China

Kweichow Moutai Plans to Increase Supply to Control Skyrocketing Retail Price

Summary:

  • Kweichow Moutai (600519.SS), the No.1 luxury liquor brand in China, plans to increase supply to dampen down the skyrocketing retail price of its products, as reported by Securities Times.
  • The company has set a ceiling for the retail price.

Why It Matters:

  • After the Chinese liquor sector recovered from recession last year, buyers and retailers rushed to purchase Kweichow Moutai products, betting on a continuous price hike due to its small production and brand recognition.
  • The article suggests that many retailers are holding stock, making it very hard for customers to purchase the product. Such moves worry the management of the company who is concerned that a collapse in the retail price would significantly harm the firm. Therefore, the firm plans to use various methods to lower expectations about future price increases and thereby control the price.
  • This situation has also pushed up Kweichow Moutai’s stock price. Since the beginning of this year, its share price has been up more than 46% and its market cap has increased to RMB 615 billion.