Jinshiyuan discusses channel inventory: It’s unrealistic to have no pressure at all, but without additional incentive policies or forced stockpiling, the company's prepayments have achieved rapid growth.

Recently, Jinseyuan released an Investor Visit and Reception Record. It mentions that the company continues to advance the construction of its online channels, and that its current online growth rate is higher than its offline growth rate. The development of its online business relies heavily on offline market foundations, and it also needs to ensure coordination between the actual transaction prices of online and offline sales to prevent channel conflicts.

Most of the online customer base are consumers who actively look for the brand. Their main needs are convenient purchasing and ensuring authenticity. Because there is no offline regular product taste-experience as an anchor, it is more difficult to launch new products directly through online channels, making it hard for consumers to develop an impulse-purchase intention.

In terms of brand building, the announcement discloses that the company is systematically promoting an upgrade of its brand value, with the goal of enhancing its brand reputation and sense of value. In the allocation of marketing resources, the company adheres to the principle of prioritizing efficiency, dynamically optimizing the investment structure, and ensuring that resources tilt toward projects that can drive high-quality growth and long-term brand value. Overall, the brand promotion spending remains stable. The organizational structure has been further optimized to achieve efficient coordination, while continuously consolidating and improving the market’s recognition of the brand.

The company’s strategic thinking for out-of-province markets has changed. It is gradually shifting from point-by-point expansion toward deepening its influence across existing overall markets, and it is also committed to increasing the repurchase rate to form a stable market. The company manages weak markets in the surrounding areas such as Shandong, Anhui, Zhejiang, Shanghai, etc. by benchmarking Jiangsu’s approach, and provides greater investment intensity for sustained cultivation. The overall growth rate in out-of-province markets is faster than in in-province markets.

Regarding the competitive strategy in in-province markets, the announcement states that under the current competitive landscape, the competitive methods of mainstream companies have essentially converged. Any aggressive policy is very likely to be followed by competitors. Therefore, the company is more inclined to consolidate its position through strategic focus and differentiated competition. The company avoids getting trapped in the quagmire of “policy-for-policy” games, and instead focuses on deepening differences in brand culture. The core logic of the company’s management is to build on its own brand characteristics to attract consumers, and to oppose engaging in inventory battles by thinking in terms of attacking competitors’ weaknesses.

The company has always placed the healthy development of its channel ecosystem in an important position. Through a strict dynamic management system and assessment mechanism, the current dealer inventory levels are generally controllable and remain within a benign range. The market pricing system stays basically stable, and the price stands of core products are resilient. This reflects dealers’ prudent operating capabilities and the effectiveness of the company’s refined channel management.

The announcement also mentions that compared with previous years, the overall channel inventory is currently in a relatively healthy and stable state. We have actually been paying close attention to the timing and rhythm; we don’t really advocate forcing hard stock onto channels. But given the state of the market environment, it’s unrealistic to give absolutely no pressure. Currently, dealers are rotating inventory normally, and inventory pressure is controllable. On the other hand, during this period after the holidays, dealers’ willingness to pay is still quite good; the overall situation of prepayments is better than what we expected.

From an intuitive perspective, the business pressure has already improved on a month-over-month basis. Without us introducing additional incentive policies for dealers or forcibly pushing inventory, prepayments have achieved relatively rapid growth. This indicates that channel sell-through and repayment willingness are healthy, and it also gives us more confidence in the subsequent market timing.

As for how to view the divergence between terminal consumption data and liquor companies’ shipment performance, the announcement says that this divergence is especially evident during industry downturn periods, and its essence is a reflection of the logic of social inventory being run down.

When industry conditions are favorable and expectations of price increases are strong, channels and consumers will voluntarily increase inventories. But when price expectations turn lower, holding back liquor instead means asset depreciation, and social inventory will flow massively into the consumption stage, resulting in factory performance declining more than terminal consumption decreases. Increases in factory inventory are usually short-term and constrained by physical space and capital limitations, making it difficult to expand indefinitely.

In the in-province market, expense deployment is basically stable. In the out-of-province market, the overall expense rate has decreased somewhat, but the company will tilt and increase deployment efforts toward key markets through a “project-based” approach. The aim is to strengthen project-based management control to prevent expenses from being converted into capital that enables low-price “off-schedule” stock sales, thereby maintaining stable product value perceptions and the stability of the pricing system.

（Company announcement）

(Editor: Lin Chen)

Keywords:

                                                            Jinseyuan
                                                            Baijiu