Kweichow Moutai, the first A-share share, announced its water consumption for the first time in the ESG report released on April 4, but the water consumption far exceeded the national standard, and the current situation of huge water withdrawal was inconsistent with the sustainable development concept advocated by ESG, and we expect Moutai to respond to this.
Produced by/Yang Finance
ID/ youngcaijing
Author/Bo Fan (Research Fellow, Yang Finance and Economics)
Design/Jiang Xuebin
Image/Web
Editor/Xu Aizhi (Research Fellow, Yang Finance and Economics)
Liaison/[email protected]
On April 4, 2023, Moutai released its 2022 Environmental, Social and Governance (ESG) Report. In the report, Moutai announced water consumption for the first time, but the water consumption far exceeded the national standard.
In Moutai's ESG report, it said that Moutai's water consumption intensity was 0.70 tons/10,000 yuan in revenue, and based on Moutai's revenue of 124.1 billion yuan in 2022, Moutai consumed a total of 8.687 million tons of water in 2022. According to Moutai's 2022 production of 91,900 tons of base wine, the water consumption per ton of Moutai wine is about 94.52 tons, which far exceeds the national standard.
There are two main national standards for water intake for liquor production for reference, one is the "Water Intake Quota Part 15: Liquor Manufacturing" issued by the National Standardization Administration in 2014; The other is the environmental protection industry standard "Clean Production Standard Liquor Manufacturing Industry" issued by the former State Environmental Protection Administration in 2007.
Among them, "Water Intake Quota Part 15: Liquor Manufacturing" (GB/T 18916.15-2014), the water intake standard for liquor stipulates that the water intake of existing enterprises is not more than 51 tons/thousand liters of raw wine, and the water intake of 1,000 liters of finished wine is not more than 7 tons/thousand liters; The water intake of new enterprises (including expansion) and advanced enterprises shall not exceed 43 tons/thousand liters of raw wine, and the water intake of 1,000 liters of finished wine shall not be more than 6 tons/thousand liters.
The standard also defines water withdrawal, saying that the supply scope of water intake for liquor manufacturing includes the water intake of three production processes: main production (including koji making, winemaking, blending, packaging), auxiliary production (including machine repair, boiler, air compressor station, sewage treatment station, inspection, laboratory inspection, transportation, etc.) and ancillary production (including office, greening, factory canteen, bathroom, toilet, etc.).
Moutai produced a total of 91,900 tons of base wine in 2022, and according to the density of 0.9 tons/thousand liters, the water intake of Moutai thousand liters of raw wine is 85 tons, which exceeds this standard.
Another standard, "Cleaner Production Standard Liquor Manufacturing Industry" (HJ/T402-2007), stipulates that the water intake for first-level cleaner production of soy wine is not more than 25 tons per thousand liters, the secondary cleaner production is not more than 30 tons, and the third-level cleaner production is not more than 35 tons. The water intake of 85 tons of Moutai 1,000 liters of raw wine also far exceeds this standard.
Moutai's water intake exceeds the national standard not only in terms of actual water consumption, but even the design water consumption of some projects exceeds the national standard.
In recent years, Moutai has been continuously expanded. In the environmental impact assessment reports of these expansion projects, the design water consumption published by Moutai exceeded the national standard.
In the "Moutai Wine Twelfth Five-Year Plan Expansion Technical Transformation China Area Second Moutai Liquor Technical Transformation Project and Supporting Environmental Assessment Report" released in 2017, among the main raw and auxiliary materials announced by Moutai, the water consumption index for domestic production is 72.4 tons of water per ton of product. This indicator exceeds the standard of no more than 43 tons/kiloliter for new or advanced enterprises required by the national standard.
Source: Kweichow Moutai Environmental Impact Assessment
In the "Environmental Protection Acceptance Monitoring Report on the Completion of the Moutai Wine Technical Transformation Project and Its Supporting Facilities Project (Phase I Project)" released in 2020 by Kweichow Moutai Wine Co., Ltd., the design consumption of water is 58 tons of water per ton of wine, which exceeds the standard of no more than 43 tons/kiloliter for new or advanced enterprises required by the national standard.
Source: Kweichow Moutai Environmental Impact Assessment
In the "13th Five-Year Plan for Moutai Wine Technical Transformation Project and Its Supporting Facilities Project (Phase II Project) Completion Environmental Protection Acceptance Monitoring Report of Kweichow Moutai Wine Co., Ltd. "13th Five-Year Plan" released in 2021, the design consumption of water is also 58 tons of water per ton of wine, which exceeds the standard of no more than 43 tons/thousand liters for new or advanced enterprises required by the national standard.
Source: Kweichow Moutai Environmental Impact Assessment
Moutai's actual water intake exceeds the national standard, which may have the impact of water use in new projects, but the design water intake of new projects exceeds the national standard, which is difficult to justify.
Shen Meng, director of Chanson Capital, believes that exceeding the national standard is certainly inappropriate in terms of rules, but the relationship between quality and water sources is closer to liquor brewing, especially sauce wines like Moutai, which rely heavily on local water quality. On the other hand, if the national standard is formulated earlier, it cannot be ruled out that the standard set by the national standard lags behind the market development.
The current situation of Moutai's huge water intake is inconsistent with the concept of sustainable development advocated by ESG, and we look forward to Moutai's response to this.