Moutai to open 110 direct sale stores

Moutai, known as the state liquor of China, is considering opening 110 direct sale stores nationwide next year in a bid to control soaring prices, provoking protests by its distribution agencies.

A visitor looks at bottles of Moutai liquor. [File Photo: Xinhua]

Moutai, known as the state liquor of China, is considering opening 110 direct sale stores nationwide next year in a bid to control soaring prices, provoking protests by its distribution agencies, reports China National Radio.

Analysts say the move may lead to a price reduction and benefit consumers since direct sale stores of Moutai will connect the manufacturer and consumers directly.

Moutai is a traditional and powerful high-end Chinese liquor that is often consumed on business occasions or sent as a gift.

Its price has been soaring in recent years. Over the past year alone, the retail price of a bottle of standard Moutai liquor, with 53 percent alcohol, has doubled to reach 2,000 yuan. But the manufacturer's price is 619 yuan per bottle. Therefore the price margin is more than 1300 yuan, all falling on consumers.

Analysts say the distributors of Moutai are opposed to direct sale stores mainly because their profits will shrink. The distributors will have to set prices in accordance with that of direct sale stores, which means their prices can't remain at the past high levels. Moreover, there will be a competition for supply sources. Moutai might be partial to its own direct sale stores and give them priority.

Analysts say Moutai could face problems in starting and operating so many direct sale stores. This year Moutai has applied to open 30 direct sale stores, but none of them have gone into operation yet. It may also be difficult to reduce the price right now since the liquor is in high demand in China.

Du Guangyi, vice manager of Kweizhow Moutai Co. Ltd, noted that since there is sufficient time before most direct sale stores are operational, they will work out practical measures to effectively run the stores and supervise the market prices.

The purpose of direct-sale stores is to guide prices, rather than being an attempt to exploit profits.

"The real price of Moutai should be known by the consumers. We cannot let the price go sky-high," said Du. "Strict measures will be taken next year to reduce its price back to normal."