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Luzhou Laojiao challenges 20 billion ex-factory prices to increase

On October 8, Luzhou Laojiao Guojiao Liquor Sales Co., Ltd. issued the “Notice on the Implementation of the Dual-Track System of Guojiao 1573 Classic Clothing Price”. After this adjustment, the ex-factory price of Guojiao 1573 Classic clothing has increased.

For industry insiders, the price increase of the Guojiao 1573 Classic Pack was not unexpected, because just before the National Day, the company announced that the single product was suspended from delivery, and the amount of control was also regarded as a precursor to the price increase.

In the past year, Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Luzhou Laojiao", 000568) can be described as a series of actions. The reporter of Time Weekly learned from the Luzhou Laojiao staff that in addition to the classic Guojiao 1573, another company's subsidiary Shipment of a single product for 100 years has also been suspended.

In the context of the industry's warming up, these measures have also made the industry and the capital market full of expectations for the future of Luzhou Laojiao. Several institutions have published research reports indicating that the company's future performance can be expected.

This year, the Luzhou Municipal Government issued the "Opinions on the Quickening of the Construction of the 100 Billion Liquor Industry in Luzhou City" (hereinafter referred to as the "Opinions"), requesting that Luzhou Laojiao's main business in 2020 should exceed 20 billion yuan. At the peak of the company's revenue in 2012 was 11.556 billion yuan, after which the liquor industry entered an adjustment period, and the company's performance also showed a cliff-like decline. In 2015, Luzhou Laojiao's revenue was about 6.9 billion yuan, which also means that if the company wants to reach the 20 billion yuan target in 2020, the compound annual growth rate needs to exceed 20%.

Management adjusted this year

At the first extraordinary shareholders' meeting held in September this year, the management of Luzhou Laojiao stated that there is a possibility of achieving the goal of 20 billion yuan, and also said that the company has basically adjusted in place. After more than a year of adjustments, Luzhou Laojiao has basically solved the problems left over from history such as “disordered brands, loose management, and insufficient marketing staff”.

In May 2015, the senior management team of Luzhou Laojiao experienced significant changes. Liu Miao, 46, and Lin Feng, 42, respectively became the new chairman and general manager of the company. Since then, the "Liu Lin" group has adopted drastic reforms and has been recognized by the market.

Judging from their resumes, Liu Miao and Lin Feng both had sales backgrounds. Liquor expert Jin Yufeng told the Times reporter that most of the core executives in the consumer goods industry are sales backgrounds because consumer products themselves emphasize sales scale and market share. Of senior executives will have more experience in marketing, team management, branding, channel management, etc., which will help improve the company's performance.

In a liquor company of similar size, such a young "combination" is rare. Xie Ming, the former chairman of Luzhou Laojiao, also stated at the shareholders meeting that "the company's new board and management team are highly educated, strong, and full of vigor. I believe that under their leadership, the company's development will have a new look. "

The Guohai Securities Research Report has pointed out that in the past, there was a problem of inefficient communication between Luzhou Laojiao and its controlling shareholder Luzhou Laojiao Group, and the arrival of the new management is expected to eliminate this problem. A person in the liquor industry, who asked not to be named, told the Times reporter that Zhang Liang, who had previously been the general manager of Luzhou Laojiao Co., Ltd., became the chairman of the group company in December last year, and the new chairman Liu Miao was his capable staff.

In August this year, Luzhou Laojiao delivered a more beautiful semi-annual report: In the first half of 2016, Luzhou Laojiao's revenue reached 4.270 billion yuan, a year-on-year increase of 15.51%; net profit was 1.112 billion yuan, a year-on-year increase of 8.96% (among which The company's investment income in Huaxi Securities decreased by nearly 69.02%); while the net cash flow from operating activities turned negative, a year-on-year increase of 226.63%.

The adjustment ideas of the management of Luzhou Laojiao can be seen to a certain extent in this semi-annual report: high-end wines increased by 194.65% year-on-year; mid-range wines increased by 17.80% year-on-year, and low-grade wines decreased by 36.47% year-on-year. The adjustment of the product line of Luzhou Laojiao started from the high-end brand Guojiao 1573, and now the adjustment has been basically completed; the mid-end brand special liquor has grown rapidly, and the cellar wine is still in the adjustment stage. Previously, the price of cellar wine and special liquor was similar. Inevitably, internal competition has occurred. After the current round of adjustments, the two brands will be in different price bands; and the low-end wine is still in the adjustment stage.

Focus on big items

In the process of product adjustment, Luzhou Laojiao ended its previous product development model, cut off more than 2,000 barcodes, replaced it with a product focus strategy, and focused on creating five strategic single products: Guojiao 1573, special song, and cellar age , Head song and second song.

At the same time, Luzhou Laojiao has also made corresponding adjustments in marketing channels. Today, Luzhou Laojiao has also formed a sales front-end business system based on four major brand companies: Guojiao, Jiaoling, Tequ and Boda. Underneath, the former "Quanquan model" has been downplayed.

In the original "Quanquan model", the Luzhou Laojiao channel management team, distribution customers and its management team jointly funded the establishment of a marketing company. This model linked companies, distributors, and sales personnel through a bond of capital. However, each dealer is an independent individual, and the advantages of each dealer are different. In the context of rapid changes in the industry and the Internet of the industry, each dealer and manufacturer are thinking about transformation. In the process, The advantages of the "Quanquan Model" are no longer so prominent.

Times Weekly reporters learned through Jin Yufeng that for many wine companies above the second line, the relationship between the company and the development of the brand has been “cut continuously, the reason is still chaotic”. "During the development process, companies naturally attracted many distributors to cooperate with manufacturers to develop products, with the number of products from small to large; as time develops, manufacturers' own brands will compete to a certain degree with the development of products; after several years of market competition , Some products that do not contribute much to performance will disappear in the process. " In this process, in order to prevent some inactive brands from overdrawing the brand equity of the parent brand without restriction, and to regulate the market order of existing products, companies will increase the cooperation threshold accordingly. Some brands that do not meet the standards will naturally Will terminate the cooperation contract with the enterprise, to achieve the purpose of cleaning up the brand.

Jin Yufeng told the Times reporter that after the industry adjustment, more and more enterprises realized the importance of "big single product" for the sustainable development of enterprises. For Luzhou Laojiao, the strategic position of Guojiao 1573 is undoubted. In the first half of this year, Guojiao 1573 contributed approximately 41% of Luzhou Laojiao's revenue with sales of 1.704 billion yuan. However, Jin Yufeng frankly told the Times reporter, "The 53-degree flying Moutai of Maotai, the 52-degree crystal Wuliangye of Wuliangye (hereinafter referred to as" Pu Wu "), the blue classic of Yanghe, these single products can reach dozens of sales. Billion yuan or even tens of billions, Guojiao 1573 is still a long way from 'super big single product'.

At present, Guojiao 1573 follows Puwu in price. Since March of this year, Wuliangye has raised prices twice, and Guojiao 1573 has also raised prices. Through Guojiao 1573's price increase path, it is not difficult to see that the company's management is still more cautious about the price of this single product. In June of this year, Guojiao 1573 suspended delivery control of inventory. In August, the company issued a document asking Guojiao 1573's batch price to be no less than 640-650 yuan. On September 1st, Guojiao 1573 launched the "terminal quota system" in the Sichuan area of the "base camp". The company stated that it would "tighten supply and reduce delivery" to maintain price stability. On the eve of the National Day holiday, Luzhou Laojiao Guojiao Liquor Sales Co., Ltd. issued a notice again, stating that because the production capacity of Guojiao 1573 has been saturated and the annual sales target for 2016 has been completed, the company decided that the classic installation of Guojiao 1573 will be performed again. Suspend shipment.

An unnamed Luzhou old cellar worker told the Times Weekly reporter that on October 8, the company has issued a notice to implement the dual-track price system. The notice states that the national cellar 1573 classic package planned quota settlement price remains unchanged, and unplanned quotas The price is 660 yuan / bottle. The above staff revealed to the Times reporter that "the price increase is within expectations, but everyone generally believes that it may rise to 680-700 yuan / bottle, which also shows that the company is still more cautious about price increases." When talking about why he was so cautious, the staff member told the Times reporter, "After all, Maotai hasn't raised prices."

Regarding Luzhou Laojiao's 20 billion yuan target, Jin Yufeng told the Times reporter that if it is difficult to achieve the goal based on natural growth alone, but if Luzhou Laojiao integrates some other wine companies through mergers and acquisitions, "20 billion yuan is still very high. possible".

On September 29, Luzhou Laojiao issued a voluntary information disclosure announcement again. The announcement stated that Luzhou Laojiao had signed a strategic agreement with Luzhou Wine Investment Company (hereinafter referred to as “Liquor Investment Company”) on September 27 this year. In terms of content, the two parties will focus on the extension of Luzhou Laojiao's main business and related industrial chains. Capital integration is required for Luzhou Laojiao's business integration, mergers and acquisitions, and capital operations.

The reporter sent an outline of the interview to Luzhou Laojiao, asking if the company had any plans for M & A and reorganization in the near future, but as of press time, the other party did not respond.

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