Caixin
Caixin Global – Latest China News & Headlines

Home >

ABOUT US

CX Live is Caixin Global's real-time news portal, featuring 24-hour breaking news, short-form analysis, and roundups from business and social media in China.

TRENDING
Onshore Yuan Breaks 6.9 Against U.S. Dollar as Trade War Intensifies
China Unicom Steps Up Mixed-Ownership Reform in Yunnan
Regulator Finds Kangmei Pharma Fabricated Financial Reports
LATEST
E-Commerce Newcomer Pinduoduo Beats Market Expectations in First Quarter
Ni Hao, Alexa: China Passes U.S. to Become World’s Largest Smart-Speaker Market
Central Bank to Unify Benchmark, Market-Based Lending Rates
JP Morgan Banker Offered Job to Kerry Logistics Scion in Bribery Case
Swiss Drone Makers Eye Chinese Market
Solar Energy Firm Hanergy to Delist From Hong Kong
Beingmate Gets Off Delisting Watchlist — But Has It Really Turned a Corner?
In Depth: Xiangshui Chemical Factory’s Recipe for Disaster
China Unicom Steps Up Mixed-Ownership Reform in Yunnan
Regulator Finds Kangmei Pharma Fabricated Financial Reports
Onshore Yuan Breaks 6.9 Against U.S. Dollar as Trade War Intensifies
Stricter Vehicle Emission Standards May Spell Further Bad News for Hobbled Industry
China Gives Tech SOEs Deadline for Improving Employee Incentives
Home Prices Rise in Major Chinese Cities
Taiwan Lawmakers Approve Same-Sex Marriage Bill
Former JP Morgan Banker Charged With Bribery in Hong Kong
Legendary Architect I.M. Pei Dies at 102
Clock Ticks Down to Starbucks Challenger Luckin’s New York Trading Debut
China Regulates Deposit Abuse in Sharing Economy
Don’t Overestimate Swine Fever Impact on 2019 Inflation, NDRC Says
Premium Liquor Kweichow Moutai is Cutting Out the Middlemen

By Zhao Runhua and Shen Xiyue / Mar 26, 2019 04:21 PM / Business & Tech

Photo: VCG

Photo: VCG

China’s most famous baijiu maker is known for liquor with high percentages of alcohol. But the company is lowering its numbers elsewhere.

Premium liquor producer Kweichow Moutai is cutting the number of its dealers, or vendors who pay franchise fees to sell its liquor directly to consumers — by as much as 20%, one such Moutai dealer told Caixin.

The company has stripped around 400 dealers of their qualifications to sell Moutai products, in a move likely engineered to further regulate sales and ensure market balance.

The number of cuts is significantly higher than had been previously indicated, when company president Li Baofang mentioned that 100 dealers might be affected by changes at the 2018 national dealers’ meeting, where he also added that the company would not likely approve new dealerships.

The company has been carefully controlling the amount of new dealers since 2016, when China’s liquor industry began to slowly recover from the anti-corruption campaign that ravaged the sales numbers of high-end bottles, the dealer said to Caixin.

Kweichow Moutai’s liquor sales target for 2019 is 31,000 tons, which is 3,000 tons more than 2018’s goal. But only 17,000 tons will be given to dealers this year, the same as last year.

Industry watchers suspect this move, then, is to maintain a healthy flow of products in a sustainable business model. Due to its status as a luxury item, some dealers intentionally stock up on the liquor, either to boost prices or wait for it to age – and vast hidden inventories change the supply and demand for the product.

This year, the company will sell more liquor directly to consumers itself, and eyes a 2019 total revenue of 100 billion yuan ($14.91 billion) and profit of 60 billion yuan.

Related: Moutai Investors Ride Roller Coaster With Baijiu Maker
Share this article
Open WeChat and scan the QR code
Copyright © 2017 Caixin Global Limited. All Rights Reserved.