High-end Baijiu Prices Surge Before Chinese New Year: Moutai Up Nearly 200 Yuan in Three Months, Feitian Moutai May Reach 1,500 Yuan

"The Moutai you once ignored, now you can't afford; the current market, you doubt; the future market, you'll regret." This saying aptly describes the current surge in high-end baijiu prices: Moutai, Wuliangye, Guojiao 1573... According to reporters, with the year-end consumption peak approaching, high-end baijiu in Changsha has entered a "price increase mode," with prices rising month by month. In just three months since the Mid-Autumn Festival, 53-degree Feitian Moutai has risen by nearly 200 yuan, and other high-end brands like Wuliangye have followed suit. Meanwhile, mid- and low-end baijiu prices remain relatively stable. Industry insiders say that the baijiu market has fully recovered this year, and next year should continue this trend, with 53-degree Feitian Moutai possibly rising to 1,500 yuan.

Market Trends

High-end Baijiu Prices Surge Before Chinese New Year: Moutai Up Nearly 200 Yuan in Three Months

"Last year, 53-degree Feitian Moutai was less than 800 yuan a bottle; in the first half of this year, it was just over 900 yuan. After National Day, it rose to 1,000 yuan, in November it was 1,080 yuan, and by December it's nearly 1,200 yuan," said a salesperson at a tobacco and liquor store in Xiangjiang Century City. He noted that Moutai's price increase has been significant this year, and customers should pick up their orders this month because "prices may rise again next month."

Currently, high-end baijiu prices are on the rise. For example, the retail price of 53-degree Feitian Moutai in Changsha is basically above 1,100 yuan per bottle, compared to around 900 yuan in the first half of this year.

A distributor of Wuliangye and Moutai in Changsha told reporters that the price has stabilized above 1,000 yuan because the first-tier wholesale price of Moutai has risen above 1,000 yuan, nearly 200 yuan higher than the lowest wholesale price after the Spring Festival this year.

Not only in physical stores, but also on major e-commerce platforms, the price of 53-degree Feitian Moutai has long been above 1,000 yuan, with current prices ranging from 1,098 yuan to 1,159 yuan per bottle. The 999 yuan price during "Double 11" is nowhere to be found.

Besides Moutai, other high-end baijiu are also seeing good price increases. "The price of 52° Crystal Bottle Wuliangye was raised to 829 yuan as early as September," a staff member in the liquor section of a Vanguard supermarket told reporters yesterday afternoon. In June, the retail price was around 720 yuan. Group purchases could get even better discounts.

Affected by the market environment, high-end baijiu prices dropped significantly in previous years. The retail price of 53-degree Feitian Moutai fell from a peak of 2,000 yuan to about 850 yuan, and 52-degree Crystal Bottle Wuliangye dropped from over 1,300 yuan to about 600 yuan. Since last year, the baijiu market has recovered, and Wuliangye has raised its ex-factory price three times so far. In September, it announced a price increase of 60 yuan per bottle for 52-degree Crystal Bottle, bringing it to 739 yuan, the highest ex-factory price ever. This also pushed its retail price above 750 yuan.

Driven by Moutai and Wuliangye, high-end baijiu has entered a price increase mode, with terminal prices for brands like Yanghe and Jiannanchun also rising to varying degrees.

Reasons

Mass Consumption Upgrade and Business Consumption Rise: 'Drink Less, Drink Better' Becomes a Habit

Moutai has always been a "hot product" in the high-end consumer market. However, for various reasons, the high-end baijiu market once saw both sales and prices decline. Now, high-end liquor is showing signs of price increases again. What has changed in the market?

Behind the price increases is a change in supply and demand. "The main consumer of high-end baijiu used to be the 'three public consumptions' (public funds, public resources, and public power). After the impact, after years of transformation, personal and business consumption gradually replaced public consumption, becoming the main driver of demand for high-end baijiu. Coupled with the year-end peak season for baijiu consumption, demand increases, so prices naturally rise," said Zheng Yingping, Secretary-General of the Circulation Branch of Hunan Provincial Liquor Industry Association. He believes that in the past two years, mass consumption upgrades and the rise of business consumption have boosted the high-end baijiu market. "Drinking less but better has gradually become a consumption habit, so people's purchasing power for high-end baijiu has increased. Moreover, when 53-degree Feitian Moutai was speculated to 2,000 yuan a bottle, it was too expensive for personal consumption. Now at 1,000 yuan, people can afford it."

Additionally, a Wuliangye distributor in Changsha, Mr. Zhang, told reporters that baijiu consumption is highly seasonal, especially for high-end brands, with high demand during festivals. Since the annual output of some high-end baijiu is fixed, supply and demand can become unbalanced, leading to price increases during peak seasons. "High-end baijiu is a commodity with high demand elasticity, greatly affected by festivals. Sales peak around New Year's Day, and the difference between peak and off-peak seasons is significant. Manufacturer output and distributor pickup quantities are limited. In the second half of the year, demand exceeds supply, so prices naturally rise."

Reporters learned that for high-end baijiu represented by Moutai, the inventory available for market sales in the second half of the year is significantly less than in the first half. According to official Moutai data, sales in the first half of the year completed 64% of the annual plan, leaving only about 8,000 tons for the second half. According to Wuliangye Group, by the end of August, it had completed 90% of its annual sales target.

Furthermore, recently, liquor companies including Moutai, Wuliangye, Yanghe, Luzhou Laojiao, and Gujing Gongjiu have successively announced supply controls or suspensions. This "hunger game" is indirectly driving up market prices. The reason for suspending supply is that they have completed or exceeded their expected tasks, with the aim of stabilizing or raising prices.

Forecast

Buying on Rising Prices: High-end Baijiu Expected to Continue Rising Next Year

After a long period of restrictions on the three public consumptions, high-end baijiu consumption seems to have returned to a normal track. Moutai and Wuliangye prices have been raised multiple times this year. Does this mean the high-end baijiu market has fully recovered? What will next year look like?

"After years of dormancy, the high-end baijiu market has fully recovered this year. I personally judge that prices will continue to rise next year, and 53-degree Feitian Moutai may rise to 1,500 yuan," said Zheng Yingping. He believes that the positive trend in the high-end baijiu sector in 2016 is mainly due to mass consumption upgrades, and the trend of high-income groups and the middle class expanding is sustainable, which will also be one of the logics for the sector's continuation in 2017. "Moreover, the taste and quality of high-end baijiu like Moutai are worth a good price. In addition, in recent years, they have attached great importance to opening up the international market, and overseas demand has increased, while annual output is relatively fixed."

Yesterday, reporters visited several tobacco and liquor stores in Kaifu District. The owners finally had smiles on their faces. "Sales are better. Just now a customer bought a case, saying they were afraid of price increases before the Spring Festival and wanted to stock up for the holiday. I suggest you also buy a few bottles; prices will really rise!"

Wholesalers also see a bullish outlook for the high-end liquor market next year: "Now, high-end liquors like Moutai have been rising all year, and the market is relatively stable. Chinese people buy on rising prices, fearing that prices will rise even more, so they prefer to buy more and store it. Some distributors, seeing good market conditions, are also reluctant to sell, which will exacerbate the supply shortage."

Reporters learned that while merchants are reluctant to sell, some social funds are also eyeing Moutai. Not long ago, Zhejiang's Houdao Asset, together with Shangyuan Group, launched a Moutai value investment fund, collectively purchasing a batch of Moutai for investment and financial management. In the view of one distributor, this is likely capital sensing the expectation of Moutai price increases under rising inflation. In fact, Moutai has not raised its ex-factory price for six consecutive years, while raw material and labor costs have been rising during this period.

However, this wave of price increases is unlikely to replicate the 2013 market.

"The Moutai headquarters will not allow prices to continue rising unchecked," industry insiders believe. Compared with previous years, the Moutai headquarters now has strong control over market prices and does not want Moutai to become an investment product again. At the recent Guizhou Liquor Expo, senior Moutai executives stated that there is no intention or consideration to raise prices. The current prices, whether ex-factory, first-tier wholesale, or terminal, are acceptable to distributors and consumers, so there is no need to raise prices.

Contrast

The Baijiu Industry as a Whole Is Still Warming Up

Can the high-end baijiu price increase benefit mid- and low-end baijiu and drive the overall recovery of the industry? In this regard, Zheng Yingping believes that simple price increases by high-end brands cannot suppress the increase in consumer demand. In contrast, mid- and low-end baijiu are seeing weakening overall sales, brand benefits, and public recognition, and they can only maintain stable prices. "Moreover, the recent actions by liquor companies to control volume and stabilize prices indicate that market momentum is insufficient; they need to control supply to maintain prices rather than relying on consumption to stabilize them. The full recovery of the baijiu market will still take time."

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