Dampened spirits: Kweichow Moutai’s luxury liquor prices hit by falling consumer spending
- The average wholesale price of Flying Fairy, the flagship product of Kweichow Moutai, has fallen 8 per cent in the past two months to below US$330 per bottle
Prices of China’s most famous liquor, Mao-tai, are falling, as weakening consumer spending spills over to high-end discretionary goods.
Mao-tai, which is used in state banquets to entertain foreign dignitaries, was once hailed and hoarded by speculators as an infallible investment that was impervious to economic downturn. Now, dwindling demand for the spirit underscores the urgency for Beijing to boost a flagging job market and resolve a property market crisis, a key conduit for Chinese citizens to preserve their wealth that is closely linked to consumption.
“With a falling property market, you obviously feel the pain of shrinking wealth and would steer clear of some discretionary consumer goods you enjoyed before, such as expensive liquor,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai.
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The falling prices of Mao-tai will weigh on overseas traders investing in China’s onshore yuan-denominated stocks. So far, Kweichow Moutai has been one of their favourite holdings, with Invesco, BlackRock and Vanguard Group among the company’s major shareholders, according to Bloomberg data.
