According to the statistical data of the China Liquor Association,2023In [year], the national liquor industry achieved sales revenue7,563Yuan billion, a year-on-year increase9.7%; Realize total profit2,328Yuan, a year-on-year increase7.5%Among them, the profit growth rate has dropped for the first time in the past five years10%within2024In [year], what are the current status quo and new issues/challenges for the liquor industry that enterprises need to address?
Frost & SullivanFrost & SullivanLou Lei, Executive Director of Frost & Sullivan's China region (hereinafter referred to as 'Frost & Sullivan'), was interviewed by Time Weekly and shared his observations on the current situation and issues in the liquor industry.
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Q: 2024In [year], what are the current status quo and new issues/challenges for the liquor industry that enterprises need to address?
We have identified the following new issues and challenges:
1How to Respond to the Transformation of Consumer Demographics
In recent years, the consumer group and scenarios for liquor consumption have been changing. Traditional business banquets and50/60The proportion of consumers from older generations has declined, while that of younger consumers has risen. How to win over young consumers in product design and positioning, sales strategies, and other aspects has become a theme in the industry.
2How to cope with price fluctuations
Consistent with the overall consumer environment, price fluctuations, including declines, are also a challenge faced by the current liquor industry. The sale of high-priced liquor is facing certain challenges. How liquor companies can maintain their own price range, or rather, how they balance prices among different sub-brands and products, as well as between brands and selling prices, are issues that companies need to address.
3How to cope with more intense competition
In recent years, the overall industry competition has gradually intensified. The boundaries between products of different brands, including prices and positioning, as well as geographical distinctions, are also becoming increasingly blurred. More and more companies are actively seeking new regional markets or launching products at different price ranges. This also means that some small enterprises will face increasing competitive pressure from large enterprises. The transmission of this top-down competitive pressure in the industry poses higher demands on the overall sales, operations, and distributor management of enterprises. Enterprises need to transform from traditional extensive management to refined management and operation.
4Inventory pressure
This is an old topic that has been discussed frequently, but from the annual and semi-annual reports of listed companies, it is very evident that rising inventory pressure is a clear issue. Inventory pressure has also been transmitted to the price side; in order to reduce inventory, prices need to be lowered, but this can encounter resistance from distributors and may also have a certain negative impact on the brand. Although there have been several cyclical challenges in the history of baijiu development, this time, how to smoothly and effectively reduce inventory is another major challenge faced by each baijiu enterprise.
Overall, the liquor industry is undergoing a cyclical adjustment and structural change period, which is closely related to various aspects of overall consumption and the economy, and is not just a problem within the liquor industry itself.
In the long run, this is beneficial for the sustainable development of the industry. Enterprises need to identify their new product positioning during this fluctuating cycle and make new improvements in operations and management to cope with the current challenges faced by the industry. It is believed that after this fluctuation, truly outstanding enterprises will emerge and lead the industry into a new development stage.
*This interview has been published in Time Weekly Reporter: Guo Peng, original title: 'Executives at Baijiu Companies Changing Frequently, Performance Pressure at Peak, Can They Turn the Tide by Replacing Staff?'
