Breaking below 2500! Recently, the bellwether of the liquor market, Moutai, has become a hot topic because its 53-degree/500ml Feitian has been "falling without end" in the circulation market. On social media, discussions about Moutai's price drop have been heating up since mid-to-late March. Some joked, "I need to grab a bargain quickly," while others said, "Maybe it'll be cheaper if we wait." The decline is not limited to the circulation channel. On April 8, the stock price of Kweichow Moutai fell more than 3% intraday, closing at 1666.66 yuan per share, down 2.82%. On April 9, it continued to fall slightly, closing at 1662.22 yuan. On April 10, it even broke below 1650 yuan. In a market economy, price fluctuations are common, and the liquor industry is no stranger to ups and downs. So why does Moutai's decline cause such a stir? The Myth of Only Rising, Never Falling? "Today it broke below 2500, so I'll hold onto my bottles for now," said Mao Shu (pseudonym), a veteran Moutai enthusiast, to Retail Jun a couple of days ago. He explained that he buys his liquor from various platforms at the factory price of 1499 yuan, "It can't fall to 1499 yuan. But scalpers might be torn—if they don't buy, they might miss a good opportunity to buy low and sell high, but if they do, they worry about further price drops." Mao Shu noted that Moutai price drops are not uncommon. The Chinese liquor industry is closely tied to holidays; during festivals, people give gifts and gather for meals, so prices typically rise before major traditional festivals like Dragon Boat Festival, Mid-Autumn Festival, and Spring Festival, then fall afterward. Before the Dragon Year Spring Festival, Moutai had already risen, so from a cyclical perspective, this is a low season for high-end liquor, and the price drop in the circulation market is normal. "Moutai's price has always been strong, but even the strongest doesn't have a myth of only rising," Mao Shu analyzed. In fact, due to changes in consumer demographics and the external environment, the consumption scenarios and demand for liquor are shifting. Younger generations are less interested in high-proof liquor than their predecessors, and they are less enamored with the brand effect of high-end liquor. As a result, high-end liquors like Moutai and Wuliangye are mainly used in business banquets or as gifts. This reduction in scenarios has led to a gradual decrease in demand at the consumer level. These changes, in turn, affect production fluctuations. Otherwise, excess inventory would inevitably impact retail prices. Supply and demand determine price movements, so liquor companies, including Moutai, have been adjusting supply to balance prices and profits in recent years. According to data released by category innovation strategy firm Ries at the recent "Spring Sugar Fair," China's liquor production capacity has been declining for three consecutive years, but revenue and profits have maintained high growth. Of course, for Moutai, its price fluctuations are not solely determined by supply and demand, because Moutai also has a "financial" attribute beyond its liquor nature. It is this unique financial attribute that causes any slight movement in Moutai to attract attention from inside and outside the industry. A key characteristic of financial products is that they "reflect expectations"—when expectations are positive, prices trend upward; when pessimistic, prices fall. So, what pessimistic expectations are driving Moutai's decline? Is Xunfeng to Blame? Judging from recent prices, the pessimism triggered by this round of Moutai's decline has not fully dissipated. On one hand, the widely watched support level of 2600 yuan in the circulation market was not held; on the other hand, the decline in the circulation market has affected stock performance. Moutai's stock has been on a downward trend since mid-March, and by the close on April 10, the price per share had fallen below 1650 yuan. Moutai's recent decline has also shaken the entire liquor industry; in the stock market, Wuliangye and Luzhou Laojiao have also suffered consecutive losses. Did this storm come out of nowhere? Obviously not. Just as there is no love or hate without reason, there is no rise or fall without reason in the economic world. In fact, Moutai's price has always been closely related to market demand, supply, and macroeconomic conditions. With consumption stratification and intensifying competition in the liquor market, even Moutai cannot remain immune. This round of price fluctuations, whether for loose bottles or full boxes, is generally attributed by industry insiders to two factors: one is the increased supply of Feitian, which raised the lottery hit rate, and the other is the launch of Xunfeng 375. Xunfeng is a digital world interactive software co-developed by Moutai and NetEase, which can be seen as a metaverse game. The game is designed based on Moutai's brewing environment and historical culture, using virtual reality, interactive experience engines, and digital twin technologies to deeply restore Moutai's brewing environment, history, and craftsmanship. Players need to collect fragments in the game and exchange them for the right to purchase Moutai. The number of fragments is not fixed; it changes with game updates, event rules, and the quantity of Moutai available. Additionally, players can obtain fragments by completing tasks, participating in events, or trading with other players, and then combine these fragments into a digital collectible, which can be redeemed for physical Moutai. According to Mao Ge, even before the 375ml Moutai was launched, the "24 Solar Terms Wine" series introduced by Xunfeng was quite popular in the community. So why does Xunfeng 375 affect the 500ml Feitian? After all, in terms of price, the factory price of Xunfeng 375 is 1498 yuan, only 1 yuan less than the 500ml Feitian, which seems not competitive. But Mao Ge calculates differently. He said that previously, scalpers' purchase price for Feitian in the circulation market was about 2700 yuan per bottle; using this price to convert, the market value of a 375ml Xunfeng bottle is about 2000 yuan. Moreover, as a product specifically for the game, Xunfeng 375 replicates Feitian Moutai in both appearance and quality, with only the Xunfeng label on the packaging. This specification is suitable for young people to drink themselves or for small gatherings with friends, and it is also a decent gift for close friends. Of course, the most important thing is the accessibility of Xunfeng 375. Compared to Feitian, which requires lightning-fast online purchases, getting Xunfeng 375 through gameplay mainly requires patience. On social media, industry insiders have said that the initial release of 200,000 bottles in collaboration with Xunfeng, combined with rumors of an annual output of 2,000 tons, has become a significant reason for the price drop of Feitian Moutai. Success or Failure Both in Youth Orientation? The collaboration with Xunfeng reflects Moutai's anxiety and desire for brand and product youth orientation. In recent years, Moutai has been trying various crossovers and co-branding to get closer to young people, who have become the main consumer group. Launching Moutai ice cream was a significant attempt. In May 2022, Moutai partnered with Mengniu to launch Moutai ice cream, which caused quite a stir in the industry. Soon, Moutai ice cream was not only sold on the iMoutai mini-program but also in physical stores. Within just three months, Moutai opened stores in Shanghai. A few days ago, Moutai Shikong reported that ice cream revenue (including tax) in the first quarter of 2024 increased by 239.62% year-on-year, and it has opened 35 flagship stores nationwide, a 48% increase year-on-year. Perhaps the success of ice cream gave Moutai confidence. In September last year, Moutai partnered with Luckin Coffee to launch "Sauce Aroma Latte," which sold over 5.42 million cups on its first day, with single-day sales exceeding 100 million yuan. Recently, Luckin announced that the number of consumers of Sauce Aroma Latte has exceeded 25 million. Clearly, the collaboration with Luckin brought Moutai a wave of young traffic. At the end of March this year, Luckin announced that it had joined hands with Moutai to open a "Four Seasons and Eight Festivals" national trend theme store at Jiahui Plaza in Shenzhen. The theme store is inspired by the beauty of the four seasons in Qi Baishi's works and combines the eight solar terms (Start of Spring, Spring Equinox, Start of Summer, Summer Solstice, Start of Autumn, Autumn Equinox, Start of Winter, Winter Solstice) to create a sensory experience of the four seasons for young consumers. Moutai's ambition extends beyond coffee. Almost simultaneously with the Luckin collaboration, Moutai also partnered with Dove chocolate to launch six flavors of "Maoxiaoling" liquor-filled chocolates. Regarding "Maoxiaoling," Ding Xiongjun, Secretary of the Party Committee and Chairman of Moutai Group, once stated that the Moutai ice cream, Sauce Aroma Latte, and Maoxiaoling chocolates under the Moutai Ice Cream Business Unit are important layouts and achievements of the "+Moutai" strategy. He said that in 2024, "Maoxiaoling" will focus on: first, product development; second, deepening channels and terminals; third, digital transformation to achieve full-process digitalization; and fourth, organizational reform of the ice cream business unit. How to become younger and get closer to young people is a major challenge facing the liquor industry. Moutai, together with NetEase, launched Xunfeng 375 through a game, which is novel in gameplay. But if, as speculated, this decline is related to the increased supply of Xunfeng, being "bitten by youth orientation" is probably not what Moutai wants to see. So, is Moutai's stabilization imminent?