A new round of price increase in liquor, Wuliangye, with a 30% price increase in Maotai

Kweichow Moutai announced on August 30th the gorgeous Zhongli Daily. At this point, the mid-term results of the 13 Liquor Listed Companies of A-shares were all released.

According to the report of 21st Century Network, the liquor section has been growing rapidly for three consecutive years. Among them, the year-on-year growth rate of net profit of listed companies from listed companies has reached 24.06%, 30.69% and 57.45%, respectively. The excessive growth of liquor companies such as Kweichow Moutai and Gujing Distillery also indicates that the feast of the liquor industry is not over.

At the same time, Wuliangye also announced that the supply price rose by 20% to 30% on the evening of August 30th, and the new round of rising price of liquor is coming.

Maotai growth over market is expected in the first half of this year, liquor companies have basically delivered a good transcript, but the growth of Guizhou Moutai's interim results of 58% or many market participants shouted more than expected.

"Kweichow Moutai's growth of 30% is a very big thing. We had expected that the growth of Kweichow Moutai would be very good," said Xue Yuhu, a food and beverage industry analyst at Huachuang Securities.

Xue Yuhu frankly stated that although they later increased Kweichow Moutai’s interim results growth to 50%, its 58% growth did exceed his expectations.

At present, the mid-year reports of 13 liquor listed companies have been completed. The fastest-growing is Gujing Distillery, whose net profit attributable to shareholders of the parent company increased by 168.14% year-on-year, followed by the restructured ST Huangtai and its shareholders at the parent company. Its net profit grew 146.84% year-on-year, and Golden Seed ranked third, with an increase of 134.43%.

Although the growth rate of Kweichow Moutai is much lower than that of the top three, Gao Hongbo said that “the base number of Gujing Distillery is small and it cannot be the same as Kweichow Moutai”.

On the evening of August 30, Kweichow Moutai’s interim results showed that in the first half of 2011, Guizhou Moutai produced 29,525 tons of Maotai and its series of products, an increase of 10.14% compared with the same production round of the previous year. At the same time, the operating income in the first half of the year was 9.82 billion yuan, an increase of 49.16% year-on-year; operating profit was 6.89 billion yuan, an increase of 57.27% year-on-year. The net profit attributable to shareholders of listed companies was 4.9 billion, an increase of 58.31% year-on-year.

The price of Wuliangye is replete with the recovery of Maotai Wuliangye and Maotai as the two giants in the liquor sector. However, Wuliangye has fallen behind Maotai in terms of its growth rate, overall market value, and product brand.

In the evening when Kweichow Moutai announced the results of its interim report, Wuliangye announced that it will make appropriate adjustments to the factory supply prices of the "Wuliangye" liquor products from September 10, with an increase of about 20%-30%.

At present, Wuliangye's supply price is 509 yuan. If the price of this product is raised by 20% to 30%, it can be raised by a maximum of 152.7 yuan. And even so, the gap between Wuliangye and Maotai still persists.

The sales price of Wuliangye is around 900 yuan, and its terminal price target is set at 1,100 yuan, while the ex-factory price of Maotai is 619 yuan. The ex-factory price of Wuliangye after this increase is only 100 yuan, but the retail price of Maotai terminal is universal. Above 1680 yuan, some areas have even reached 1980 yuan.

Wuliangye was higher than Maotai in retail price, but now Maotai and Wuliangye have opened a gap of 600 yuan, which will obviously put pressure on Wuliangye and will affect consumer recognition of its brand.

"Wuliangye must catch up with Maotai." Xue Yuhu told reporters that the Wuliangye price increase is to shorten the gap with Maotai.

“Upgrading supply prices will have a conductive effect and ultimately affect the price of end products. While Wuliangye must reshape the brand under the pressure of Maotai, the brand is perceived by consumers. The most intuitive brand perception of consumers is the terminal price, so Wuliangye also needs to be synchronized with Maotai at the terminal price,” said Xue Yuhu.

The price increase of Wuliangye is likely to bring about a new wave of rising prices for liquor.

Xue Yuhu told reporters that Wuliangye price increase will lead to the follow-up effect of other liquors. At present, the Mid-Autumn Festival is approaching. Liquor also enters the busy season from the Mid-Autumn Festival to the Spring Festival. With the Mid-Autumn Festival, National Day, New Year's Day and the Spring Festival, the tide of new liquor price increases is likely to surge.