![]() It’s also just opened a non-profit university, Moutai University, the first in China to offer baijiu distillation as its core degree, to create even more experts on the luxury drink. Even as factories around the country embrace automation, its factory floor remains deliberately manpower heavy - the ribbon on each Moutai bottle is still tied by hand. There’s also the sense of social responsibility that Moutai must show, particularly as a profitable business in Guizhou, one of China’s poorest provinces. The company has said it has asked affiliates to keep prices stable and told retailers to prevent hoarding. So relying too heavily on price increases of its basic brands isn’t sustainable. And as a state-owned enterprise, Moutai is also expected to display a certain public spirit. Still, Beijing puts restrictions on the prices of high-end liquor. An 18 percent price increase announced by Moutai in December drove its shares up more than 8 percent. In the face of production limits, the easiest way to keep revenue growing is, of course, to raise prices. “Continuing this pace of depletion is not sustainable,” said Bernstein analyst Euan McLeish. They estimate Moutai boosted supply of Flying Fairy by 38 percent in 2017, implying it borrowed from the future in order to deliver a short-term result. estimate Moutai will have to limit its supply growth to 4 percent annually for the next three to five years to be able to sell the Flying Fairy brand sustainably - without using up too much of its stores of aging liquor. While that’s 53 percent more than last year’s production of 39,313 tons, the numbers reflect the endpoint to potential expansion.Īnalysts at Sanford C. But he said Moutai won’t be able to produce more than 60,000 metric tons of its baijiu annually, based on the land it controls. Yuan, who has been at the company for four decades, is also attempting to increase production. Moutai expects revenue in 2017 to exceed 60 billion yuan, and to rise more than 10 percent in 2018. “Since sales volume will stay constant next year, we think we can maintain revenue growth through this strategy,” Yuan said, referring to the more premium products. Then there’s the opportunity to sell higher priced “mature baijiu” - the older the baijiu, the more expensive (and profitable) it is. That one is listed for 1,999 yuan on the company’s website, though it’s also sold out. He’s added more limited edition bottles like the ones Moutai created for the 70th anniversary of China’s World War II victory over Japan. Yuan, 61, wants to sell more customized lines, like the HK$6,000 ($767) bottles with the company’s label that was created exclusively for a Macau junket operator. But purchases by ordinary Chinese have more than compensated since then. Just four years ago, the distiller was battling a slowdown as an austerity drive in Beijing slashed demand from government officials. It’s what Mao Zedong and his comrades toasted with at the founding of the People’s Republic in 1949. While few outside China buy the liquor, Moutai baijiu is baked into national myth as the drink of choice for Communist Party leaders. “I believe Moutai is one of these.” Fiery Liquor “Two thousand years ago, the Chinese calling card was lions, 1,000 years ago it was Chinese porcelain, 500 years ago it was tea leaves and now it’s local brands with their own intellectual property,” he said. In a rare interview in December, he said the answer will lie - at least partly - in introducing more ultra-premium and customized products that capitalize on the Moutai brand. are already starting to win more business.Īll that’s putting Moutai’s chairman, Yuan Renguo, in the difficult position of having to sustain growth even as his company literally runs out of liquor. As the state-owned giant grapples with shortages, smaller rivals like Wuliangye Yibin Co. The grain and water used to make it must come from Maotai town and the brew must be buried in urns for at least four years before it’s sold. ![]() On shopping site JD.com, an 80-year bottle is listed for 196,888 yuan ($30,000).Ĭhinese buyers say they like Moutai’s baijiu for its complex flavor and a purity that prevents hangovers - but its special manufacturing process also puts limits on its production. The Chinese firm sells each bottle of its main Flying Fairy brand to distributors for 969 yuan ($150) and sets a suggested resale ceiling of 1,499 yuan, yet they routinely go for double online and off. That in turn has pushed its market value to more than $145 billion, well past British whisky giant Diageo Plc. Moutai baijiu’s fiery flavor and potential to appreciate in price is driving the blistering demand. The buying frenzy - and resulting inventory shortages - extend nation-wide. Lines form wherever bottles are available. But inside the liquor stores along the road, the distiller’s main brands are all sold out.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |