Summary of Key Points
The liquor industry is undergoing a period of significant adjustment, with a series of irregularities recently coming to light: emotional marketing tactics by so-called “old men” targeting middle-aged men to sell high-priced counterfeit wines; numerous liquor merchants going bankrupt due to fraudulent practices such as buying at high prices and selling at low prices, or manipulating subsidies; and illegal fundraising schemes where customers are promised shares in exchange for purchasing wine. The root of these issues lies in the industry’s downward cycle (declining revenue and profits, and a triple contraction in sales), coupled with the failure of outdated business models (expansion of production capacity, pressure on distribution channels, and overemphasis on the financial value of liquor). As a result, some companies are resorting to risky strategies. To improve the industry, stricter regulation and a focus on meeting consumer needs (real sales and customer service) are essential.
Detailed Analysis
1. Emotional Marketing by “Old Men” Selling Wine
What are these “old men”? Simply put, they are men disguised as women who use emotional tactics to trick middle-aged men over 40 into buying wine. The process is quite cunning:
- Attracting Customers: They use AI-generated videos of attractive women to attract their target audience.
- Building a Story: They create fictitious stories of hardship, such as being divorced and raising children, to establish a sense of intimacy.
- Making a Profit: They sell counterfeit wines (e.g., Guizhou Yingbin Wine) for prices ranging from 698 to 1999 yuan, when the actual cost is only 20–30 yuan, with some sales reaching millions in a single month and generating commissions of up to 50%.
The Guizhou Bazi Liquor Company has been investigated by regulatory authorities and the police, but many similar businesses still operate hidden within WeChat or QQ groups, disappearing as soon as problems arise.
2. Liquor Merchants Going Bankrupt
Liquor merchants across the country have faced financial crises, with two common issues:
- High-Buy Low-Sell Scams: For example, Lu Mouling in Chongqing bought Maotai at higher prices than the market rate and then sold it off cheaply to quickly recoup funds, relying on delayed payments to maintain cash flow. His scheme involved 160 million yuan in fraud and led to his arrest by the police.
- Manipulating E-commerce Subsidies: A company in Linyi, Shandong, without official rights to represent certain wines, organized fake transactions to exploit platform subsidies and price differences for profit. Many merchants are now demanding cash payments and avoiding credit sales.
3. Buying Wine with the Promise of Shares
New fraudulent schemes involve claiming that a wine company is about to go public and offering shares in exchange for purchases, promising dividends that would cover the cost of the wine. In reality, customers end up with either substandard wine or invalid agreements, and those who try to get their money back are blocked. The Guizhou Securities Regulatory Bureau has warned that this is a form of illegal fundraising.
4. The Root of the Problems: A Downward Industry and Failed Business Models
Why have so many issues emerged? The industry is facing tough times:
- Economic Data: Revenue of liquor companies decreased by 7% and profits by 17.7% from January to June this year; 80% of companies are seeing declining profits, with 70% expecting a worse situation in the second half of the year.
- Outdated Models: The traditional model of producing excess wine, forcing it on distributors, and exploiting its financial value has failed. Now, there is overstock, making it difficult to sell products and leading to cash flow problems.
- Business Practices: Many problematic companies are not truly in the liquor business; they aim to make a quick profit before disappearing—either through fraudulent schemes or misleading marketing.
5. The Way Forward: Stricter Regulation and a Focus on Consumers
The industry needs to change:
- Tougher Regulations: The cost of violations is increasing, and tactics like those used by the “old men” will be strictly punished.
- A Focus on Consumers: Companies must shift from pressureing distributors to selling wine directly to consumers, understanding their needs and providing quality service.
- Survival Depends on Authenticity: Only those companies that truly focus on producing good wine and valuing customers will survive the market reshuffle.
These issues are part of the industry’s adjustment process, but with stricter regulation and self-purification by the market, the liquor industry will eventually return to its core mission of providing high-quality wine to genuine consumers.