Ping An View:
Baijiu consumption province needs strong and tough, quantity reduction and increase structure upgrading. Anhui Province, a strong liquor culture, belongs to the Baijiu Baijiu province. It ranks fifth in the liquor production ranking in 2018. In recent years, the scale of Anhui Baijiu market has been growing steadily, and its growth momentum mainly comes from the structural upgrading and price increase brought about by the upgrading of consumption in the industry. From the perspective of consumption ability, the per capita disposable income growth and per capita GDP growth in Anhui are ahead of the national level, and the economic pull has been well performed, providing strong support for Baijiu consumption. From the perspective of catering development, the growth rate of catering revenue in Anhui ranks second in China, with a compound growth rate of 10.79% in 17-20 years, second only to Shandong. From the industry trend, Anhui Baijiu is decreasing in price and increasing in structure. As the key market of liquor banquet in Anhui, banquet prices are obviously shifted up with the price of liquor. Therefore, Baijiu liquor is greatly influenced by the consumption upgrading trend of the industry, and the price band is constantly shifting upward.
Competition accelerated, brand concentration, and the pattern of "one super and two strong" appeared. According to the size of the Baijiu market in Anhui in 2020, about four of the listed liquor companies in the province were listed: Anhui Gujing Distillery Company Limited(000596) , Anhui Kouzi Distillery Co.Ltd(603589) , Anhui Yingjia Distillery Co.Ltd(603198) and Anhui Golden Seed Winery Co.Ltd(600199) in the Baijiu market share of the province: 21.8%, 9.6%, 6.1%, 1.8%, CR4 39.3%, and 33 billion head concentrating. The Baijiu market in the province showed a trend of market share to brand concentration, concentration to culture, concentration to culture, and concentration to the origin. After several changes of ownership, the leader of Huijiu liquor has evolved from "Four Golden Flowers" to the current "one super and two strong" pattern with Gujing as the leader and Anhui Kouzi Distillery Co.Ltd(603589) and Anhui Yingjia Distillery Co.Ltd(603198) as the second echelon. Gujing is the leader of Huijiu liquor by virtue of its high-quality product power of "year original pulp" series and the stable channel power of "three links project".
Channel models have their own advantages, improve quality and efficiency, and upgrade production capacity. Gujing adopts the management mode of in-depth distribution, directly controls the channel terminal, and the dealer is only responsible for distribution, warehousing and other auxiliary work, and the sales expense rate is significantly higher than that of its peers. Anhui Kouzi Distillery Co.Ltd(603589) adopts the big business model, implements the management by region and category, authorizes the dealers to operate the main body of the market, and the manufacturers are only responsible for guidance. From the perspective of dealers' profit, Koizumi's profit is generally higher than that of Gujing. The main reason is that Koizumi adopts the operation mode of naked price, which is beneficial to dealers, makes them have a high gross profit margin, and realizes the win-win mode of manufacturers' interests through long-term cooperation. The channel modes of Gujing and kouzi have their own advantages and disadvantages, and continue to iterate according to the current situation. In addition, in order to improve the quality of production, Baijiu enterprises in Anhui have actively built expansion projects in recent years to achieve upgrading of quality and efficiency.
The mainstream price band continues to rise, benchmarking Jiangsu to see the future space. The consumption upgrading trend promotes the continuous upgrading of the price band of Huijiu. At present, the mainstream price band is in the range of 200-300 yuan. With the rise of the price belt, all liquor enterprises have changed from low-end to medium and high-end, and the product upgrading is in parallel with the national strategy. At present, the sub high end has differentiated into a higher subdivided price band. In the future, the price band of 600 yuan will become the main battlefield for various wine enterprises, and 300-400 yuan will become the daily drinking products of target consumers. In the Jiangsu market, we think that the liquor is the benchmark of consumption promotion of Baijiu, and the consumption level of the people is 3-4 years ahead of Anhui. With the sustained high growth of Anhui's economy, the liquor consumption structure will be further aligned with the Jiangsu market, and the space of product structure upgrading will be broad. We expect that the expansion of Baijiu market in Anhui will be better than the whole country, and the secondary high-end volume will accelerate. The demand for the mid price belt will be upgraded to become the fastest growing price band. The market size of Anhui Baijiu in 2024 will exceed 40 billion.
Investment suggestion: this year's Spring Festival sales show regional differentiation. Affected by the epidemic, Henan, Shaanxi and other local areas lost about 10% - 15% of the annual sales, while Anhui, Jiangsu and other epidemic free areas performed better than expected. Among them, Hui liquor performed particularly well, the payment collection progress was faster than in previous years, the channel profit was rich, and the market approval price was strong, The inventory level of dealers is in a reasonable range, and the overall fundamentals are still good. In recent years, Huijiu has strong local liquor and strong channel control, and the consumption scale and grade are expected to be in line with that of Suzhou liquor. We are optimistic about the future performance of Huijiu, and suggest paying attention to Anhui Kouzi Distillery Co.Ltd(603589) , Anhui Gujing Distillery Company Limited(000596) , Anhui Yingjia Distillery Co.Ltd(603198) .
Risk tips: 1) policy risk. Baijiu industry demand and tax rate are greatly influenced by policies, such as changes in relevant policies, which may have a greater impact on the company's revenues and profits. 2) Baijiu industry downturn risk. Baijiu industry and the price trend is highly correlated, if Baijiu prices decline, may lead to a substantial slowdown in corporate revenue growth. 3) Industry competition intensifies. There is a problem of intensified competition in the Baijiu industry. We should guard against the adverse effects of price war and fleeing goods brought about by the deterioration of competition. 4) Food safety risks. Food safety is the red line. Once food safety problems occur, they will have a great negative impact on the industry.
