What are you feeling anxious about?, Moutai, attempting to break through the circle with young people

Guide: What is Maotai worried about behind the continuous "goodwill" to young people and striving to make Baijiu younger? Will young people really buy Maotai?

Author | Lin Zhiyin, Le Yan, Luan Li, First Financial

The first Moutai for young people, from ice cream to coffee to chocolate, Kweichow Moutai, as the leading enterprise in the Baijiu industry, is trying to "please" young people.

At 3:30 p.m. on September 16, Kweichow Moutai and Duff jointly launched Maoxiaoling Liquor Heart Chocolate, which was the second time since this month that Moutai tried to co brand with other brands across the border.

Maotai, which carries its own traffic, has made a certain sensation on social media by its cross-border co branding, but what is Maotai anxious about behind its continued "goodwill" to young people and its efforts to make Baijiu younger? Will young people really buy Maotai?

Cross border collaboration

Departing from Shanghai and flying for about 3 hours, arrive at Xingyi Airport in Guizhou. This is a relatively small airport with only one luggage carousel, and both departure and arrival are in the same hall. However, recently it has been unusually lively here as the 2023 International Mountain Tourism and Outdoor Sports Conference is being held. In the afternoon of September 16, during the sports conference, Kweichow Moutai and Dove jointly announced the official launch of "Maoxiaoling" liqueur chocolate. Add 2% 53% vol Kweichow Moutai liquor to each core chocolate.

The reporter from First Financial News learned from RT Mart that as of 12:00 noon on September 17th, 2000 boxes of Moutai Heart Chocolate from Shanghai RT Mart have been sold, and half of the stores in the first release have sold out the sugar reducing version of the 2-pack. RT Mart is urgently restocking, and it is expected that on the 19th, all 26 stores of RT Mart in Shanghai will sell reduced sugar versions of alcoholic beverages. Defu's official online platform launched after-sales service on September 16th, and the products were sold out in seconds.

This is not the first time Maotai has engaged in such cross-border consumer goods cooperation. On September 4, when Kweichow Moutai and Ruixing Coffee launched their co branded coffee "Soy Sauce Latte", social media was once screened. According to data released by Luckin Coffee, the first day sales of a single sauce flavored latte exceeded 5.42 million cups, and the first day sales of a single product exceeded 100 million yuan. After the product was launched on the market, there was also a phenomenon of selling out of stock. Luckin Coffee announced on September 11th that its sauce flavored latte has been restocked to some city stores since September 10th and will resume nationwide supply from September 19th.

This time, when "Maoxiaoling" liquor heart chocolate officially went on sale, the attention on social media has cooled down compared to sauce flavored lattes. The outside world believes that this is related to the chocolate being preheated in advance; On the other hand, in the short term, the intensive collaboration of Maotai has caused some aesthetic fatigue for consumers.

However, as the world's largest liquor company by market value, Kweichow Moutai is strongly determined to "break the circle" for young people.

"In the face of new consumption trends, as a traditional brand, Moutai should always be young, enhance the vitality of the enterprise, and must embrace youth and embrace Generation Z. From ice cream to soy sauce latte, and then to wine heart chocolate, Moutai 'wears new shoes and takes a new path'. We have completed the peripheral products and a series of extended development of drinking, eating, tasting, drinking, and taking, namely, drinking Moutai wine, eating Moutai banquet, tasting Moutai ice cream, drinking soy sauce latte, and taking wine heart chocolate." Ding Xiongjun, chairman of Kweichow Moutai Group and chairman of Maotai Group, said at the launch ceremony of the new wine heart chocolate product "Maoxiao Ling".

Approaching young people

At the end of 2015, high-end Baijiu represented by Maotai Feitian Liquor took the lead in recovering in the industry sales. In addition to the sustained high growth in the past few years, the whole industry is now facing new challenges due to the pressure of the macroeconomic environment and the downward trend of consumption. From the channel side, the market inventory is high, the dynamic sales are slow, the circulation side and the supply side are in different degrees of "involution", and the Baijiu industry has entered the era of stock competition from the era of incremental development.

According to the data of the National Bureau of Statistics, from January to December 2022, the cumulative output of Baijiu enterprises above designated size nationwide will be 6.712 million kiloliters, down 5.6% year on year. This is the sixth consecutive year of decline in Baijiu production since 2017. Moreover, in the first seven months of 2023, the national production of Baijiu above designated size will reach 2.367 million kiloliters, down 13.3% again.

Against the background of continuous decline in the industry output, Kweichow Moutai has shown a certain anti cyclical ability, and the output and sales continue to grow.

In 2022, Kweichow Moutai will achieve an operating revenue of 124.1 billion yuan, up 16.87% year on year; The net profit attributable to shareholders of the listed company was 62.716 billion yuan, a year-on-year increase of 19.55%, and at that time, the performance growth rate reached a new high in nearly four years.

According to the 2023 semi annual report released by Kweichow Moutai on August 2, the total operating revenue in the first half of the year was 70.987 billion yuan, and the net profit attributable to the parent company was 35.98 billion yuan, higher than the previously predicted data. Among them, revenue increased by 20.76% year-on-year, not only maintaining double-digit growth, but also returning to a six-month revenue growth rate of 20% after 5 years.

Since the end of 2015, Kweichow Moutai has undergone great changes.

Firstly, there is the anti-corruption and channel flattening transformation. With the increasing premium power of the Feitian Maotai brand, there are frequent price chaos and even rent-seeking situations in Maotai. Starting from 2018, a large number of non-standard Maotai liquor and series liquor distributors have been banned. Instead, the company is vigorously supporting direct sales channels.

At the end of August 2021, Ding Xiongjun became the new "leader" of Maotai. After he took office, Maotai's channel adjustment continued, weakening the power of wholesale agents and further supporting its own direct sales channels. In 2022, Maotai's direct sales channel revenue reached 49.379 billion yuan, an increase of 105.49%, accounting for nearly 40% of the company's revenue. In the first half of 2023, Kweichow Moutai's direct sales channel revenue is 31.42 billion yuan, and the wholesale agency channel revenue is 37.933 billion yuan. The direct sales channel revenue is approaching the wholesale agency channel revenue.

Secondly, there is product transformation, and the company is also attempting to break the monopoly of Maotai liquor and develop a series of liquor businesses.

These measures have all driven stable growth in Maotai's performance.

At the same time of transformation, Maotai continuously releases signals to promote the youthfulness and fashion of the Maotai brand. "Seizing young people is seizing the future of Maotai," Ding Xiongjun once said.

The digital sales platform "i Moutai" APP launched by Kweichow Moutai on March 31, 2022 is aimed at young consumer groups, which also shoulder the responsibility of cultivating young consumer groups.

Kweichow Moutai also continues to think about how to attract young consumers. At the 2022 shareholders' meeting of Kweichow Moutai, Ding Xiongjun responded to the external concerns such as whether to raise the price of Moutai liquor and balance the channels; At the same time, it also reveals a "must consider issue", which is the horizontal expansion of the industrial ecosystem. He believes that in recent years, Maotai has conducted systematic thinking on the horizontal expansion of the industrial ecology. On the one hand, in the application of base liquor, Maotai has used base liquor to create a series of peripheral products that are close to young people; On the other hand, in terms of microbiology technology, it is hoped that in the future, microbiology technology can be used to develop some future foods.

Anxiety in Maotai

As the flagship product of Maotai, Feitian Maotai has already surpassed the attributes of fast selling products and also possesses financial attributes.

"Every year, many customers come to our Guizhou, and some of them come for Maotai. According to some rules, if passengers take a designated flight route and meet the requirements, each person can purchase two bottles of Maotai liquor. We will purchase some of their Maotai liquor from these buyers, and then resell it to merchants who specialize in collecting Maotai liquor at a higher price. Passengers can cover a portion of their travel costs, and we can earn about 500 yuan per bottle of Maotai." In some cities in Guizhou, taxi drivers told First Financial reporters that they not only drive, but also earn some "extra income" through Maotai liquor transactions.

Until now, Feitian Maotai liquor is still hard to find.

However, all signs show that Moutai is already worried about whether it will lose the young Baijiu consumer group? This problem, in fact, is also a major problem that puzzles the whole Baijiu industry.

On December 22, 2022, Reese Strategic Positioning Consulting released the "Young People's Liquor - Innovative Research Report on Chinese Liquor Category". The report conducts qualitative interviews and quantitative research on 2219 young people from 25 cities, deeply analyzing the current situation of young people's drinking behavior, and based on psychological insight and cognitive analysis, gaining insight into the drinking trends of young people. According to the survey results, the population of young people is huge, with a potential young alcoholic beverage population of up to 490 million, and the market size of young alcoholic beverages is as high as 400 billion yuan.

Although the potential young people's drinking market is huge, it is not easy for Baijiu enterprises to occupy the minds of these young people.

According to the above report, depending on the high-end upgrading trend, the market size of Baijiu will not be significantly affected in the short term, but in the long term, Baijiu has a "mental crisis" among young people. Baijiu and rice wine are both significantly recognized as "the wine of the previous generation", and 41% of the respondents will actively mention that Baijiu is the wine of the elders, the elderly and the previous generation when talking about Baijiu.

In fact, with the change of consumption generation, how to solve the problem of Baijiu rejuvenation has become more urgent.

According to the seventh national census, the population of China's post-80s generation is 223 million, the post-90s generation is 221 million, and the post-00s generation is 163 million. The total population proportion of the three is 42%. As the first batch of post-80s generation has entered the age of 40+, the post-90s generation has also reached 30+.

The growth peak of the last round of Baijiu was mainly driven by consumers born from 1950 to 1970, who had deep feelings for Baijiu consumption. However, with the change of the times, the Baijiu consumption group gradually changed, and the post-80s and post-90s generation raised by drinks gradually became the main consumer group. However, the latter lacked good feelings for the spicy taste and post drinking reaction of Baijiu, and even for the traditional entertainment culture.

The report from Reese Strategic Positioning Consulting shows that young people are very cautious in choosing alcohol content. On the one hand, they hope to drink alcohol with low alcohol content, good taste, and easy drinking; On the other hand, I hope to achieve slight intoxication.

In other words, it is not a small challenge for high Baijiu to attract young people.

Breaking through boundaries and crossing boundaries, not excessive

Since the Baijiu industry began to warm up in 2016, Baijiu brands have been trying to gain a wider range of attention from young groups through cross-border approaches, among which Luzhou Laojiao is the most advanced.

Since 2016, Luzhou Laojiao has launched cross-border perfume, chocolate, ice cream, milk tea, etc. Among them, Luzhou Laojiao's tenacious perfume once became a popular online brand. Netizens once joked, "Your perfume has no wine, but I am drunk like a dog."

At the 18th China International Liquor Expo held in April this year, Li Yong, Deputy General Manager and Secretary of the Board of Directors of Luzhou Laojiao Co., Ltd., revealed that in recent years, Luzhou Laojiao has mainly broken through in three aspects: drinking scenes, product line innovation, and brand value innovation.

In terms of product line innovation, Li Yong believes that Luzhou Laojiao, milk tea, ice-cream, coffee, and perfume in the past have many cross-border cooperation. The idea is to constantly innovate Luzhou Laojiao's product line, and Baijiu will become younger and more fashionable through cross-border cooperation, and integrate with the lives of many young people and the public.

Cai Xuefei, an analyst of the liquor industry, told China Business News that at present, to break the crowd barrier and enhance the brand topic, cross-border cooperation is the most direct way for Baijiu brands.

From the outside world's perspective, Baijiu enterprises do not want to diversify to increase sales, but want to narrow the distance with young consumers. For example, the estimated revenue of Moutai Ice Cream in 2022 is 260 million yuan, which is almost negligible compared with the revenue of hundreds of billions of yuan in Kweichow Moutai Moutai.

With the growing popularity of Baijiu cross-border wind, the industry also has some thoughts on Baijiu cross-border wind.

Xiao Zhuqing, the chairman of Wuhan Jingkui Technology Co., Ltd., said that he was optimistic about the distribution of desserts, chocolates, new teas and other categories and scenes close to young people through cross-border cooperation among large liquor enterprises, but also suggested that liquor enterprises should introduce senior R&D and operation professionals in cross-border target industries, attach importance to taste testing and taste innovation, regularly carry out interactive exchange activities popular with young consumers, and at the same time pay attention to planting grass on Internet platforms popular with young people, such as Kwai Tiktok Xiaohongshu, to cultivate and accumulate consumer awareness, and encourage young consumers to share the consumption experience.

Cai Xuefei said that Baijiu, especially high-end Baijiu products, have "identity" problems, and Baijiu enterprises also need to pay attention to avoid excessive cross-border problems. Cross border has high requirements for the value and operation of the main brand. If cross border products are improperly developed or over developed, cross border will dilute the value of the main brand. Cross border of inappropriate categories will further confuse consumers' minds and affect brand image, especially high-end Baijiu, a social product. Consumers attach great importance to the identity empowerment value given by products. Thing is precious, and consumption must have a high threshold, and it is only valuable for specific people. Once high-end Baijiu brands lose this sense of mystery and scarcity, they will inevitably weaken their core value. Naturally, they cannot support high prices. Trying to reach the public through cross border to meet different consumer goals is not a rational choice for high-end Baijiu.

"Previously, Baijiu mainly focused on the dining table in the selection of scenarios for educating young consumers, but this scenario was relatively simple, and the use of ice cream, coffee, chocolate, etc. enriched the use of Baijiu, but I personally think that not all Baijiu brands are suitable for this cross-border, for example, Maotai itself has certain scarcity and luxury attributes, and goes to co brand with other brands. The latter can borrow from Maotai, but Maotai itself may not increase in value." said the First Financial Reporter, a Baijiu business person.

A senior dealer who has business with leading hotel enterprises such as Moutai all the year round also believes that high-end Baijiu such as Moutai is not very attractive to young consumers. The core competitiveness of Moutai lies in its unique Maotai flavor, which is obviously different from that of other distilleries. Older people tend to purchase Maotai in places such as banquets and business meetings due to their dignity. In addition, due to the scarcity of Maotai, it also has the attribute of similar financial transactions, which has led to many people speculating on the price of Maotai. "But all this does not mean that Moutai will continue to be popular with consumers. The upsurge of these short-term consumer goods will subside. In fact, more young people do not have a special preference for high-end Baijiu such as Moutai."

At the launch ceremony of the "Maoxiaoling" liquor heart chocolate new product, Ding Xiongjun stated that liquor is the foundation of Maotai's establishment and development, and has always been "the main business and the fist in the fist". With the launch of Maoxiaoling Liquor Heart Chocolate, the "+Maotai" series of peripheral products will come to an end.

Recently, at a Baijiu forum, Wang Xinguo, president of China Alcohol Circulation Association, told the media such as First Finance that cultural heritage is the core driving force of the Baijiu industry. At present, the Baijiu industry has entered a new round of adjustment. From the perspective of historical laws, the release of new impetus is often behind the adjustment. The problems encountered by Baijiu, such as insufficient consumption vitality, shrinking consumer groups, and limited market scope, can only stimulate consumption vitality and expand consumer groups in the long run by fully demonstrating the cultural connotation of Baijiu and releasing the cultural value of Baijiu through cultural renaissance; Only in this way can we enhance our emotional recognition of Baijiu and continuously enhance the industrial value.