China Food

Luzhou Laojiao can’t break the “three walls” built by itself

obsession is too deep, and eventually becomes a magic barrier.
Whether young people like to drink Baijiu or not can not stop the polarization of the whole Baijiu industry.
In the first half of this year, the revenue and profit growth of listed liquor companies showed a significant slowdown compared with the same period last year. Moreover, the semi annual reports of 10 liquor circulation enterprises also show that most of the revenue of liquor channels in the first half of this year did not achieve good results. To be precise, it was “generally negative growth”.
On the other hand, the leading liquor enterprises are the strong ones. According to relevant media, the revenue of the top five “maowuyang fenlu” reached 144.745 billion yuan, with a net profit of 62.331 billion yuan, accounting for about 80% and 89% of the 19 listed companies respectively.
The “top five” originally means a higher market position, not to mention a bright “battle report” to show strength. Take Luzhou Laojiao as an example. In the first half of 2022, it achieved a revenue of about 11.664 billion yuan, a year-on-year increase of 25.19%, and a net profit of about 5.532 billion yuan, a year-on-year increase of 30.89%. It is a gratifying report card.
But the problem is that if the market competition does not advance, it will fall back. Luzhou Laojiao, which once ranked third in the industry, is even more eager to regain its former glory. How can it be willing to stay in the fifth place?
However, the “cruel story” of the industry is that Luzhou Laojiao has always wanted to “return to the top three”. It has struggled for seven years, but the distance is getting farther and farther, as if it is an unreachable illusion.

Three defeats and retreat from the high-end market

As early as 2015, Liu Miao, the new commander of Luzhou Laojiao, shouted the slogan of “returning to the top three”.
In the annual report of the second year, Luzhou Laojiao clearly proposed the strategic goal of returning to the top three in the industry by the end of the 13th five year plan. In order to achieve this goal, the management also “put forward higher requirements for the competitiveness of the company in terms of innovation ability, brand building and management efficiency”.
The objectives and requirements are gradually clarified. Next, we need to see the implementation and result feedback.
One achievement that attracted attention was that Luzhou Laojiao narrowed the gap with Yanghe shares during the 13th Five Year Plan period. In 2016, Luzhou Laojiao’s revenue was 8.627 billion yuan, compared with 17.183 billion yuan for Yanghe shares, with a gap of 8.556 billion yuan; By 2020, Luzhou Laojiao’s revenue will increase to 16.653 billion yuan, while Yanghe’s revenue will reach 21.101 billion yuan, with a gap of only 4.448 billion yuan.
Perhaps in order to always cheer himself up, Liu Miao did not mention “returning to the top three” during the 13th five year plan, and tried to lead Luzhou Laojiao to break through, but the final result was not satisfactory.
In 2020, the end of the 13th five year plan, Luzhou Laojiao’s revenue and net profit can only rank fourth in the industry, and the dream has not been realized.
Even so, “returning to the top three” is still Lu
However, last year, the “other liquor” sector was deeply impacted, with sales falling by 52%. The media called Luzhou Laojiao “low-end liquor lost its whole line” and “almost collapsed”.
This is not a problem for the Luzhou Laojiao family. In fact, the middle and high-end Baijiu with stronger social and gift attributes has become the main revenue force of the whole Baijiu industry, while the performance of low-end liquor has been relatively sluggish both last year and the first half of this year.
The reason is that the containment of the epidemic is obvious. A Baijiu dealer disclosed to Caijing that due to the impact of the epidemic, consumer demand for marriage and other things shrank in the first half of this year, affecting low-end Baijiu consumption.
However, the loss of Luzhou Laojiao low-end liquor can not completely “throw the pot” to the epidemic, and its own problems have a great impact.
In 2022, the “new national standard” of Baijiu will be fully implemented, and flavored Baijiu, including edible alcohol blended liquor, will be defined as prepared liquor and kicked out of the Baijiu category. Under this requirement, Luzhou Laojiao’s low-end liquor “Erqu” was just among those excluded, so it had to stop production last year.
In 2021, the total revenue of Luzhou Laojiao’s “other wines” including touqu and Erqu was about 2 billion yuan, 200 million yuan less than the previous year. Low end Baijiu is a red sea of struggle among liquor enterprises. The concentration of Cr3 in the market is only 12%. It is not easy for even famous brands to compete for the market in this field. The loss of 200 million market shares is not small.
Faced with the dilemma of low-end liquor, Luzhou Laojiao rearranged its layout in 2021, launching “Luzhou Laojiao 1952” which is positioned at the secondary high-end and “black cap” which is positioned at the middle and low-end of light bottle liquor (meaning that you can directly see wine bottles without packaging boxes).
Luzhou Laojiao has high hopes for these two products. It hopes that the former will “take on the mission of leading the revival of Luzhou Laojiao’s series of brands from the perspective of price and image”, and the latter will become a “cash cow”, which claims to achieve a “black cover” with cumulative sales of 10 billion in three years.
From the analysis of the industry and its own situation, we can find that the above “high hopes” are difficult to achieve.

As far as Luzhou Laojiao 1952 is concerned, the development resistance is large, first of all, because of the impact of the epidemic on the consumption demand of secondary high-end Baijiu; Secondly, the secondary high-end Baijiu racing track is dominated by regions, such as Langjiu in Sichuan Province, Jiugui Liquor in Hunan Province, Xijiu in Guizhou Province, etc. most of them rely on liquor enterprises to radiate from the “main position” to open up the market. Luzhou Laojiao needs to be cultivated for a long time if it wants to get a piece of the market, and it can not start quickly.

In terms of “black cover”, Luzhou Laojiao priced 98 yuan as soon as it sold, almost reaching the ceiling of the current price of bare bottles of wine, and the persuasion index is quite high.
This is because the price of middle and low-end Baijiu is mostly lower than 50 yuan / 500ml, and the price of low-end liquor is even lower than 20 yuan. In this price band, low – and middle-income groups and urban migrant workers constitute the main consumer groups.
Moreover, in the current economic situation, the difficulty of making money and the price sensitivity have greatly increased. How many people need to buy the 98 yuan bottle of wine to sell 10 billion yuan in three years?
Luzhou Laojiao hopes to “innovate products, constantly explore new models and achieve new breakthroughs”, but at least it has not yet achieved this goal.
Perhaps Luzhou Laojiao needs to be more pragmatic in the face of the increasingly fierce competition for the “top three”. While continuing to compete for the high-end liquor market, efforts should be made to cultivate sub high-end, middle and low-end products, so as to increase both quantity and quality, instead of being led by the idea of “top three” or “returning to the value of Chinese famous liquor”.
Recognize the reality and give up fantasy. The glory of the past is both a capital and a shackle. If an old brand wants to win a new market, it should not only focus on what it had in the past, but also understand what the market lacks now.
Author: Xu Yunliu; Source: new entropy (ID: baoliaohui), reprinted with authorization. Reprint authorization and media cooperation: Jennifer (wechat: 15151447934);
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Luzhou Laojiao can’t break the “three walls” built by itself
者:徐云流 ;来源:新熵(ID:baoliaohui),转载已获得授权。



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