The Chinese liquor market is facing a changing environment, including evolving consumer demand and increasing competition. These challenges are leading to a consolidation of the industry, with the strongest players becoming even more dominant.

In this article, we will explore the challenges and opportunities facing the Chinese liquor market. We will also hear from industry leaders, such as Kweichow Moutai Chairman Ding Xiongjun, about their insights and strategies for success.

Distribution channel reform

In 2022, Kweichow Moutai, the leading Chinese liquor producer, reported record-breaking revenue and profit growth. The company's chairman, Ding Xiongjun, attributed this success to a number of factors, including the company's strong brand, its growing control over the distribution channel, and its focus on innovation.

One of the most important factors behind Kweichow Moutai's growth is its channel reform. In recent years, the company has been working to increase its direct sales ratio, said people from a public fund to NBD. 

As a result, Kweichow Moutai has now established six major sales channels: iMoutai, self-owned stores, group buying, e-commerce, supermarkets, and social distributors.

Ding Xiongjun has said that the company is working to create a "channel ecosystem" in which each channel plays a unique role and all channels work together to provide a seamless customer experience.

File photo

Grow the consumer scope

In 2023, Kweichow Moutai, the leading Chinese liquor producer, is taking steps to reach a wider audience, including younger consumers.

At the company's annual shareholders meeting, Chairman Ding Xiongjun said that the company is committed to "an ecosystem-based layout" and will not "reject any group."

To meet the changing market and the needs of young consumers, it has launched a number of new products and channels.

One of the most notable new products is Moutai ice cream. The ice cream is sold through the company's iMoutai digital platform and is priced at around 66 yuan per piece.

File photo/NBD

Ding Xiongjun has said that Moutai ice cream is not just a consumer product, but a strategic product. It is designed to help familiarize young consumers about the taste of Moutai's signature sauce flavor and to promote the company's brand among younger consumers.

Another key initiative is the expansion of Kweichow Moutai's serie wines. In the first half of 2023, sales of series wines reached 10.74 billion yuan, up 32.58% from a year earlier. 

The market is confident in the future prospects of Moutai 1935. "The quality of Moutai 1935 is very good," a Moutai distributor told NBD. "It will be easy to reach the 10 billion yuan target this year."

Ample dividends

Kweichow Moutai has been paying out record-breaking dividends in recent years. In 2022, the company paid out a total of 53.2 billion yuan in dividends, including a special dividend of 27.3 billion yuan.

Kweichow Moutai's cash dividend payout ratio has been over 50% for eight consecutive years, and has been stable at 51.9% for the past four years. Since 2013, the company's total dividend payouts have increased by about 600.73%.

"We are very satisfied with the company's dividends," said Lin Yuan, chairman of Shenzhen Linyuan Investment Co., Ltd. "Since its IPO, Moutai has been creating good value for shareholders, and its stock price has been trending upwards. We believe that this company will continue to create miracles in the future."

In terms of how to increase dividends in the future, company executives have said that "the main way is to grow the pie."