By FENG Yuchen
Baijiu stocks saw a strong surge at the opening on Wednesday, with Kweichow Moutai, Yilite, and Shanghai Guijiu briefly hitting limit-up.
Although prices had pulled back by close, Kweichow Moutai remained the leader in the baijiu sector, achieving a trading volume of nearly 170 billion yuan and a gain of 5.7 percent. Yilite and Luzhou Laojiao saw gains of over 3 percent.
Six years of stability
Late on Tuesday, Kweichow Moutai announced a factory price increase for its Maotai liquor. The average increase is approximately 20 percent, with the company emphasizing that this adjustment does not affect the market guidance price of its products.
The price shift will certainly have an impact on performance. It is Kweichow Moutai's first price increase in six years, the last being in late 2017.
Guotai Junan Securities released a research report estimating the annual Maotai production for this price increase at around 17,000 tons, with overall production remaining relatively stable. Based on this calculation, the increase will contribute about 6 billion yuan to full-year revenue in 2024, equating to a 4-percent increase in revenue growth.
Measure for measure
The report also highlighted that historical trends following price increases show a general uptick in batch prices within six months.
In response to the industry leader’s price rise, several listed baijiu companies said they would take a "measured approach."
Luzhou Laojiao presently has no intention to raise prices. Wuliangye will monitor the situation. Shanxi Fenjiu noted that routine price adjustments apply to the company's products, but huge price shifts are not anticipated.
Toasting a healthy market
Baijiu companies have been doing well this year. Among the 20 listed, 18 reported profits in Q3. Many registered gains of over 6 percent.
The 20 made a combined revenue of more than 300 billion yuan in Q3. Net profit of 120 billion yuan was up by 20 billion yuan.
