At present, the Baijiu industry has entered a period of deep adjustment, testing the dynamic sales ability of each enterprise.
Recently, Shuijingfang released its 2023 annual report, showing both revenue and net profit attributable to shareholders of the listed company increasing. Moreover, both revenue growth and net profit growth were higher than the previous year. The company has also achieved the business goals set in early 2023.
How does Shuijingfang achieve cycle crossing in the current environment, and what are some things worth reviewing? Let’s analyze it specifically.
Performance growth rate higher than the previous year
The latest annual report released by Shuijingfang shows that in 2023, the company achieved a revenue of 4.953 billion yuan, a year-on-year increase of 6%; The net profit attributable to shareholders of the listed company was 1.269 billion yuan, a year-on-year increase of 4.36%.
In the previous year, 2022, the revenue growth rate of Shuijingfang and the net profit growth rate attributable to shareholders of the listed company were 0.88% and 1.40%, respectively.
Shuijingfang’s product revenue mainly comes from high-end liquor and mid-range liquor, with high-end liquor dominating. In 2023, it achieved a revenue of 4.671 billion yuan, a year-on-year increase of 3.73%. This revenue growth rate is also higher than in 2022, with the latter’s revenue growth rate decreasing by 0.36% year-on-year.
In 2023, Shuijingfang’s mid-range liquor achieved a revenue of 205 million yuan, a year-on-year increase of 64.08%, which is also higher than the revenue growth rate of 22.15% in 2022.
At present, the squeezing stock competition situation of Baijiu industry in China is continuing to evolve, and the pattern of industry competition is accelerating to reshape. Influenced by the external macroeconomic environment, insufficient effective demand for alcohol, weak consumption, overcapacity and high inventory are common problems in Baijiu. At the same time, under the pressure of the industry as a whole, the Matthew effect of “the strong will always be strong” continues to intensify, the influence of the head brand becomes more prominent, the number of Baijiu enterprises above the scale continues to decrease, and the industry concentration continues to increase.
Faced with challenges brought by the external environment, the main task of the company in the first quarter of 2023 was to reduce social inventory and stabilize the value chain. Although this led to a significant year-on-year decline in performance in the first quarter, it laid the foundation for subsequent performance development. After entering the second quarter of 2023, dealer inventory returned to a healthy level, and store inventory significantly decreased, returning to normal levels.
Looking back at that time, the reason why Shuijingfang had the courage to reduce social inventory was because the company firmly believed that a stable and healthy value chain was an important guarantee for maintaining the common interests of manufacturers and an important prerequisite for establishing stable brand value for consumers.
In 2023, Shuijingfang’s business team formulated relevant management measures, tracked and corrected irrational sales behavior in a timely manner through digital systems, and ensured the healthy development of the business.
Reflected in the 2023 annual report, Shuijingfang’s inventory turnover rate was 0.34 times, higher than the 0.31 times in 2022, indicating good sales for the company.
Meanwhile, in 2023, the net cash flow generated by Shuijingfang’s operating activities was 1.734 billion yuan, a year-on-year increase of 31.98%. The company stated that this was mainly due to sales growth and an increase in cash received from selling goods.
Overall, in the past 2023, Shuijingfang not only withstood the downward pressure of the industry, but also achieved stable operation.
Traverse cycle
In recent years, although the Baijiu industry has entered a period of deep adjustment, the influence of famous liquor brands has become prominent. At the same time, consumer demand has shown two trends, namely, consumption classification and preference for advantageous production areas, high brand enterprises and high-value products. This consumption trend has actually brought new development opportunities to famous liquor enterprises.
Shuijingfang is also actively embracing this change and taking advantage of the situation.
In the past 2023, Shuijingfang has continued to maintain its existing strategy and will continue to adhere to the same strategy.
To meet the diverse needs of consumers, Shuijingfang has increased investment in major products such as Jingtai and No.8, while expanding its product layout in both directions. In order to meet the consumption needs of the circle and further expand the coverage of the Jingtai series, Shuijingfang continues to promote the classic product New Jingtai and launches the “Shuijingfang Jingtai Yipin”. At the same time, it launched the super high-end product “Swellfun · First Square” to enrich the company’s brand matrix and bring consumers more high-quality and unique Baijiu experience.
In addition, the company has also launched multiple e-commerce exclusive products such as “Little Water Well”, “Water Well Banquet”, and “Treasure Series (Qilin Pixiu) Gift Box” through e-commerce channels, aiming to enable more consumers to taste higher and higher quality liquor in the price range of around 200 to 300 yuan, and strengthen their attention to the middle and low price range. They have established a dedicated “Emperor’s Yellow Bottle” team to strengthen their business.
While striving for product innovation, Shuijingfang is also meticulously cultivating its channels. The company’s resources are focused on channel expansion, constantly exploring the depth and breadth of channels.
In terms of depth, Shuijingfang has deeply rooted itself in the core city and stabilized its foundation; Simultaneously expanding potential markets and seeking new market increments.
In terms of breadth, Shuijingfang actively focuses on areas such as group buying and consumer cultivation, and actively strengthens e-commerce to seize traffic opportunities. By working together through multiple channels and seizing opportunities for business growth from multiple dimensions.
Ouyang Qianli, an expert in Baijiu industry and founder of Qianli Think Tank, believes that consumers are paying more and more attention to quality and personalized experience when choosing Baijiu. For consumers who pursue a high-quality lifestyle, famous liquor is not only a beverage, but also a reflection of their attitude towards life. Famous liquor companies like Shuijingfang are constantly innovating their products and breaking through channels to meet the diverse needs of consumers and seize new growth opportunities in the changing market.
In fact, the performance of the first quarter of 2024 also proves the feasibility of Shuijingfang’s strategy.
In the first quarter of 2024, Shuijingfang achieved a revenue of 933 million yuan, a year-on-year increase of 9.38%; The net profit attributable to shareholders of the listed company was 186 million yuan, a year-on-year increase of 16.82%. This performance growth rate is further higher than the full year of 2023.
Zhou Yuanxin, chief marketing and digital commerce officer of Swellfun, said: “The company’s growth momentum comes from three aspects, first is the irreplaceable famous liquor gene, second is the long history recognized by consumers, and finally is the unremitting efforts in market expansion. Facing the future, we will continue to explore innovative marketing models, and tell consumers the story and culture behind Baijiu through more innovative ways.”
Jiang Leifeng, Acting General Manager of Shuijingfang, stated that steady and healthy growth is a product of adhering to long-term strategies and focusing on key areas. Growth does not occur in isolation, it is closely related to the collective efforts of the overall environment, partners, consumers, and various stakeholders. In the future, Shuijingfang will adhere to its long-term strategy, adapt to market dynamics, constantly examine strategies and tactics, and strive to create more value together with stakeholders.
In the past year, Shuijingfang has achieved significant success not only in product innovation and brand inheritance, but also demonstrated its keen market insight and execution in marketing strategy and market expansion by adhering to its long-term strategy.
Looking ahead to the future, Shuijingfang will continue to adhere to its long-term strategy, continuously optimize its product structure, strengthen brand building, expand market influence, and continue to promote the sustainable development of the enterprise, bringing consumers a more excellent product experience.
In the 2023 annual report, Shuijingfang also set its operating goals for 2024, which are to maintain growth in both its main business revenue and net profit. To this end, the company has also proposed measures such as deepening the development of core markets, concentrating resources to build the top 100 cities in China, continuously optimizing the value chain, continuously driving inventory reduction, continuously exploring group buying channels, increasing support for banquet products, continuing to strengthen circle marketing, and continuously cultivating the 600 year old intangible cultural heritage quality genes of Shuijingfang.
Recently, Guojin Securities released a research report stating that Shuijingfang’s advantages lie in its good product quality and stable manufacturer relationships. Currently, the progress is steadily advancing, and the company is also vigorously developing the Tianhao Chen and Shuijing series to adapt to the demand environment. The company is steadily focusing on Zhenniang No. 8 and will add about 9000 new effective stores in 2023. It is expected that the company will achieve its revenue/profit growth target in the next 24 years with high confidence, and the potential high elasticity of the secondary high-end price range.
(This article is for reference only and does not constitute investment advice.)