Company Special: Alcohol industry closes in on mid-market

Wuliangye Group opened a press conference on July 23, to unveil two new products targeted at the mid-market. Provided to China Daily

Investment in the alcohol industry has cooled down in China this year, and one of the nation's top distillers has decided to direct their sights on the mid-market.

At a press conference on March 25 in Chengdu city, Sichuan province, Wuliangye Group introduced its five strategic sub-brands, four of which were targeted at the mid-market.

One of the products, the Mianrou Jianzhuang was welcomed on the market, achieving sales income of 50 million yuan ($8.2 million) in the first month after its launch on May 29.

Two of the company's latest products, the Wuliang Touqu and the Wuliang Tequ, unveiled in late July, are also mid-market oriented, featuring traditional processing techniques and tastes. They are priced between 200 and 500 yuan in order to appeal to the "most ordinary people", according to company executives.

Officials said the launch of the two new products will serve as both a compliment to the company's current product structure and a symbol that the company is pursuing the value of the liquor.

During the first four months of this year, the total liquor output across the nation was 3.8 billion liters, increasing 6.9 percent compared to the same time last year, but the growth rate decreased more than 10 percentage points year-on-year.

In Sichuan - home to Wuliangye and more than 300 other distillers - 971.6 million liters of liquor was produced during that period, with a combined profit of 7.4 billion yuan. This was down 2.3 percent, the first year-on-year decline in the last decade.

"To resolve the challenges of the changing market, products of Wuliangye will cover all prices," said Liu Zhongguo, chairman of Wuliangye Yibin Co.

"We will further refine our products on the high-end market, launch more products on the mid-market, and improve the quality of those low-price products, to meet the demands of diverse customers," Liu said.

Tang Qiao, chairman of Wuliangye Group, said that they were once in a seller's market, but now it is a buyer's market.

"Our concept must change with the market situation."

He said that company officials used to promote high-end products to achieve profit while expanding the lower-end market with cheaper products.

"We will evolve that model in the future, and optimize our product structure."

He added that product quality, after-sales service, and price will be the three key factors to succeed consumers and the market.

Wang Guochun, counselor of the provincial government of Sichuan and chairman of a local liquor industry association, said that the mid-market is a large market that contains many different consumers.

Other industry insiders noted that the competition in the mid-market is the most intense, as the higher-end market is shrinking.

"What the liquor companies need to do now is study the consumers carefully, find their targeted groups, and make products that suit them," he said.

zhangzhao@chinadaily.com.cn

(China Daily 08/02/2013 page10)