Summary of Shede Liquor Industry Conference Call Company Overview - **Company**: Shede Liquor Industry - **Date**: September 23, 2025 Key Points Industry Context - The overall liquor industry is expected to decline by 15%-20% during the Mid-Autumn Festival in 2025 due to industry-wide downturns [2][3] - Shede Liquor is focusing on the mid-to-high-end market to mitigate the impact of the industry decline [2][3] Sales Performance - The main product, "Pinwei Shede," saw a positive sales trend in August, with sales volume doubling for the "Ten-Year" product in the first half of 2025 [2][5] - The company anticipates better performance than the industry average in Q3 2025 due to strategic focus on the mid-to-high-end market and channel clearing efforts [2][3] Pricing and Channel Management - Shede Liquor has implemented measures to stabilize prices, including leveling wholesale prices, providing value-added services instead of physical gifts, and simplifying policies to improve efficiency [6][7] - The company has managed to keep price fluctuations for its products within 10% through inventory clearance and controlled shipments [7] - 70% of frontline sales personnel received bonuses in the first half of 2025, indicating effective incentive structures [6][7] Product Strategy - The strategic positioning of Shede Liquor is focused on mid-to-high-end products and popular light bottle wines [4][11] - The company is targeting stable growth in products priced below 300 yuan, while also promoting new products like "Wisdom Shede" in weaker regions [5][11] Sales Team and Channel Health - The sales team remains stable despite industry pressures, with a focus on retaining and incentivizing mid-to-senior level sales personnel [9] - The company emphasizes that sales volume must exceed invoice numbers to ensure channel health, moving away from a purely invoice-driven approach [8] Revenue Growth and New Initiatives - Online sales have shown significant growth, contributing 340 million yuan in revenue in the first half of 2025, a 31% increase year-on-year [4][13] - The company has developed a dedicated app for customized services and has engaged in partnerships with celebrities for product launches, enhancing market reach [13][15] Market Development - Shede Liquor is focusing on developing key base markets such as Shandong, Hebei, and Sichuan, with plans to grow these markets significantly over the next 3-5 years [14] - The company is also exploring new growth points through innovative channel models and internal growth strategies, moving beyond traditional inventory management [15] Conclusion - Shede Liquor is strategically navigating a challenging industry landscape by focusing on mid-to-high-end products, stabilizing pricing, and enhancing sales team effectiveness while exploring new growth avenues through technology and market development initiatives [2][4][11][15]

Core Viewpoint - Shede Liquor Industry (600702.SH) anticipates a significant decrease in net profit for 2024, projecting a range of 320 million to 420 million yuan, influenced by the broader challenges facing the liquor industry, including demand slowdown and high inventory levels [1] Group 1: Company Performance - The company expects net profit attributable to shareholders to be between 320 million and 420 million yuan for 2024, with a non-GAAP net profit forecast of 366 million to 466 million yuan [1] - Despite the performance pressure, the pricing structure of core products remains stable, with prices for key products like Wisdom Shede and Taste Shede showing increases compared to the beginning of 2024 [1] - The company is implementing a "control volume and support price" strategy to assist distributors and enhance sales, while also increasing investment in brand building [1] Group 2: Industry Context - The liquor industry is currently undergoing a deep adjustment period, facing challenges such as demand slowdown, high inventory, and price declines, leading to increased competition among companies [1] - The China Alcoholic Drinks Association has called for the industry to proactively lower expectations and manage profits to secure future growth [1] - Analysts believe that despite the current profitability challenges, Shede Liquor's differentiated advantage with "old liquor + famous liquor" remains intact, suggesting a potential for recovery in 2025 [3] Group 3: Future Outlook - Shede Liquor plans to focus on brand enhancement, channel development, and consumer cultivation, aiming to improve overall competitiveness and ensure stable growth [2] - The company has initiated significant projects in innovation and production expansion, which may impact short-term performance but are expected to enhance product quality and market competitiveness in the long run [2] - Analysts predict that with inventory improvements and continued product releases, Shede Liquor may experience a rebound in growth in 2025 [3]

Core Insights - The white liquor market has experienced a collective price decline since 2025, affecting both high-end and mid-range products due to a cooling consumption environment and high inventory pressures [1][15][16] - The South China region, particularly the Guangdong-Hong Kong-Macao Greater Bay Area, has shown significant price differentiation and a notable decline in retail prices for various white liquor products [1][2][3] Market Performance - More than half of the monitored products have seen a price drop since the beginning of the year, with high-end products being the most affected [2][15] - Among 21 monitored products, 15 experienced a decline in average retail prices, with only 4 showing slight increases and 2 remaining stable [2][3] - The most significant price drop was observed in Feitian Moutai, which fell from approximately 2624 CNY to 2368 CNY, a decrease of 256 CNY [2][3] Price Trends by Product - Feitian Moutai's market price has dropped significantly, with current prices ranging from 2100 to 2400 CNY per bottle, marking a decline of over 15% from its peak [3][15] - Other products in the thousand CNY price range, such as the eighth generation Wuliangye and Guojiao 1573, also saw price reductions, with the eighth generation Wuliangye dropping by 110 CNY [10][15] - Mid-range products like Yanghe Dream Blue M6+ and Guotai Guobiao also experienced price declines, although to a lesser extent compared to high-end products [4][10] Regional Price Dynamics - In Guangzhou, 17 out of 21 products saw price declines, with Feitian Moutai dropping from 2648 CNY to 2305 CNY [7][8] - Shenzhen's market showed a downward trend in retail prices, although some products had inflated prices due to high-end retail channels [9][10] - Dongguan's market exhibited significant price fluctuations influenced by seasonal demand and promotional activities, with Feitian Moutai's price dropping to 2299 CNY during peak sales periods [12][13] Inventory and Market Conditions - The white liquor industry is currently in a deep adjustment phase, with high inventory levels leading to price pressures across all product categories [15][16] - Approximately 60% of companies are facing price inversion, particularly in the 800 to 1500 CNY price range, which is experiencing the most significant downward pressure [15][16] - The average inventory turnover days have increased to 900 days, indicating a challenging market environment for producers [15][16] Future Outlook - The market is expected to continue facing challenges as companies balance between maintaining prices and expanding market share [17][18] - The introduction of new statistical methods and the inclusion of additional cities like Foshan in price monitoring may provide a clearer picture of market dynamics moving forward [20][21]

Group 1 - The core viewpoint of the article highlights a downward trend in liquor prices in major cities like Guangzhou, Shenzhen, and Dongguan as the Dragon Boat Festival approaches, with over two-thirds of products experiencing price declines [1][2][4] - In Guangzhou, the retail price of Feitian Moutai has dropped to an average of 2579.73 yuan per bottle, with some retailers offering it at around 2300 yuan, while other premium products like Wuliangye have seen a slight decrease of 18 yuan per bottle [2][3] - Shenzhen's market shows a similar trend, with over two-thirds of sampled products experiencing price drops, although some prices may be artificially inflated due to limited availability in certain channels [4][5] Group 2 - In Dongguan, nearly half of the sampled products maintained stable prices, with only 8 out of 21 products showing a decline, while the price of Luzhou Laojiao increased by 61.1 yuan to 1075.6 yuan per bottle due to replenished stock in certain channels [7][8] - The article notes that the upcoming 618 shopping festival has led to price adjustments on e-commerce platforms, with 15 out of 21 sampled premium liquors experiencing price reductions, while only one liquor saw an increase [9][10] - A comparison between the Bay Area and Southwest liquor prices reveals that the Bay Area's retail prices are significantly higher, with differences ranging from 15 to 82 yuan, attributed to higher demand for premium products in the region [11][12]

Group 1 - The white liquor market is currently experiencing a downturn, with prices of key products declining despite companies implementing supply control measures [2][3][5] - Major brands such as Junpin Xijiu and Zhaiyao have seen significant price drops, with Junpin Xijiu's average price falling to 774.25 yuan per bottle, down from 806.75 yuan [5][7] - The market is facing challenges such as high channel inventory, a sharp decline in the performance of liquor companies, and a phenomenon of "wholesale-retail price inversion" [2][9][10] Group 2 - Companies are adopting a "supply control" strategy to stabilize market prices and manage inventory, with several brands announcing supply suspensions or strict quota controls [10][12] - The performance of major liquor companies is slowing, with firms like Wuliangye and Luzhou Laojiao adjusting their revenue growth targets to align with macroeconomic indicators [13] - The industry is entering a new phase characterized by structural adjustments and a shift towards younger, lower-alcohol, and healthier products, necessitating continuous innovation for companies to seize growth opportunities [2][9]