Wine is for drinking, not for speculation. Since the beginning of this year, whether you hoard Moutai liquor or buy Kweichow Moutai stocks, you would have made a fortune. Facing the continuous speculation-driven price increases of its products, Moutai Group even resorted to measures used in real estate regulation—price caps and purchase restrictions. In August this year, when Moutai again announced measures to control Moutai liquor prices, a person in charge said: "We want to send a clear signal again to break the psychological expectation that Moutai liquor prices will be adjusted." But as the New Year approaches, Moutai liquor prices can no longer be controlled. Just this morning (December 28), Kweichow Moutai suddenly announced that starting from 2018, it will appropriately raise the prices of Moutai liquor products, with an average increase of about 18%. Baijiu prices rise one after another, Moutai finally can't sit still After more than four years of adjustment, the entire baijiu industry finally had a triumphant year in 2017, with high-end baijiu seeing both volume and price increases, seemingly returning to the glory days of the golden decade. For example, in March this year, Luzhou Laojiao announced that the ex-factory price of its 52-degree Guojiao 1573 classic edition would be raised from 620 yuan to 680 yuan per bottle. In July this year, Shuijingfang sent a "Notice on Product Price Adjustment" to provincial-level general distributors, raising the ex-factory prices of its main high-end and mid-to-high-end products—Diancang, Jingtai, and Zhenniang No. 8—by 15 yuan/bottle, 10 yuan/bottle, and 10 yuan/bottle, respectively. In addition, since the beginning of this year, Tuopai Shede, Langjiu Honghualang, and others have also raised prices one after another. Unlike other baijiu price increases, "price control" was Moutai's main theme this year. But as the year-end approaches, Moutai has finally been unable to sit still. This morning (December 28), Kweichow Moutai issued an "Announcement on the Company's Production and Operation Situation" stating: In order to better coordinate various factors, the company has decided to appropriately raise the prices of Moutai liquor products starting from 2018, with an average increase of about 18%. This price adjustment will have a certain impact on the company's 2018 operating performance. Previously, the ex-factory price of Feitian Moutai was 819 yuan per bottle; if it rises by 18%, it will reach 969 yuan per bottle. On the morning of December 28, the "National Distributor Liaison Meeting of Guojiu Moutai 2017" was held at the Moutai Conference Center in the Moutai factory area. ▲ Scene of the National Distributor Liaison Meeting of Guojiu Moutai 2017 (Photo by Zhu Wanping, NBD) At the meeting, Moutai Group Chairman Yuan Renguo stated: "We will never shrink the market, and we will never lose the brand image of Guojiu Moutai." Based on purposes such as achieving sustainable development, maintaining market order, balancing manufacturer and distributor interests, and adjusting supply and demand, Moutai decided to raise the supply prices of various products starting from January 1, 2018, with an increase range of 9% to 25%. Regarding the price increase, Yuan Renguo immediately interpreted it on site, calling on distributors not to push up the market price of Moutai liquor, so that consumers can truly drink it. He emphasized that since Moutai liquor is for "drinking" and "storage," prices should be treated rationally; Moutai liquor is not for speculation. As of the close of this morning's trading session, Kweichow Moutai's stock price surged 5.33%, rising 35.41 yuan per share, and is just one step away from returning to 700 yuan. Price control and purchase restrictions, Moutai liquor still keeps rising In fact, starting from 2016, the market price of Moutai liquor began to soar. Entering 2017, "price control" became the focus of Kweichow Moutai's work. In April this year, Kweichow Moutai held a market work meeting, clarifying the market target control prices for Feitian Moutai and Rooster Year Moutai. The suggested marked price for Feitian Moutai at specialty stores was 1,199 yuan, with a market target control price of 1,299 yuan; for Rooster Year Moutai, the suggested marked price was 1,299 yuan, with a market target control price of 1,599 yuan. Moutai Group General Manager Li Baofang stated at the meeting that severe measures would be taken to curb excessively rapid price increases, saying, "Whoever creates chaos will have their rice bowl smashed." ▲ Image source: Visual China Some analysts believe that the main reason Moutai is cracking down on price increases is to suppress the irrational hoarding demand that has already appeared in the market. Li Baofang said: Many distributors can't stop themselves. When the market was bad, they were satisfied with a profit of 50 yuan, but now they are not satisfied with profits of several hundred yuan. The greed of individual distributors is one of the main drivers of Moutai's price increases. He also stated that distributors who intentionally or maliciously raise market prices will be punished by deducting from their contracts once discovered. According to Xinhua News Agency, in August this year, at the "Guojiu Moutai Market Seminar" held in Beijing, Kweichow Moutai once again released a series of measures and signals to stabilize market prices. At that time, Moutai Group Chairman Yuan Renguo pointed out that wine is for drinking, not for speculation. Moutai would continue to implement the two price red lines: "the terminal supply price of Feitian 53-degree 500ml Moutai must not exceed 1,199 yuan, and the retail price must not exceed 1,299 yuan," and must maintain terminal price stability. When communicating with distributors, Li Baofang emphasized: Irrational and abnormal continuous price increases will inevitably lead to the continued growth of irrational and abnormal demand such as hoarding and speculation. If supply cannot keep up, and when prices cannot objectively reflect the value of the commodity and rise to a certain critical point, a collapse or even a cliff-like drop is inevitable. This is certainly a result we do not want to see.
"We want to send a clear signal again to break the psychological expectation that Moutai liquor prices will be adjusted," the Moutai Group person in charge pointed out. However, the high-profile price caps did not improve the situation. After the "Feitian Moutai price cap and purchase restriction order" was implemented, Beijing Youth Daily reporters visited the market and found that at stores designated by Moutai Group, 53-degree Feitian Moutai was being supplied in limited quantities at 1,299 yuan per day, with "a limit of two bottles per person," as one clerk said, "Come earlier tomorrow, and bring your ID." In franchise stores, the retail price of 53-degree Feitian Moutai had already risen to as high as 1,880 yuan per bottle. The price difference for Feitian Moutai within the same city was 581 yuan. A specialty store clerk also said: "When we opened at 9 o'clock today, there were already many people queuing outside." Source: Daily Economic News (ID: nbdnews) -END-