The Zhitong Finance App learned that Fangzheng Securities released a research report saying that the rice wine industry is at an inflection point of category revival driven by the reconfiguration of channel elements. The current cooperation is still asymmetrical. There is a huge difference in volume between the two sides, making it difficult for rice wine to substantially fill the profit gap of major liquor merchants in the short term; although channel restructuring is trending, investment promotion is only the starting point, so we need to be wary of overestimating short-term popularity. The bank believes that the current scale of rice wine is only about 20 billion yuan, and there is considerable room for improvement in the penetration rate. The driving force comes from changes in economic stages, changes in kinetic energy structure, changes in drinking preferences and scenarios, and intergenerational changes.
Fangzheng Securities's main views are as follows:
The rice wine industry is at an inflection point of category revival driven by the reconfiguration of channel elements
Profit margins on the liquor channel side have been systematically narrowed for four consecutive years, forcing major liquor merchants with capital, networking networks, and the ability to taste and operate to find new categories of exports; rice wine has become a real vehicle for undertaking this round of channel resource migration due to low awareness, high channel gross profit brought about by low price transparency, and a high-end price band that has not yet been defined.
The inflection point of this round of rice wine channel is driven by triple thrust resonance
First, liquor channel profits have been systematically narrowed, with production falling for nine consecutive years and price inversion, and channel pressure has continued to be transmitted since 2022; second, core assets such as cash flow and credit, high-net-worth connections and group buying resources, tasting and operation, and price control teams that have been accumulated by major liquor merchants over the years “cannot be idle”, and there is an urgent need for a new allocation of exports after liquor has lost the value-added benefits of hoarding; Third, structural contradictions in manufacturer relationships have been revealed. Those who have already won a seat have been paid and paid by the winery Direct marketing and digital price control continue to be squeezed. In this context, leading rice wine companies have opened up investment, providing major liquor merchants with a strategic window to add volume, identity assets, and participate in defining new categories, forming the core catalyst for the inflection point at the channel end.
Mutual benefit forms a realistic foundation for current vendor cooperation
On the channel side, rice wine market awareness is limited, price transparency is low. The gross profit of high-end product channels can reach 20% to 30% or more, and the market size is small, the payment threshold is low, and the trial and error costs for major liquor merchants are limited; on the winery side, the core shortcomings of rice wine are not in quality but insufficient in high-end mentality, and large merchants can provide “table opportunities” to introduce products into high-net-worth customer groups, and complete circle reach through tasting sessions and group buying networks to promote the transition of rice wine value from regional dining wine to high-end social wine. At the same time, the current cooperation is still asymmetrical. The two sides are very different in size, making it difficult for rice wine to substantially fill the profit gap of major liquor merchants in the short term; despite the general trend of channel restructuring, investment promotion is only the starting point, so we need to be wary of overestimating short-term popularity.
High-end rice wine is achieving a triple breakthrough
In terms of price, from long-term solidification of table wine and cooking wine below 30 yuan to the emergence of flagships worth more than 1,000 yuan, such as Guyue Longshan's “National Brewing 1959” (1959 yuan/bottle, 40 years old) and Huijishan's “Master Lanting”, the price ceiling has been substantially opened; in terms of manufacturer relationships, since high-end brands of the same level have not yet been formed, cooperation is closer to “co-entrepreneurship”, evolved into high-end single product agents, joint venture regional subsidiaries, customized development, co-built brands, and self-built brands; in terms of value systems, etc. Standard, but the bank considers the place of origin, year, handmade winter wine, no added caramel The four elements of color are expected to form a reference system for the expression of the value of high-end rice wine.
The bank believes that the current scale of rice wine is only about 20 billion yuan, and there is considerable room for improvement in the penetration rate. The driving force comes from changes in economic stages, changes in kinetic energy structure, changes in drinking preferences and scenarios, and intergenerational changes
At the valuation level, PE/PS phased out during the inflection point of the industry, current structural indicators > revenue indicators > profit indicators. Compared horizontally with liquor companies of the same size, rice wine companies have room for optimization in terms of gross profit margin, cost ratio, and quantitative tax system. If the gross margin of Guyue Longshan reaches a comparable average and the sales expenses ratio of Huijishan falls to a comparable average, the net profit margin of both has room for improvement of nearly 10 pcts. The bank believes that revaluing stocks of base wine from a PB perspective can provide an important reference for current valuation levels. From the perspective of PB, the book value of about 260,000 tons of aged sake from Guyue Longshan is 1,434 billion yuan, and the unit cost is about 5,515 yuan/ton. Under the neutral assumption (15 years of wine age, 10% annualized value added), the revaluation value is higher than the book value, and the stock price may still be undervalued at a discount.
Risk warning: the risk of a weak consumer environment; the risk of new product promotion falling short of expectations; the risk of increased market competition; the recovery of consumer spending power falling short of expectations, etc.