With the launch of iMoutai, direct sales channels are likely to become one of Kweichow Moutai’s growth drivers, market analysts said. For instance, the shipment price of the 500ml Feitian Moutai to distributors is CNY969 (USD153) a bottle, but it can ask for CNY1,499 for the same bottle through direct sales. Kweichow Moutai sells most of its products through distributors, but it is now trying to shift more product through direct sales as it can get a higher price and improve its profit margin. Successful participants can collect their purchases from Kweichow Moutai outlets or designated distributors. The subscription system uses blockchain-based depository technology, and the whole process is notarized by the Hangzhou Internet Notary Public Office, the Renhuai, southwestern Guizhou province-based company said. But such is the demand, only three people out of every 10,000 who tried to buy it were successful. The firm's fiery signature alcohol Kweichow Moutai is available on the platform for CNY3,599 a bottle (USD567), 20 percent less than the price charged by third-party dealers. IMoutai became the most downloaded app on Apple's App store on March 28, one day after it was launched, with over 430,000 downloads. Kweichow Maotai’s share price jumped 3.55 percent to close at CNY1,780.01 (USD280). Due to the heavy usage of the Chishui river’s water, it currently faces low upstream storage as well as pollution problems which questions if the company will be able to increase production to meet the demand.(Yicai Global) April 1 - Shares in Kweichow Moutai advanced today after China’s leading liquor maker launched its new direct-sales platform iMoutai, offering much better pricing than can be found elsewhere, with six million people signing up in the first hour, the Securities Times reported. The specific environment in that area and the water from the Chishui river which runs there are a necessity to produce Moutai. And the company is not even able to meet demand as the product can only be produced in a specific Chinese region called Guizhou Province. Driven by an increase in demand from the Chinese market (responsible for >95% of total sales). A flowing beverage demand that boosts salesĬoupled with their high margins there has been a strong increase in sales of 79.3% (CAGR: 15.7%). By cutting out the distributor, Moutai can realize a 54% higher price for an average bottle. Moutai is seeking to further improve its margins through iMoutai, its direct sales platform, which offers consumers 20% better prices than in-store. Last year, a crate of 24 bottles was auctioned for an incredible 1.4 million U.S. Next to this, they also release limited edition bottles which are easily over a thousand euros. Baijiu generally comes in bottles of 500ml, and prices commonly exceed two hundred euros per bottle.įigure 1: Kweichow Moutai %EBIT vs. Moutai is so profitable because it is able to sell their product at a large premium price. The company realizes an average EBIT margin of more than 66%, which is more than 5 times higher than the global liquor industry average. This is the exact reason behind one of the strongest business qualities of Kweichow Moutai, their incredibly high margins within the liquor industry. Incredibly high margins for Kweichow Moutai It became associated with the national party and the Chinese elite, becoming a status symbol and collector’s item next to a drink. In China, it is almost impossible to wish for a better advertisement and consequently, Moutai started gaining a special status. He, and after him many other Chinese leaders, typically served it during state events. It is even rumored that this was the favorite drink of Mao Zedong. And for the national party, there is only one brand of Baijiu: ‘Moutai’. ![]() It is common to “toast” with Baijiu after closing an important business deal or special occasion. The national spirit of China has a clear color and contains an alcohol content between 35% and 60%. To understand all this, we first need to understand the role of an alcoholic drink called Baijiu in China. But why has nobody outside of China heard of this enormous company and why is it one of the best performing companies in the global liquor industry? A toast to presidential endorsements To illustrate: that is more than the total value of Nike & Coca-Cola combined. ![]() At the time of writing the company is worth an incredible amount of 337 billion Euros. Two weeks ago, the (partially) state-owned company Kweichow Moutai surpassed Tencent as the most valuable (partially) publicly traded Chinese company. Operational profit (2021): Above Average. ![]() Net sales development (2021): Above Average.This blog contains a combination of financials and news sources. A-INSIGHTS is specialized in analyzing company figures, which captures detailed information on the activities of companies and explains the drivers behind their performance.
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