The high-end dream is hard to realize, 'sauce and thick' are all wanted, Langjiu's expansion encounters difficulties

The market capacity for blended-flavor baijiu is small, and awareness is insufficient. Therefore, the transformation path of Langjiu Group is full of uncertainties. Whether it can achieve a sales leap in the blended-flavor segment will depend on subsequent brand building, market expansion, and execution.

Original @新熵 Author 丨 Yan Zhao Editor 丨 Jue Ying

From the Honghualang targeting the mass banquet market to the Qinghualang aiming for the mid-to-high-end market and frequently "bumping into" Moutai, Langjiu Group has cultivated two sub-brands with billion-yuan potential over the years. However, Langjiu's ambitions go beyond this. After repeated setbacks in the high-end market, can Langjiu break through by focusing on the blended-flavor segment?

Recently, multiple media reports indicated that the "Honghualang Spring Festival Gala Season Launch & 2024 Edition Honghualang·Red 15 Tasting" ceremony kicked off at Langjiu Manor. Prior to this, Langjiu Group officially announced that production of the 2020 edition Honghualang·Red 15 would cease starting October 8, 2024.

With the upgraded Honghualang 率先占位蛇年春节档， the long-absent Honghualang will return to the public eye. Rewinding the clock 15 years, Honghualang became a household name by partnering with CCTV's Spring Festival Gala for the first time and sponsoring the "My Favorite Spring Festival Gala Program" for three consecutive years.

However, perhaps because Honghualang is positioned in the "sub-high-end" market as a "volume product" prioritizing scale, its brand influence falls far short of high-end brands like Moutai and Wuliangye, and even lacks presence compared to Langjiu's own Qinghualang. In other words, while Honghualang is ubiquitous, consumers seem to "turn a blind eye" to it.

The development of Langjiu Group in recent years can also be described as "frustrated." Not only is it far behind the Top 5 in terms of sales and market share, but in the capital market, Langjiu and Jiannanchun are also the "unfortunate brothers" among Sichuan's baijiu brands, being the only two unlisted companies among Sichuan's "Six Golden Flowers." So, how will the "well-known" Langjiu overcome its 困境 in the future?

High-End 受阻， IPO 无果

As Langjiu's "entry-level" product, the "Centennial Langjiu" strategy previously released by Langjiu clearly positioned Honghualang—立足次高端， serving as Langjiu's foundational product，稳扎稳打， aiming to become the No. 1 brand in China's banquet market and striving to "achieve over 10 billion yuan in sales for Honghualang by 2025." However, even if Honghualang 顺利实现百亿目标， its 过于 "ordinary" brand positioning 恐怕也无法承载 Langjiu's high-end ambitions.

Therefore, in recent years, Langjiu has frequently used Qinghualang to "bump into" Moutai, attempting to 抢占份额 in the high-end market. As a 酱香酒 brand positioned in the mid-to-high-end market, Qinghualang was 包装 as "one of China's two major 酱香白酒" as early as 2017, with related advertisements frequently appearing on TV, airports, and train stations.

Langjiu Group Chairman Wang Junlin once publicly stated that he demanded Langjiu advertisements appear at least once every five minutes in China's high-speed rail stations and airports. Langjiu's 决心 to bet on high-end 酱香酒 is evident. However, this slogan sparked significant controversy. Not only did it seem to "bump into" Moutai, but it also appeared to 贬损 other 酱香酒 brands, potentially constituting unfair competition.

Meanwhile, despite Langjiu's 全力推广 of Qinghualang, attempting to bring its brand power closer to Moutai through this slogan, the 消费市场却并不买账. For example, to "align" with the high-end market, as early as 2019, Langjiu announced that Qinghualang's target retail price would be set at 1,500 yuan per bottle, with plans to achieve this through six gradual price increases over three years.

Currently, Qinghualang's official price is as high as 1,499 yuan/bottle, even comparable to Feitian Moutai. However, under sales pressure, its actual retail price struggles to maintain this level, with many online stores selling it for around 700 yuan/bottle.残酷的市场数据也表明 that the sub-high-end 终究不是高端。

Qinghualang 不仅没有因为提价而变得更加高端， but 反而陷入了价格倒挂成为常态的尴尬之中. Additionally, due to pricing issues, Langjiu was once embroiled in controversy over "pushing inventory to 冲业绩" among distributors.

▲ Image/Screenshot from JD.com's Qinghualang Official Flagship Store

Apart from 受阻 in the high-end market, Langjiu's attempts to 冲击二级资本市场 have also been 一波三折. As early as 2007, Langjiu planned to go public, but due to 规模 and 业绩的限制， the plan was 搁置. Despite 多次尝试冲击资本市场， Langjiu 始终未能如愿. In 2022, Langjiu even 主动撤回了 IPO application, a 耐人寻味的过程。

Analysis suggests that Langjiu's repeated 上市受挫 stems from 质疑 over the legality and 规范性 of its 改制 process. Additionally, its 长期承压的业绩， with limited success in the high-end market beyond the Honghualang brand, has been a factor.

For example, after Langjiu submitted its 招股书 again in May 2020, the 证监会抛出了 53 尖锐的问题 in May 2021，涉及改制合法性，国有资产流失，经营管理规范性， and 商标归属争议等敏感话题。

Moreover, due to high product inventory, debt-fueled 基酒产能 expansion, and increased marketing 投入， Langjiu's 资产负债率 has remained 居高不下， further 阻碍其撬开资本市场的大门。

Data shows that from 2018 to 2020, its 合并口径的资产负债率 exceeded 60%. According to 同花顺 iFind, in some years, Langjiu's 负债率甚至超出行业平均水平的两倍之多。

Thus, while Langjiu faces setbacks in the high-end market, its 冲击 IPO also encounters 重重障碍. Its future 发展战略恐怕也难以插上资本的翅膀。

转战 "Blended-Flavor," 并非坦途

穷则思变. Industry insiders generally believe that as a regional 酒企， Langjiu's 品牌高度， value, and 资金实力 are key constraints on its further development. Therefore, after setbacks in 对标茅台 and 酱香酒布局， Langjiu has begun to 弱化浓香 and bet on the blended-flavor 赛道。

Its 底气 lies in a widely cited statistic: in 2020, blended-flavor baijiu accounted for only 3% of 产能 but 7% of 市场销售份额， indicating significant market potential. Langjiu's specific product strategy is: "酱香高端， blended-flavor 领先，两香双优."

In May 2024, Langjiu merged the 顺品郎事业部 (upgraded from the Xiaolangjiu division) and the 龙马郎事业部 (upgraded from the Langpaitequ division) to establish the Langjiu Blended-Flavor Division, which will oversee blended-flavor products.

This 意味着 Langjiu is no longer 局限于 "Second Moutai" but is 转而瞄准 the less competitive blended-flavor 赛道. With this product strategy, Wang Junlin also made internal adjustments.

However, Langjiu's blended-flavor 布局未必是一片坦途. On one hand, the blended-flavor market is relatively small, with no 真正意义上的强势品牌崛起. According to Frost & Sullivan, by 2026, China's baijiu market will reach 769.5 billion yuan, while the blended-flavor segment will only account for 34.3 billion yuan, less than 4.5%. As industry insiders 调侃: "Those who can't make good 浓香 or 酱香 end up making blended-flavor."

This 意味着 the blended-flavor market suffers from 认知度不足， and Langjiu will need to invest more in brand building, market expansion, and consumer education to succeed.

On the other hand, Langjiu's 产能问题 in the blended-flavor segment cannot be ignored. Langjiu has primarily focused on 酱酒， with its 浓香基酒 largely 依赖外购， a key 原料 for blended-flavor baijiu. Thus, blended-flavor 产能也面临挑战。

Its 招股书 previously noted that its 浓香酒窖 are new, with fewer 窖池 and shorter 窖龄， leading to low 出酒率 and 产量. This 意味着 Langjiu's bet on blended-flavor will first face the challenge of insufficient 浓香基酒产能。

Consequently, its blended-flavor sales have been stuck below 10 billion yuan. Despite Wang Junlin's 雄心勃勃 statement in 2017 that Xiaolangjiu-led blended-flavor sales would exceed 10 billion yuan by 2020，招股书 data shows that Langpaitequ and Xiaolangjiu (classified as mid-range baijiu) achieved only 2.565 billion yuan in 2020, far short of the target.

Thus, with market 认知不足 and 产能不足问题 persisting, even elevating blended-flavor's strategic importance won't help Langjiu avoid these 现实问题。

竞争加剧， 恐难解围

Industry data 表明 that the baijiu industry has reached an inflection point, dominated by high-end brands competing fiercely. Thus, Langjiu 同样面临激烈的市场竞争 in the high-end market.

Public data shows that in H1 2024, baijiu industry revenue grew 11%, down 3.13% from the 14.13% growth in 2022-2023, indicating a slowdown.

Moreover, by 2023, baijiu production had declined for seven consecutive years, with 销量逐年下降 but 行业收入只增不减. This suggests that brands are pushing 高端化， driving up prices, while 产能过剩 remains severe.

The market is nearing its ceiling, largely due to shifting demographics. As Gen Z enters the workforce and older generations age, low-alcohol baijiu like Jiangxiaobai has gained popularity, reflecting 萎缩 in traditional mid-to-high-alcohol 消费人群。

Meanwhile, revenue and profits are increasingly concentrated among 头部 players. In H1 2024, six listed baijiu firms (e.g., Moutai, Wuliangye) accounted for 88% of total revenue and 93% of net profit among 20 listed companies.

Qinghualang, Langjiu's key high-end 筹码， faces an uphill battle to join the 头部阵营. On one hand, despite 对标茅台， it has failed to compete at the high end, struggling even against peers in its own tier.

On the other hand, despite investing 20 billion yuan to build the 10-square-kilometer Langjiu Manor in 2020 to elevate its 酱香酒 brands, the "Manor 酱酒"营销理念 has not fully translated into high-end brand influence. The 巨大代价 of this investment has become a 沉没成本。

According to its 招股书， Langjiu's 销售费用率 was 35.58%, 39.2%, and 23.2% from 2017 to 2019. In 2020, it dropped to around 20 billion yuan but still accounted for 21.59%, far 高于茅台's 2.6% and peers like Wuliangye and Luzhou Laojiao.

Thus, Langjiu's high-end setbacks and blended-flavor pivot reflect a 高不成、低不就的无奈感。

Amid industry 下行， most baijiu firms face high inventory and debt, and Langjiu is no exception. Its 负债率 has even been double the industry average at times.

Moreover, while 去库存 is a priority for the 产能过剩 industry, Langjiu is "反其道而行之，" expanding blended-flavor 产能 despite its low market acceptance, posing 潜在的风险。

The baijiu 赛道 is fiercely competitive. Langjiu's "wanting it all" approach may only lead to 分散力量 and 顾此失彼。

References:

1、《Langjiu "Falling Behind," Can Distributors Wait for Spring?》Mantis Observer

2、《Will Langjiu Bet Right This Time?》Qingcheng Finance

3、《A Longer View on Baijiu's "Slowdown"》Yunjiu Media

4、《Can the Upgraded Honghualang·Red 15 Help Langjiu Overcome "Dual 困境"?》Dagong FMCG

5、《IPO Setbacks, High-End Struggles: Is Wang Junlin's "Centennial Langjiu" a Pipe Dream?》Bowang Finance

6、《Ditching the "Second Moutai" Label, Langjiu Aims to Be "Blended-Flavor King"》Bohu Finance