As the Mid-Autumn Festival and National Day approach, the liquor market is entering its traditional peak consumption season. However, the wholesale price of the high-end Maotai, known as the "ceiling" of the liquor industry, has not risen but instead has continued its recent downward trend.
The latest reference price from last week shows that the wholesale price of the 2024 Feitian Maotai original case has dropped to 2,595 yuan per bottle, breaking through the 2,600 yuan threshold. Many liquor industry analysts believe that the current issue in the entire liquor industry is still the insufficient purchasing power of society. As the supply of famous liquors continues to increase, their scarcity will also decrease. If the demand growth lags, the price pressure will further increase.
Regarding the issue of falling prices, Zhang Deqin, Chairman of Kweichow Moutai, responded at the semi-annual performance meeting held on Monday, stating that the market situation of Maotai is generally stable. Zhang Deqin said:
Moutai attaches great importance to the market situation. The company conducts in-depth market research in various provinces and regions, holds market work meetings in these areas, and has in-depth discussions and exchanges with representatives from various channels such as distributors, e-commerce, group purchases, and self-operated stores in the provinces and regions. The company continuously improves a systematic and coordinated strategic and tactical system, and the market situation is generally stable.
In the first half of the year, both revenue and net profit growth have slowed down.
On August 8, Kweichow Moutai released its first financial report after the change of leadership. The results show that in the first half of this year, Kweichow Moutai's revenue was 81.931 billion yuan, setting a new historical high, with a year-on-year increase of 17.76%; the net profit attributable to the parent company was 41.696 billion yuan, with a year-on-year increase of 15.88%. However, both revenue and net profit growth have slowed down compared to the same period last year. According to calculations, Kweichow Moutai earned an average of nearly 230 million yuan per day in the first half of the year, higher than the 199 million yuan in the first half of the previous year.
Zhang Deqin summarized the performance of the first half of the year as follows:
The company's operational goals are scientifically set based on multiple factors such as production, market, and base alcohol. The board of directors and the production and operation team will fulfill their duties and work diligently to ensure that the annual target of a 15% increase in total operating income is achieved on schedule. Regarding the growth rate for next year, the company will disclose it in a timely manner after decision-making through relevant procedures.
Moutai liquor has not increased distributors.
At the performance meeting, Jiang Yan, Deputy General Manager, Chief Financial Officer, and Secretary of the Board of Directors of Kweichow Moutai, stated that Kweichow Moutai liquor has not increased distributors. The 18 new additions are all series liquor distributors, and the company's policy towards Moutai liquor distributors has not changed.The semi-annual report indicates that, segmented by sales channels, Kweichow Moutai's direct sales revenue in the first half of the year was 33.728 billion yuan, which is a calculated year-on-year increase of 7.3%, accounting for 41.2% of the total revenue. In the same period of the previous year, this proportion was 45.16%. The wholesale agency revenue was 47.986 billion yuan, with a calculated year-on-year increase of 26.5%.
Regarding the increase in the proportion of wholesale channel revenue in the first half of the year, Jiang Yan responded that the company's wholesale channel revenue saw a significant year-on-year increase, mainly due to the higher ex-factory price of the 53% vol Kweichow Moutai liquor (Feitian, Wuxing). As a result, the proportion of wholesale channel revenue increased, and the company's wholesale channel sales policy has not been adjusted.
Production is within the normal range.
Due to the intensified price fluctuations of Feitian Moutai in the first half of the year, the decline in production capacity has also become an important issue of concern to investors.
Jiang Yan stated that the brewing of Kweichow Moutai liquor adopts a natural open solid-state fermentation model, and fluctuations in production within a certain range are normal. So far, the 2024 production has completed six rounds of wine extraction, and the seventh round has already begun, with the overall base liquor production within the normal range.
According to public information, in the first half of 2023, Kweichow Moutai completed a base liquor production of 44,600 tons; in the first half of 2024, the base liquor production was approximately 39,100 tons.
In December 2022, Kweichow Moutai planned to invest about 15.516 billion yuan to build the "Fourteenth Five-Year Plan" technological transformation project for Moutai liquor. Once completed, the project can add an annual production capacity of about 19,800 tons of Moutai liquor.
Zhang Deqin stated that, based on the current construction progress, the company has established the thirty-first liquor-making workshop, which is planned to start production this year on the Double Ninth Festival. According to the production process of Moutai liquor, this additional capacity will not be available for market distribution for at least another 5 years.