China Galaxy Securities has released a research report indicating that the recent price adjustments by Kweichow Moutai could stimulate short-term price increases across the entire baijiu industry. The recent rebound in wholesale prices of Feitian Moutai and Wuliangye has provided initial validation of this trend. This could potentially drive a recovery in the baijiu sector's stock performance. However, the sustainability of this recovery will need to be confirmed by observing actual sales during the upcoming Mid-Autumn Festival and National Day peak season.
At the listed company level, the report recommends focusing on Kweichow Moutai Co.,Ltd. (600519.SH), which is leading the effort to restore its pricing system and is continuing its consumer-facing (C-end) transformation to capture market share. Other brands in the high-end price bracket are expected to follow Moutai's price increase, allowing for a minor recovery in their own wholesale prices. For regional baijiu companies, the report suggests focusing on those with strong company-specific advantages.
Moutai's Offline Retail Stores Raise Prices Again
According to reports from Jiushuo, on August 8th, Kweichow Moutai once again raised retail prices for several products at its offline self-operated stores. The standard Feitian Moutai saw a price increase to 1,753 yuan (+2%), while the premium Moutai rose to 2,410 yuan (+2%). The classic version of Maotai Zodiac Moutai increased to 1,951 yuan, and the Five-Star Moutai rose to 1,743 yuan. This follows two previous price hikes in March and July of this year for the ex-factory price and retail price within the self-operated system for the standard Feitian Moutai.
This price increase is intended to set a benchmark for offline retail prices. Taking the standard Feitian Moutai as an example, its pricing system includes three tiers: offline self-operated stores (retail price of 1,753 yuan), the iMoutai app (retail price of 1,639 yuan), and non-direct sales channels (ex-factory price of 1,369 yuan, with wholesale and retail prices fluctuating with the market). By raising prices at its offline self-operated stores, the company is establishing a benchmark for the entire offline retail market, preparing for the upcoming Mid-Autumn Festival and National Day peak season. This move also marks a significant step in Moutai's control over retail terminal prices, formalizing the dynamic adjustment mechanism where self-operated stores anchor the true transaction price for end-users.
Wholesale Prices Rise in Response
According to data from Today's Liquor Price, the market wholesale price of Feitian Moutai rose to 1,730 yuan on August 9th, driven by the price increase at Moutai's offline direct-sale stores. This represents a 5% increase from the price on July 18th and a 12% increase from the beginning of the year. Additionally, Jiushuo reports that the wholesale price of Wuliangye's Pu Wu Eighth Generation product has also seen a recent uptick.
Price Hike Reflects Moutai's Continued C-end Transformation
Previously, Moutai's offline self-operated stores prioritized supply for group purchase clients. Following this adjustment, individual retail customers can also make purchases. This reflects the company's continued and steady progress in its strategic transformation towards C-end consumers. Furthermore, the daily purchase limit for individual customers helps stabilize the market pricing system.
Improvement Signals Emerge; Focus on Q4 Peak Season Sales
China Galaxy Securities believes that after a period of fundamental adjustment in the baijiu industry during the second quarter, the operational pressure on both liquor companies and distribution channels has been partially alleviated. Coupled with the low base of shipments from liquor companies in the second half of the previous year, a sequential improvement is expected. The current rebound in market prices of Feitian Moutai and Wuliangye is seen as a key signal. However, the sustainability of this improvement requires further observation of sales recovery during the Mid-Autumn Festival and National Day peak season.
Risk
Risks include weaker-than-expected demand recovery, fluctuations in wholesale prices, and food safety risks.
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