Kweichow Moutai to boost investment, exports to BRI economies
Kweichow Moutai Co Ltd, China’s high-end distiller from Maotai town in Southwest China’s Guizhou province, said in the next few years, it will make more investments and aims to export more products to Belt and Road economies.
By September, the company had sold its products in 44 countries and regions involved in the Belt and Road Initiative, and its main export product is the 500-milliliter bottle of its classic Feitian 53 percent liquor. This kind of liquor that left the factory last year now retails at 1499 yuan ($212) on online shopping platform Tmall.
Moutai started to export its products in 1993 when the export volume was 45 metric tons. Last year, the volume stood at 2,177.47 tons, which created sales revenue of $469 million.
“In some mature overseas markets such as the United States, Australia and France, we sell our products through mainstream channels such as large supermarket chains, liquor stores, and luxury hotels. Some local consumers have started to buy Moutai products, but the main consumer group is still Chinese,” said An Huailun, president of Kweichow Moutai Import and Export Co Ltd.
“In some emerging markets such as Africa, South America and Eastern Europe, we sell Moutai products through local Chinese supermarkets and restaurants, as well as local bars and hotels. The development of the Belt and Road Initiative has attracted more Chinese-funded institutions and overseas Chinese to buy more products of Moutai,” An said.
Compared with foreign liquor brands, some overseas consumers are not used to the unique taste of Moutai, or Chinese baijiu. The comand pany is trying to mix Moutai spirits with other drinks to make cocktails and promote it in bars.
Meanwhile, the distiller is making efforts to sell more Moutai products at mid-end and high-end overseas Chinese restaurants, as the company would like to attract more local consumers to drink Moutai as an accompaniment to Chinese food.
The Shanghai-listed company’s market capitalization now stands at more than 1.4 trillion yuan. In June, it became the first stock to see its share price exceed 1,000 yuan per share after 27 years. It became the most expensive stock in the A-share market, boosted by continuously growing demand and good earnings.
The company said it also faces many restrictions when developing overseas markets. It needs to consider market growth potential, cultural differences, and laws and regulations.
Last year, overseas sales of Moutai its series of products in Asia accounted for 44.87 percent of the total, followed by Europe and North America, with 21.57 percent and 10.91 percent respectively, according to the company.
“The sales of our products have not jumped out of the East Asian cultural circle yet, we still need to increase efforts to cultivate more foreign consumers in Western markets, in addition to putting more investment into emerging markets,” An said.
Besides Moutai, Guizhou, a spirit-producing area, has about 5,000 spirit makers, including more than 600 registered companies. Among them, 128 distillers have seen their annual sales revenues exceed 20 million yuan, and 48 companies have achieved annual sales revenues of more than 100 million yuan.
Guizhou Xiongzheng Liquors Group is one of the major white spirit distillers based in Maotai. Founded in 2000, the company has seen its business grow rapidly in recent years.
Last year, it started to export its products — mainly three kinds of liquor that retail for 289 yuan to 699 yuan per bottle — to the United Kingdom.
“Our target consumers are aged between 30 and 50. We sell through food shows as well as some major channels like supermarkets. Local consumers are curious about Moutai-type liquor and they like the taste of our products,” said Zhang Zaibin, president of Guizhou Xiongzheng Liquors Group.
“The domestic market will still be our dominant market. We also plan to expand into some overseas markets near the UK; the local foreign markets still need more cultivation and brand promotion. Besides, the company faces challenges such as trade tariffs and the management of goods delivery systems overseas,” he said.
Last year, the production volume of spirits in Guizhou accounted for 3.5 percent of the national total, but the profits yielded from Guizhou enterprises made up 43 percent of the total, according to the local government.
“With annual production volumes of over 300 million liters, spirit making has become a 100 billion yuan-level sector in Guizhou. It stands as an important pillar industry for the province,” said Chen Yiqin, governor of Guizhou province.
“We will protect the ecology of spirit making, and continuously optimize the industrial layout and development pattern. We will further extend the industrial chains to raw material planting, packaging and printing, logistics and transportation, and e-commerce, and promote the integration of primary, secondary and tertiary industries of spirit distilling,” she said.
The sales of our products have not jumped out of the East Asian cultural circle yet, we still need to increase efforts to cultivate more foreign consumers in Western markets, in addition to putting more investment into emerging markets.” An Huailun, president of Kweichow Moutai Import and Export Co Ltd