KWEICHOW MOUTAI’S 20% PRICE HIKE TARGETS DISTRIBUTORS NOT CONSUMERS
By Siulan Law Mathews DipWSET
Source: Kweichow Moutai
China’s leading baijiu brand Kweichow Moutai raised ex-factory price of its mass market line Feitian Moutai by 20 percent from 1 November, this is the company’s first price hike in six years.
The new ex-factory price is RMB1,162 (USD158) per bottle from RMB969 previously. The hike will not affect its recommended retail price of RMB1,499 per bottle.
This means that Kweichow Moutai is aiming at taking a bigger cut from distributors but not consumers.
The distiller has had to take action before to prevent runaway prices caused by retailers stockpiling amid short supply.
Kweichow Moutai has introduced a direct sales model in recent years to bypass distributors and have better control over prices.
According to its latest earnings report, direct sales accounted for almost 45 percent of total revenue in the first three quarters, more than the 40 percent logged over the whole of last year.
Analysts said the price hike was much bigger than expected and should boost Kweichow Moutai’s revenue by RMB6.2 billion and profits by RMB4.1b this year.
The company’s share price has traded up more than 8 percent since the price hike.
Kweichow Moutai’s revenue jumped 18.5 percent to RMB103.3b in the first three quarters of 2023, its profit soared 19.1 percent to CNY52.9b.
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