Traditionally, China’s festive Lunar New Year season is supposed to see a peak in liquor sales. However, local merchants are saying their business this year has been flat.
According to First Financial, some wine merchants in Jinan city, Shandong province, said their alcoholic beverage sales were a bit cold this Lunar New Year. Especially the group purchase channel, the demand for wine for some customer visits and gifts showed a downward trend.
These sellers had tried various methods to reduce prices and attract customers, such as preparing supplies two months ahead of the seasonal period. Yet, sales have not been promising. Even the national liquor Kweichow Moutai, also known as the world’s most valuable spirit brand with another name Feitian Moutai, was also short of buyers compared to last year’s peak.
Alcohol merchants in Tangshan city of Hebei province, Qingdao of Shandong, and other areas have similarly reported slower sales than in the previous years.
Some liquor analysts said that the dull market was not unprecedented. China’s domestic demand for this commodity has weakened since 2021 compared to previous years of sturdy consumption.
There are several factors behind this year’s decrease. Although the liquor sales were low, the price did not fluctuate much—especially the cost of high-end liquor.
Kweichow Moutai’s sales have been weaker than in previous years, but partially it was related to the company’s market adjustment actions. Its new chairman, who Chinese regulators appointed last September, had pledged reforms in the distribution channel and pricing system.
First Financial reported that in 2021, dealers’ wholesale and retail sale prices of a Feitian Moutai bottle were 2,800 yuan and 3,180 yuan, or between US$440.2 and nearly US$500, respectively. However, store prices are not significantly different, which was correspondingly 3,200 yuan and 3,700 yuan, or between US$503.09 and US$581.70.
Regarding the future sales of liquor, expectations on the market are mixed.
A research report by ZSE Securities believes that although the growth rate of wine companies will slow down in 2022, they will still focus on upgrading and improving the structure to achieve a double increase in revenue and profit, so there will be no need to be pessimistic.
But the distributors are not so optimistic. They said that the stock of a domestic beer band tended to increase by 30% to 40% during the peak season in previous years. However, this year, the bulk of supply remained the same, indicating that the winemakers have been more cautious about the prospects of the market this year.
Meanwhile, white wine expert Xiao Zhuqing believes that this year’s New Year liquor market could be relatively stable because consumption behavior would change from impulsive to rational consumption.
However, online Chinese users are giving more straightforward reasons than experts’ analysis. For example, they put it that the most important reason for the cold liquor market is that people “have no money.”