China

Kweichow Moutai Commences Customized Liquor Sales To Balance Price System

This article was originally published on May 27, 2014 at 12:26 am EST

Summary:

  • According to Tencent Finance, Chinese liquor producr Kweichow Moutai (CH: 600519) recently released details of its new “customized liquor” offering.
  • Kweichow Moutai will provide “standard customization” and “individual customization” services on all its current liquor, including its traditional and key product “Moutai Liquor” and all series liquors, at prices higher than corresponding prices of normal products.
  • For example, for the company’s “Feitian” series liquor whose factory price is RMB 819 per bottle, the company plans to provide “standard customization” products at RMB 1,049 per bottle (500 milliliter bottle) on orders of more than 20 bottles. The company also provides “individual customized” products at RMB 999 per bottle on orders of more than 1 ton of liquor.

Why It Matters:

  • In March Kweichow Moutai said that it planned to launch customization services. The move was made in order to balance the liquor price system with a low market price. As reported previously by SGI, liquor quality scandals and a huge curtailment of government funding for officer’s consumption in 2012 have reduced domestic demand for liquor sharply, especially high-end liquor. Distributors were faced with huge inventories and decreasing demand and offered market prices that were lower than factory prices.
  • Also to balance the price system liquor maker Wuliangye Yibin Co (CH: 000858) recently cut the factory price of its two products. Wuliangye Yibin also plans to offer customized liquor in the near future.