General rise? Spirits set off a "trend of price increase" at the end of the year, and experts revealed the reasons behind it. | Liquor incident

Wen | Liu Na of Sina Finance and Economics

Editor | Han Dapeng

When the Lunar New year falls, the price of liquor will rise again.

Niulanshan increased by 20 yuan to 50 yuan, and blue and white drunken by 5% to 20%. As for the price increase, Wu Guoqiang, a liquor dealer, told Sina Finance that the price of liquor has risen seasonally around the Spring Festival every year. A number of industry insiders believe that in December, near the peak of New Year's Day and Spring Festival beverage consumption, base wine is in short supply, prices have risen by 15% to 20%, and it has become a common phenomenon.

If the price of inexpensive liquor has gone up, will the price of high-end liquor go up accordingly? Cai Xuefei, a wine analyst and general manager of Wisdom Consulting, said, "in the past five years from 2016 to 2021, the price of well-known spirits in China has increased by about 30% and 50%."

Cai Xuefei believes that the rise in the price of inexpensive liquor is affected by rising raw materials such as sorghum, rising labor costs, rising tax costs and other factors. The logic of high-end liquor price adjustment is mainly the expansion of sub-high-end to high-end; the logical relationship between high-end liquor price increase and cost growth is not so close, and the price rise is more the occupation behavior of brand influence.

　The prices of waist spirits such as Niulanshan and Guyue have been raised.

On December 24, Shunxin Agriculture announced that due to different increases in production cost components such as raw materials and labor, it is planned to adjust the prices of some products according to the company's market situation and the supply and demand of products. This adjustment plan will be implemented on January 1, 2022. The specific plans are as follows: 42 degrees 500ml century-old Niulanshan liquor (Funiu) is increased by 20 yuan per bottle; 42.6 degrees 500ml century Niulanshan liquor (Xiuniu) is increased by 30 yuan per bottle; 42.9 degrees 500ml centennial Niulanshan liquor (Guoniu) is increased by 50 yuan per bottle.

On the same day, Guyue Longshan also issued a price increase notice, saying that in order to improve Guyue Longshan's brand strength and competitiveness, the company decided to adjust the prices of some products, such as blue and white drunk series, storage series, fruit wine, relief and other product lines, with a price increase of 5%, 20%, and the adjustment plan will be implemented from January 20, 2022.

In addition to the above brands, a number of second-and third-tier waist enterprises also announced price adjustments, Xijiu raised the prices of all products on December 12; Gujinggong Group adjusted the original group purchase price of the year, and the wine industry also issued a notice that it would adjust the price system of the collection collection series from January 1, 2022.

Cai Xuefei, a wine analyst and general manager of Wisdom Consulting, believes that the rise in the price of spirits such as Niulanshan is due to the rise in raw materials such as sorghum, labor costs, tax costs and other factors that eventually lead to price transmission.

"although the price adjustment was implemented from January to the end of January, dealers have been notified of the price adjustment, so prices on the retail side have begun to rise." A Beijing dealer told Sina Finance.

"Liquor prices rise seasonally twice a year, one until March every year before the Spring Festival, and the other before the Mid-Autumn Festival," Wu Guoqiang told Sina Finance. "the main reason is that before Chinese traditional JOYY Inc festivals, liquor purchases have increased, and the relationship between supply and demand has led to a rise in liquor prices."

In fact, in recent years, most of the domestic raw materials such as cartons, glass, aluminum, barley and corn have increased by 20% to 60%, which has brought a lot of pressure on the production costs of wine enterprises, especially some wines with low profit level. A number of industry insiders believe that in December, near the peak of New Year's Day and Spring Festival beverage consumption, base wine is in short supply, prices are rising, and prices are rising by 15% and 20%. It has become a common phenomenon.

　Will high-end spirits "lift all boats"?

For more consumers, the increase in the price of ordinary liquor is relatively reasonable, and the high-end liquor itself has a high gross profit margin, which will not be understood if the price rises frequently.

Cheap liquor is a mass consumer goods, the price rise is due to the cost of raw materials and other reasons, passive rise. While Maotai, Wuliangye and other high-end spirits, the cost of raw materials accounts for a very low proportion, the gross profit margin is more than 90%, the rising cost will not pose pressure for the time being.

But in fact, high-end spirits frequently adjust their official prices, and a number of brands have raised prices in the last month. At the beginning of this month, the ex-factory price of the eighth generation of Wuliangye increased by nearly 9%.

Multiple sources confirmed that Wuliangye updated its contract policy with dealers. The planned ex-factory price of the eighth generation Wuliangye was still 889 yuan per bottle, and the unplanned price was raised from 999 yuan per bottle to 1089 yuan per bottle. According to comprehensive calculation, the ex-factory price of the eighth generation Wuliangye will be raised from 889 yuan to 969 yuan, which is not only close to the thousand yuan mark, but also consistent with the ex-factory price of 53-degree Feitian Maotai liquor.

Luzhou laojiao immediately followed up, raising the planned quota supply price of Guojiao 1573, the core product of 52 degrees and 38 degrees in North China and other regions; at the same time, well-known wine companies such as the wine industry, Jiannanchun, Gujing tribute wine and other well-known wine companies also adjusted the prices of their mainstream products.

"Wholesale prices to dealers are also rising, and eventually they must be transmitted to retail buyers," says dealer Wu Guoqiang. The official guided price of high-end spirits has been rising in recent years, and this trend is basically irreversible. Because dealers "take wine" prices have gone up.

"the logical relationship between the price increase of high-end liquor and cost growth is not so close, and the price rise is more of a space-occupying behavior, especially the expansion of sub-high-end liquor to the high end." referring to the reasons for the price increase of high-end liquor, Cai Xuefei explained that famous liquors such as Wuliangye and Maotai have a very strong brand value, and the brand value is sought after by the market, and one of the ways to reflect the brand value is the price.

For example, after the price increase of the first echelon represented by Maotai and Wuliangye, the original price range occupied by Maotai is vacated, and the price of the second echelon of liquor will rise to occupy this position, which is the occupation strategy of well-known liquor. By the same token, spirits ranging from 300 yuan to 500 yuan will rise in the price range of 700 yuan to 800 yuan if they are of excellent quality and have brand influence.

According to Cai Xuefei, the price of well-known spirits in China has increased by about 30% and 50% in the past five years from 2016 to 2021. In the past two years, there has been a rising trend of "small steps and fast running" in well-known liquors. specifically, the price increase is relatively small, but the price increase frequency is very high.

"judging from the price of goods, the price of high-end liquor has been rising over the years." Wu Guoqiang said that as a result, after the fluctuation of spirits during the Spring Festival this year, the price will fall lower than the pre-festival increase. In other words, the price of high-end liquor has risen after fluctuations compared with that before the Spring Festival.