Reporter of Meijing: Zhu Wanping Editor of Meijing: Dong Xingsheng
In 2021, Lutong, who has worked in the liquor industry for 20 years, gave up his former success path and turned into an entrepreneur, took root in the core production area of Maotai Town sauce liquor, and led the "real-work sauce liquor" to make a big move.
For Lutong, making money is not the most important thing for starting a business this time. "My ambition or goal is not to do a business - selling 300 million or 500 million, but to spend 20 years or even longer to build a good company and brand." Recently, when "Media Integrated Media Will Enter Wine" talked to Lu Tong, chairman and president of Zhengong Wine Industry, he said this.
Lutong Image source: Photo provided by the company
In more than an hour of interview, Lutong talked about his thoughts on the company's development and his observations on the industry. What the outside world is quite curious about is that in the face of Maotai, Langjiu , Xijiu and other leading sauce liquor , as the industry's "new recruits", how can Zhengong sauce liquor compete with these leading manufacturers?
"Long-term optimism, medium-short-term prudence"
Looking back, this time, Lutong may not be very good when choosing the time node for entrepreneurship. On the one hand, since the second half of last year, the domestic soy sauce wine industry has entered a period of adjustment, and the heat of soy sauce wine has cooled down; on the other hand, the epidemic has been repeated since this year, and the consumption of liquor is relatively weak, and the real-time sauce wine that has just started this year will inevitably be affected to a certain extent.
"There is definitely an impact, especially on the market side, which has a relatively obvious impact. One is that the pace of the entire work has been affected. We originally planned to fully launch market sales and promotion investment work at the Chengdu Spring Sugar and Wine Fair in mid-March this year. However, due to the epidemic, the Spring Sugar and Wine Fair has also been postponed, and many work arrangements cannot be carried out at the normal pace. For example, our investment work, either people cannot go out or business cannot see each other, and these have a very obvious impact on market work." Lutong said.
consumer side has also been impacted by the epidemic. During this year's Mid-Autumn Festival, the liquor market was relatively dull. During the repeated epidemic, the speed of product sales and shipment prices have been affected.
However, Lutong admitted that the impact of the epidemic is a problem facing the entire industry. "It should be said that compared to those companies that already have a certain size, our challenge is still smaller. Because we start from scratch, selling a bottle of wine, a box of wine, and a ton of wine. In the current situation, what Zhengong Sauce Liquor needs to do is to re-examine the rhythm, and to improve some strategies and strategies, so as to move more firmly and more stably."
Zhengong Sauce Liquor Picture source: Photo provided by the company
"In the medium and short term, we are a cautious man; but in the long run, we are a firm optimist." In Lutong's view, there is no way to make wine, especially sauce wine, and even if the market is good, it is not possible.
"More value quality, production capacity, channel network and consumer awareness"
Relatively speaking, the sauce-flavored liquor industry is a relatively "traditional" industry, and old wine companies such as Moutai, Langjiu, and Xijiu occupy the leading position in the industry. As a "new recruit" in the industry, how can Zhengong sauce liquor compete with these top sauce liquor brands?
In Lutong's view, first of all, "choose is greater than effort". Although the macro environment has changed and the market has also adjusted, the core logic of choosing the sauce wine industry at the beginning has not changed: liquor is a good business, and sauce wine is a good category.
Secondly, the advantage of Zhengong sauce wine lies in its focus. "We are newer than other brands, but our advantage is that we are more focused." Lutong said that whether it is from the perspective of quality, value, or channel, brand building and business model, Zhengong Sauce Liquor is more focused.
Finally, Zhengong Jiangxiu is willing to give up profits and adopts a high-cost and low-gross profit model in the early stage to establish an advantage, that is, focus on the 300-500 yuan price range, and at the same time, use base wines that are better than competitors at the same price to carry out a "dimensionality reduction strike". Because of this, Zhengong's products received good market responses once they were launched.
"I would rather sacrifice the gross profit margin of the product to build an advantage in the early stage of the brand establishment, that is, within three or four years. The real-time sauce wine can not make money in the early stage, but what I want is quality and production capacity, the scale of wine storage, the channel network and consumer awareness. I hope to seize the time and build the brand." Lutong said.
At present, Zhengong Sauce Liquor is vigorously expanding its production. According to the plan, during the 14th Five-Year Plan period, Zhengong Sauce Liquor will invest in the construction of a core base of 12,000 tons of high-quality Daqu sauce aromatic wine making, 30,000 tons of koji and 60,000 tons of wine storage, and at the same time complete relevant supporting facilities to form a full industrial layout of sauce liquor including production, storage, packaging, and livestock tourism.
Image source: Image provided by the enterprise
Lutong admitted that what he wanted to do is not a business worth hundreds of millions. "If I just want to make some money, I will definitely not adopt this approach. I will not spend a lot of money to buy wineries as soon as I come up, nor will I spend hundreds of millions of yuan to make wine every year before sales, and also do expansion and brand building, etc.."
However, building channels, building brands, and expanding also means that a large amount of funds for real-time sauce wine will be deposited. Lutong also said without hesitation that this may lead to a huge gap in the company's early sales revenue and cash expenditure. "This gap may take 3-5 years to balance the entry and exit. We have all invested in the early stage." The rough growth of
"cutting leeks" has ended, "Whoever does it will be finished!" The layout of
channel is one of the most important tasks of Zhengong Jiangjiu. For this area, three words are used - focusing, sinking and deep cultivation to summarize the focus of the company's channel layout.
"I won't go all over the world like many brands in the past. Especially some soybean-flavored liquor brands, as long as they are given money, they can recruit any business, and they are recruiting on a large scale nationwide. After recruiting, the subsequent market construction work is unsustainable, resulting in a very low retention rate of merchants." Lutong believes that this "leek-cut"-style rough growth model has ended, "can't do that anymore, whoever does it will be done."
Sauce Liquor Production Area Image source: Photo provided by the company
As for sinking, Lutong said that the market action of Zhengong Sauce Liquor must be down to sales, establish contact with consumers, and make the wine drink. To deepen the market, we must continue to build the market. "We hope that a certain market can do 2 tons in the first year, 3 tons in the second year, and 5 tons in the third year, so that we can continue to make efforts. Instead of starting up, we will get 5 tons first. After collecting the money, it depends on luck later."
At present, Zhengong sauce liquor mainly chooses markets with a good consumption atmosphere and a large market basic capacity, such as Shandong, Henan, Guangdong, Fujian, etc., and further selects certain prefecture-level cities in these provinces to make key layouts.
However, whether it is channel construction, brand construction, capacity expansion, and the early adoption of the "high cost and low gross profit" model, it puts forward extremely high requirements for the financial strength of Zhengong Jiangxiu. How to solve the funding problem? In response, Lutong revealed that the company has basically finalized an investment and will be implemented soon.
"As long as the Maotai banner does not fall, the continuous growth of sauce-flavored liquor will not end."
Speaking of the prospects of the sauce-flavored liquor industry, Lutong said that he is still optimistic about the long-term development of sauce-flavored liquor. "From the market space, the sauce liquor markets in Henan, Guangdong and Shandong are developing well now, and the proportion of sauce liquor is quite high. The proportion of sauce liquor in Jiangsu, Zhejiang, Hebei, Anhui and other places is not high, and the development of the sauce liquor market is not complete, so there is still a great opportunity."
In addition to the nationalization of sauce liquor, under the influence of Moutai, consumers who originally drank strong aroma wine, red wine, and foreign wine are also trying to drink sauce liquor. "As long as the banner of Moutai stands firmly there, the continuous growth of the entire category of sauce liquor will not end."
Zhengong Sauce Liquor Picture source: Photo provided by the company
Lutong's viewpoint also coincides with many observers in the industry.
"At present, the proportion of sauce wine in white wine is still very small. In recent years, sauce wine has been constantly eroding other fragrance markets. I personally think sauce wine has not ended, and it is still early for sauce wine to reach the ceiling."In September this year, at the 2022 Seventh China Wine Capital Forum hosted by Daily Economic News , Chairman of Shenzhen Linyuan Investment Management Co., Ltd. Linyuan said in an interview with a reporter from "Daily Economic News".
"The business model of sauce wine is still very good. In the long run, it is likely to enter a steady-state expansion range in the future. In the future, high-quality soybean liquor will still be relatively scarce. The overall market share of soybean liquor is still a major trend, and soybean liquor is still a good track. "At that time, Ye Shuhuai, chief analyst of wine and beverage at Oriental Securities, also told reporters.
However, Lutong also admitted that in the short term, we must also recognize the reality and be prepared to deal with challenges. "First of all, you have to ensure that the company can survive. Don't do it, because you are "dead". Secondly, we must further cultivate our internal strength and create future competitive elements. ”
Daily Economic News
