Ahead of a long holiday that combines Mid-Autumn Festival with National Day, which falls between Oct. 1 and 8, the price of China's signature high-end spirit Kweichow Moutai, a brand from the country's southwestern Guizhou Province, is soaring.
Liquor is an important part of the holiday banquets for most families during traditional Chinese festivals. The recommended retail price of a 500ml bottle of Moutai's most popular Feitian 53 percent liquor is 1,499 yuan (US$219.5). However, in many Beijing stores, its actual retail price has already surpassed 3,000 yuan, more than double the recommended price and even more than the monthly salaries of many Chinese workers.
The share price of Kweichow Moutai Co. Ltd. is also hitting record highs. Moutai was listed on Aug. 27, 2001 on the Shanghai Stock Exchange with an issuing price of 31.39 yuan per share. Its share price exceeded 1,000 yuan per share on the trading day of June 27, 2019, making a historical breakthrough and becoming the most expensive stock in China’s A-share market. On Sept. 2 this year, its share price further increased and set a record high of 1,826 yuan per share. This means that the share price of Moutai has increased by about 60 times in the past 19 years since its initial public offering.
The market capitalization of Kweichow Moutai Co. Ltd. is now more than 2 trillion yuan. Nevertheless, the GDP of Guizhou Province, where Moutai is located, was 1.6769 trillion yuan in 2019, which means that the market cap of Moutai as a company has surpassed the GDP of the entire province.
Moutai's price hike has spread to other top liquor brands in China. Other major Chinese liquor makers are also reporting solid sales and outstanding performance. They include Sichuan-based Wuliangye Yibin Co. Ltd. and Luzhou Laojiao Group, which are leading the advance of the spirits and consumer sectors in the stock markets.
Such price hikes are making high-quality liquors even more unaffordable for ordinary Chinese wage earners. Yet despite its high price tag, Moutai is still frequently the name on the bottle when it comes to official banquets across China. Moutai is not delicious compared with popular beverages, but we cannot deny the fact that it has turned out to be a symbol when talking about the extravagance of governmental agencies.
Criticism of Moutai over its close association with graft is growing especially at a time when public holidays are drawing near and its price is surging. As a luxury item and a popular gift, the liquor has been featured in almost all graft probes. China's discipline inspection committees at various levels have ordered officials not to send or receive Moutai as gifts. However, many government officials, their spouses, children and relatives, and even some top Moutai managers have been detained for participating in commercial activities related to the iconic liquor such as acquiring Moutai's sales licenses, raising sales quotas and facilitating the presale of the liquor for profit.
In 2019, Moutai's revenue was 88.8 billion yuan and its net profit was 41.2 billion yuan. Since the profit is incredibly high, many scalpers and illegal dealers are selling counterfeit Moutai to cheat consumers. If we add all the sales of so-called Moutai liquor every year, it would be much more than the actual annual output of Moutai.
Moreover, in my point of view, for a country which pays special attention to ecological development and technology innovations, it is unreasonable and even ridiculous for a liquor brand to have been the most expensive stock for quite a long time.
(The author is the editor-in-chief of Shenzhen Daily with a Ph.D. from the Journalism and Communication School of Wuhan University.)