Expand knowledge - What are the natural industries with low inventory turnover efficiency from high-end liquor (2)
What are the natural industries with low inventory turnover efficiency (2)
In last week’s article, Xiaoxian introduced the first very typical industry with low turnover rate, that It's the real estate industry.
In addition to the real estate industry, another industry with naturally low turnover is the high-end liquor industry.
When everyone sees the concept of high-end liquor, do not understand that all alcohol companies or the alcohol industry are low-turnover industries.
In the alcohol industry, there is a type of company with a high turnover rate, such as the beer industry.
For example, Chongqing Beer’s inventory turnover days are only a few dozen days, and Tsingtao Beer’s inventory turnover days are only a few dozen days.
Before that, Xiaoxian here lists the inventory turnover data of some liquor companies. See Table 1 for details.
Table 1 Inventory turnover days data of typical liquor companies
When we see the above data, we will naturally notice significant differences in the industry.
The top five companies are all companies in the liquor industry, and all of them produce high-end liquor products.
The main revenue of the three companies, Kweichow Moutai, Wuliangye and Luzhou Laojiao, is mainly high-end liquor. Shanxi Fenjiu is also focusing on the high-end liquor sector, and Yanghe Co., Ltd. is one of the top three companies in the liquor industry. It is one of the strongest brands, but currently the company still has many products scattered in mid- to low-end liquor. The company is in the process of transformation, but the transformation is not complete enough.
Chongqing Beer and Tsingtao Beer are companies in the beer industry.
When we compare these two industries, we will find that there are very big differences in the business of the industries.
The first five companies have the same long inventory turnover days. Basically, the turnover days are more than 300 days. Some of them even have inventory turnover days as high as 1,200 days or even longer. time, which is equivalent to a maximum of 5 years.
However, in comparison, the performance of the beer industry is very different. Basically, the company's inventory turnover days are basically dozens of days, and the longer ones are 170 days, but Xiaoxian has not yet I have seen too many beer companies whose inventory turnover days have been stable at more than 100 days for a long time.
From the perspective of supply chain managers, one of the issues we need to pay attention to is why the inventory turnover days of companies with the same alcohol brand are so different.
Regarding this question, Xiaoxian’s answer is that the two types of companies are essentially two completely different businesses. The differences mentioned here are in two aspects.
First, the two products are completely different in terms of ingredients
Second, the business models and commodity values of the two products are absolutely different
The first difference Dimension - Differences in Product Ingredients
Liquor and beer are essentially two completely different types of products.
Of course, these two products are both produced through fermentation. There is no fundamental difference between the two in terms of the overall process. They are both products that are ultimately formed by fermenting grains with microorganisms.
However, the difference between the two is still quite large, and there are many differences, such as raw materials, product ingredients, etc.
A. Differences in raw materials:
The main raw materials of liquor are cereals and potatoes, such as sorghum, corn, sweet potato, etc. High-quality raw materials are mainly sorghum. In addition, during production, Serve with some other ingredients.
The main raw material of beer is generally malt, that is, wheat.
There are still very big differences between raw materials such as wheat, sorghum and corn.
B. Differences in ingredients:
In addition to the differences in raw materials, the two have great differences in the ingredients of the final product.
First of all, the degrees of the two are very different, that is, the alcohol concentration is very different.
The alcohol content of liquors that can be seen on the streets is basically above 20 degrees. Of course, the alcohol content of high-end liquor brands is generally higher.
The alcohol content of beer is much lower. Basically, the alcohol content of most beers is below 10 degrees. I don’t know if it is technically possible to see a beer with an alcohol content of 15 degrees.
Secondly, there is a big difference in ingredients between the two.
Liquor contains many ingredients, such as alcohol, various esters, and other alcohols, of which alcohol is the main ingredient.
Beer contains a large amount of amino acids and seems to contain some vitamins, while the alcohol content is much less than that of liquor.
Of course, the above two differences are the most intuitive differences between the two. There are many differences between liquor and beer.
However, if we really want to analyze the differences between the two from a professional perspective, this article will be turned into a popular science article. What Xiaoxian wants to talk about is the topic of inventory turnover. Therefore, it is not appropriate to talk too much about the physical differences between the two products. Differences in properties and chemical properties do not mean anything.
Therefore, we have to turn to the second more important difference topic between liquor and beer-business model and commodity value.
The second dimension of difference - business model and commodity value
When high-end liquor and beer satisfy their respective consumers, their respective values and missions are completely different, and even Both are wines, but they may have completely different customer groups.
The value dimension assumed by high-end liquor is essentially for showing off and complimenting each other.
This is the most straightforward expression of the value of high-end liquor.
Why is it said to be showing off and complimenting each other?
In essence, when people use high-end liquor as a product for gifts and receptions, it often implies two meanings - the host's standards are high, and at the same time, the recipient's The specifications are also high.
Therefore, when Moutai is given as a gift to a more distinguished guest, it sends two signals to the recipient - you are very powerful, and I am also very powerful and can Worthy of you.
If we are more elegant, we say that high-end liquor is to reflect social needs.
Many times, when entertaining more distinguished guests or giving gifts, you need to choose some high-end gifts. Those with high standards may choose Moutai. Giving Moutai as a gift or drinking Moutai are all to strengthen the social interaction between the two parties. interactive.
However, the value conveyed by products such as beer is not the same. In Xiaoxian’s view, the value conveyed by beer is more about taste and experience.
When I was in college, beer was often the most popular drink among classmates.
Why choose this?
In Xiaoxian's opinion, one of the reasons may be that the alcohol content of beer is low, and drinking more will make it less likely to get drunk. College students are not afraid of tigers when they are born, and they often prefer a bold way of drinking.
When drinking beer, a glass of beer is eaten in one gulp. However, when several people sit at a table, few people dare to drink liquor like this, and they have to drink it slowly.
Drinking beer is more about the taste and experience. For example, in the summer, beer sales generally increase significantly. One of the reasons is that drinking beer feels particularly good in hot weather.
However, high-end liquor is not easy to bring about this kind of taste experience. Generally, when drinking alone, there are not that many people who can drink high-end liquor every day. If you really want to have a glass of liquor by yourself, you might choose low-end brands like Erguotou or Jiangxiaobai.
Due to the particularity of the value of high-end liquor, high-end liquor also has another value - financial attribute.
At this point, high-end liquor has the same attributes as real estate.
The past two decades have been the golden age of real estate. The average housing price in mainland China has maintained a compound annual growth rate of 10%, while the housing prices in first-tier properties, or rather in the core areas of first-tier cities, have grown more than More than 15%.
Similarly, the past two decades have also been the golden age of high-end liquor. See Table 2 for specific data.
Table 2 shows the ex-factory prices of several major high-end liquors over the years
Remarks:
1. The above data units are all yuan/kg or yuan/liter;< /p>
2. Xiaoxian has not analyzed the ex-factory price data of Wuliangye and Luzhou Laojiao in 2020, so it has not been disclosed;
3. The proportion of mid-to-low-end liquor business of other liquor brands Larger, not listed here.
When a product can maintain such a stable price increase and its growth rate exceeds the inflation rate, this product has strong financial attributes. In other words, high-end liquor can Anti-inflation and even able to add value.
High-end liquor is a product with a very long shelf life and can be stored for up to more than ten years. The longer the storage time, the better the taste of the product. Therefore, high-end liquor naturally has certain monetary attributes.
Gold has always been used as a natural medium for money. One of the reasons is because of gold's stability - gold does not deteriorate, of course, but there are many other reasons.
However, beer does not have such a financial attribute.
In Xiaoxian’s view, there are two reasons why beer does not have financial attributes.
Reason 1: Beer is not high-end
As a product that is close to the people, no matter how the manufacturer creates a high-end brand of beer, in the minds of consumers, compared with liquor, In other words, beer is, after all, a low-end product, or a mass product, and mass products are not scarce.
Reason 2: The shelf life of beer is short
The shelf life of liquor can be several years, but it is difficult for beer to be stored for more than one year. If the beer is stored for more than one year, it will most likely deteriorate. Unstable products cannot become a substitute for currency in any case, and naturally cannot reflect their financial attributes.
In view of the significant difference in product value between high-end liquor and beer, this extends to the significant difference in business models between the two.
In Xiaoxian’s view, the business model of high-end liquor should be to produce products with a richer taste. The focus of the product strategy is on the marketing side to strengthen the product’s position in the minds of consumers. However, in addition, more attention should be paid to the product side, that is, improving the taste of the product.
One way to improve the taste of high-end liquor is to keep the product longer and ferment it in a good environment for a long time, which will ultimately produce a better taste.
This is one of the reasons why my country’s well-known high-end brands are often located in places with particularly good Feng Shui.
For example, Moutai liquor was born in Moutai Town in the southwest region. Moutai Town is backed by Chishui and relies on the excellent water quality and raw materials of that day to eventually become this excellent product.
In addition, Wuliangye and Luzhou Laojiao were also born in the southwest region with a pleasant climate.
Therefore, it can be simply understood that one of the necessary conditions for high-end liquor is a longer production cycle. It can even be understood that the longer the production cycle, the better the quality of the product.
This means that high-end liquor is naturally a business model with low turnover. Therefore, under the current technical level, high-end liquor cannot break through its natural barrier of low turnover.
Not so with beer.
Beer is a beverage that is inherently difficult to reflect its nobility. It is difficult for brand owners to increase sales by shaping the high-end positioning of their products. At this time, managers should focus more on marketing and the supply chain. superior.
That is to say: through better sales channels and sales strategies, achieve the proportion and accessibility of the consumer group, and at the same time, improve the operational quality of the enterprise through optimizing the supply chain management model, and Improve inventory turnover to achieve better development of the enterprise.
Finally, in order to give everyone a more intuitive understanding of the low turnover characteristics of liquor, here is an introduction to the production process of Moutai.
The production cycle of Moutai is long. The materials are put into production every year on the Double Ninth Festival. The same batch of raw materials takes one year, nine times of cooking, eight times of fermentation, seven times of taking out the wine, and then stored in the winery for more than three years. After careful blending, ordinary Moutai finished wine can be packaged and shipped from the factory. The entire process took at least five years.
Such a production process naturally means that a batch of Moutai liquor will take at least 5 years to be produced starting from the initial input of raw materials. Naturally, we cannot expect a high turnover of Moutai liquor.
Today’s article focuses on high-end liquor. Regarding its low turnover characteristics, there are still some possibilities to improve its turnover efficiency.
A. The birth of new technology
The birth of new technology is an effective means that can change the liquor production cycle.
At present, all high-end liquors are produced through natural fermentation. The characteristic of natural fermentation is that the ingredients in the product form a natural mixture, and the ingredients are difficult to separate artificially. Of course, such a The disadvantage of the state is that the production cycle is very long.
If we invent some new technologies in the future that can produce liquor with the same taste and ingredients, then the existing fermentation process will be eliminated or become a treasured technology.
Such new technology will significantly shorten the production cycle of high-end liquor.
However, in Xiaoxian's view, the birth of such a new technology is difficult. It is difficult to find a technology that can make the same product or a better-tasting liquor.
In addition, the birth of such technology often means the disappearance of the high-end liquor industry.
One of the reasons why high-end liquor is so high-end is because of the scarcity of high-end liquor, that is, supply exceeds demand.
The underlying reason for the scarcity of high-end liquor is the insufficient production capacity of liquor companies, or the production cycle is too long.
In the past many years, Moutai has been in short supply. Although Kweichow Moutai has been expanding production capacity every year, the production capacity is still insufficient.
Once such technology is born, the production of high-end liquor will break through geographical restrictions and cycle bottlenecks, and will be mass-produced in a very short period of time. At this time, supply will easily exceed demand. state.
B. Changes in the industry ecology
The largest consumer group of high-end liquor is actually the generation born before the 1960s. This generation has accompanied the process of China’s reform and opening up. , became the biggest recipient of reform results.
At present, such a group has become a very large proportion of China’s population, and the proportion of this group will profoundly affect the supply and demand pattern of high-end liquor in the future.
As the next generation ages further or passes away, China’s high-end liquor industry may experience oversupply.
Once the industry enters a state of oversupply, the possible impact is that increasing product turnover may be a choice for enterprises, although under the current technical level, it may be difficult to significantly shorten the production cycle of high-end liquor.
In subsequent articles, Xiaoxian will introduce some industries with high turnover rates, so please stay tuned.