Positive Reviews: The Alcohol Ban Forces Tobacco and Liquor Stores to Break Free from “Resource Dependence” and Accelerate the Market – Oriented Transformation of the Industry
Sixty days after the release of the newly revised “Regulations on Practicing Thrift and Opposing Waste in Party and Government Organs” (hereinafter referred to as the “Alcohol Ban”) in May 2025, tobacco and liquor stores were the most directly affected group. In some provinces and cities, sales dropped by 80% year – on – year, and over 90% of tobacco and liquor stores were in operational difficulties. However, from the perspective of the long – term development of the industry, this “growing pain” may be the key turning point for the liquor circulation sector to break free from “resource dependence” and move towards market – oriented competition.
I. Breaking the “Pseudo – C – end” Business Logic and Promoting the Industry’s Return to Real Consumption Demand
For a long time, the “prosperity” of tobacco and liquor stores has been characterized by a distinct “pseudo – C – end” feature: on the surface, they are retail stores targeting consumers, but in reality, their revenues are highly dependent on government and enterprise group purchases (accounting for 50% – 70%). The essence of this model is a “relationship – based business” — obtaining orders by maintaining customer resources from state – owned enterprises, public institutions and other B/G – end clients, rather than relying on the natural purchases of C – end consumers. This kind of dependence not only makes the business risks of tobacco and liquor stores highly concentrated (such as policy changes directly impacting core revenues), but also distorts the real supply – demand relationship in the liquor circulation market: the “popularity” of some high – end liquors is not due to mass consumer demand, but rather “face – saving consumption” or implicit welfare in government and enterprise scenarios.
The introduction of the Alcohol Ban has precisely cut off this false prosperity of the “pseudo – C – end”, forcing tobacco and liquor stores to re – examine the real market demand. When the purchasing demand from state – owned enterprises and public institutions, which accounts for more than half, disappears, tobacco and liquor stores must turn to real C – end consumers and focus on daily consumption scenarios such as family gatherings, friend dinners, and self – drinking. This transformation may seem passive, but in fact, it is an inevitable choice for the liquor circulation industry to return to market laws. Only a business model based on real consumption demand can withstand the impact of external variables such as policies and economic cycles.
II. Accelerating Channel Innovation and Promoting Efficiency Upgrades in the Circulation Link
Under the pressure of the Alcohol Ban, the transformation exploration of tobacco and liquor stores has quietly begun: some stores have entered platforms such as JD.com and Meituan to develop instant retail business, relying on the geographical advantages of offline stores to meet consumers’ demand for “buy now, get now”; other stores have shifted their focus to the gift market, deeply exploring the business of gift card issuance and recycling, trying to find new growth points outside traditional group purchases. Although these attempts are still in the early stage, they have shown positive signs.
The rise of instant retail is essentially a transformation of tobacco and liquor stores from “sitting merchants” to “itinerant merchants”. In the past, tobacco and liquor stores relying on government and enterprise resources often “waited for customers to come to the door” and had a weak ability to reach C – end consumers. By connecting to local life platforms, tobacco and liquor stores can cover a wider consumer group and improve the “space – time efficiency” and “labor efficiency” of the stores. For example, a tobacco and liquor store owner in the Jiangsu – Zhejiang region mentioned in a survey that after connecting to Meituan Flash Sale, the proportion of his night orders (for family gatherings and temporary dinners) increased from less than 5% to 20%, effectively making up for the decline in group purchase orders. This kind of channel innovation based on digital tools not only improves the circulation efficiency but also provides a more sustainable growth path for tobacco and liquor stores.
III. Optimizing the Industry Structure, Eliminating Inefficient Production Capacity, and Promoting Industry Concentration
The number of tobacco and liquor stores in China reached a peak of 5.6 million in 2019, far exceeding the real market demand. Against the background of the overall slowdown in the liquor industry’s sales and inventory backlog, a large number of tobacco and liquor stores were already in a state of “inefficient operation”. The impact of the Alcohol Ban is like pressing an “accelerated clearance” button for the industry. According to the prediction of the China Tobacco and Alcohol Circulation Association, the number of tobacco and liquor stores will decrease by 17% – 22% in 2025, which means that some stores relying on government and enterprise resources and lacking market – oriented operation capabilities will be eliminated, while high – quality stores with C – end service capabilities and digital operation capabilities will survive.
The improvement of industry concentration is conducive to the concentration of resources on more efficient circulation entities. For example, chain tobacco and liquor stores can purchase goods at a lower cost and offer a richer SKU (such as adding non – liquor categories like beer and beverages) due to their scale advantages; stores with instant retail capabilities can obtain more C – end orders through platform traffic. This process of “survival of the fittest” will ultimately promote the upgrade of the liquor circulation industry from “scattered, small and chaotic” to “professional, branded and large – scale”.
Negative Reviews: Severe Short – term Impact, Numerous Transformation Challenges, and the Industry Faces a “Painful Period” Survival Test
Although the Alcohol Ban provides impetus for the long – term transformation of tobacco and liquor stores, in the short term, this policy impact has plunged the industry into a “survival crisis”. From the sharp decline in sales to inventory backlog, from the lack of transformation resources to the intensification of external competition, the “pain” of tobacco and liquor stores is far from over.
I. Disappearance of the Core Income Source and High Risk of Cash Flow Break
For most tobacco and liquor stores, government and enterprise group purchase orders are the “income pillar”. After the purchasing demand from state – owned enterprises and public institutions, which accounts for more than 50%, disappears, the remaining 20% of retail income cannot cover the rigid costs such as rent, labor, and inventory at all. Take a tobacco and liquor store in a third – tier city in Shandong as an example. Its monthly rent is 15,000 yuan and the labor cost is 10,000 yuan. In the past, relying on state – owned enterprise group purchases, the monthly income was 150,000 yuan and the net profit was about 30,000 yuan. After the Alcohol Ban, the retail income dropped to 30,000 yuan, and after deducting costs, the monthly loss was 20,000 yuan, and the cash flow could only be maintained for 3 – 4 months.
What’s more serious is that the “time cost” of liquor inventory is extremely high. Tobacco and liquor stores usually purchase goods from liquor enterprises through the method of “pay first, pick up goods later”. Inventory backlog not only occupies funds but also may lead to losses due to price inversion (the retail price is lower than the purchase price). For example, a tobacco and liquor store owner revealed that the purchase price of a certain high – end liquor in his warehouse is 1,200 yuan per bottle, and the current retail price has dropped to 1,000 yuan per bottle. If it cannot be sold quickly, there will be a loss of 200 yuan per bottle. This “inventory depreciation” pressure further exacerbates the cash flow crisis of tobacco and liquor stores.
II. Insufficient Transformation Ability and Most Stores Are “Willing but Unable”
Although some tobacco and liquor stores try to transform in directions such as instant retail and the gift market, most stores lack the corresponding resources and capabilities. On the one hand, instant retail requires digital operation capabilities. From platform entry, product listing to marketing activity design, all need professional team support. Most tobacco and liquor store owners operate in the “husband – and – wife store” mode and lack Internet operation experience. On the other hand, the competition in the gift market is also fierce. Large – scale chain supermarkets and brand liquor enterprise direct – sales stores have already deployed the gift card business, and the “license advantage” (famous liquor agency) of tobacco and liquor stores is difficult to be transformed into competitiveness in C – end retail.
In addition, the “geographical location” of tobacco and liquor stores also limits the transformation space. Many tobacco and liquor stores are located around office buildings and government agencies, originally to facilitate government and enterprise customers’ purchases. Now, the C – end footfall in these areas is insufficient. After turning to retail, they are less competitive than community stores and business district stores. For example, a tobacco and liquor store owner in an economic development zone in Jiangsu tried to transform into community retail, but because the store is far from residential areas, even with price promotions, the footfall is still far lower than expected.
III. Intensified External Competition and the Industry May Fall into “Low – price Involution”
While the Alcohol Ban leads to the overall shrinkage of the demand for tobacco and liquor stores, external competitors are accelerating to seize the market. Large – scale chain liquor stores (such as Huazhi Liquor Store and 1919) can purchase goods at a lower price due to their scale advantages and cover more consumers through online – offline integrated operation. Convenience stores (such as 7 – Eleven and Lawson) rely on their dense network of stores and the convenience of 24 – hour operation to gain a share in the instant retail scenario. In contrast, single – store tobacco and liquor stores have neither price advantages nor channel coverage capabilities and are at a disadvantage in market – oriented competition.
What’s more dangerous is that in order to quickly recover funds, some tobacco and liquor stores may adopt the “low – price selling” strategy, resulting in chaos in the regional market price system. For example, a tobacco and liquor store owner sold a certain mid – end liquor at a price 10% lower than the purchase price to relieve inventory pressure. Although some funds were recovered in the short term, the local price system of this brand was damaged, triggering “follow – up price cuts” from other tobacco and liquor stores, and ultimately leading to a further compression of the industry’s profits. If this “suicidal competition” spreads, it may delay the recovery process of the entire industry.
Suggestions for Entrepreneurs: Shift from “Resource Dependence” to “Capability – Driven” and Build a Market – Oriented Survival Logic
Facing the impact brought by the Alcohol Ban, tobacco and liquor store entrepreneurs need to break out of the thinking of “waiting for policy relaxation” and actively embrace market – oriented transformation. Here are some specific suggestions:
I. Adjust the Business Structure, Shift from “Group Purchase – Oriented” to “Diversified Scenario Coverage”
Abandon the dependence on government and enterprise group purchases and focus on exploring the real C – end consumption scenarios:
– Instant Retail: Connect to platforms such as Meituan Flash Sale and JD Daojia, optimize the online product display (such as highlighting selling points like “arrive in 30 minutes” and “emergency liquor”), and launch promotional activities during peak consumption periods such as nights and weekends.
– Family Consumption: Develop small – sized packages (such as 100ml small bottles of liquor) and combination packages (liquor + snacks gift boxes) to meet the needs of family self – drinking and small gatherings with friends.
– Gift Market: Cooperate with local bakeries and flower shops to launch cross – border gift boxes such as “liquor + cake” and “liquor + flowers” to increase the added value of products and avoid direct competition with large – scale supermarkets.
II. Improve Service Capabilities, Shift from “Selling Goods” to “Selling Experiences”
C – end consumers are much more sensitive to services than B – end customers. Tobacco and liquor stores need to establish user stickiness through differentiated services:
– Member Management: Establish customer profiles, record consumers’ drinking preferences (such as fragrance type and alcohol degree) and important dates (such as birthdays and anniversaries), and push personalized recommendations via text messages or WeChat.
– Experiential Marketing: Regularly hold activities such as “liquor tasting parties” and “cocktail – making teaching” to invite consumers to the store to participate, enhancing interactivity and brand awareness.
– After – sales Value – added: Provide services such as “wine storage on behalf of customers” (consumers can store the purchased liquor in the store and pick it up at any time) and “free delivery” (for orders within 3 kilometers around the store) to lower the consumption threshold.
III. Optimize the Supply Chain, Shift from “Relying on a Single Brand” to “Multi – category Complementation”
Break the limitation of “only selling liquor” and improve the risk – resistance ability by enriching SKU:
– Add Popular Categories: Introduce low – price, high – frequency consumption categories such as beer, wine, and pre – mixed cocktails to attract young consumers.
– Expand Non – liquor Products: Sell liquor – related utensils such as wine glasses and decanters, as well as snacks such as nuts and dried fruits to increase the customer unit price.
– Strengthen Product Selection Ability: Adjust the product structure according to local consumption habits (such as increasing low – alcohol liquor in the southern market and high – alcohol liquor in the northern market) to avoid blindly following the trend and acting as an agent for high – price liquors.
IV. Pay Attention to Policy Dynamics and Ensure Compliance in Business Operations
The implementation of the Alcohol Ban may be accompanied by “escalation at the local level” (such as the prohibition of liquor at private parties for public officials). Entrepreneurs need to closely monitor policy changes to avoid risks caused by illegal sales:
– Strictly distinguish between “work meals” and “private consumption” scenarios and do not actively promote liquor to government and enterprise units.
– Keep sales records to ensure that each transaction is traceable and avoid getting involved in “illegal procurement” disputes.
– Actively participate in industry association activities and voice reasonable demands through collective efforts (such as appealing for policies to clarify the boundary of “private consumption”).
The impact of the Alcohol Ban on tobacco and liquor stores is essentially an inevitable path for the liquor circulation industry to transform from “resource – driven” to “market – driven”. In the short term, a large number of stores relying on government and enterprise group purchases will be eliminated. But in the long run, high – quality stores with market – oriented operation capabilities and the ability to serve C – end consumers will survive and grow. For entrepreneurs, instead of waiting for “policy relaxation”, they should actively embrace changes. Only by building a business model based on real demand can they gain a firm foothold in the next cycle of the liquor industry.
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