If one word could describe this year's baijiu market, it would be "rising." In the first half of the year, major distilleries held steady, but by the Mid-Autumn Festival, giants like Wuliangye, Moutai, Yanghe, and Guojiao suddenly raised prices on their flagship products to varying degrees.

Amid the chorus of price increases from first-tier brands, many are beginning to wonder: after three years of decline, has the baijiu industry emerged from the shadows and started to recover?

Moutai Constrains Channels, E-commerce Platforms Show Goodwill

During this year's "Double 11" shopping festival, a document from Moutai sparked heated discussion in the industry. On November 4, Moutai issued a document titled "Friendly Reminder for the Double 11 Period," warning e-commerce platforms not to sell Moutai at low prices. In this document, Moutai's official stance was somewhat ambiguous, only stating that it had no cooperative relationship with major e-commerce platforms. Just two years ago, Moutai's document at the same time used the phrase "advice to consumers" and characterized e-commerce platforms as engaging in "low-price dumping." The change in official rhetoric shows Moutai's attitude: don't mess with prices.

Surprisingly, major liquor e-commerce platforms such as 1919 and Jiuxian.com all released friendly signals, expressing support for Moutai's decision.

Those familiar with the baijiu industry know that in recent years, the relationship between e-commerce platforms and baijiu manufacturers could be described as "irreconcilable." Major e-commerce platforms, under the banner of "low prices," have been conquering markets nationwide, and their relationship with baijiu manufacturers has been tense. This year, the e-commerce platforms' proactive goodwill may partly be due to strategic transformation, but does it also reflect that baijiu manufacturers have emerged from the shadows and begun to influence e-commerce channels?

Wuliangye Leads, First-Tier Brands Raise Prices Across the Board

Wuliangye, which shares the title of twin stars of Chinese baijiu with Moutai, experienced a price hike wave in the second half of this year.

During the Mid-Autumn Festival, Wuliangye announced that starting September 15, the ex-factory price of 52° Wuliangye would rise to 739 yuan per bottle, an increase of 60 yuan per bottle. At the same time, the suggested retail price also rose to 829 yuan. This was Wuliangye's second price adjustment this year.

Following the price increase of "Pu Wu" (Wuliangye's flagship product), Yanghe, Jiannanchun, and Guojiao also raised prices. Yanghe's core products such as Haizhilan, Tianzhilan, and Mengzhilan saw minimum transaction prices rise by 6-25 yuan. Guojiao 1573's off-plan settlement price rose to 660 yuan per bottle.

Although Moutai has not officially announced a price increase, the price of 53° Feitian Moutai has been rising all year.

With first-tier brands raising prices across the board, is the baijiu industry warming up?

Second-Tier Brands in Trouble

Unlike the unison price increases of first-tier brands, second-tier baijiu brands are not having an easy time.

On October 20, Jiugui Liquor announced that its deputy general manager, Liu Fahong, had confirmed his resignation. This is not the first executive to leave Jiugui. In January this year, the board of Jiugui received written resignation reports from then-chairman Zhao Gongwei, director Shen Shuzhong, and then-general manager Xia Xinguo. Subsequently, on April 25, Jiugui's deputy general manager Fan Zhen resigned for personal reasons.

The underlying cause of the executive turmoil is, of course, performance issues. The impact of the 2012 plasticizer incident continues. Despite being backed by COFCO, Jiugui officially "removed its hat" (i.e., resumed normal trading) in April this year, but its revenue and net profit still both declined in the first half of the year.

Unlike Jiugui's performance issues, Tuopai Shede's revenue from January to September this year has already caught up with last year's full-year performance, reaching 1.099 billion yuan, with net profit attributable to shareholders of listed companies increasing nearly 13 times to 54 million yuan. However, Tuopai Shede has not yet escaped the quagmire of high inventory and high debt.

Price Increases = Industry Recovery?

The unison price increases by first-tier brands make people sigh that the baijiu industry seems to have emerged from the shadows and started to recover. But the difficulties of second-tier brands make one wonder: does a price increase really mean the industry has recovered?

Some industry insiders analyze that the price increases by baijiu companies do not necessarily mean that terminal sales are booming; it is likely that manufacturers are adopting volume control measures to maintain brand value. Taking Guojiao 1573 as an example, its price increase has more symbolic significance than practical significance. Raising the psychological price of Guojiao 1573 is actually to promote sales of the more affordable Luzhou Laojiao series.

In recent years, the baijiu industry has been in a trough, and product prices have fallen significantly. Now that the overall environment has slightly improved, liquor companies are eager to raise prices, actually creating an illusion of scarcity to protect brand value.

In addition, as a leading player in the domestic baijiu industry, Wuliangye has been following Moutai's price increases, which makes one suspect whether Wuliangye is trying to enhance its brand through this.

Summary

Since the central government's eight-point regulation was issued at the end of 2012, the decade-long golden age of the baijiu industry, which benefited from "three public consumptions" (official receptions, official vehicles, and official trips), came to an end. Four years have passed, and the inventory pressure of major liquor companies has gradually disappeared. In the foreseeable future, the baijiu industry will usher in a recovery period. However, it is still too early to declare that the entire industry has emerged from the shadows based solely on the current price increases.

Source: Chuanhuo Assistant (ID: chuanhuo01)

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