Jiangxiaobai/Jovo——Three Strategies Facing the New Generation ——Road Tao, Chairman & CEO, Chongqing Jiangxiaobai Liquor Co., Ltd.

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Jiangxiaobai/Jovo——Three Strategies Facing the New Generation
——Road Tao, Chairman & CEO, Chongqing Jiangxiaobai Liquor Co., Ltd.
Actually, compared with other categories in the food and beverage
industry, white spirit is more traditional, conservative and even secluded
to some extent. Under the present circumstance, many different kinds of
categories are challenged by some common problems today. First of all,
the development of categories is slowing down, which is not exclusive to
certain product but all the industry. Secondly, products are not novel
enough for the consumers nowadays, especially the traditional ones.
Thirdly, due to the lack of novelty, new generations started to give up the

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brands. In the past 5 years, we experimented from three different aspects
to be innovative, which is called “Three Strategies”. These three
aspects are category, product and brand.
The main topic of today is about product innovation. But I, myself, is in
charge of the whole company. So I would like to further elaborate on the
consideration we had before the innovation and the brand-building work
after the innovation.
First of all, we developed“Jiangxiaobai” from a competitive analysis
from four different aspects which can be concluded as “large”,
“small”, “high-end” and “new”. What does this analysis mean ?
The F&B industry have many targeted categories in the market today.

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White spirit, one of the four quintessence of Chinese culture, is the one
with the longest history among all the categories. The uprising of white
spirit industry is very early, and it has a large market scale, with market
value reached 260 billion yuan in 2016. Now it still keeps a single-digit
growth rate. However the new generation of consumers has little interest
in white spirit. On the contrary, what caught their attentions are foreign
liquor and innovative ones.
Since last year, we have been marketing and promoting our products in
inland cities, such as Chongqing, Chengdu and Changsha. In the end of
last year, we broke into Shanghai’s market. The data of first quarter of
Shanghai market is out of my expectations. To most people, the
consumers in Shanghai are cooler and more fashionable. So they might
not accept traditional white spirit that well. But generally speaking, the
situation in Shanghai is better than we expected. The statistics showed us
that there is potential market for us to explore and innovate new
products. From another perspective of the situation, we can draw to the
question that is how to innovate. Actually, we should simulate the case in
a specific situation. Logically speaking, over 99% traditional white spirit
manufacturers will target at traditional consumers and very few of them
would target at the new generation. White spirit is most consumed as

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gift or on dining tables at wedding, anniversary or business banquet. So
we don’t design “Jiangxiaobai” to cater for those four situations. We
target at the fifth consuming purpose as leisure products. Our company
is only a middle-scaled enterprise. We don’t have enough capital to
cover all kinds of consumers. Giving the situation, we would rather target
at a smaller market.
Thirdly, due to consumption upgrade, consumers are willing to spend
more money in order to get higher-qualified products. Some people say
that “Jiangxiaobai” is not a high-end brand, but we have already been
a high-end brand among white spirit sold in small bottles. The price for
mainstream Erguotou (a kind of white spirit) is usually between 5 to
10RMB. But we push up the price to 20RMB. By improving the quality of
our products, we attract consumers to consume our expensive products
along with better quality. On the other hand, we must be more efficient
than the traditional white spirit manufacturers. We should be more
efficient in production, brand-building, advertising and operating. For
example, it’s very money-consuming for the traditional manufacturer
to build their brands. While for us, we advertise on new media more than
they do, which is more efficient and cheap. Besides, compared with the
traditional ones, we spend less on stock keeping unit. This greatly boosts

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the efficiency of operating, managing and selling. As for channel
updagrade, consumers have already formed certain channels to get
products. Besides, shops and consumers have different channels to get
products. Actually, nowdays, with the development of E-commerce and
B2B, the channels are changing greatly. Consumers have access to more
channels. This largely enhances the efficiency. So that is what we do
every year. We find new ways to promote our efficiency.
In terms of young generations, we have been trying to detect the new
trend. And at the same time we present our new image and develop new
channels to send products to our consumers. We made some reasonable
innovation in such fields. That’s why you can see the image of our
product “Jiangxiaobai”. Our products are the most diverse products

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with images connecting with new generations.
In my previous speech I mainly introduced the logic behind “Three
Strategies” we adopted in our products. And in most industries, the
so-called innovation should be the process of diving deeper into the
products instead of simply combining different things together. What we
should do is to detect the difference between categories which we
ignored before. Products are the foundation of a company; we can’t
separate products from innovation or simply talking about products
without considering the market. How to perform better in innovation is
the challenge that every traditional industry is facing today. The
traditional industries are trying to get accepted by the new generation,
and transform the new generation into their fans.
Firstly, I want to talk about specialty. In food and beverage industry,
localization and additives-free are the two major trends. For example,
Maotai Spirit from Guizhou and Er-guo-tou White Spirit from Beijing,
these two white spirits are very localized. The localization is the solid
fundament for a brand to enter global market. The more localized the
product is, the better chance for it to prevail all over the country even the
world. Actually, the Chongqing Kaoliang spirit is a product still remains

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undeveloped. The process of brewing of Chongqing Kaoliang spirit is
quite different from others. The difference lies in the material of white
spirit. In China, most white spirits are distilled form a mixture of several
types of grains. Chongqing Kaoliang spirit, however, is distilled only from
kaoliang. As for the flavor, most white spirits have strong taste.
Chongqing Kaoliang spirit is not the same case. This trait can be utilized
to attract the consumer with mild taste. And new generations are exactly
the one with mild taste. As a result, we concluded a methodology in
product innovation. We should start from the consumption scenarios
and then develop the products that can best suit the consumers’ needs
and solve their problems in specific scenarios.
What kind of situation are our products designed for? Four phrases can

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give the description of it. They are: a party for a few, tipsy drinking, casual
moments and jolly mood. First, about a party for few. This kind of party
should be confined within 5 people who are friends, co-workers or
classmates. It should not be a business one. In this situation, people are
not drinking in order to ask other people for help. The purpose in this
kind of party is to relax. Second, tipsy drinking. Nobody needs to be
drunk in this situation. People are only looking for the tipsy feeling. Third,
casual moments mean that the consumption of “Jiangxiaobai” can be
rather frequent and normal. Lastly, jolly mood. We all acknowledge that
the consumption of tea and coffee are connected with people’s mood,
while the emotion connection of white sprit consumption is more
strongly. Thus white spirits do not only exist for people’s rigid demand
and functional demand.
Then, how to use products to improve social experiences? There
definitely are demands embedded in social situations such as a party of
few and tipsy drinking. “Jiangxiaobai” classic mini bottles are created
to cater for these social occasions. Last year, we developed a series of
products called “express bottle”. Apart from soothing emotions of our
consumers, we also try our best to explore the most inner desire of them.
Why do people consume alcohols? The reason is that people want to

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express themselves, especially Chinese. Why would I say so? Because our
culture is very conservative, especially education-wise. We are taught not
to be loose lips. But people need opportunities to express their emotions
and feelings. That’s why many people like to talk a lot after drinking
alcohols. Even though they are introversive, they have desire to express
themselves.
So we developed “express bottle” which brought a sales increase of 82%
in the fourth quarter of last year. The product in “express bottle” is the
first generation of “Jiangxiaobai”. Yet through creative package design
to communicate with consumers, we have made people find our
products interesting. Then, the consumers will spontaneously introduce
our products to their friends, which brings greater reputation for our

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products. In order to make our consumers feel as the participants of our
products, we enabled them to create their own “express bottle”. Once
the consumers scan the QR code on our H5 page, they can send their
feelings at the drinking moment back to our platform via WeChat.
Meanwhile we will select the interesting messages from our consumers
and then print them out on the bottle. Consumers can also share their
own design of “Jiangxiaobai” bottles on social media. This can provide
better consumption experience and advertising effect.
This is another product of my company, called “For Intimate Friends”. It
highly targets 3 or 5 people’s drinking situation. Besides, this March, we
developed another new product called “Contact Me”. This one is also
designed to cater for the consumers in specific situations. Based on

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consumption scenarios and consumers, we also cooperated with Zhang
Xiaohei, a domestic famous cartoon IP, to promote our products.
Generally speaking, our way of innovation is to dive deeper into our
categories, specify them, and redefine them based on the relations
between our consumers and their consumption scenarios. Then we can
innovate our brand targeting new generations.