Kweichow Moutai President Pledges Price of Flagship Liquor Not to Rise Anytime Soon
Tang Shihua
/SOURCE : yicai
Kweichow Moutai President Pledges Price of Flagship Liquor Not to Rise Anytime Soon

(Yicai Global) May 29 – The price of its hallmark  liquor will not increase in the short run, China's famed Kweichow Moutai Distillery announced on its official Weibo account, citing its President and Chairman Li Baofang's pledge to consumers today. 

Li, who stepped in as interim president last week after his predecessor's detention on corruption charges, issued the undertaking at the company shareholders' meeting today. Raising prices again to increase the burden on consumers is unnecessary, he said, since a recommended price of CNY1,499 (USD217) for a bottle of 500 milliliter Moutai has brought huge sales profits to the firm. 

Direct sales outlets for the spirit -- the world's most valuable liquor brand -- are only present in first-tier cities, and even they are relatively few, Li said, in response to shareholders' questioning why buying fair and reasonable priced Moutai is so difficult. Few of Moutai's products sell through direct sale channels, he added. The company will include direct sales channels in the future and increase its sales volume products sold through them to 1,600 tons per year from the previous 500 tons. 

It will enhance the management and control of sales channels and immediately sanction those who refuse to sell products at fair prices, Li replied, addressing a query as to why a bottle of Kweichow Moutai is generally priced at more than CNY1,800 at retail outlets. 

The company, which is based in Zunyi in China's southwestern Guizhou province cannot produce Moutai elsewhere to lift output since Moutai's quality largely depends on the geographical and geological character of its source, and market demand has skyrocketed along with rising living standards. As a result, the actual retail price of Moutai is often far higher than the distiller's recommended retail price of CNY1,499 per bottle. 

For example, a bottle of 500ml Kweichow Moutai was tagged at CNY2,030 on China's famous Suning.Com e-commerce platform today. This is not only much costlier than the suggested price but also much higher than the factory price of CNY969. 

Strong demand and short supply breeds greed and temptation. Yuan Renguo, the distillery's former president from whom Li took over as interim president, was arrested last week and expelled from public office and party membership on charges of "trading money for power and offering facilities to illegal dealers for their illicit provision of Moutai liquor." 

Net profit of the Guizhou-based company surged to CNY11.2 billion in the first quarter, it announced last month, at which time its shares were trading at CNY990, pushing its market capitalization up to more than CNY1.2 trillion.

Editor: Ben Armour

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Keywords: Retail Price , Hard Drink , Supply and Demand , Kweichow Moutai