Jinshiyuan: Will not bet everything on a certain price range due to short-term market fluctuations, expecting positive revenue growth after the second quarter.

Recently, Jiangsu Jingdian (今世缘) released an investor visit reception record sheet. During the exchanges, when asked how the upgrade and replacement of competitors’ core products would affect the industry’s off-premise sales momentum and the company, the announcement stated that, based on historical experience, upgrading core products needs to go through a period of market testing; if the product changes are small, market changes are also small. If the upgrade and adjustments are significant, it usually takes more than two years to stabilize in the market. Currently, the overall industry pace of launching new products has slowed down, and the upgrade effects of old products still need to be verified by the market.

The announcement introduced that Guo Jiu (国缘) Dan Ya (淡雅) has been performing well, and in recent years it has maintained a year-on-year growth trend. Four-open (四开) and two-open (对开) saw year-on-year declines but month-on-month improvements; after entering the second quarter, it is expected to return to a growth trend.

Against the backdrop of industry-wide pressure, the company’s V Series, as a strategic product positioned in the high end, is developing in line with the company’s expectations. Although short-term absolute sales are affected by the broader environment, within its respective price band, the V Series’ market share has maintained an overall trend of steady to slightly improving.

Currently, business and official-government consumption scenarios are in a period of structural adjustment and reshaping. From market feedback, large institutions’ purchasing behaviors for hosting, gifts, and employee benefits are becoming more rational and standardized. Entering such channels requires stronger comprehensive service capabilities and brand value.

Meanwhile, personal out-of-pocket consumption scenarios (including out-of-pocket meals by personnel within the system) maintain normal activity. We believe that the cultivation and upgrading of mainstream consumption habits will be a solid foundation for the industry’s long-term healthy development, and the company is continuously strengthening brand communication and product layout in this regard.

In the current market environment, product performance across different price tiers shows structural divergence. Specifically, the company’s high-end and mid-high-end products are under pressure year-on-year, but are expected to reverse after the second quarter; mainstream consumption’s Dan Ya series, single-open (单开) series, and other low- to mid-price products have demonstrated stronger demand resilience.

There were also questions from investors: after going through multiple major peak seasons such as the Mid-Autumn Festival and the Spring Festival, whether the high-end series’ month-on-month performance has recovered. In response, the announcement said that, judging from month-on-month data, there has been an improvement to some extent. By product category, the performance at the V9 price segment is still relatively weak; four-open is relatively better; V3 is in the middle; V6 is also fine, but its volume is a bit smaller.

The announcement also mentioned that our overall strategy is long-term and stable: we will not put all our focus on any single price band due to short-term market fluctuations, nor will we completely abandon any price bands we have already locked in. For several major product lines, we will continue to invest in and push them forward.

Of course, in actual operations, we will definitely adjust with appropriate flexibility based on competitive conditions. For example, if over a period of time a certain product performs exceptionally well and has better off-premise sales momentum, we will certainly provide somewhat more support to it in terms of resources, reflecting the efficiency of resource allocation. But this is a kind of dynamic fine-tuning, which will not affect the normal promotion of other products, nor will it sacrifice long-term brand building. The company’s brand promotion and advertising spend have always been relatively stable.

It is hard to define the current product structure simply by “returning to which year,” because the growth and pullback trajectories of different categories are not synchronized. During industry growth periods, not all categories advance in step; similarly, during adjustment periods, their pullback paths also differ. For example, the rapid growth of new products such as the “V Series” in recent years is more based on new products and new markets rather than a purely broad environmental systemic market cycle.

The announcement also analyzed that the Spring Festival is not a period with frequent official business activities. Now, during the Spring Festival, public servants may shift their consumption scenarios more toward gatherings at home with family and friends. Because official and business-related scenarios typically involve higher product tiers and stronger per-capita drinking intensity, the overall contraction in demand will still impact the market.

As the consumption environment enters a new normal, the year-on-year structural changes in the second and third quarters will improve to some extent, but not significantly; it will be impossible to return to the way it used to be. Although illegal behavior is still under strict supervision, normal gatherings with friends and compliant social activities are recovering. We expect that after the second quarter, revenues will achieve positive year-on-year growth.

From the current situation, there has not been any obvious structural upgrade in mainstream price bands. The so-called “upgrade” is more reflected in improvements in product composition rather than a simple increase in prices. After some consumers’ market prices have been lowered, they will choose to use their original budgets to buy products that previously had higher prices. This kind of improvement in product levels does not represent a leap in price bands. There may be some signs of a quantity contraction followed by an upgrade in the low-end market.

The civilian banquet market indeed shows certain characteristics of “rigid upgrades,” mainly constrained by the “face logic” in social situations. Within certain social groups and circles, consumption behavior has demonstration effects and upward attraction. If the leaders or those with stronger financial capability increase the alcohol standards first, other team members, in order to maintain their social status, will typically choose to follow suit, thereby driving the entire group to complete the crossing from lower price levels to higher price levels. This logic will be suppressed to some extent when income growth among the public is slow. Although this upgrade process is slow and advances in a stepwise manner, it helps consumption structure remain at a certain level without easily experiencing a drastic downgrade.

(Business announcement)

(Editor: Lin Chen)

Keywords:

                                                            Jiangsu Jingdian (今世缘)
                                                            Baijiu (白酒)