Moutai price hike does not mean industry recovery

Gelonghui March 31｜Moutai announced last night that it is raising the price of Feitian. The ex-factory price has been raised from 1169 yuan to 1269 yuan, and the retail price within the company’s own retail system has been raised from 1499 yuan to 1539 yuan.

A consumption industry researcher at Gelonghui Research Institute said that, judging from current market guidance on Feitian wholesale quotes, raising the ex-factory price compresses distributors’ profit margins and helps the company build thicker profit for itself. However, this move should not be seen as short-sighted. Since January of this year, Moutai has been selling Feitian on iMoutai, and the feedback on the results has been very good—up to now, iMoutai has still been sold out every day.

The researcher pointed out that, when wholesale quotes were previously very high, if Moutai were to place large quantities of Feitian priced at 1499 yuan on iMoutai, it would inevitably disrupt pricing in the distributor system. But now that wholesale quotes have fallen significantly, Moutai can follow this trend: by reclaiming sales rights for Feitian, the resistance will be much smaller. After selling for a few months, Moutai has also tested the market’s capacity to absorb the product, so raising the Feitian terminal price is therefore logical. Through the price increase, Moutai can also offset the negative impact this year from the significant decline in non-standard and other series wines, maintaining the steadiness of its fundamentals. In addition, as long as iMoutai continues to be in a supply shortage, Moutai can keep making small step-by-step price increases to provide continuity for its growth. It should be noted that Moutai is able to do this because of the unique brand advantage of Feitian; it should not be regarded as a signal of an overall recovery across the liquor industry. (Gelonghui)