59 yuan per bottle and 25 yuan per bottle respectively. At the press conference, the head of Jianzhuang brand operations stated that in the future, they will build highland markets around eight cities: Baoding, Heze, Liaocheng, Zaozhuang, Zhengzhou, Nanyang, Nanjing, and Chengdu, thereby driving the development of the national market. This means that Wuliangye is re-examining and placing more importance on the bottled liquor market. Jianzhuang is an old brand under Wuliangye. In 1995, Sichuan Changhong and FAW were respectively awarded the titles of "China's TV King" and "China's Automobile King," while Wuliangye was awarded the title of "China's Liquor Industry King." At that time, Jianzhuang was one of Wuliangye's main brands. However, as Wuliangye continued to expand and its brands increased, this had an adverse impact on Wuliangye's operations, causing it to lose the throne of "Liquor King" to Guizhou Moutai. Therefore, in recent years, Wuliangye has begun to streamline its product lines and integrate the Jianzhuang series. At the end of 2018, Wuliangye proposed to grow Jianzhuang to 5 billion yuan within five years. In 2019, Wuliangye also held a "Jianzhuang Brand Story Event," announcing that Wuliangye would fully support Jianzhuang's development, implement the integration strategy of the Jianzhuang brand thoroughly, and make Jianzhuang the king of the 100-yuan price band. In 2019, Jianzhuang also sponsored a Chinese League One football team in Sichuan. At the end of that year, new Jianzhuang series products were launched, including Daguang, Hongyou, Jinghe, Gaoguang, and Xiaozhuang. Among them, Daguang, Gaoguang, and Xiaozhuang (100ml small bottle) are all bottled liquors. Wuliangye's official channels do not have clear price tags. According to previous reports by industry media, Xiaozhuang is priced at 25 yuan, Daguang at 48 yuan, and Gaoguang at 88 yuan. However, Shijie learned from multiple distributors that prices vary by region. For example, a distributor in Anhui has prices of 15 yuan for Xiaozhuang, 50 yuan for Daguang, and 80 yuan for Gaoguang, while the Wuliangye Building Experience Center store in Beijing has prices of 29 yuan for Xiaozhuang, 58 yuan for Daguang, and 98 yuan for Gaoguang. In short, these bottled liquors of Jianzhuang bear the important task of Wuliangye in the price band below 100 yuan. Wang Peng is a distributor of a leading liquor company in a certain region of Sichuan. As a frontline salesperson, he deeply feels the changes in the baijiu market. He said that as a major baijiu province, Sichuan's baijiu production accounted for nearly 52% of the national total in 2022, and bottled liquor has become increasingly popular in Sichuan in the past two years, with prices mainly concentrated between 10 yuan and 100 yuan, and the most important price band is 20 yuan to 80 yuan. During the Spring Festival, the mass consumer market represented by bottled liquor recovered faster. The baijiu industry is a market of stock competition, and it is increasingly difficult for liquor companies to find new breakthroughs. In recent years, many players who have been fiercely competing in the high-end market have turned around to attack downward, bringing the battle to the bottled liquor market. 2023 is the last year of Jianzhuang's 5 billion yuan goal. For Jianzhuang, Rongguang is a supplement to its combat effectiveness in the 100-yuan price band. For Wuliangye, Jianzhuang's combat effectiveness is indispensable.
Wuliangye Does Not Want to Fall Behind
"Baijiu is a declining industry." Deng Delong, global president of Trout & Partners, believes that in the next decade, the baijiu industry will be in a "Warring States era." After reaching a peak of 13.584 million kiloliters in 2016, baijiu production has been declining. In 2022, the cumulative national baijiu production was 6.712 million kiloliters, a year-on-year decrease of 5.6%. This is the sixth consecutive year of decline. Compared with 2016, by 2022, industry production has halved. With production continuously declining, companies still need to seek new growth points, and the competitive pressure faced by various brands is self-evident. Wuliangye's renewed efforts in the bottled liquor market also reflect concerns about the company's overall growth. (Image source: Visual China) Since being fully surpassed by Guizhou Moutai in 2013, Wuliangye has become a chaser. Behind Wuliangye, Luzhou Laojiao is constantly shouting to return to the top three in the industry, adopting a follow-up strategy, closely following Wuliangye's price increase rhythm. Yanghe, after three years of adjustment, has returned to growth, clearly not wanting to give Luzhou Laojiao a chance. The competitive landscape among industry giants has quietly changed. Shanxi Fenjiu has developed rapidly through a series of reforms, and in the first half of 2022, its revenue surpassed Luzhou Laojiao. The top five listed baijiu companies in the industry have become Guizhou Moutai, Wuliangye, Yanghe, Shanxi Fenjiu, and Luzhou Laojiao. During these years of structural prosperity in the baijiu industry, the high-end and sub-high-end markets have seen both volume and price increases, and high-endization has become the core theme of the baijiu industry in the past few years. Both large and small liquor companies are desperately moving toward the high-end market. In the high-end baijiu market, "Mao Wu Lu" are the three giants. Wuliangye has been making continuous moves in the high-end market in recent years. In its 2022 semi-annual report, Wuliangye mentioned that the core position of the eighth-generation Wuliangye in the 1,000-yuan price band continues to be consolidated, and Classic Wuliangye is making efforts in the 2,000+ baijiu market. Through continuous price increases, the official guidance price of the eighth-generation Wuliangye has risen to 1,499 yuan per bottle, directly benchmarking Feitian Moutai. The strategic high-end single product Classic Wuliangye, launched in 2020, has an official retail price as high as 2,899 yuan per bottle, demonstrating Wuliangye's ambition in the high-end market. Wuliangye's main combat effectiveness is in the high-end market, but its brand strength is difficult to support its ambitions. Shijie learned from multiple distributors and liquor merchants that the actual transaction price of the eighth-generation Wuliangye can drop to around 1,000 yuan, while the terminal actual selling price of Classic Wuliangye can drop to within 2,000 yuan. From a performance perspective, among the "high-end three giants," Wuliangye has shown signs of falling behind. Compared with sub-high-end giants Yanghe and Shanxi Fenjiu, Wuliangye is also the same. High-end baijiu is no longer just a consumer product; it also has the attributes of luxury goods and investment. So many brands want to tell stories here, build brand image, and find growth points. However, after years of competition and market changes, the high-end market seems unable to roll further. Baijiu brands are worried about finding breakthroughs. Liquor companies that urgently need to let consumers know them again and pay for them have "crowded" their marketing into the 2023 Spring Festival Gala, such as Wuliangye, Yanghe, Shede Spirits, and Gujing Gongjiu, all participating in the sponsorship of the Gala. Although Wuliangye has not disclosed its sponsorship fee, the total value of its interactive gifts during the Gala reached 100 million yuan, showing its effort. Currently, the high-endization and price increases of baijiu have encountered bottlenecks to a certain extent. And Wuliangye certainly does not want to fall behind. With the recovery of mass consumption and the activity of the bottled liquor market, Wuliangye has shifted some attention to its tower base brand - Jianzhuang. In fact, the mass consumer market has become a new arena of involution. Zeng Congqin has been chairman of Wuliangye Group since 2022, exactly one full year. Wuliangye's need for growth is urgent.
Bottled Liquor Is Becoming Increasingly Competitive
"The epidemic years have forced the baijiu market to move forward. Now the demand and competition in the baijiu market are moving toward two extremes: either bottled liquor for tens of yuan or high-end liquor," Wang Peng told Shijie. High-end liquor around 1,000 yuan and bottled liquor for tens of yuan are two different worlds. High-end liquor is about social etiquette and interests, while mid-to-low-end and even bottled liquor have the original attributes of baijiu, being the daily drinking liquor for ordinary people. The 100-yuan price band is attractive. As a frontline salesperson, Wang Peng clearly feels that after the relaxation in December last year, the mid-to-low-end market has recovered well overall, but competition has become increasingly fierce. Unlike high-end liquor, bottled liquor has low selling prices and thin profits, but it has the broadest consumer base. According to data from the China Alcoholic Drinks Association, the market size of bottled liquor has been rising, reaching 98.8 billion yuan in 2021, and is expected to exceed 150 billion yuan by 2024. This 100-billion-yuan market is now being valued by Wuliangye, and other liquor companies have long been eyeing it. (Image note: More and more bottled liquors are appearing on supermarket shelves / Shijie) In fact, bottled liquor is not a "new world" in the liquor industry. In the last century, bottled liquor was the absolute main force in the market, but during the process of liquor companies moving toward high-end, bottled liquor was gradually marginalized and became synonymous with low-end liquor. After the end of the "golden decade" of the baijiu industry, several brands of bottled liquor began to develop rapidly, such as Laocunzhang, Xiaodao, Niulanshan Chenniang, Longjiang Jiayuan, Xiaocunwai, Jiangxiaobai, Luxiaoer, Yidanliang, Xiaolangjiu, Guangliang, etc. With consumption upgrading, famous liquor companies have begun to make efforts in high-line bottled liquor, such as Fenjiu Bofen, Xifeng Green Neck, Wuliangye Jianzhuang, Langjiu Jianxiang series, Jiannanchun Gongnong brand, Tuopai T68, etc. According to a research report by Tianfeng Securities in December 2022, the competitive landscape of the bottled liquor market, measured by brand revenue, can be divided into three major camps: 10 billion yuan scale, 3-5 billion yuan scale, and 0.5-1 billion yuan scale. In the 10 billion yuan scale camp, the flag bearers are Fenjiu and Niulanshan, with main products being Huanggai, Honggai Bofen, and Bainiu'er. Bofen is priced at 45-55 yuan per bottle, and Bainiu'er at 15-20 yuan per bottle. In the 3-5 billion yuan scale camp, the flag bearers are Jingjiu and Hongxing, with main products being small bottle Jingjiu and Hongxing Erguotou. Small bottle Jingjiu is priced at 20-25 yuan per bottle, and Hongxing's main products are blue bottle, jianxiang white bottle, and qingxiang green bottle, priced at 15-35 yuan per bottle. In the 0.5-1 billion yuan scale camp, companies mainly sell products priced at 15-50 yuan per bottle, mainly including Jiannan Mianzhu, Tuopai Teji, Dukang Laozihao, Baofeng Daqu, Gujing Gong, Lüxifeng, Yidanliang, Longjiang Jiayuan, Fenyang Wang, etc. In addition, there are about 300 local liquor companies with a scale of over 100 million yuan across the country. The high-end baijiu market is highly concentrated, with "Mao Wu Lu" holding over 90% market share, while the bottled liquor industry has low barriers and a relatively fragmented competitive landscape, with almost every region having local bottled liquor. By 2020, the top five in the bottled liquor market only held a total market share of 30%. The market is expanding, and the price band is rising. In recent years, many liquor companies have been re-laying out bottled liquor, exploring this market from strategy, products, and marketing. Famous liquors are increasing their efforts, and emerging brands are also making moves. Yanghe launched the gold medal Shuangou Daqu in 2021; Shede Spirits launched Tuopai Liuliang in 2021 after launching Tuopai Teji T68; Luzhou Laojiao launched Heigai in 2022; Wuliangye's Jianzhuang Rongguang was launched in 2023... Just around the release of Jianzhuang Rongguang, Langjiu held a Langjiu Jianxiang strategy press conference, stating that it aims to achieve annual sales of 10 billion yuan for Langjiu Jianxiang within two to three years, with main products including Xiaolangjiu and Shunpinlang; Jiangxiaobai held its annual meeting, saying that in 2023 it will focus on two "battles," one of which is the strategic renewal battle for Jiangxiaobai small bottle liquor. The intensification of competition is directly reflected in the performance of Niulanshan, the "leader of bottled liquor." In 2021, Shunxin Agriculture's baijiu business revenue barely grew. In 2022, Shunxin Agriculture is expected to report a net loss attributable to shareholders of 520 million to 680 million yuan, which is inseparable from the decline in its baijiu business. Baijiu expert Tie Li once told Shijie that it is difficult to form a truly national absolute leader in bottled liquor in the Chinese market. Now it seems that the bottled liquor market will become increasingly competitive, and Jianzhuang's pressure is naturally not small. (Wang Peng in the article is a pseudonym)**