Click to view details On the evening of January 1, 2019, Kweichow Moutai released an announcement regarding its production and operation status. In 2018, both revenue and net profit achieved excellent results with year-on-year growth of over 20%. The announcement stated: In 2018, revenue was approximately 75 billion yuan, up 23% year-on-year, and net profit was approximately 34 billion yuan, up 25%. Moutai's target for 2019 is 14% year-on-year growth, roughly calculating revenue at 85.5 billion yuan. Additionally, Moutai disclosed its 2018 production figures in the announcement. In 2018, the base liquor production of Moutai liquor was approximately 49,700 tons, up 16% from 42,800 tons in 2017, and the production of Jiangxiang series liquor was 20,500 tons. It is worth noting that although Moutai Shares includes many subsidiaries, from a production perspective, this performance report of the joint-stock company is to a certain extent equivalent to the combination of "Moutai liquor" + "Jiangxiang series liquor." Coincidentally, at the end of December, Moutai Jiangxiang liquor and Moutai liquor successively held their 2018 national distributor conferences. Combining these figures with the summaries from those meetings provides more value and room for thought. 01 "Special" and "Rare" 2018 2018 marked both the 40th anniversary of reform and opening-up and the 20th year of Moutai's "marketization." At the same time, Moutai's 2018 was "special" and "rare." At the meeting, Moutai's 2018 achievements were described as follows: Revenue and net profit reached new highs, and in 2019, the group will powerfully usher in a new era of 100 billion! Focusing on 2018 marketing work, Li Baofang, Secretary of the Party Committee, Chairman, and General Manager of Moutai Group, gave full affirmation of "steady progress," concentrated in four major aspects:

First, the overall stability of the Moutai liquor market;

Second, advancing the construction of Moutai culture, initially presenting a "cultural Moutai" with "quality, brand, and connotation";

Third, a major transformation in market services, adhering to policy stability and efficient execution, and strengthening the service awareness of the marketing system;

Fourth, accelerating the aggregation of new development momentum, adding a "Successor Work Department" to achieve work mechanism innovation, and the second global "Moutai Fans Festival" showcased Moutai's openness, inclusiveness, and innovation. 02 Jiangxiang Series Liquor Approaching 9 Billion, Particularly Outstanding Li Baofang, Secretary of the Party Committee, Chairman, and General Manager of Moutai Group, commented on the development of Jiangxiang liquor: The series liquor marketing performance is particularly outstanding and is the biggest gain for Moutai in the past three years. Looking at specific figures:

  1. Compared to 2015: Sales volume increased from 7,800 tons to 30,000 tons, approximately 4 times that of 2015, with an average annual growth rate of 57%; sales revenue increased from 1.3 billion yuan to 8.8 billion yuan, approximately 7 times that of 2015, with an average annual growth rate of 89%, and its share in the group rose from 3% in 2015 to 10%, significantly enhancing its support and contribution, becoming an important pillar of the group company;
  2. In 2018, Jiangxiang series liquor achieved sales revenue of 8.8 billion yuan, up 36% year-on-year; paid taxes of 800 million yuan, up 82% year-on-year. In the view of Jiu Shuo: This scale has become the first brand of mass-market Jiangxiang liquor in the industry;
  3. By product: Moutai Prince liquor achieved sales of 12,000 tons and sales revenue of 3.8 billion yuan, retaining its position as the group's second-largest and the series liquor's largest single product; Lai Mao and Guizhou Daqu saw sales revenue exceed 1 billion yuan for the first time, becoming two "1 billion-yuan level" single products after Han Jiang;
  4. Also at 30,000 tons, from 6.5 billion yuan in 2017 to 8.8 billion yuan in 2018 (as of December 21), this indicates high-quality development through structural growth. The unit price per ton of series liquor increased from 217,000 yuan in 2017 to 293,000 yuan, an increase of 35%. 03 Will Moutai Continue to Rise Next Year? At the meeting, Moutai Group Chairman Li Baofang clearly stated, In the coming year and even longer, the prices of Moutai liquor and series liquor will be capped for a period and will not be adjusted again. "Scarcity does not mean sky-high prices; prices cannot become a 'runaway wild horse.'" At the same time, he also proposed that given the group's inability to continuously expand production capacity and the sustained growth in consumer demand, the supply shortage of Moutai liquor will become the norm for a considerable period. Moutai Group plans to sell approximately 31,000 tons of Moutai liquor next year, an increase of 3,000 tons compared to 2018. Moutai Group will also implement differentiated distribution based on local conditions and consider demand differences at different time points to adjust regional balance and the annual sales rhythm. The planned sales volume means that Moutai Group will at least prepare to put an equivalent amount of Moutai liquor on the market. In 2017, the sales plan for Moutai liquor was 26,800 tons, increasing to 28,000 tons in 2018. During special times such as Mid-Autumn Festival and Spring Festival, Moutai will also release additional volume. Insufficient supply of Moutai liquor has always been considered one of the main factors driving price increases. Moutai Group has also repeatedly explained that the complex craftsmanship and strict storage requirements of Moutai liquor limit its production. In 2017, Moutai Group's overall production, including series liquor, was only 63,800 tons, while Wuliangye Group, which focuses on strong-flavor liquor, can produce 180,000 tons a year, almost three times that of Moutai. However, the planned sales volume will not be supplied to distributors all at once. When signing distribution contracts with distributors in 2019, Moutai will use the 2017 planned volume as the base and existing stock, adhering to "no increase, no decrease," with a total of 17,000 tons. Moutai stated that 31,000 tons is still only a preliminary planned volume. Currently, Moutai Group's work focus is to release approximately 7,500 tons of regular Moutai liquor to the market before the Spring Festival this year to ensure supply during the peak season. The Pig Year Moutai zodiac liquor will also be concentrated on the market after New Year's Day, ensuring that the release volume reaches about 30% before the Spring Festival. In terms of operations, Li Baofang emphasized continuing to focus on culture and service. "Moutai must not have a 'shortage dependency.' Only by focusing on culture and service can it have vitality and competitiveness," he said. In 2019, Moutai will cancel the previous measures requiring ID registration and phone registration to purchase liquor, will not refuse cash payments, and will no longer conduct any form of promotional activities. Moutai Group believes that turning these past temporary measures into routine means is disrespectful to customers. Additionally, for a period to come, Moutai liquor will no longer add new exclusive stores, special distributors, or general distributors. At the recently concluded Moutai national distributor conference, more than 100 distributors had their qualifications revoked. At the same time, Moutai Group is preparing to expand direct sales channels and promote flattened marketing. Specific measures include expanding direct sales in various provinces, cooperating with large supermarkets and well-known e-commerce platforms, and distributing to airport and high-speed rail station sales points in key domestic cities. Text compiled from Interface News and Jiu Shuo Click here to register in one step