Moutai Prices Plummet: What's Happening with Guizhou Moutai?
The Mid-Autumn and National Day holidays are traditionally considered the peak season for white liquor consumption, but this year seems to be a bit different.
Recently, the price of Feitian Moutai has been falling continuously.
Today's liquor price data shows that on September 24th, the wholesale reference price for the 2024 Feitian Moutai in the original box with a specification of 53 degrees/500ml was 2,355 yuan/bottle, and 2,250 yuan/bottle for the loose bottle; the wholesale price for the "Long Mao" original box was 2,490 yuan/bottle.
It is worth noting that the official guide price for "Long Mao" is 2,499 yuan/bottle, which has already fallen below the guide price.
Some media reports indicate that due to the continuous decline in the wholesale price of Moutai liquor, the quoted price for the scalpers to buy back Moutai liquor has become a time price, and even the buyback of Long Mao has been suspended.
At the same time, Kweichow Moutai (600519.SH) launched its first share repurchase since going public.
On September 21st, Kweichow Moutai announced that it would repurchase shares not less than 3 billion yuan (inclusive) and not more than 6 billion yuan (inclusive) through a centralized bidding transaction, with a repurchase price not exceeding 1,795.78 yuan/share (inclusive), and the repurchased shares will be used for cancellation and reduction of the company's registered capital.
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When will Zhang Deqin, who took office this year, be able to stop the "decline" of Kweichow Moutai?
Both stock prices and liquor prices have fallen.
During the period of March and April this year, the continuous decline in the market wholesale price of Feitian Moutai sparked a discussion.
At that time, since March, the wholesale reference price for the original box of Feitian Moutai in 2024 fell from 2,990 yuan to about 2,800 yuan, and the loose bottle fell from 2,710 yuan to about 2,500 yuan.
This time, some opinions believe that it is related to the 375ml Xunfeng liquor.
Data shows that Xunfeng liquor is a digital fusion product launched by Kweichow Moutai on December 31, 2023, and is only sold through the Xunfeng digital world, with a specification of 53%vol 375ml, which belongs to the same category of Moutai liquor as Feitian Moutai.
In late March, 375ml Xunfeng liquor was officially launched through the Xunfeng digital world, priced at 1,498 yuan/bottle, with a total of 200,000 bottles released in the first batch.
Many opinions believe that due to the specification being close to 500ml, the substitution for the original 500ml Feitian Moutai is strong, which has driven this round of price decline.
On April 8th, a Kweichow Moutai staff member stated that the planned volume of Xunfeng liquor accounts for a small proportion of the annual release volume of Moutai liquor and will not affect the price system of Moutai liquor.
In addition, there is news that in March this year, the distribution ratio of Moutai liquor in traditional sales channels reached about 13% of the annual total volume, while the same period in previous years was about 7%.
If the 25% distribution volume of January and February is also included, then in the first quarter of this year, the distribution volume of Moutai liquor in the distribution channels has already accounted for nearly 40% of the annual total volume.
The increase in supply also led to a decline in market prices.
By the Dragon Boat Festival, Feitian Moutai ushered in a new round of decline.
The loose bottle price once fell below 2,100 yuan/bottle.
And this time, Kweichow Moutai finally took action to control the price.
The market release of the 12-bottle Feitian Moutai was canceled; the opening box policy for Feitian Moutai was canceled; the delivery of 15-year-old Maotai liquor and boutique Maotai in some regions was suspended; the Maotai 1935 series of products was also suspended; the release of 375ml Xunfeng Maotai liquor was suspended.
After the price control, the price of Feitian Moutai also warmed up.
Today's liquor price shows that on August 17th, the loose bottle price of Feitian Moutai rebounded to 2,450 yuan/bottle, and the original box price rebounded to 2,785 yuan/bottle.
In July earlier, Xunfeng liquor also resumed release.
However, the good times didn't last long, and the price of Feitian Moutai fell again.
On September 23rd, the original box price of Feitian Moutai was 2,365 yuan/bottle; the loose bottle was 2,250 yuan/bottle, and the next day, the original box price fell to 2,355 yuan/bottle, and the loose bottle remained unchanged.
The outside world is also looking forward to Kweichow Moutai taking action to control the price again.
At the same time as the decline in the price of Feitian Moutai, the stock price of Kweichow Moutai is also falling.
According to Tonghuashun data, from the beginning of this year to September 23rd, the stock price of Kweichow Moutai fell by 25.58%.
In August, Kweichow Moutai also disclosed a new dividend plan.
From 2024 to 2026, the total cash dividend distributed by the company each year will not be less than 75% of the net profit attributable to the shareholders of the listed company for that year, and the cash dividend for each year will be implemented in two installments (annual and mid-term dividends).
On September 24th, at a press conference held by the State Council Information Office, the People's Bank of China, the State Financial Regulatory Administration, and the China Securities Regulatory Commission announced a series of major policies that will soon be introduced, including increasing the intensity of monetary policy regulation and further supporting the stable economic growth.
Affected by a series of good news, the stock price of Kweichow Moutai rose by 8.8%, closing at 1,372.6 yuan/share, and the annual decline was narrowed to 19.03%.
From the performance, Kweichow Moutai has not yet been affected by the price of Feitian Moutai.
In the first half of this year, Kweichow Moutai's revenue was 81.931 billion yuan, a year-on-year increase of 17.76%; the net profit attributable to the shareholders of the listed company was 41.696 billion yuan, a year-on-year increase of 15.88%.
However, Kweichow Moutai has also increased its investment in advertising and marketing.
In the first half of this year, Kweichow Moutai's sales expenses were 2.617 billion yuan, a year-on-year increase of 46.53%.
In the first half of 2023, Kweichow Moutai's sales expenses increased by 18.52% year-on-year to 1.786 billion yuan.
Obviously, Kweichow Moutai also has some pressure.
This year, when Kweichow Moutai encountered setbacks in the market, there were also significant changes in Kweichow Moutai - the change of leadership.
On the evening of April 30th, Kweichow Moutai announced that according to relevant documents, Zhang Deqin was recommended as a candidate for the company's director and chairman, and it was suggested that Ding Xiongjun no longer serve as the company's chairman and director.
Subsequently, Ding Xiongjun resigned from his positions as chairman, director, and corresponding positions in the special committees under the board of directors due to work adjustments.
Zhang Deqin took office as the chairman of Kweichow Moutai.
On August 14th, Kweichow Moutai announced that according to relevant documents, Xiang Ping and Zhang Xu were recommended as candidates for the company's deputy general managers, and it was suggested that Tu Huabin and Wang Xiaowei no longer serve as deputy general managers.
Data shows that both Xiang Ping and Zhang Xu are "old hands" of Kweichow Moutai.
Xiang Ping has rich production management experience, and Zhang Xu has marketing experience.
With Zhang Deqin's appointment, the "Moutai system" has gained more say.
The direction of Kweichow Moutai is also changing.
Zhang Deqin has repeatedly expressed the importance of dealers.
On May 10th, at the first "Three Provinces Dealers Discussion Meeting" with dealers since taking office as chairman of Moutai, Zhang Deqin stated that "dealers are the family of Moutai."
At the semi-annual performance briefing meeting held in September 2024, an investor asked questions about Kweichow Moutai's channel strategy and dealer policies, and Zhang Deqin replied that at present, Kweichow Moutai has formed a relatively complete channel ecosystem.
From the perspective of financial statements, the wholesale channel includes social distribution, e-commerce, supermarkets, etc., and the direct sales channel includes self-operated companies, iMoutai, etc.
There are no changes in Kweichow Moutai's dealer policies at present.
At the same time, Zhang Deqin stated, "Moutai attaches great importance to market conditions.
We conduct in-depth market research in various provinces and regions, hold market work meetings in various provinces and regions, and have in-depth discussions and exchanges with representatives of various channels such as dealers, e-commerce, group purchases, and provincial self-operated companies, continuously improving a systematic and coordinated strategic and tactical system.
The overall market situation is relatively stable."
From Zhang Deqin's remarks, it can be seen that dealers are still an important channel for Kweichow Moutai.
In the first half of this year, Kweichow Moutai's wholesale agency revenue was 48.175 billion yuan, and the direct sales revenue was 33.756 billion yuan, respectively, an increase of 26.5% and 7.35% year-on-year.
Among them, the revenue of the iMoutai channel was 10.25 billion yuan, an increase of 9.76% year-on-year.
In terms of the number of dealers, as of the end of the report period, Kweichow Moutai has 2,097 dealers in China.
18 were added, and 1 was reduced.
Kweichow Moutai stated that the increased dealers are all series liquor dealers.
In addition to balancing channel relations, Zhang Deqin needs to find new growth points for Kweichow Moutai.
Guojin Securities pointed out that the Mid-Autumn Festival liquor sales window has come to an end, and the channels generally feedback that sales have declined, with a decline of more than double digits.
Among them, a few best-selling products and best-selling prices performed relatively better, with sales only declining by single digits or remaining flat, while non-best-selling prices and brands with weaker foundations in the region saw a higher decline in sales.
From the perspective of price levels, it is generally reported that the resilience of the mid-range price of 100-200 yuan is good, while the business corresponding to the high-end price is relatively weaker, but the thousand-yuan price has taken over some of the downgraded super-high-end gift and other demands.
The liquor industry has already faced sales pressure.
In the continuous decline of the price of Feitian Moutai, its financial attributes have been weakened, which also adds some uncertainty to the future of Kweichow Moutai, and Kweichow Moutai may need to find new growth points.
In the era of Ding Xiongjun, "youth" was the focus of Kweichow Moutai, and it also created a billion-level single product for the company, Maotai 1935.
Entering the era of Zhang Deqin, "new business" may be the new focus.
On July 23rd, the 2024 semi-annual market work meeting of Kweichow Moutai liquor proposed that Kweichow Moutai liquor should actively transform towards "new business" and do a good job in "three transformations": first, customer group transformation, aiming at unicorns, specialized and refined new, and small giants, and cultivating new consumer groups such as practitioners in new energy, biotechnology, and digital technology industries; second, scene transformation, developing business consumption for potential industries and future industries, while developing scenes such as family and friends gatherings; third, service transformation, the marketing idea should shift from "birds of a feather flock together" to "people are divided into groups", and the service concept should shift from "selling products" to "selling lifestyles" for different segmented groups.
From August 15th to August 16th, the Moutai Group held a national supermarket department store channel market work meeting and a market work meeting for the distribution and self-operated system in the five provinces and regions of Yunnan, Guizhou, Sichuan, Chongqing, and Tibet.
The meeting pointed out that from the market feedback, the overall trend of liquor consumption is stable, and the consumer group under 40 years old has increased significantly.
For the sale of Moutai liquor, the overall number of customers is increasing, the customer structure is changing, and the demand side is robust.
Each channel should scientifically grasp the macro situation, adapt to consumption trends, and leverage its own advantages, focusing on the transformation and upgrading of traditional industries, emerging industries, and future industries, actively expanding the "new business" consumer group, continuously optimizing the customer structure, and promoting the transformation of the Moutai liquor consumer group.Guojun Securities stated that in the golden autumn season of 2024, apart from Moutai and Wuliangye, the sales of liquor companies generally relaxed their pricing systems and increased their spending efforts.
They speculate that the characteristics of "detaching from real estate dependence" and "de-luxurification" in white liquor consumption will continue to be prominent.
In this dimension, "market share is the brand," and what companies can leverage is their own product structure's depth advantage, using strong channels, big brands, and large production capacity.
With the right pricing strategy, they can continuously encroach on competitors.
It is evident that the new customers Zhang Deqin has tapped for Guizhou Moutai are the "new business" consumer group, rather than a broader young demographic.
Targeting the "new business" sector also helps maintain Moutai's brand positioning.
Whether this strategy is effective will require time to reveal the answer.