Moutai Prices Drop Again: Industry Perspectives
During the Mid-Autumn and National Day holidays, which are traditionally a peak sales season for alcoholic beverages, the wholesale price of Moutai has been continuously falling, affecting market sentiment.
Alcohol price data shows that from September 11th to September 25th, the wholesale price of 24-year Feitian Moutai (500ml) in loose bottles fell from 2400 yuan to 2200 yuan, a drop of 200 yuan in two weeks; the original bottle price fell from 2580 yuan to 2320 yuan, a drop of 260 yuan.
On September 26th, Moutai prices saw a slight rebound, with the wholesale price of 24-year Feitian loose bottles at 2240 yuan/bottle, up 40 yuan from the previous day; the original bottle was reported at 2350 yuan/bottle, up 30 yuan from the previous day.
"Ordinary Moutai has little room for appreciation."
Distributors are particularly sensitive to the price drop.
Recently, several liquor business owners in Shanghai told reporters from the International Finance News that the latest market sales price of loose Moutai in 2024 is between 2450 yuan and 2500 yuan, which is not as high as in previous years.
A liquor merchant frankly stated, "Not only is the price not as high as in previous years, but the downward trend has become more apparent after the Mid-Autumn Festival. However, even if it doesn't make as much money as before, the value of Moutai remains strong and has not yet had a substantial impact on operations."
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What will the future trend of liquor prices be?
Food industry analyst Zhu Danpeng believes that the continuous decline in overall consumer spending has a significant impact on Moutai. If consumer dividends continue to decline in the future, it will be a great challenge for Moutai. The prohibition of high-end alcoholic beverages in official receptions may further reduce Moutai sales, and liquor prices may continue to decline.Independent wine industry commentator Xiao Zhuqing told reporters from the International Finance News that currently, consumers are not very optimistic about their future income expectations. The trend of consumption contraction and consumption downgrade is still ongoing, which to some extent leads to the continued downturn in the catering and gift markets. Moreover, industries such as real estate, large infrastructure, and finance, which were the main consumers of Maotai liquor, are undergoing in-depth adjustments. These factors all have an impact on the demand for high-end liquor.
So, will prices have a chance to rise back up by the end of the year and during the Spring Festival?
Some dealers told reporters, "Prices may rise at the end of the year, but it is unlikely to return to previous high levels. At most, the price of a bottle may increase by two to three hundred yuan." They added that if it is for personal consumption or as a gift, such price fluctuations will not have much of a substantial impact on consumer purchasing behavior. If it is for investment and collection, ordinary Feitian Maotai no longer has much room for appreciation, and the more valuable ones are the zodiac series of Maotai.
At the beginning of this year, Maotai launched the Year of the Dragon zodiac liquor (hereinafter referred to as "Dragon Maotai"), which was once speculated to 7,000 yuan per bottle when it was first released. However, it is worth noting that the current market price for collecting wine is lower than the official price (2,499 yuan), and many scalpers have already suspended the collection of Dragon Maotai.
Spending a lot of money to "stabilize the military's heart"
Since May, the stock price of Kweichow Moutai Co., Ltd. has fluctuated and declined all the way. On September 19, it fell to 1,254.83 yuan per share during the trading day, reaching a new low in nearly 23 months. The market value also fell to 1,584 billion yuan on that day, with more than 584 billion yuan evaporated compared to the beginning of the year.
In order to boost market confidence, Kweichow Moutai issued an announcement to repurchase stock prices on the evening of September 20.
This is the first time the company has repurchased shares since its listing 23 years ago. The company plans to spend 3 billion to 6 billion yuan to repurchase company shares, with a repurchase price not exceeding 1,795.78 yuan per share. This is seen by the industry as an important means of maintaining stock prices and stabilizing the military's heart.
Looking at the performance of the first half of the year, even though the industry is in a period of deep adjustment, Kweichow Moutai is still stable. During the reporting period, the company's operating income was 83.451 billion yuan, a year-on-year increase of 17.56%; the net profit attributable to the shareholders of the listed company was 41.696 billion yuan, a year-on-year increase of 15.88%.
Kweichow Moutai's revenue target for this year is to increase by 15% compared to last year (150.56 billion yuan), which means it needs to achieve a revenue of about 173.144 billion yuan. In the first half of the year, its target completion rate was 48.19%. The company's chairman, Zhang Deqin, said at a recent investor exchange meeting, "We will ensure the completion of the performance target."In order to safeguard its performance, Moutai has also begun to strive for customer acquisition.
At the market work meeting held in July, the management of Kweichow Moutai expressed for the first time their intention to actively transform towards "new business", which can be seen in three aspects:
Firstly, there is a transformation in the customer base, targeting unicorns, specialized and innovative companies, and little giants, and cultivating practitioners in emerging industries such as new energy, biotechnology, and digital technology as a new consumer group.
Secondly, there is a transformation in the consumption scenarios, developing business consumption for potential industries and future industries, and developing scenarios such as family and friend gatherings.
Thirdly, there is a transformation in service, shifting the service philosophy from "selling products" to "selling lifestyles" for different segmented groups.
Xiao Zhuqing stated that the consumer groups, consumption scenarios, and service model transformations mentioned above have just begun to be promoted, and it remains to be seen when they will take effect. These factors will comprehensively affect the price expectations of channels.
He believes that Moutai is currently facing a dilemma. Amid the trend of consumer downgrade, there is a certain inherent contradiction between the company's performance tasks and the market price of the product.
"As a local state-owned enterprise and a listed company, Kweichow Moutai has the responsibility to complete performance targets; however, the current weak consumption of white spirits means the company should adopt a 'control quantity and stabilize price' approach to stabilize market prices, which is beneficial to the sustainable development of the Moutai ecosystem. How to seek growth while stabilizing prices is a test for the Moutai management team," said Xiao Zhuqing.