**Unprecedented Industry Shock Hits Chinese Baijiu Industry**
China’s baijiu industry is currently experiencing unprecedented upheaval. Maotai Town, known as the core production area of Maotai liquor, has long been prosperous in the baijiu industry, but now most distilleries have ceased production. According to some industry insiders, Maotai Town, which originally had around 868 distilleries, now only has over 100 still in operation. They describe the baijiu industry as entering a “cold winter.”
Maotai Town is known as the “Number One Liquor Town in China” and serves as an important hub for baijiu brewing technology and industry. Throughout this year, the Chinese baijiu market has been continuously sluggish, leading to a significant impact on the distilleries in Maotai Town.
The manager of a distillery in Maotai Town, Mr. Zhang, revealed that while there may be hundreds of distilleries in name, less than 20% are actually operational. He stated, “Maotai Town currently has 868 distilleries with baijiu production permits. However, based on my knowledge, there are only over 100 distilleries that are truly operational and able to produce and supply baijiu regularly.”
He further admitted, “The market has indeed been very sluggish this year. Since the ban on alcohol consumption at official functions starting in May (which restricts drinking during official activities), production has been extremely challenging.”
As distilleries struggle for survival, downstream distributors are also facing tough times. Baijiu agent Wang Ying, speaking under a pseudonym, mentioned intense price competition and internal redundancy that is causing profit margins to decline. She stated, “The baijiu industry can no longer be considered a sunrise industry. It has been on a continual decline, and for now, it is better to stay away as much as possible.”
Citing the example of the once highly profitable Feitian Maotai, Wang Ying explained that many reputable businesses are now reluctant to stock it and cannot afford to lower prices further, as it is no longer profitable. She emphasized, “Offering low prices is unsustainable, as low prices mean no profit, indicating that what the factory provides is not good quality.”
Presently, market price competition is fierce, with continuous declines in prices. Some platforms like e-commerce websites and Pinduoduo are selling Feitian Maotai for as low as 1499 yuan per bottle. Wang Ying mentioned, “If it’s sourced directly from the factory or authorized distributors, there’s no way it can be sold at 1499 yuan per bottle unless it’s recycled Maotai.”
Wang Ying predicted that Maotai’s price will continue to fall in the future. She mentioned that previously, investing in Maotai would never result in losses, but now, some stored Maotai might not only fail to yield profits but could depreciate in value. She concluded, “My target price is to drop to 1300 yuan per bottle.”
Another baijiu distributor, Gao Jian, also under a pseudonym, indicated that the current price adjustments are more about profit games, especially concerning the survival of distributors. He speculated, “Why are they (the authorities) cracking down on e-commerce now? It’s to protect the interests of distributors because they are easier to control.”
He conjectured, “If e-commerce platforms stop selling, then distributors won’t release their stocks either. I think Maotai will probably rise to around 1700 yuan per bottle and then stabilize, as at 1700 yuan per bottle, they will basically be able to start shipping again.”