This year marks the 24th anniversary of Jiuxian Group, during which significant changes have unfolded. Yet, Hao Hongfeng, the group’s chairman, remains as candid as ever.
Amid the current market hype around low-alcohol wines, Hao dismisses the trend: "It’s a fad, not the future of Chinese baijiu. Pricing these products so high shows no sincerity in targeting young consumers."
He recalls that around 2013, the company had hundreds of cases of low-alcohol baijiu in inventory alongside high-proof variants. A decade later, the high-proof baijiu doubled in value, while the low-alcohol versions saw no price appreciation, underscoring their limited storage value.
In an interview, Hao also shared his views on industry trends, corporate branding, and the challenges facing distributors.
**On Low-Alcohol Baijiu: A Passing Trend** Hao argues that low-alcohol baijiu is merely a temporary trend, not a sustainable direction for China’s liquor industry. Younger consumers, constrained by budgets, often opt for fruit wines or beer. However, as they mature and engage in business settings, they gravitate toward high-proof baijiu, a cultural staple.
He criticizes brands for overpricing low-alcohol products, noting that sub-100-yuan pricing would better align with young adults’ spending power. "At 100+ yuan, these products create unnecessary financial pressure," he adds.
**Storage Value: High-Proof Outperforms** Hao highlights the stark contrast in appreciation between high- and low-alcohol baijiu. Over ten years, high-proof stocks doubled in value, while low-proof variants stagnated. Prolonged storage also risks flavor degradation due to alcohol-water separation.
**Channel Challenges: A Silver Lining?** Despite short-term struggles for distributors and retailers, Hao sees the current industry adjustment as an opportunity. "With oversupply replacing scarcity, channels will play a more pivotal role," he predicts.
**Pricing Wars and Overproduction** Hao attributes widespread price inversions to overproduction—e.g., 5 million bottles made for 1 million in demand. This glut fuels cutthroat competition, which he expects to persist for 3–5 years before rationalization.
**Survival of the Fittest** He forecasts 80% of mom-and-pop liquor stores will shutter due to inefficiency and non-standardized service, urging consolidation for survival.
**Affordability Wins** Amid economic headwinds, consumers prioritize value. Hao applauds brands introducing budget-friendly options, like "bare-bottle" baijiu, as a shift from premium-only strategies.
**Manufacturer-Distributor Dynamics** Hao advocates for zero-inventory models, urging brands to sell directly to consumers rather than pressuring distributors with excess stock.
**Market Consolidation** While absolute revenue growth appears sluggish, Hao notes market share is consolidating toward top players, reinforcing the "strong get stronger" adage.
**On Personal Branding: A Necessary Evil** Hao, an early adopter of personal branding among liquor executives, admits it’s a double-edged sword. "No one prefers the spotlight unless compelled," he says, acknowledging the stress but valuing its cost-effective marketing.
**Expansion and Offline Focus** Jiuxian plans to open 10,000 stores in three years, targeting lower-tier cities with its "Super Store" model. Despite e-commerce growth, Hao emphasizes offline’s 85% market dominance, particularly in non-urban areas.
**Instant Retail: No Threat** With China’s 1.5-trillion-yuan liquor market, Hao sees room for all models, dismissing zero-sum competition concerns.
**Online Launches: Efficiency Boost** He welcomes brands debuting products online for speed and reach, calling it "social progress."
**Rongda Baijiu: Value Over Prestige** Hao’s Rongda brand embraces affordability, rejecting premium pricing for a "good, cheap, honest" ethos inspired by Xiaomi.
**On Industry Leaders** - **Kweichow Moutai (600519):** Praised for consumer-friendly moves like packaging tweaks and price adjustments, Hao sees its recent dip as expanding accessibility. - **Fenjiu:** Positioned to thrive in a downturn due to its value-for-money appeal. - **Yanghe:** Hao lauds its high-quality, affordable offerings, tipping one as a potential blockbuster.
**Final Take** Hao’s mantra: "Business first, IPO second." With Q3 revenue up 20%, he’s bullish on the sector’s resilience—and his group’s offline push.
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