Eight months ago, during a shareholders' meeting for Guizhou Moutai, Zhang Deqin made a notable entry as the new chairmanHe emphasized the company's readiness to abandon initiatives that might not align with Moutai's core identityAt that time, the whispers about the discontinuation of the soy-scented latte and the more substantial rumors of Moutai ice cream stores closing were still on the horizon.
The innovative products introduced during Ding Xiong Jun's leadership, including soy-scented lattes, Moutai ice cream, alcohol-filled chocolates, and the iMoutai app, were strategic tools aimed at capturing the younger demographicMoutai ventured beyond the traditional realm of liquor, achieving significant attention from a previously untapped audienceHowever, the winds of change seem to swirl as the leadership changes take place, hinting at a recalibration in the strategy targeting youth.
In a market working meeting held mid-last year, the company acknowledged its intent to pivot towards new business consumption, intending to connect with professionals in emerging fields such as biotechnology
This shift indicates a critical moment where Moutai might abandon its youthful initiatives in favor of recentering on core operations, leading one to wonder: is Moutai retracting from its youthful engagement?
Recently, Moutai ice cream landed back in the spotlight, but not for opening another location — instead, it came under scrutiny due to its store closuresRumors about the retraction of Moutai ice cream shops and the waning visibility of the soy-scented latte on Luckin Coffee menus had been circulating for some timeThe silence from Guizhou Moutai on these matters stands in stark contrast to the initial aggressive rollout of their youth-centric strategy two years ago.
The cross-industry boom in the liquor industry culminated in 2022, birthing unique products like Moutai ice cream, iMoutai, and soy-scented lattesThis variety attracted an audience that far exceeded market expectations
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Moutai ice cream, in particular, was seen as a pivotal product to connect with younger consumersThe former chairman, Ding Xiong Jun, described it as a strategic touchpoint for engaging the youth.
Launched in May 2022, Moutai ice cream marked its territory as “the first taste of Moutai for the youth,” with prices soaring to impressive heightsBy mid-2023, nearly ten million cups had been sold, accumulating upwards of 600 million yuan in salesBut, looking into 2024, the noise around Moutai ice cream has noticeably diminished; several stores, particularly in major cities like Beijing, have ceased operationsRumors hint at the possibility of the ice cream division exiting the market entirely within the year.
Following Moutai ice cream, the soy-scented latte in collaboration with Luckin emerged as a second major hitUpon its launch in September 2023, the latte garnered remarkable sales, breaking over five million cups on the first sale day and crossing the one billion yuan threshold
Following this success, Moutai sought to capitalize further, teaming up with Dove to produce the alcohol-filled chocolates, which also saw overwhelming demand.
While these crossover collaborations generated remarkable traffic for Moutai, they didn’t significantly boost the company’s scaleIn their financial reports, the figures from these innovative products are lumped into a broader category labeled ‘other income,’ which pales in comparison to their overall revenue scaleFor example, in the periods from 2022 to the first half of 2024, their reported ‘other income’ had stagnated, with figures of approximately 328 million yuan, 475 million yuan, and 217 million yuan respectively – negligible in the context of a company that generates revenues exceeding 100 billion yuan.
In contrast, the collaborative partners like Luckin reaped substantial profits, claiming that their soy-scented latte reached over 25 million users by March 2024. Originally hailed as a continuous product, the soy-scented latte has begun its slow retreat from the menu, while the alcohol-filled chocolate also seems to have quietly vanished from sight.
Since Zhang Deqin’s return last year after two years at the helm of Xijiu, he has decisively steered Moutai back to its roots, paying homage to his experience growing up within the Moutai milieu
Focusing primarily on Moutai’s core business is pivotal to weathering market fluctuations.
Deqin has articulated the need to explore innovations that reinforce Moutai's legacy of quality, indicating that the once-ambitious youth-oriented strategy might be cooling off for substantial reasonsAs a high-end liquor brand, Guizhou Moutai has solidified its position around delivering high-quality products while reinforcing its market dominance amidst changing timesWith the white liquor sector navigating through price disruptions, alongside weak market consumption, fluctuations in the retail markets for Moutai have created ripples throughout distribution channels and impacted stock prices.
By late June last year, Moutai's flagship product, Feitian Moutai, faced a significant drop in wholesale reference pricingAlarmingly, it dipped below 2100 yuan per bottle, nudging dangerously close to the psychological threshold that could undermine market stability
In response, Moutai took swift measures, including the cessation of certain product deliveries to regulate supply and stabilize pricing.
Post-implementation of these strategies, the prices for Feitian gradually recovered, and recent updates indicate improved wholesale prices for products in their 24-year rangeBy Q3 2024, the company hopes to continue refining its product distribution structure, bolstering the ratios for special editions while tempering the allocations for standard products, ultimately elevating the overall product mix.
Predictions for the last year suggest Moutai is on track to achieve an estimated revenue of around 173.8 billion yuan, alongside a net profit of approximately 85.7 billion yuan, marking a steady year-on-year growthThe company is anticipated to employ adjustments in product structure as a means of stabilizing its pricing in the coming year, asserting their commitment to a patient market engagement.
As consumer demographics evolve, Guizhou Moutai is shifting its focus back towards business consumption scenarios