Sino-Singapore Jingwei Client, August 2 (Yan Shuxin) Recently, Kweichow Moutai disclosed the 2021 semi-annual report. The direct sales channel revenue was 9.504 billion yuan, an increase of 84.45% year-on-year, which became the biggest highlight in the company’s semi-annual report.
Kweichow Moutai introduced in the semi-annual report that direct sales channels refer to self-operated channels, and wholesale agency channels refer to social distributors, supermarkets, and e-commerce channels. In the industry, supermarkets and e-commerce have been defaulted as part of the direct sales channel of Moutai in Kweichow.
Why does Kweichow Moutai classify supermarkets and e-commerce as wholesale agency channels? What kind of “careful thinking” is hidden in this?
New Jingwei photo by Yan Shuxin in the data map
Direct sales revenue increased by more than 80%, excluding supermarkets and e-commerce?
Recently, Kweichow Moutai disclosed its 2021 semi-annual report. In the first half of the year, it achieved revenue of 49.08 billion yuan, an increase of 11.68% year-on-year; net profit attributable to shareholders of listed companies (hereinafter referred to as net profit) was 24.654 billion yuan, an increase of 9.08% year-on-year.
Among them, in terms of different channels, in the first half of this year, Kweichow Moutai’s direct sales channel revenue was 9.504 billion yuan, an increase of 84.45% year-on-year, and its proportion increased from 11.72% in the same period of the previous year to 19.36%; the wholesale agency channel revenue was 39.505 billion yuan, a year-on-year increase 1.93%.
Kweichow Moutai introduced in the 2021 semi-annual report that the company’s direct sales channels refer to self-operated channels, and wholesale agency channels refer to social distributors, supermarkets, and e-commerce channels. This introduction is slightly different from the statement in the 2020 semi-annual report.
The 2020 semi-annual report shows that Kweichow Moutai did not specifically explain the “direct sales channel”. When introducing the company’s sales model, it only stated that “the company’s products are sold through domestic social channel regional distribution, direct sales channels, and foreign social channel regional distribution.” It also makes simple statistics on the revenue of direct sales channels and wholesale channels during the reporting period.
Liquor marketing expert Cai Xuefei told the Sino-Singapore Jingwei client that the industry generally regards supermarkets and e-commerce as part of Kweichow Moutai’s direct sales channels, “because these two channels are basically direct cooperation with the factory, and related cooperation The party can only cooperate under the authorization of the factory, and the price system is consistent with the direct sales channels of Kweichow Moutai.”
That being the case, why does Kweichow Moutai classify supermarkets and e-commerce as wholesale agency channels? In the first half of 2020 and the first half of 2021, has the statistical caliber of Kweichow Moutai’s revenue from various channels changed again? On August 2, the Sino-Singapore Jingwei client called the Kweichow Moutai Secretary of the Board and sent an interview letter. As of the time of publication, no reply was received.
Cai Xuefei believes that the reason why Kweichow Moutai is divided in this way is to reduce the resistance to the reform of the marketing system. “Expanding direct sales channels will inevitably damage the quotas and profits related to the distribution channels.”
The Sino-Singapore Jingwei Client noticed that the earliest explanation of “direct sales channels” by Kweichow Moutai was in November 2020. At that time, Kweichow Moutai revealed at the direct sales channel business forum in 2020 that direct sales channels planned to sell 4160 tons of Feitian Moutai in the fourth quarter of 2020. Some media have reported on this, treating supermarkets, e-commerce, etc. as direct selling channels, and believing that the proportion of direct selling channels and performance of Kweichow Moutai in the fourth quarter of 2020 will increase significantly.
Subsequently, Kweichow Moutai issued a clarification announcement, stating that “In the regular reports disclosed by the company, the sales channels are divided into direct sales and wholesale. Direct sales revenue refers to the revenue realized through self-operated channels, and wholesale revenue refers to social distributors, supermarkets, e-commerce, etc. Revenue realized by channels”.
According to public reports, starting from the second half of 2018, Kweichow Moutai has gradually cut off some dealers, and the extra quota has been changed to direct sales, which will meet market demand through direct supply through online and supermarkets. After that, Kweichow Moutai’s marketing system reform of “focusing on expanding direct sales channels and promoting flat marketing” was gradually implemented. In April 2019, Kweichow Moutai publicly recruited supermarkets and stores to become its direct sales channel providers; in July of the same year, the e-commerce platform was also included in the scope of recruitment. As of the end of 2020, Kweichow Moutai has cooperated with 68 direct sales channels, including e-commerce, supermarkets and so on.
Expansion of direct sales can buy cheap Moutai?
Cai Xuefei told the Sino-Singapore Jingwei client that the expansion of Kweichow Moutai’s direct sales channels has further reduced the market share of traditional dealer channels and will help increase corporate profits.
“Because the supply price of direct sales channels is higher than that of distribution channels, and the sales chain is shorter, the expansion of direct sales can increase corporate profits and enhance the company’s channel and price control capabilities.” Cai Xuefei said.
Industrial Securities also mentioned in a recent research report that the pace of Moutai’s shipments this year was slightly slower than the same period last year (the April-May plan will be implemented at the end of February and early March, the June plan will be implemented at the end of April, and the July-August plan will be implemented in May. The plan is to be implemented on a monthly basis this year). It is expected that the sales volume in the first half of the year will be basically the same year-on-year, and the growth will mainly depend on the increase in the proportion of direct sales and the contribution of the increase in the price of ton wine brought by the non-standard price increase and volume in the second quarter.
“As Moutai strengthens its market layout capabilities, it is expected that the proportion of direct sales will continue to increase. On the one hand, it can strengthen the control of channels. More dealers that have been cut off will be sold by joint-stock companies. The corporate governance will be more complete. Second, it can be improved. The price of one ton of wine, in turn, contributes to the increase in performance.” The agency believes.
Data show that as of the end of the first half of 2021, the number of domestic dealers in Kweichow Moutai has been reduced from 3,215 in the same period in 2018 to 2,096.
However, can expanding direct sales really stabilize the market price of Moutai?
“At present, the expansion of direct sales channels is beneficial to ordinary consumers, and a relatively fair purchasing environment is conducive to consumers buying Moutai. But objectively speaking, due to insufficient supply of Moutai, the financial investment attributes are too strong and exist. With a lot of hype, this measure will not be able to fundamentally solve the problem of out-of-control Maotai prices in the short term.” Cai Xuefei believes.
According to a research report by Minsheng Securities, after the Spring Festival, Feitian Moutai’s approval price continued to rise. Recently, the entire quotation has approached the 3,800 yuan mark, and the bulk wine has also reached the 3,000 yuan mark, showing that the contradiction between supply and demand is still prominent.
“Under the background of the upgrading of residents’ income and consumption, we believe that the company’s products, relying on product strength and brand power, may be in a tight balance between supply and demand for a long time.” Ping An Securities mentioned. (Zhongxin Jingwei APP)
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