The move of the liquor brand might improve its profit model, restraining distributors
Kweichow Moutai (600519) (Chinese: 贵州茅台), China’s luxury liquor maker, announced officially today that it will roll out a digital marketing APP “i Moutai” on March 31.
On a trial run, consumers can download the app and make an appointment to buy four newly unveiled products. However, the most popular Feitian Moutai (Chinese: 飞天茅台), named after famous historical Buddhist paintings with a literal meaning of flying fairies, remains unavailable.
“i Moutai” offers access to 12 third-party e-commerce platforms to provide consumers with purchase information about Feitian Moutai.
The app also supports online registration, real-name authentication, online and offline payment, cancellation and refund, and in-store pickup. Consumers who have successfully registered need to bring their ID cards to designated channels to collect the goods.
With the news of Moutai’s e-commerce launch came its shares slumping across the board, because direct sales can hinder distributors’ profits. Moutai opened today with CNY 1,625 apiece, with an over 5% decrease during intraday trading.
The digital move was in line with the company’s goal to restrain distributors, according to food industry analyst Zhu Danpeng.
“The key question is the ratio for direct sales on the platform,” Zhu said, adding that it could be helpful if the sales account for over 50%, which is impossible right now.
Cai Xuefei, a liquor industry analyst, echoed, saying that adopting direct sales on the e-commerce platform can improve Moutai’s overall profitability. If the company forces distributors to sell online, it will further crack down on offline hoarding and other speculations about the liquor.
The liquor at certain points has been branded a wealth management product for its ability to store and accrue value on its own.
“The biggest beneficiaries of the e-commerce launch are the consumers who need small quantities of the products,” Cai said.
Moutai wasn’t alone in shares drop, as the resurgence of the Covid-19 epidemic in first-tier cities hampered liquor stocks. Shares of 18 out of 19 liquor companies plunged, including Jiugui Liquor (000799) (Chinese: 酒鬼酒), Gujing Distillery Company (000596) (Chinese: 古井贡酒), and Wuliangye (000858) (Chinese: 五粮液).
As of today’s trading, Moutai shares plummeted 1.73% to CNY 1,660.80 apiece, with a market cap of CNY 2.09 trillion. Prices have fallen over 25% from a high of CNY 2,216.96 apiece three months ago.