Kweichow Moutai Co. raised prices of its flagship Feitian Moutai spirit for the second time in several months, as China’s biggest liquor maker works to boost margins hit by sagging demand.
The baijiu maker hiked Feitian’s retail price on its official e-commerce platform by 100 yuan ($14.8) to 1,639 yuan per bottle starting July 18, according to an exchange filing. The ex-factory price, which is charged to distributors and wholesalers, also increased by 100 yuan to 1,369 yuan per bottle.
Moutai last raised Feitian’s ex-factory and retail prices on March 31. Before that, it had hiked the ex-factory price in late 2023, and the suggested retail sticker in 2018.
The company’s shares rose as much as 4.2% on Monday, the most since May.
The latest price increases come as the premium baijiu maker seeks to bolster margins amid a broader downturn in demand driven by China’s economic slowdown, a younger generation of lighter drinkers and a government crackdown on lavish banquets.
“We think this signals management is protecting profitability against a likely softening of corporate demand and hence weaker distributor volumes due to the government’s anti-extravagance campaign and weak economic conditions,” Bloomberg Intelligence analyst Elaine Lai wrote in a note.
The move also amplifies Moutai’s intention to further lift its sales mix toward its direct-to-consumer channels and reduce speculation by unauthorized wholesalers, according to Citigroup analysts including Xiaopo Wei.
By Bloomberg News.