On Wednesday evening, Guizhou Maotai Co., Ltd. announced that its revenue growth in 2024 had slowed down. This was attributed to the company strengthening inventory control to address the price fluctuations of its flagship product, Feitian Maotai. The company also decreased the production volume of Maotai base liquor for the first time.
In the annual report released by Guizhou Maotai on Wednesday night, the company reported a revenue of 170.899 billion yuan in 2024, a 15.71% increase compared to the previous year. This growth rate was lower than the 18% and 17% increases in 2023 and 2022, respectively. Net income rose by 15% to 86 billion yuan. According to the profit report, Maotai’s goal for the new 2025 fiscal year is to achieve approximately 9% revenue growth.
For a long time, Maotai liquor has been considered a barometer of Chinese consumer demand. However, in recent years, the retail performance of Maotai liquor has been squeezed by inflationary pressures. Bloomberg reported that due to the continued sluggishness of the Chinese real estate market and weak consumer confidence, the demand for high-end spirits like Feitian Maotai declined last year, leading to decreased sales. Industry data provider Today Liquor House stated that by the end of December last year, the wholesale price of a bottle of original packaged 2024 Feitian Maotai had dropped from 2,950 yuan at its initial release in January to 2,315 yuan, a decrease of over 20%.
Local media cited distributors as saying that Maotai took measures such as limiting supply to try to prevent a drastic drop in wholesale prices. Wholesale price is the price at which Maotai distributors sell to liquor retailers.
A research report by Citigroup indicated that to stabilize prices, the company also reduced Maotai base liquor production by 2%, marking the first production cut since 2014. Maotai’s profit performance is largely unaffected by wholesale price fluctuations as it sells to distributors at a fixed price of 1,169 yuan per 500ml bottle. However, the soft wholesale prices still put pressure on Maotai’s stock, which fell by over 10% during 2024.
Reuters previously reported estimates from securities firms and company executives suggesting that at least 50% of Maotai’s inventory produced over the past decade remains unconsumed and is held as stock, often as an alternative investment. Some analysts have warned that large-scale inventory sell-offs could further impact Maotai’s market and stock prices. UBS Research predicts that by the mid-2025, the market price of Feitian Maotai may fall well below the 2,000 yuan benchmark.
Starting from last year, China’s baijiu market has been continuously sluggish. Even the highly anticipated sales peaks during the “Mid-Autumn Festival” and “Chinese New Year” holidays fell below expectations. Post-Chinese New Year, a phenomenon of retail prices being lower than factory prices (backward pricing) emerged in the Chinese baijiu market, prompting several liquor companies to implement a “shock therapy” of ceasing supply to stabilize market prices.
Mainland Cover News reported on March 3 that along the route from Zunyi to Maotai Town, the once densely packed billboards have become sparse, sometimes requiring a five to ten-kilometer stretch before another billboard is seen. Maotai Town itself has also become much quieter than before, with liquor stores lining the streets but few customers in sight. The person in charge of a well-known liquor company in the area mentioned that since the beginning of this year, 70% of production capacity in the vicinity of Maotai Town has ceased, over 30% of investment managers have transitioned to other fields, and many have turned to driving ride-hailing services.