Author: Chake
Moutai, China's leading high-end liquor, has suffered its biggest price dive in recent years.
The price of Kweichow Moutai 53 degrees Feitian fell below 2,100 yuan at the end of June this year. (Internet)
In terms of retail prices, the market guide price of Moutai's signature product "Feitian" is 1,499 yuan (about S$279.5) per bottle, but the market price ranges from 2,700 yuan to 3,000 yuan. However, at the end of June this year, the market price of Feitian Moutai once fell below 2,100 yuan.
Moutai's share price also fell sharply. In the past two months, Kweichow Moutai's share price fell from 1,770 yuan in early May to 1,440 yuan on Monday (July 1), a decline of 18%.
Many Chinese consumers believe that Moutai is a collection that will appreciate in value, and Moutai stock is what many investors call their "faith" in the A-share market - whether it is a bull market or a bear market, Moutai can always recover lost ground after a large drawdown and rise in twists and turns. Therefore, Moutai has long been the largest heavy stock in public and private placements.
But just last Monday (June 24), Moutai, which has been the No. 1 in China's A-share market for four consecutive years, was replaced by the Industrial and Commercial Bank of China.
This time, will Moutai be able to resist macro and cyclical changes again?
Scalpers aren't selling anymore?
Moutai is known as China's national liquor, and its value is related to the brewing process and the unique brewing environment of Moutai Town, but also to the role it has played in history.
A widely circulated story is that in 1972, when the then Chinese Premier Zhou Enlai entertained the visiting US President Richard Nixon and his entourage at the Great Hall of the People, he strongly recommended Moutai, saying that Moutai was a "panacea" for the CCP's Long March.
Stained with the red traditional "panacea", coupled with the limited annual output, although the guide price of Moutai is 1499 yuan, the retail price is much higher than the guide price after heavy price increases by dealers, scalpers, tobacco and alcohol stores. In 2020, the price of a single bottle of Feitian wine at 53 degrees of Moutai soared to a high of 3,150 yuan, and the market was flooded with various scalpers who hoarded goods for a while.
But this year the situation is different. In April, when liquor entered the off-season after the Spring Festival, the price of Feitian fell to 2,600 yuan, but no one took advantage of the low price to stock up, and the price fell all the way. On June 24, the reference price of bulk flying fell to 2,080 yuan, a four-year low.
The Economic Observer reported that this was Feitian Moutai's longest decline in the past three years.
According to the report, in the auction market, the unsold rate of old wine and vintage wine has risen, and collectors have a strong wait-and-see mood, while some scalpers who make profits by selling and hoarding goods to tobacco and liquor stores have also suffered losses, and some scalpers are withdrawing from the second-hand recycling market of Moutai.
The pawn amount of Moutai is also declining, and the report pointed out that the pawn amount of 53 degrees Feitian Moutai in 2024 given by many pawn shops in Beijing has touched the market guidance price of 1,499 yuan.
According to the Financial Associated Press, some pawnshops in Guangdong no longer accept Moutai as collateral.
Moutai is no longer used in the scenario?
Some analysts believe that since May, China's e-commerce platforms have been fiercely competitive, and various subsidies and price reductions have greatly increased the supply of cheap Moutai in the market, which has become the fuse for the decline in Moutai prices, but the underlying reason is the decrease in demand and the reduction in use scenarios.
China Business Daily quoted a brokerage analyst in the liquor industry as saying that the fundamental reason for the decline in Feitian Moutai's price is that the market's demand for ultra-high-end liquor like Feitian Moutai has decreased, and Moutai's investment in Moutai has increased every year, which has caused an oversupply of products and a large demand gap.
According to the analysis of the self-media "whale business", in daily life, high-end liquor is mainly used for gifts, official business receptions and banquets for red and white ceremonies, but at present, official business receptions are becoming more and more strict, and high-end liquor often exceeds the prescribed limits, and due to the economic environment is not optimistic, people who do red and white ceremonial events are gradually looking for relatively reasonable wine, non-high-end liquor.
Moutai also frequently appeared in anti-corruption-related news, and many fallen officials were exposed to illegal acceptance of Moutai liquor and banquets "do not drink non-Moutai liquor".
At the end of last month, Li Wei, deputy head of the discipline inspection and supervision team and first-level investigator of the Guizhou Provincial Commission for Discipline Inspection and Supervision stationed in the Provincial Department of Natural Resources, was double-opened, and it was mentioned in the report that Li Wei had violated discipline and law such as "buying Moutai in violation of regulations".
On June 18, the Hunan Commission for Discipline Inspection reported the details of the corruption of Tang Yuewu, secretary of the Yiluoma County Party Committee in the province, saying that Tang Yuewu was addicted to alcohol and greedy for cups, and did not drink anything other than Moutai, and said that he "almost never drank other alcohol" in Taojiang.
At a banquet for investment promotion, because the organizer arranged other brands of liquor, Tang Yuewu did not serve a cup until he was replaced with Moutai, and the banquet continued. Therefore, it is also nicknamed "Tang Moutai".
Some netizens commented that in the past, officials drinking Moutai was a symbol of power and status, but now officials and Moutai are put together, which is the story of corrupt elements.
Real estate developers were once the main consumers of Moutai, and the downturn in China's real estate market has also affected the consumption of Moutai.
Chen Jianhua, a liquor retailer, was quoted by Caixin as saying that the main reasons for the decline in demand for alcohol were the reduced use of alcohol by real estate developers and the decline in consumption power.
Another Chengdu wine merchant told the Economic Observer that he has nine stores in Chengdu, and in previous years, 90 percent of Moutai was sold to real estate and engineering. But this year things are not good, and he has closed two stores.
Can Moutai fly into the homes of ordinary people?
Will Moutai rise back? Some shareholders said on the investment exchange platform Xueqiu that the resilience of Kweichow Moutai lies not only in the status of Kweichow Moutai as an important state-owned enterprise in Guizhou Province and the quality of its liquor, but also in the deep foundation of Moutai in the high-end population and system, but this foundation seems to be shaking.
In September last year, Kweichow Moutai and Luckin Coffee jointly launched a "sauce latte" containing Moutai. (Internet)
Obviously, Moutai also hopes to develop a wider audience of young people, and Luckin Coffee launched "Sauce Latte", Dove launched wine chocolate, and also cooperated with Mengniu to launch Moutai ice cream, which once became an Internet celebrity product.
Moutai cooperated with Mengniu to launch Moutai ice cream. The picture shows the first Moutai ice cream flagship store in Hunan in 2022 in Changsha Joy City. (China News Service)
However, young people's pursuit of new products has not translated into the purchase of Moutai. On the one hand, they did not see more aura of Moutai than other liquors like the previous generation; On the other hand, on the table of young people, there are red wines, beers, whiskeys, all kinds of mixology, and liquor is far from the protagonist.
In the face of the drop in both selling price and stock price, Moutai officially released an internal meeting message on WeChat on Sunday (June 30). The meeting pointed out that the basic attributes of Moutai have not changed, and the basic demand side has not changed; Although the current situation is more complicated, Moutai has the confidence, strength and ability to go through this cycle.
Wine hasn't changed, but the macro environment and consumers have changed a lot.
Cycles go round, but times keep moving forward. China's economy has gone through a glorious 20 years, and Moutai has also created the "Moutai myth" during this period. Now, China's economic growth is slowing, and investors who once "believed in Moutai" have become conservative and cautious. Moutai must fly into the homes of ordinary people and attract ordinary and rational consumers. Moutai's price reduction may be the trend of the times.