This fall is a bit special. In the past, the "prosperity" scene of the liquor industry, especially high-end liquor, raising prices in order to face the Mid-Autumn Festival, National Day and even the Spring Festival sales peak season, disappeared, but instead, there was a bleak si

This fall is a bit special. In the past, the "prosperity" scene of the liquor industry, especially high-end liquor, raising prices in order to face the Mid-Autumn Festival, National Day and even the Spring Festival sales peak season, disappeared, but instead, there was a bleak situation where price cuts and promotions were vigorously promoted but the results were not good.

Price increases in the two festivals. Merchants are busy promoting

In addition to the Moutai in the top, which continues as in short supply and hot sales, high-end liquors and local liquors including Wuliangye have joined the army of various fancy promotions.

Around the Mid-Autumn Festival, many media in China have visited major shopping malls and stores on site to experience various discount activities such as "direct reduction", "full reduction", "discount", "buy large bottles and get small bottles", "buy wine and get phone bills" at the liquor terminal.

And this promotional scene reappears again on the eve of National Day. Consumption Daily reporter recently visited a large life supermarket in Beijing and found that alcohol promotion discounts are also quite strong. If you buy two bottles of Xiaojinbiao Erguotou, you can get one free bottle, and if you buy one hundred, you can get 30 yuan off.

But so proud, sales performance is not ideal. According to the Daily Economic News, a wine merchant in Quanzhou, Fujian revealed to reporters that the sales during the Mid-Autumn Festival this year were only more than 200,000 yuan. In previous years, around the Mid-Autumn Festival, under normal circumstances, its sales were at the level of tens of millions.

Why hasn’t the price increased during this year’s Liquor Double Festival?

As we all know, since March this year, the domestic epidemic has been ups and downs, rebounding and spreading multiple points, and the epidemic in some areas is particularly worrying. Under the epidemic prevention and control, consumption scenarios such as business banquets and family wedding banquets have been reduced, and the demand for liquor has weakened.

Generally speaking, high-end famous liquors have long-term development plans and expand their production capacity in the early stage. Due to weak consumption, the inventory pressure on dealers has increased. The "2022 Annual Winery Status and Development Report" released by China Liquor Exhibition in August this year showed that from January to June this year, 80% of liquor distributors had serious inventory. Among them, about 39.7% of the wine merchants' warehouses have been in stock for more than 5 months, and 33.6% of the wine merchants' warehouses have been in stock for 3 to 5 months. Against this background, competition in the liquor industry has turned into competition in the stock market. Except for a small number of brands such as Moutai, other sub-high-end brands need to be cleaned up and put on light.

Historical factors have been in the peak season since 2016, and the price increase in the previous period requires time to be digested. There is little room for further price increase in the face of unfavorable market conditions and macro environment this year. Famous wines need to maintain stable development of prices and be ready to go.

The city gate caught fire, causing fish to fall into the pond. For local liquor, in order to alleviate competition with national branded liquors, local liquors have to lower prices and promote promotions during the Mid-Autumn Festival and National Day. Also facing the epidemic, poor consumption and inventory pressure, high-end liquor, as a competitor, is promoting, local liquor has to join the ranks of the festival promotion army. Moreover, local liquor itself has the characteristics of price sensitivity. If the original price remains unchanged, it may lose some local emotional customers that have finally accumulated. Although promotions do not necessarily make small profits and make quick turnovers and increase profits, they help retain original old customers. Stay with green mountains, and don’t be afraid of burning firewood. As long as these customers keep following them, as the market environment improves in the future, they can gradually increase prices in accordance with the trend. But if the price is raised at present, it is obviously the time is not right.

Under the Matthew effect , local liquor's own brand awareness and channels are limited, and they are only content with some surrounding areas. If they really want to go out and become a national liquor brand, they still face heavy development pressure.

Will the boots with rising prices of liquor still be put into the ground?

Recently, Luzhou Laojiao announced that it would stop receiving Guojiao 1573 sales orders, seemingly preparing for the possible subsequent price increase. In the long run, price increases are an unstoppable trend, but it remains to be seen when the boots will eventually land.

The biggest bottleneck in the liquor industry is the lack of consumption. Although localities have been implementing the national policy of stimulating consumption, consumption coupons are issued at any time. However, economist Wang Xiaolu recently stated that consumption is not stimulated, and we must make everyone dare to consume, rather than stimulate consumption.

At present, the liquor industry needs to digest previous inventory, and many distributors are still selling liquor from last year. Secondly, as the epidemic is finally cleared, the domestic economy will gradually recover under a series of policies such as the country's stable growth. By then, residents' consumption demand will further heat up. Driven by consumer demand, the recovery and growth of the industry in the future will be unstoppable, and price increases will be a natural thing.

From the basic principles of economics, if the liquor industry wants to achieve profit growth, it must first rely on price increases to strengthen the brand, expand the brand premium, and increase profit margins. Second, we must rely on small profits but quick turnover to seize more users and market share and drive sales to rise. Currently, high-end liquor is still dormant. After experiencing the bleakness of autumn and the fire of winter, the price-raising boots may finally land in a few months. Local liquor is unwilling to just follow the cheap route, and price increases are also an important means for them to create brand advantages and expand their brand influence. Let's wait and see when the final price-raising boots will land.