Analysts in high spirits on baijiu giant's digital move

Kweichow Moutai Co Ltd, China's iconic high-end spirits maker in Southwest China's Guizhou province, announced that it will launch its official digital sales platform on Thursday for pilot operation, and analysts are bullish on the company's long-term growth prospects.

Consumers can already download the app－iMaotai－on their mobile devices. When the app is officially launched, buyers over the age of 18 can make advanced purchases of the latest four types of the company's alcoholic products. But the new app won't be selling Moutai's classic Feitian 53 percent liquor in 500 milliliter bottles.

The app has become the one with the highest downloading volume among all free apps.

All products available on the app use a reservation system, and each identification number can be bound to one account. The reservation time is between 9 am and 10 am, and consumers need to pick up their products at offline stores.

Shanghai-listed Moutai saw its shares close at 1,667 yuan ($262) per share on Tuesday, edging up 0.37 percent. Currently, Moutai stands as the most expensive food and beverage stock globally. Its valuation reached 2.1 trillion yuan, which exceeded that of Nasdaq-listed US multinational Coca Cola Co since mid-2020.

Shares of many other leading Chinese liquor distillers, such as Sichuan-based Wuliangye Yibin Co Ltd and Luzhou Laojiao Group, slipped in Tuesday trade.

Meanwhile, Moutai released its latest earnings forecast on Monday evening. In the first three months, Moutai is expected to achieve sales of 33.1 billion yuan, up 18 percent year-on-year. During the period, its net profit is likely to have reached 16.6 billion yuan, up 19 percent year-on-year. This is the best first-quarter performance in three years, the company said.

"In the first quarter, sales of baijiu (spirit) have been robust in the country. With a richer product portfolio of Moutai and given its scarcity, it is expected to show good profitability in the mid and long term," said a report by Hua Chuang Securities.

Moutai also made substantial gains last year. In 2021, it achieved sales of 109.4 billion yuan, growing 11.71 percent over the previous year, representing the first time annual sales exceeded 100 billion yuan. Last year, net profits reached 52.5 billion yuan, up 12.34 percent year-on-year.

"Now, sales of higher-end baijiu products only account for about 5 percent of the total in China, and they boast significant room for future growth. Sustained economic growth will ensure sufficient consumption capacity, despite the COVID-19 pandemic having aggravated negative emotions in the short term," said a research report of China Securities.

This is not the first time that Moutai made an attempt to grow its e-commerce footprint. In 2014, the distiller spent 100 million yuan to establish its e-commerce business. The platform was launched in 2017, and more than 2,800 distillers settled their business via the platform. In late 2019, the e-commerce platform ceased operations and underwent liquidation.