Controlling inventory and reducing supply, Moutai makes another move

As the wholesale price of Feitian Moutai continues to hit new lows for the year, Guizhou Moutai (600519.SH) has begun to take more substantial measures.

According to information obtained from private equity investors in the East China region by TradeWind01, in order to stabilize the market price of Feitian, Moutai has reduced the amount of Feitian distributed through distribution channels starting from June, with quotas decreasing year-on-year.

To stabilize the wholesale price of Moutai, the company has temporarily suspended the approval process for corporate group purchases of Feitian Moutai and slowed down the pace of shipments.

However, these measures have not had a significant impact on supporting the wholesale price of Feitian.

According to today's liquor price data, on June 23, the wholesale price of 24-year-old bulk Feitian Moutai dropped by 95 yuan to 2140 yuan per bottle, with a nearly 300 yuan decrease in the past 10 days.

As market confidence gradually dissipates, Moutai's new leader, Zhang Deqin, has finally taken action.

Recently, TradeWind01 learned from sources close to Guizhou Moutai that the company has issued a notice to adjust some policies.

One of the adjustments is the cancellation of market distribution of 12-bottle packs of Feitian Moutai and the opening policy for this specification; the other is the suspension of shipments of Moutai aged fifteen years and boutique Moutai in some regions.

On December 13, 2021, Guizhou Moutai began to market 12 bottles/box of Feitian Moutai and required distributors to sell them unboxed.

The cancellation of the market distribution of 12-bottle packs of Feitian Moutai indirectly reduces the supply of "loose Fei" (500ml bulk Feitian Moutai) from the distillery.

However, this does not mean a reduction in the total amount of Feitian Moutai being distributed.

An analyst from a brokerage firm in East China told TradeWind01 that this measure does not imply a reduction in distributors' quotas for Feitian Moutai, but rather a transfer of the 12-bottle/box loose Fei quota to 6-bottle/box, with limited actual impact.

Distributors in Hubei province also mentioned to TradeWind01 that the impact of these measures on social inventory is not significant, "there are no major holidays now, in previous years, the Mid-Autumn Festival was the best time for prices."

Currently, 6 bottles/box of Feitian Moutai can be sold in full boxes. Since Moutai sold in original boxes is mostly used for gifting, the wholesale price per bottle in the original box is higher compared to loose Fei.

During Gao Weidong's tenure in 2021, Moutai required 100% unboxing of Feitian Moutai and recycling of the cardboard boxes, leading to a bizarre situation where a Moutai cardboard box was being speculated at 500 yuan.

On June 23, the wholesale price of 24-year-old Feitian Moutai in the original box was 2420 yuan per bottle, still 280 yuan higher than loose Fei.

The other two products adjusted by Guizhou Moutai are the non-standard products Moutai aged fifteen years and boutique Moutai.

The reason for suspending shipments of these two products is that under Ding Xiongjun's leadership, Guizhou Moutai increased the distribution of non-standard products.

Now, with overall market demand weak, the higher-end non-standard products face significant price pressure compared to Feitian Moutai.

For example, on June 23, the wholesale price of boutique Moutai dropped by 20 yuan in a single day to 2990 yuan per bottle, with a decrease of over 300 yuan for the year, leaving less than 700 yuan difference from the factory price of 2299 yuan per bottle At the shareholders' meeting of Moutai, Zhang Deqin, who made his first public appearance, once said: "If a path is not quite suitable for the company's development, the company will adjust immediately. We must believe in Moutai's ability to correct mistakes."

However, shortly after the new leader's remarks, the ex-factory price of Moutai liquor began to plummet.

The core contradiction of the Feitian pricing still lies in the mismatch between supply and demand, but this adjustment by Moutai did not involve a change in the supply of Feitian Moutai liquor. Whether this move alone can achieve the goal of boosting market prices remains to be seen.

In the jittery liquor market, it seems that we have truly reached a moment where confidence is more precious than gold