In the Chinese liquor industry, a phenomenon where the factory price is higher than the selling price has emerged, leading many liquor companies to halt new orders, adopting a strategy known as “controlling stock to stabilize prices.” However, industry experts believe this is not a long-term solution.
Before the Chinese New Year, many Chinese liquor brands experienced the phenomenon of price inversion. For instance, the price of Wuliangye’s 8th generation Puwu on Taobao’s billion-dollar subsidy channel was 885 yuan per bottle, significantly lower than the offline price of 955 yuan per bottle and far below the factory price of 1019 yuan per bottle.
During the Chinese New Year period, the sales performance of medium to high-end liquors weakened, with some regional markets even showing price inversions of 20% to 30%. Ping An Securities analysis indicates that due to soft business demand, medium to high-end liquors are still under pressure, with sales declining significantly year-on-year.
Facing a sluggish liquor market, in January of this year, Wuliangye suspended the full-channel supply of its 8th generation Puwu (52% ABV) in several regions including East China, South China, and Central China to stabilize prices. On January 10th, Guizhou Zhenjiu notified the suspension of sales orders for the 3rd generation “Zhen Fifteen” (including non-prizes). On January 21st, Lidu Winery suspended the supply of Lidu Sorghum 1308 World Heritage Gift, Lidu Sorghum 1955, and Lidu Sorghum 1975 products.
During the Chinese New Year period, Jiuqishijie announced the suspension of sales orders for 42% ABV 500ml Guoyuan Sika, Duikai. On February 6th, Yanghe Distillery announced the suspension of sales orders for the 6th generation Hai Zhi Lan within Jiangsu Province and implemented strict quota control policies for Meng Zhi Lan M6+, halting sales orders for markets that do not meet the relevant requirements.
Currently, liquor companies are focusing on the core strategy of “controlling stock to stabilize prices,” with many leading liquor companies continuing the practice of suspending supply of certain core products.
Industry insiders generally believe that the price correction resulting from supply suspension is more of a short-term effect and the long-term sustainability depends on changes in market supply and demand dynamics and the subsequent strategies of enterprises.
Liquor analyst Xiao Zhuqing believes that controlling quantity to maintain prices is a technical means, and the liquor industry fundamentally needs to improve supply and demand relationships. However, this is influenced by multiple factors such as economic environment and social employment. Ultimately, restoring consumer confidence is crucial.
Researcher Ouyang Qianli in the beverage industry pointed out that this year’s decision by liquor companies to halt supply is different compared to previous years: “This year’s supply suspension is to support the prices of core products, ensuring orderly market development. In the past, it was mostly to attract distributors to make payments for purchases in order to prevent price increases or shortages.”
Many netizens do not approve of the liquor companies’ strategy of “controlling stock to stabilize prices.”
“Chen Dong” believes: “The real core reason lies in the changing demand side in response to price changes. The tactics played by liquor factories will only yield temporary results and will not have a significant impact in the end.”
“Zhang Rui” also says: “Controlling stock to raise prices is like the hunger marketing used in the automobile industry. But does the current environment in the liquor market still have those conditions?”
Netizen “Zhang Xibin” expressed: “After controlling stock, other liquors will immediately fill the gap! Don’t be too confident, China is huge, a few companies cannot control everything.”