During the Chinese New Year period, the Chinese liquor market has been struggling. Many distributors have indicated that sales during this festive season are similar to usual, with no expectations for increased profits this year – they can only hope to break even.
Traditionally, the Chinese New Year is a peak sales season for Chinese liquor, with distributors making significant profits and even raising prices. However, this year, Chinese liquor distributors are not celebrating the same success.
According to a report by Time Finance on January 25th, a tobacco and liquor store owner in Guangzhou mentioned, “This year’s New Year business is not as good as previous years, so we are not taking a break.” In an effort to boost sales, the store owner plans to operate as usual throughout the New Year period.
An area manager named Li Wei of a certain liquor brand also expressed that this Chinese New Year lacks the usual festive atmosphere. Li Wei stated, “In the past few years, the sales of white liquor would noticeably improve during the Mid-Autumn Festival and Chinese New Year, but last year’s Mid-Autumn Festival and this year’s Chinese New Year are similar to normal times.” He mentioned that this year, they dare not talk about profits and can only focus on selling to cover costs.
Li Wei disclosed, “My clients currently have almost zero inventory on hand; they are just waiting to restock before the New Year.”
In previous years leading up to the Chinese New Year, liquor companies would raise prices and pressure distributors to make payments. However, this year, there have been almost no price increases initiated by liquor companies.
Li Wei explained, “We do tend to raise prices a bit every year, but the market conditions this year are really poor, so we won’t be increasing prices.”
Furthermore, in order to control significant price drops, liquor companies are limiting the supply of white liquor in the market. On January 9th, there were reports that Wuliangye had suspended the supply of its Eighth Generation Puwu and informed distributors to recall products priced under 900 yuan (RMB). Distributors in various regions like East China, South China, and Central China confirmed this news.
On January 17th, Yanghe Group also announced that they would immediately stop supplying their Yanghe Blue and Tianhe Blue products to various online platforms.
Moreover, liquor manufacturers have begun lowering prices for promotions.
According to a report by Tencent News Prism on January 24th, as the Chinese New Year approaches, the liquor industry is entering its most crucial sales period of the year, and the “price war” has intensified.
On a certain online platform, mainstream high-end white liquor products with official prices set above 1000 yuan are now being sold at discounted prices: Wuliangye’s 52% ABV 500ml Eighth Generation Puwu is priced at only 950 yuan; Guojiao 1573’s 52% ABV 500ml is available for just 890 yuan; Fenjiu’s 53% ABV 500ml Qinghua 30 is priced at 870 yuan…
Offline stores are also running discount promotions. There were reports that a 30-year-aged Luzhou Laojiao, offered by a store owner for 1200 yuan, was cheaper by 100 yuan compared to the official store price. The store owner explained that this price doesn’t bring profits, but the New Year is a peak season for liquor sales, so they need to boost sales volume and clear inventory to receive rebates from the company.
In a large supermarket in Guangzhou, the word “Discount” in red on a yellow background stands out in the white liquor section. A bottle of Guotai Guobiao priced at 699 yuan is now selling for 498 yuan per bottle; and a bottle of Wuliang Gold priced at 558 yuan can now be purchased at 858 yuan for 2 bottles.
Currently, various manufacturers are utilizing various channels such as online, offline, and direct stores to sell at low prices to achieve their inventory reduction goals.
In response, a netizen named “Lixiangluo” said, “There is an oversupply of liquor, with more and more liquor companies and increasing production, while the number of people drinking liquor is decreasing. It is not strange for prices to drop. Unless liquor companies pour the liquor down the drain, maintaining prices would be odd. A good quality liquor only costs so much to produce. The high profits are unreasonable. It is now the era of low profits. Returning liquor prices to rational levels is the trend.”
Another netizen, “Langge,” believes, “With the economy declining, luxury items are surely going to decrease in price.”
“Wang Yong” also stressed that it is imperative for high-end white liquor to reduce prices as the majority of ordinary people cannot afford them, especially with existing housing and car loans to repay.