Last night after the New Year’s Eve dinner and waiting for the Spring Festival Gala, I saw a 10-minute advertisement. The brands advertised before the Spring Festival Gala: Shede, Moutai, Fenjiu, Yili, Wuliangye, Gujing Gong, all food and beverages, and most of them are liquor companies.
Correspondingly, Alipay, WeChat, Baidu, Kuaishou, and Pinduoduo, which were hot Internet companies in the past few years, collectively lost their voices in this Spring Festival Gala.
Many people say that liquor companies are rich, but I don’t think so. No one must spend more because they are rich. This logic does not hold. At the moment when a transaction occurs, both parties must feel that they have “earned money” before the transaction occurs. Money is smart.
The logic of Internet companies’ previous advertising is very simple – grabbing people and grabbing traffic. The huge traffic of the Spring Festival Gala is very scary. I still remember that in the year of the Baidu Spring Festival Gala, I was still working at Xiaomi, because many people did not download Mobile 100. The Spring Festival Gala received a wave of traffic, and the App Stores of Xiaomi, OV, and Apple were directly suspended. We and SRE urgently added machines and barely resisted. In essence, it is to use the Spring Festival Gala to attract new growth.
Why is the Internet no longer advertising? It’s meaningless. C-side traffic has peaked and shouted for several years. Then continue to think about why liquor companies need to collectively advertise in the Spring Festival Gala? Their business does not seem to be based on the logic of attracting newcomers and growth. What is the reason behind it? Has the liquor company started to roll in?
Chinese business has gone through three stages.
The first stage is that demand is king. In the stage when our materials are still scarce, as long as there are good products, we can kill others without leaving any pieces;
The second stage is that channels are king. Whoever can reach more outlets and reach more people will be the winner. In essence, the Internet is also robbing channels, but we have many nouns, such as public domain, There is no difference between the private domain and what Yili wants to spread its outlets below the third and fourth lines;
The third stage is that the brand is king. When the supply is oversupplied and the channels are of the same quality, then all brand owners have to answer a question – who am I? Brand awareness needs to be constantly advertised, and must be penetrated. . Take it far away and say, “We don’t accept gifts for this year’s festival” – “Receive melatonin even if you receive gifts”, and take it close to say, “We don’t produce water, we are just porters of nature.”
In the long run, only differentiated people can make money and differentiated people can survive. This is the first reason – to strengthen the brand mind. It takes time for users to understand the brand thoroughly. Once it is formed, there will be a strong moat. “National Liquor Moutai” is not a year or two in everyone’s mind. It can be formed after a few billion. Mechanisms of advertising: inform, persuade, remind, reinforce. Even big brands need to remind consumers at all times to strengthen their cognition, as if to say: Ah, friends, don’t leave.
The second point is that high-end liquor is rolling in low-end liquor. Liquor companies listed on CCTV actually account for a very small part of the entire liquor industry, and are among the top 10. The overall growth rate of the liquor industry is not high, but the overall high-end and sub-high-end growth rates are quite high. It is the low-end and mid-end wines that cannibalize.
Take the Wuliangye management report exclusively sponsored by the 2023 Spring Festival Gala as an example. The company’s judgment on the industry is that there will be no shortage of wine for a long time, and there will be a shortage of good wine for a long time.
From the perspective of macroeconomics, although my country’s economic development is facing the triple pressure of demand contraction, supply shock, and weakening expectations, there are still many uncertain and unstable factors, but favorable conditions are still prominent, and the fundamentals of my country’s long-term economic growth have not changed. The economic vitality and resilience remain strong, and the consumption base and capacity remain solid.
From the perspective of industry development, structural growth has become the main theme of the development of the liquor industry. Advantageous brands, advantageous enterprises, and advantageous production areas will continue to benefit, and the industry concentration will gradually increase. In particular, the growth of high-quality production capacity supply is far behind the growth of high-end consumer demand, and the era of quality competition of “long-term lack of wine and long-term shortage of good wine” in the industry is advancing in depth.
From the actual point of view of the enterprise, the directional and patterned development momentum in the fields of market, channel, brand, and product has continued unabated, and the enterprise has entered a new stage of high-quality growth in an all-round way.
——”Wuliangye Annual Report 2021″
In 2021, a century of changes and a century of epidemics will intertwine, and the external environment will become more complex, severe and uncertain, but the fundamentals of my country’s long-term economic growth will not change. The total production and sales volume of the liquor industry tends to be stable, and the quality and benefits are steadily improving. The main development trends are as follows:
First, the development of the industry has further improved quality and efficiency. In 2021, liquor enterprises above designated size will complete operating income of 603.348 billion yuan, a year-on-year increase of 18.6%; realize a total profit of 170.194 billion yuan, a year-on-year increase of 32.95%, and the high-quality development of the industry has achieved remarkable results;
The second is to further enhance the industrial concentration. The market share of the industry will continue to concentrate on advantageous brands, advantageous production capacity and advantageous production areas, and the structural growth pattern will exist for a long time;
The third is to further upgrade the consumption structure. Under the background of common prosperity, the disposable income of residents continues to increase, and the demand for high-quality liquor consumption will drive the development of high-quality and advantageous famous liquor.
—— “Moutai Annual Report 2021”
The third point is to create a new brand. A typical Yili stock, people like the new and dislike the old when it comes to must-choice consumption. Like Anmuxi and Jindian, many people don’t know that they belong to Yili. In fact, Yili has a rich product line. When brand owners advertise, they often deliberately do not have a relationship with the original brand, because they need to reposition. When I went to the supermarket to buy Anmuxi, I looked at the price, and it was much more expensive than Yili’s normal temperature white milk.
The brand companies of the Spring Festival Gala can indeed find many high-quality targets, and even a piece of business history. From the three big items to home appliances going to the countryside, to the golden decade of the mobile Internet, and to the current consumption upgrade, every time is the epitome of an era.
There are many successes, but there are also many failures, such as Qin Chibiao Wang in 1996 (if you are interested, you can read “The Great Defeat” written by Wu Xiaobo), the login is the peak, and there are slowly fading out of people’s sight: Xinfei Refrigerator, Very cola. The train passed by, extremely sad.
Happy New Year everyone~
$Yili Shares(SH600887)$ $Kweichow Moutai(SH600519)$ $Tencent Holdings(00700)$
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