This year, liquor companies continue to boom, and the product range covers Baijiu, yellow wine, beer and other fields. The new year is approaching, and the tide of price increase of wine enterprises is rising again. On December 28, Luzhou Laojiao Co.Ltd(000568) issued a notice that the price system of 100 year Luzhou Laojiao Co.Ltd(000568) cellar age wine for 60 years (52 degrees, 43 degrees and 38 degrees) will be increased from now on. Previously, Anhui Gujing Distillery Company Limited(000596) , Wuliangye Yibin Co.Ltd(000858) , Niulanshan and other brand liquor enterprises also gathered together and announced the price increase plan. According to incomplete statistics by the reporter of Securities Daily, since November, as of December 28, more than 10 well-known liquor enterprises have announced to increase the prices of their products.
There have been many different voices in the market for this round of price increase of wine enterprises. Some netizens said in an open platform: “the market has the final say, but in the past two years Moutai has become an investment product. Who has bought the price increase?” Some netizens joked: “love doesn’t rise. Anyway, I can’t afford these wines.”
A Zhejiang cigarette and liquor dealer, Zhao, told the Securities Daily reporters that the price increase was not very optimistic. “If the consumer side suck, even if the price of liquor companies will rise, the terminal prices will not rise,” the Chinese government said. But at the same time, most dealers remain optimistic about the price increase. They believe that the price increases are mostly high priced baijiu. The price increase has little effect on sales volume. Instead, merchants can increase sales promotion efforts to boost market confidence.
So what are the main driving factors for the large-scale price increase of wine enterprises? How long will this wave of “price rise tide” last? In an interview with the Securities Daily, Wang Chikun, a financial commentator, said: “the rise in wine prices is affected by multiple factors such as the rise in raw material costs, emotional transmission and festival market.”
According to Wang Chikun’s analysis: “The end of the year and the Spring Festival are the peak sales seasons, and the market demand is strong. Price increase is a means for wine enterprises to compete for channel funds. Because the old price is paid before the price increase and the new price is paid after the price increase, ordinary dealers will prepare the demand during the whole spring festival before the price increase, which is a factor for price increase in the peak season in the traditional sense. In addition, this year, energy The continuous rise in the prices of bulk commodities and raw materials has not only brought great pressure on the production costs of wine enterprises, but also promoted the rise of wine prices. ”
In fact, the impact of rising costs on prices this year is also fully reflected in the public information of relevant wine enterprises. On December 24, rice wine leader Zhejiang Guyuelongshan Shaoxing Wine Co.Ltd(600059) announced that in view of the sharp rise in raw material prices and labor costs, the production and operation costs of enterprises have increased, and the prices of some products have been raised, including fruit wine, relief, color varieties, champion Red and other products. The average gross profit margin of the above products in 2020 is 29.88%. The management of China Resources beer disclosed at the performance briefing in the first half of the year that the cost of packaging materials and other raw materials rose sharply in the first half of the year, bringing a cost increase of at least 4%.
It is worth mentioning that after combing the reporters, it was found that the increase of yellow wine and beer industry is related to the increase of cost pressure. But the Baijiu liquor industry’s price increase products are mainly concentrated on the second tier brands, and the products are mostly high-end products, so the relationship between the increase in prices and the cost growth does not seem to be so close.
Take Luzhou Laojiao Co.Ltd(000568) as an example, as early as mid December, Luzhou Laojiao Co.Ltd(000568) has raised the prices of 38 degree and 52 degree national cellar 1573 classic clothes and 52 degree Luzhou Laojiao Co.Ltd(000568) Tequ liquor (time-honored brand) 2018 edition. According to the reporter, Guojiao 1573, Luzhou Laojiao Co.Ltd(000568) Tequ and Centennial Luzhou Laojiao Co.Ltd(000568) cellar age wines are classified as medium and high-grade wines in the company’s product categories. However, according to the results disclosed by the company this year, Luzhou Laojiao Co.Ltd(000568) in the first half of the year, the revenue of medium and high-grade liquor reached 8.218 billion yuan, a year-on-year increase of 23.45%, accounting for 88.21% of the total revenue in the first half of the year. In the first half of the year, the gross profit margin of liquor products was 86.01%, of which the gross profit margin of medium and high-grade products was as high as 90.60%.
So what is the underlying logic of the price rise of these high-end brand Baijiu enterprises?
Qian Xiangjin, a distinguished professor of the school of management of Zhejiang University, said in an interview with Securities Daily: The core reason for the rise of high-end Baijiu is that the market profit space brought by the price increase is relatively clear. From the psychological point of view, the high-end Baijiu is mostly used for business needs and gifts. Such consumers have the consumer psychology of buying up or not buying. The price rise of liquor enterprises in the peak season of the year-end is also in line with market inertia. In addition, as long as one company releases price increases, In order to establish and consolidate their own price image, other enterprises are likely to adopt the following market strategy to hold their price position in the industry. This price increase is not necessarily from the perspective of consumption and supply, but more from the change of enterprise pricing strategy. With the price rise, the related head Baijiu enterprises’ performance growth in 2022 will be effectively supported.
According to the survey of Everbright Securities Company Limited(601788) , the price increases of Wuliangye Yibin Co.Ltd(000858) and Guojiao have been basically implemented. Recently, major liquor enterprises have successively held annual dealer conferences to gradually start the preparations for the Spring Festival peak season in the coming year. Some liquor enterprises have begun to make payments in 2022 and preliminarily planned the sales target for next year. Among them, Kweichow Moutai Co.Ltd(600519) has completed the tasks for the whole year of 2021, some markets begin to pay in January next year, and the revenue growth is expected to accelerate in 2022; Wuliangye Yibin Co.Ltd(000858) after the price increase, some dealers have completed 10-20% payment collection in the coming year, and Henan and other markets feedback that the payment collection requirements for the Spring Festival are more than 40%.
(Securities Daily)
