The Rise Of Maotai Flavor Liquor: The Industry Structure Of Several Listed Liquor Enterprises May Change

After experiencing a sharp correction in the beginning of the year of the ox, the liquor plate of a shares has risen slowly since the middle of March.

According to wind data, the overall increase of liquor index has reached 37.53% since March 10.

In this period of more than one month, the spring national sugar and Wine Fair (hereinafter referred to as "the fair") was restarted because of the epidemic situation and was successfully held in Chengdu in April.

In this year's sugar and wine fair, "sauce and wine hot" became the hottest theme, which attracted wide attention of the participants. Some researchers told reporters that the rise of "sauce liquor fever" in recent years will impact the future pattern of liquor industry.

"Sauce and wine fever" swept many places

"A while ago, the sugar and wine party was going to be a sauce party." A medium-sized private Baijiu researcher joked to reporters.

The researcher is not alone in this regard. According to the feedback from various organizations, "sauce and wine fever" is indeed a more obvious feeling of the participants of the sugar and Wine Fair.

For example, the food and beverage team of CSCI said, "on the whole, there are two very obvious feelings: 1. High end strategists must compete, 1000 yuan price band or accelerate the expansion, and the secondary high-end does not slow down, but the competition intensifies; 2. Sauce and wine fever is irresistible, and the dividend period is expected to last more than 10 years. "

The food and beverage team of Huachuang securities also said in the record of the meeting that "under the trend of soy sauce and wine craze, sauce and wine plate will be the focus of Chengdu spring sugar fair in 2021, and the proportion of forums will increase significantly. The professional theme exhibition" heart of sauce and wine "is very popular, and the sauce and wine exhibition has become a phenomenal category grand event."

"Sauce and wine fever" is not only reflected in the venue, but also in the market data. According to agency statistics, the compound annual growth rate of revenue / output of Maotai flavor liquor from 2017 to 2019 is as high as 26% / 22%, which is obviously better than other flavor types. In contrast, Luzhou flavor type and light flavor type almost zero growth in the same period.

According to the survey summary of some liquor dealers and experts obtained by the reporter, Maotai flavor liquor has the heat matching with the high growth data in some parts of the country.

For example, a liquor expert from Henan Province said at a recent institutional research meeting that drinking soy sauce liquor "has formed a certain atmosphere in Henan Province": "now some consumers prefer to drink 300-500 yuan sauce wine rather than 1000 yuan Luzhou flavor liquor."

In another survey summary of Henan liquor dealers, a Henan big businessman pointed out that at present, the sales amount of Henan sauce liquor has accounted for more than half.

"In 2020, there will be more than 20 billion sauce liquor in Henan, and more than 40 billion liquor in the whole Henan market, accounting for half of the total amount, among which Maotai is the largest, and the quantity is still inferior to Luzhou flavor. Now, as long as Maotai doesn't collapse, there won't be any problem with the whole sauce wine. " The liquor is said to be a big merchant.

According to the statistics of institutions, Henan, Shandong, Guangdong and other provinces have become an important market for liquor consumption, and the local market share of sauce liquor has reached 50%, 50% and 20%. In addition, Guizhou, as the origin of sauce wine, has always been the base of sauce wine consumption, and 90% of the local market share is occupied by sauce wine.

"Shandong and Henan are big liquor consumption provinces, with few local strong brands, and foreign sauce liquor brands are expanding rapidly; Shandong is influenced by Lupai sauce wine, and its consumption base is good; Guangdong has developed economy, frequent business exchanges and high-end sauce wine Dongfang securities explains why.

It is worth mentioning that when a seller's analyst investigated Sichuan, the base of Luzhou flavor liquor, in March, he also said that the future trend was "sauce liquor fever".

So, why has "sauce and wine fever" begun to rise in recent two years?

"One is the consumption demand of medium and high-end liquor brought by Maotai; the other is that the quality of Maotai liquor is better." The researchers said.

Huaxi Securities also pointed out that the corresponding behind the sauce wine craze is actually consumption upgrading. The original motive force of consumption upgrading is better products and better consumption experience.

"For consumers, soy sauce wine" has the strength (high degree) and the taste of wine (the aroma is more aggressive), but there is no wine business (the body burden after drinking is small) " Huaxi Securities said.

Several liquor companies enter the Bureau

In addition to consumption upgrading, the aforementioned researchers also told reporters that Maotai flavor liquor is a "better business" for liquor manufacturers.

According to the data of China food network, the production capacity of Maotai flavor liquor in 2019 will be about 550000 kiloliters, with sales revenue of 135 billion yuan, a year-on-year increase of 22.7%, and a profit of 55 billion yuan, a year-on-year increase of 22%.

In 2019, Maotai flavor liquor achieved 21.3% sales revenue and 42.7% profit with 7% production capacity in liquor industry.

Because of this, in recent years, all kinds of domestic capital have been focused on the "better business" of Maotai flavor liquor, and many of the entrants mainly focus on other flavor liquor enterprises.

Shuijingfang (600779. SH) is the latest listed liquor company. On the evening of April 9, Shuijingfang announced that the company had signed a framework agreement on joint venture project with Liang Mingfeng and Guowei company in Chengdu, and Shuijingfang planned to jointly invest with Liang Mingfeng to establish a new joint venture company with the name tentatively named Guizhou Shuijingfang Guowei liquor industry Co., Ltd.

It is reported that the registered capital of the joint venture is at least 800 million yuan. Shuijingfang contributed in cash, accounting for 70% of the registered capital of the joint venture, and Mr. Liang Mingfeng contributed in kind, accounting for 30% of the registered capital of the joint venture.

According to the current plan, Guowei company will be responsible for the future production, while Shuijingfang is mainly responsible for the channel. As for the planned production capacity and the future positioning of sauce wine products, it has not yet been determined.

Shuijingfang is far from the only listed liquor company involved in sauce liquor in A-share market. According to incomplete statistics by reporters, since 2010, liquor companies including Wuliangye (000858. SZ), Yanghe shares (002304. SZ) and jishiyuan (603369. SH) have also laid out sauce wine.

In June 2016, Yanghe acquired a Maotai flavor liquor company named Guizhou guijiu, which was also the first strategic M & a project of Yanghe during the 13th Five Year Plan period.

In 2019, the chairman of Yanghe said at the annual marketing conference that the year of 2019 will be the comprehensive development year of Yanghe Maotai flavor liquor product layout. We should focus on promoting the national layout of Maotai flavor liquor, and take the leading products of guijiu as the "submachine gun" to fully penetrate the key markets in and outside Guizhou Province.

It was also in the same year, Yanghe said that the planned production capacity of its expensive liquor was 5000 tons. At present, the brand was in the cultivation stage, and the sales volume was not large.

The above statement has also been confirmed by Yanghe stock holders. The source told reporters that at present "the overall scale and volume of expensive liquor is not very large, and the sales volume in surrounding areas may be better. It is planned to lay out e-commerce channels."

In contrast, Wuliangye, another liquor enterprise, entered the Bureau earlier. As early as in the middle of 2010, Wuliangye launched Yongfu sauce wine.

According to reports at that time, Wuliangye attached great importance to the operation of Yongfu sauce wine. In addition to delaying the listing time for several times, it also established a separate business division and established a separate marketing and accounting system.

However, Wuliangye related people said to reporters a few days ago, "Wuliangye sauce wine has not been done, now (sold) are a few years ago."

The A-share listed liquor companies who like "sauce wine" still have the fate of this world. At the sugar and Wine Fair in 2019, jishiyuan launched the high-end Guoyuan crystal V series with a price of more than 1000 yuan.

At that time, jishiyuan said that the company started to develop Maotai flavor products in 2001, and the final product was Guoyuan V9 with elegant Maotai flavor style. The liquor body used high-quality old base liquor of more than 10 years, and the price was only half of the market price of Maotai at that time.

According to the 2020 annual report of jishiyuan, the sales growth of V series last year has exceeded 50%. At the performance exchange meeting on April 19 this year, the management of Jinshiyuan said that the sales volume of V Series in the first quarter of 2021 had reached about half of that of last year. Among them, elegant sauce flavor V9 accounts for 40% of V Series sales.

In response to the question "how to promote V9", Jinshiyuan said that the business market is the top priority at present. Due to the high acceptance of V9 consumers, promotion is less difficult than expected.

"V series is mainly for the upgrading of the company's products to do layout, V9 is currently more group buying channels. In the follow-up period, no consideration was given to the launch of medium and high-end sauce liquor with hundreds of yuan. "The relevant personage of this world fate told the reporter that elegant Maotai flavor is the company's own development characteristics," there is no need to go close to the traditional sauce flavor. If consumers like the taste of our products more, we will stick to our own way. "

"There must be some exchanges with Guizhou sauce wine. As for mergers and acquisitions (liquor enterprises), it depends on the fate of the future." The person said.

Industry structure will be impacted

Although there are many other flavor liquor enterprises entering the Bureau of soy sauce liquor, the aforementioned liquor researcher told reporters that for other flavor liquor enterprises, it is not easy to enter the Bureau of Maotai flavor liquor.

"First of all, the production technology of soy sauce wine is more complex, which has higher requirements for the production environment. Although the production process can be copied to other regions, the quality is difficult to control. This can't be done in the north. In the south, in fact, there are not many areas suitable for making sauce wine. In short, we can draw concentric circles in Maotai Town, and the farther away from it, the worse the quality. " The researcher said.

Everbright Securities also pointed out that compared with Luzhou flavor liquor and Qingxiang liquor, the production process of sauce liquor is complicated and the brewing time is longer. With Chishui River Basin as the core area, Maotai flavor liquor has a strong production area concept. In 2020, the production capacity of sauce liquor in Chishui River Basin will account for more than 85% of the national production capacity.

"Moreover, sauce wine, especially kunsha wine with high quality, has a very high investment cost. Taking the production capacity of 10000 tons of kunsha sauce wine as an example, its construction investment needs 2.5 billion yuan. After that, the annual brewing cost is still 500 million. In addition, due to the limitation of technology, there is no liquor in the first four years, and it will be sold in the fifth year to generate revenue. It doesn't count the difficulty of getting land, the cost of interest, the cost of storage and transportation, the cost of personnel and so on. " According to the aforementioned researchers, it is very expensive for wine companies to get involved in sauce wine production and build new production lines. Few wine companies can get so much cash.

At present, the scale of Chinese sauce wine industry is still expanding rapidly. According to the forecast of Everbright Securities, from the perspective of production capacity, most liquor companies have expanded their production capacity since 2019, with a total planned output of 180000 tons. Considering the optimistic, neutral and pessimistic situations, it is expected that the production capacity will reach 73 / 65 / 600000 tons in 2022 and 44 / 39 / 360000 tons in 2026. Assuming that the average price of the industry maintains a growth rate of 4% - 6%, the compound growth rate of the sauce and wine industry in 2019-2026 will be 15% / 12% / 10% respectively. In 2026, the income of sauce liquor industry will reach 3705 / 3087 / 266.5 billion yuan, accounting for more than 30% of the liquor industry.

With the rapid development of soy sauce liquor, it is not easy for other flavor liquor enterprises to enter the Bureau, and it is not easy to keep the original market share.

Huaxi Securities pointed out that in the face of demand explosion, sauce wine will subvert the industry competition. The strong experience of soy sauce wine products makes the brand details and brand building work "not seem so important for the time being". Moreover, because of the direct realization of consumption cognition interception at the consumer end, the current sauce liquor enterprises do not need to do "meticulous channel deep cultivation and complex consumption cultivation" like Luzhou flavor liquor enterprises, but only need to "do a good job in capacity supply", With the rapid national investment promotion, horse racing and enclosure ".

"To a certain extent, this is another dimension reduction attack in addition to the brand in the competition of Maotai flavor category for Luzhou flavor category -- leading in marketing can not resist the general trend of sauce liquor." Huaxi Securities said.

"In the future, almost all other flavor wines will be affected by sauce wine. Among them, the less affected may be the high-end liquor of other flavor types, because the high-end liquor of each family is really good wine and will have full market competitiveness. " The researchers said.

However, the source also told reporters that the performance of other flavor liquor, including Luzhou flavor, will not be greatly disturbed in the short term.

According to the published first quarter report of 2021, the performance of a number of wine companies exceeded market expectations. Some organizations pointed out that "the structural prosperity of liquor industry will continue".

For example, Shuijingfang is expected to achieve a revenue of 1.23 billion yuan in the first quarter, with a year-on-year increase of 53.6%, and a net profit of 425 million yuan, a year-on-year increase of 119%; In the first quarter, Jinhui liquor (603919. SH) achieved a total revenue of 510 million, a year-on-year increase of 48.4%, and a net profit of 120 million, a year-on-year increase of 99.3%.

Highland barley wine (002646. SZ), which lost money in the first quarter of last year, has also recently released a performance forecast for the first quarter, which is expected to turn losses into profits and achieve a net profit of 60-80 million yuan.

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