According to the 2017 Big Data Report on Chinese New Year Products released by Alibaba, alcohol has huge business opportunities in mobile e-commerce, new consumer groups, rural markets and large consuming provinces, especially as the hometown of Maotai and wuliangye and other famous wines. All the time, manufacturers compete to raise prices, liquor absentminded and found the heyday. So is that really the case
For a long time, the “liquor blending” and “liquor industry profiteering” have been criticized, making the liquor industry has been standing at the forefront of the wave. In particular, the profit margins on sales of some shoddy baijiu, blended with edible alcohol, may be higher than you think. In fact, on the one hand, due to the lack of standards and supervision of the liquor industry, the concentration of the industry is not high, coupled with strong professional, production and marketing process is not transparent and other factors, people do not have a deep understanding of the liquor industry, and it is difficult to distinguish the true and false, good and bad. Alcohol, on the other hand, as the eating habits of the Chinese traditional culture and celebrate the vintages, and become an indispensable part of people on the table, coupled with a gorgeous packaging, liquor was often is a gift of a best choice, therefore, is a love-hate relationship of its people, and more hope to more transparent, liquor-making industry close to the masses.
Blending is no problem, what blending is the key, however, it is necessary to emphasize here that brewing wine is generally less blending, but distilled wine is mostly blending, it is an important technological process, the word blending itself is no problem, what blending is the key. Ji Keliang once said, “All good spirits need blending. Alcohol is the main ingredient in liquor, but also trace acid, ester, ketone, phenol and other substances. It is the ratio of these ingredients that determines the style of liquor. Therefore, ordinary enterprises need to produce ‘flavoured wine’, through flavoring wine to maintain the balance of various ingredients, so as to ensure the quality and style of their wine.” It is worth noting that the liquor is not blended with industrial alcohol, which is fake liquor; It takes the old wine of that year as the base wine, and then blends it with wines of different years (which may be higher or lower than that particular year), different rounds and different typical wine bodies, and finally makes it meet the taste quality and style of the aged wine of a particular year required by national standards. Of course, in the actual production, there are still many wineries are used to buy edible alcohol, and then add flavor; Or your own winery produces a portion of the unique original wine for flavor blending. In this regard, the law stipulates that liquid-based liquor and solid-liquid liquor are not allowed to be labeled as solid liquor. Alcoholic spirits mixed with edible alcohol (liquid liquor) must be marked on the ingredients list with edible alcohol, water and food additives, and the raw materials shall not be marked as sorghum, wheat, etc. For liquor (solid-liquid liquor) blended with solid liquor (not less than 30%) and edible alcohol, the ingredients must be marked with liquid liquor or edible alcohol, instead of sorghum, wheat, etc. It is forbidden to falsely mark compulsory labeling contents such as product execution standards and ingredient list, to produce liquor without labeling, incomplete labeling or with false labeling information, and to produce liquor marked with words such as “special supply”, “special supply”, “special purpose”, “special demand”, etc. However, most wineries do not legally label alcohol, let alone point out that alcohol is added.
Is liquor industry profiteering after all? As for the excessive profits in the liquor industry, there is a lot of controversy outside the industry. It is reported that in 2005, Wuliangye specially launched the 90th anniversary of the gold medal wine, among which “0009” commemorative wine shot a single bottle of 880,000 yuan; Produced on October 2, 1958 in 2011, five Star Moutai, aged Moutai, set a record of 1,035 million yuan per bottle. A bottle of Fenjiu fetched 2.09 million yuan in September 2010. Invented in 1992, Handi Moutai sold for 8.9 million yuan per bottle. In 1935, Laimao wine became the bidding king in the history of Chinese liquor auction with a price of 10.7 million yuan per bottle, and became the “King of Chinese liquor”. Industry analysis, well-known listed wine companies to obtain windfall profits for the following reasons: first, high-end product positioning, high sales price, large profit space; Second, the advertising and marketing investment of well-known wine enterprises is large, resulting in better and worse, and the market is more and more concentrated to well-known wine enterprises; Third, well-known wine enterprises will avoid taxes through “price transfer” and other ways, and their actual tax burden is low; In addition, the inventory value is obviously underestimated, also become liquor investment “windfall” one of the hype fulcrum. Statistics show that in the decades before 2012, major baijiu brands had been raising prices at an average rate of 20% to 30%, and the net profit growth of China’s baijiu industry even exceeded 30% in 2011, with some major brands even higher than this average. The news broke that the gross margin of Kweichow Moutai’s liquor business was as high as 92% in 2015, among which the gross margin of Moutai liquor was close to 94%.
According to the performance statistics of the half annual report disclosed by 19 a-share liquor listed companies, the total operating revenue of 19 companies reached 68.37 billion yuan, up 12.28% year on year; Net profit attributable to shareholders of the parent company was RMB 200.08 billion, up 12.49% year-on-year. The industry as a whole has performed well. However, we can also clearly see that after the golden decade before 2012, especially after the state strictly controlled the “three official vehicles” expenditure, the liquor industry has indeed entered a long winter period. According to the latest data of China Wine Industry Association, in 2015, there were a total of 2689 enterprises above the scale in the wine industry, including 299 loss-making enterprises, with a loss area of 11.12%, and a total loss of 5.437 billion yuan, with a year-on-year increase of 18.80%.
Back to the liquor product itself. Senior liquor manager Jin Yufeng once analyzed, liquor industry “only look at” brewing and production link, gross margin is really high, after all, the main raw material sorghum wine, even now the price has reached more than 5000 yuan per ton, doubled in two years, it is equivalent to 2.5 yuan a jin. According to the average calculation of four catties of sorghum brewed by different flavor types, the direct brewing cost is only 10 yuan per catty, compared with the middle and high-end liquor often more than 200 yuan, “really” seems to be a huge profit. “But now, in addition to maotai Wuliangye’s low marketing expense rate, other liquor enterprises are spending more and more on marketing and labor costs in the intermediate link. In many regions, liquor brands only spend 40-50% on marketing. Take into account the costs and expenses of production, and how much profit is left? Can you call it profiteering?”
“What CCTV misleads the public is that the 28 yuan per catty mentioned in the interview refers to the price of 500ML wine body, which is the cooperation price to the underwriters. The direct cost is 48 yuan per box after the distributor adds the packaging (20 yuan according to the brewery manager). Plus tax and all costs and expenses, give everybody simple reckoning is clear: the underwriter will taxes, logistics, manpower cost, promotion expenses, promotional support, rewards and rebates and other operating costs, plus the financial cost, a combined already close to 40% of the fee, so even by 105 yuan for, is also only 63 yuan, profit 15 yuan. After 15/105, is 14.28% profit margin a windfall? The regional agent will charge a 30% backwardmargin markup (plus costs, fees and taxes) of rmb150 for the retailer. If the retailer sells 218 yuan and the gross margin is 30%, is it a windfall profit? (Few retailers are willing to pay 198 yuan retail price for 150!) “That is to say, the production of liquor is very simple, but it is not a simple process to sell out at last. But without a certain thickness of profit, it is hard to find people to do things. In addition, high-grade liquor drives the average profit margin of liquor industry, so in the outside world, liquor enterprises are profiteering. In addition, the biggest cost of baijiu is not the material cost, but the cost of storage and time, although many wineries don’t actually pay the labeled time cost and corresponding storage cost. So, liquor industry after all is profiteering industry? Drinking buddies are free to comment.