Kweichow Moutai starts online sales platform to boost profit margins, leaving distributors out in the cold
- Kweichow Moutai will launch its own online sales platform as the Chinese liquor maker seeks to overhaul its marketing network
- The iMoutai app goes online on Thursday, but the company’s flagship Feitian Moutai product will not be available on the online store initially
The app – iMoutai – will go online on Thursday, the Guizhou province-based company said on its official WeChat account. It was the most downloaded app on the Apple store on Tuesday, underscoring consumers’ enthusiasm for the Chinese traditional baijiu that is typically sold for more than 2,000 yuan (US$314) a bottle on major Chinese e-commerce platforms and stores.
While the flagship Feitian Moutai will not be available on the app initially, consumers will be able to place orders for four other liquor categories whose prices range from 1,088 yuan to 4,599 yuan, according to Kweichow Moutai.
Analysts view the launch of Kweichow Moutai’s e-commerce platform as a move to boost its margins by cutting out dealers who reap hefty gains from the difference between wholesale and retail prices.
The Chinese producer of the alcohol, which was used by state leaders such as Mao Zedong and Deng Xiaoping in banquets for foreign dignitaries, is grappling with the task of retaining the profit growth rate that slipped to single digits in the third quarter, as a slowdown in growth and a fare-up in the pandemic chipped away at consumer spending.
The move will allow Kweichow Moutai to strengthen control over the sales network and better allocate channel profits, according to Zheshang Securities, which predicts that the premium Feitian Moutai will be available on the app from May.
“In the long run, the significance of launching the e-commerce platform lies in deepening the reform of the distribution channel,” said Yang Ji, an analyst at the brokerage. “The online sales of Feitian Moutai will help to balance the pricing system.”
