How big is the impact of Feitian Moutai's price increase?

　　"When to raise the price, how to raise the price, you really have to be wise, if Feitian Moutai can raise the price, there will be more profits." This is the company's chairman Ding Xiongjun's response to the price increase of Moutai at this year's Kweichow Moutai shareholders' meeting.

　　At midnight on October 31, Kweichow Moutai issued an announcement, announcing a 20% increase in the ex-factory price of 500ml 53-degree Moutai (Feitian, Wuxing, hereinafter referred to as Feitian Moutai), and the ex-factory price will reach 1169 yuan / bottle after the price increase. This is Kweichow Moutai's first time in nearly 6 years, and the ex-factory price of Feitian Moutai has been raised again.

　　The reporter of the Nandu Bay Finance Society-Wine New Consumption Index Research Group noticed that the price increase of Feitian Moutai affects all nerves, and the industry generally believes that it has a far-reaching impact on the industry, whether it is a sauce-flavored liquor or a famous liquor with a price of 1,000 yuan, it will bring a role in boosting the confidence of the consumer market, and the impact on the performance of Kweichow Moutai may be reflected in next year.

　　How much impact does it have on Moutai?

　　It mainly affects the dealer channel

　　At this year's annual general meeting of shareholders of Kweichow Moutai, Ding Xiongjun said that Moutai's business goal this year is to increase revenue by 15%, and the company hopes to have better performance.

　　According to Nandu's previous report, in the third quarter of this year, Kweichow Moutai's single-quarter revenue and net profit increased by 14.04% and 15.68% respectively. In the first and second quarters of this year, the company's revenue increased by 20.00% and 21.72%, and net profit increased by 19.9% and 20.22%, respectively. From the perspective of single-quarter growth, the growth rate of Kweichow Moutai's performance slowed down in the third quarter of this year.

　　For Kweichow Moutai, the increase in the ex-factory price of Moutai, which accounts for more than 85% of sales, has a self-evident impact on performance, but some industry insiders said that although the new ex-factory price will be implemented in November this year, its main impact may be reflected in 2024.

　　The impact of Moutai's price increase in previous years may be used as a reference. At the beginning of 2018, the ex-factory price of 53 degrees 500 ml Feitian Moutai was raised to 969 yuan. According to the annual report of that year, Moutai's gross profit margin increased to 93.74% from 92.82% in the previous year, and its revenue and net profit increased by 26.43% and 30% year-on-year respectively.

　　However, it is worth noting that 90% of Kweichow Moutai's revenue sources at that time came from dealers, how much can Kweichow Moutai be boosted at this stage? According to the reporter of Nandu Bay Finance Society, the ex-factory price adjustment does not involve the market guidance price, and on the direct sales channel of Kweichow Moutai, the selling price of Moutai is basically sold according to 1499 yuan / bottle, so the price increase mainly affects the dealer channel. According to the data of Kweichow Moutai's third quarterly report, the company's revenue from wholesale channels (mainly dealers) accounted for 55%, and after the ex-factory price was increased by 20%, Moutai's revenue in the dealer channel may increase significantly in the past two months, and there may not be much fluctuation in the direct sales channel.

　　For distributors, after the ex-factory price of Moutai is raised, their profits will naturally be affected. In an interview with a reporter from Nandu Bay Finance Society, a dealer said that after Moutai raised the ex-factory price, it did directly increase the cost of taking the goods, "but the actual sales price of Moutai in the market is much higher than the market guide price, so whether it is wholesale or retail, dealers still have a large profit margin", "The impact of the ex-factory price increase has not yet appeared."

　　According to the reporter of Nandu Bay Finance Society, affected by the weakening of the "Mid-Autumn Festival-National Day" liquor sales season, the transaction price of Moutai in the market is declining, and in mid-to-late October, the price of Moutai (including other non-standard products) is declining, for example, the wholesale transaction price of the original box of Feitian Moutai in 2023 will fall back to the range of 2,900 yuan/bottle, while two years ago, the wholesale transaction price of the original box of Feitian Moutai in the same year needs to be more than 3,000 yuan/bottle.

　　Will the soy sauce and wine industry follow suit and raise prices?

　　First of all, we must solve the problem of price stabilization and inventory

　　For the sauce-flavored liquor industry, the previous "sauce-flavored fever" was driven by Kweichow Moutai, and if the "leading brother" raised the price this time, it will undoubtedly play a vane effect in the industry. However, when the reporter of Nandu Bay Finance Society asked some soy sauce liquor companies to verify whether there was a plan to raise prices recently, the relevant companies said that there was no price increase for the time being.

　　"Moutai has raised prices, which is a good thing for the industry." The manager in charge of a sauce-flavored liquor in Guangdong told a reporter from Nandu Bay Finance Society that Moutai's increase in ex-factory price is to directly improve the image and value of the entire sauce-flavored liquor industry, especially at the consumer level, which will increase the overall value perception of soy sauce liquor, "soy sauce wine with a price of 1,000 yuan may have a favorable space."

　　Huatai Securities believes that Moutai, as an industry leader, will have a greater impact on the industry than Moutai itself, and at the same time further raise the price ceiling of the industry, and the industry order and pattern are expected to usher in an opportunity for improvement.

　　Throughout the soy sauce and liquor industry, many waist enterprises in the industry are more or less based on Kweichow Moutai, from the proximity of brand naming, to the application of Maotai bottles, to the pricing of "× 99" and "1×99", etc., which are more or less close to Kweichow Moutai. From the perspective of the industry, Moutai will increase the ex-factory price this time, and some companies may follow up with "high-profile" or "low-key" follow-up.

　　However, the reporter of Nandu Bay Finance Society noticed that for the current soy sauce and wine industry, "raising prices with Moutai" is not a top priority, and price stabilization and destocking are urgent tasks.

　　According to the reporter of Nandu Bay Finance Society, the liquor industry has shown the phenomenon of "not prosperous in the peak season" since the beginning of this year, especially the price inversion of some soy sauce wine products. In addition, for small and medium-sized soy sauce and wine enterprises, helping channels to destock and re-"igniting" dealers' sentiment to get goods is also a problem that must be faced next.

　　Good for the price band of 1,000 yuan?

　　It will help boost confidence in the development of the industry

　　In addition to soy sauce liquor, it also provides more room and opportunities for strong flavor liquor companies such as Wuliangye and Luzhou Laojiao to raise prices. Some analysts said that this move is very good for the upward development of the 1,000-yuan price band. Ping An Securities Research Report pointed out that after Moutai raised prices, it also opened the ceiling for products with a price of 1,000 yuan such as Wuliangye and Guojiao 1573, which helped boost confidence in the development of the liquor industry.

　　With the price increase of Moutai, will other wine companies follow suit and adjust the price of their products? The reporter of Nandu Bay Finance Society called the secretary office of the board of directors of a number of strong aroma liquor companies, and the answer was that there is no plan to increase prices at present.

　　When the reporter of Nandu Bay Finance Society called the secretary office of the board of directors of Luzhou Laojiao on the morning of the 1st, the other party said that there is no plan to raise prices for the time being, and the follow-up situation can pay attention to the company's announcement. However, in the afternoon of the same day, Luzhou Laojiao released a price increase, saying that the price of its high-end products 60 versions of special songs was raised, and the price of its 52-degree products was increased to 478 yuan/bottle, and the 43-degree products were raised to 438 yuan/bottle. Subsequently, Luzhou Laojiao claimed: the price increase was a previous plan.

　　Previously, Nandu Bay Finance Society reported that since the beginning of this year, the price of high-end famous liquor products other than Feitian Moutai has been inverted, and liquor companies are also facing problems such as high inventory and slow sales, and the consumer demand in the liquor market still needs to be further stimulated.

　　Cai Xuefei, an analyst in the liquor industry, pointed out that the price increase is to boost market consumer confidence, thereby stimulating market demand and driving market consumption. At present, Moutai's price increase will indeed increase the price space of the industry and promote the consumption of soy sauce and liquor, but most wine companies are digesting the high inventory and price inversion caused by the epidemic, so it is unlikely to bring about an industry-wide price increase.

　　Xiao Zhuqing, an analyst in the liquor industry, also believes that other distilleries have no basis for following up on price increases, on the one hand, the social inventory of liquor brands other than Moutai is too large and the price cannot rise; On the other hand, the entire liquor industry is currently involuted and the competition is fierce, "because other famous liquors other than Moutai are very substitutable, and the price increase will give competitors an opportunity."

　　How are consumers affected?

　　There is a high probability that the terminal market price will increase

　　For a long time, shareholders have been calling for Moutai to raise prices, and investors hope to increase the company's revenue and profits through the price increase of Feitian Moutai, so as to obtain higher investment returns. Therefore, Moutai's price increase has also received a "applause" from investors and institutional analysts.

　　For consumers, what will be the impact of Moutai's increase in ex-factory prices?

　　First of all, from the price point of view, according to the announcement issued by Kweichow Moutai, this round of price adjustment only involves the ex-factory price, and does not involve the market guidance price of the company's products. However, most people in the industry believe that the terminal market price of Feitian Moutai is likely to be raised.

　　For example, Xiao Zhuqing predicts that the market guidance price of Moutai will not rise for the time being, but the market price of its market circulation may rise.

　　Even so, many netizens think that "it doesn't matter if it goes up or not". The reason is that Moutai has always been regarded as a high-end luxury product, attracting high-net-worth buyers who are looking for quality, rather than ordinary consumers. Cai Xuefei also believes that the Feitian Moutai consumer group itself is not sensitive to the price of high-end wine, so the impact on the demand for this part of the people's wine is not significant.

　　In addition, another type of audience for Moutai is people who see it as an investment and a collectible. For this part of the group, the price increase of Moutai also means an increase in its investment value, which is good for some consumers.

　　Written by: Nandu Bay Finance Society reporter Bei Bei Wang Jingjuan