Summary of Key Points
The liquor market in Jinan is undergoing significant changes in its distribution channels: amidst an overall decline in scale (with sales falling below 7 billion yuan in 2025 and a decrease of about 30%), local liquor companies such as Baotuquan and Gubeichun have achieved counter-cyclical growth by managing their own direct sales outlets. National renowned brands like Gujing, Jiannanchun, and Fenjiu are also increasing their involvement in terminal management. The role of distributors has shifted from being mere holders of brand rights to becoming providers of terminal services and organizers of resources; they seek to create irreplaceable value through their own brands, private domain operations, and delivery services. This transformation is not about eliminating distributors altogether but rather about a redivision of responsibilities between manufacturers and distributors, reflecting an improvement in the efficiency of the liquor industry’s distribution network.
1. Why are Manufacturers Getting Involved Directly in Terminal Management?
Stabilizing prices and preventing market shrinkage are the main motivations. In tough economic times, manufacturers fear that intermediaries will add excessive prices or hold back inventory, leading to price collapses and resulting in losses for everyone. Local liquor companies in Jinan have long recognized this: Baotuquan has been directly managing its sales in Jinan since 2003, avoiding price fluctuations due to intermediaries, and its core product, 358, has seen sales of 800,000 bottles and revenues exceeding 100 million yuan. Gubeichun’s direct sales have also led to a 80% increase in sales volume, with revenue surpassing 200 million yuan.
National brands are adopting similar strategies: Gujing Gongjiu’s Gu16 and Gu20 use an “alliance merchant model,” where former agents become major shareholders while the manufacturer takes full control of operations, stripping them of their decision-making power. Jiannanchun Crystal Sword is also managed directly by the manufacturer, with agents only responsible for making payments and occasional deliveries, functioning more as payment facilitators. The benefits are clear: stable prices, guaranteed profits, and direct reach to consumers.
2. The Changing Role of Distributors
Distributors no longer hold the sole power over brands; their roles have evolved:
- Some have become delivery providers, with manufacturers handling deliveries and returns locally.
- Others focus on maintaining customer relationships, as manufacturers’ sales representatives may conduct tastings, but customers still prefer familiar local faces.
- Some act as resource organizers, helping manufacturers connect with local businesses for group purchases and providing customized services using their networks.
In other words, unnecessary functions (such as simple price markup) have been eliminated, while valuable services (localized support) have been retained.
3. Distributors’ Strategies for Survival
Distributors in Jinan have found several ways to adapt:
- Developing Their Own Brands: Companies like Wenlan Winery have collaborated with producers from Luzhou and Renhuai to create the “Wenlan” brand, generating annual revenues of over 40 million yuan. These brands are not subject to manufacturers’ price controls, resulting in higher profits.
- Building Private Customer Networks: Dealer Chen Ming sells customized wines through private channels, relying on customer word-of-mouth and offering free tastings to encourage repeat purchases.
- Focusing on Delivery Services: Since manufacturers avoid handling the last-mile delivery and returns, distributors have seized this as a competitive advantage.
- Offering Customized Products: By leveraging their networks, they can cater to businesses and avoid competition through traditional distribution channels.
These strategies allow distributors to survive in a market where manufacturers are taking on more responsibilities.
4. The True Nature of the Transformation: It’s Not About Eliminating Distributors, but About Weeding Out Ineffective Ones
Researcher Ouyang Qianli explains that “eliminating distributors” is a misconception; the real trend is for distributors to become less functional. Manufacturers with strong financial and logistical capabilities will replace those that cannot provide essential services (such as promotion, customer maintenance, or localized support). For example, Baozhen Winery offers exclusive customized products, serving the local liquor community effectively and generating both volume and profit. Sun Lei, a major distributor in Jinan, notes that customers prefer familiar faces from local dealers.
5. The Implications for the Future of Distributors
The changes in Jinan are representative of the broader trends in the liquor industry. As manufacturers take more control over terminals, distributors’ survival will depend on their ability to provide irreplaceable services and resources:
- Access to local networks (e.g., group purchase opportunities).
- Strong service capabilities (e.g., private domain management, customer relationship maintenance).
- Product innovation (e.g., own brands, customized products).
As Feng Bengang puts it, “Only business models that contribute to the ecosystem generate profit. Those that rely solely on finance and logistics will be replaced; those that offer localized services and emotional connections will always have a place.” This transformation is about mutual improvement, not elimination.