Wuliangye brewing ambitious plan
By Jiang Jingjing (China Business Weekly)
Updated: 2004-11-18 15:38

Liquor giant Wuliangye Group Co Ltd intends to slash its 26 brands down to 18, to strengthen and maintain its No 1 position in China and consolidate its impending entry into the world market.

"Wuliangye will develop one world-famous brand, nine national brands and eight regional brands in the near future," said Jiang Jia, the group's sales director.

He said the firm is focusing on supporting 18 brands, recognized by customer demand as the most popular, and let the rest fall away from the fierce competitive alcoholic beverage market.

It was not revealed which brands will be cut; rumours speculate the lower-end products will be the first to go.

Jiang, however, ruled out any possibility of this being the case, saying that the 18 brands will still be directed across the whole spectrum of the market.

The most expensive will be 300-400 yuan (US$36.23-48.31) while cheapest products will cost only 3-5 yuan (36-60 US cents) per bottle, Jiang said.

"Those (products) costing between 100 yuan (US$12.08) to 200 yuan (US$21.16) will be the company's focus, since most of the market demand is there," Jiang said.

The company is also expanding its attention to the overseas market, especially in areas with a large number of Chinese residents, within Southeast Asia, the United States and Europe.

Insiders point out the reason why the company carry out the strategy is that the company cannot afford to maintain the numerous kinds of products.

In the early 1990s, Wuliangye only had three brands, but then it decided to increase the product range through OEM (original equipment manufacturing) to win more market share, according to a Private Economy News report.

So far, it has 26 brands and each brand has about three categories, differentiated by the brewery process, offering almost 80 products in the saturated niche markets.

An anonymous insider has indicated that many of the products they produce compete with each other, damaging the brand image..

The company will amend its product range to regain the brand's luxurious image.

Experts suggest the market trend for liquor is manufacturing high-end brands.

"In recent years, many Chinese liquor producers have expanded their sales and profits by introducing expensive, high-end brands," said Zhao Jianhua, an expert with the China Brewing Industry Association.

Genghis Khan Group, originally a producer of spirits in Hohhot, the capital of Inner Mongolia Autonomous Region, invested 65 million yuan (US$7.85 million) to shoot 30 commercials to promote its top brand, Genghis Khan.

The liquors will sell for between 200-500 yuan (US$24.15-60.40) per bottle.

Sichuan-based Langjiu and Guizhou-based Moutai are also shifting their focus toward high-end products.

Statistics from the China Brewing Industry Association specify that the country produced more than 3.31 million tons of liquor last year, up 2.04 per cent from 2002. Sales volume reached 54.53 billion yuan (US$6.59 billion) last year, up 11.79 per cent year-on-year.

Wuliangye Group and Guizhou Moutai Group, both in Guizhou Province, remain the top two liquor producers in the country.

Not limiting itself to liquor production and sales, Wuliangye extends its product line to automobile parts, pharmaceuticals and hair care products.

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