Wine culture is essential to the Chinese dinner table during the New Year holidays. Now that the new year is approaching, the major wine companies have also begun their final layout, and news of price increases and new products is constantly pouring out.

　　On the evening of December 28, a copy of the “Notice on Adjusting the 60-Year Price System for the Century-Old Luzhou Laojiao Cellar Wine” from Luzhou Laojiao Cellar Sales Co., Ltd. came out. The dealer confirmed that the news of the price increase was true.

　　The price increase at the end of the year should be a good thing for liquor, which is in peak season, but the shareholders of Laojiao in Luzhou quarreled. Some people think, “Tomorrow's high rise will stop; it's the last New Year's Eve wave.” However, there were also people who said, “It dropped after the last price increase, and it will definitely fall tomorrow.”

　　As a result, the entire liquor sector fell. As of the midday closure of the market, Yingjiagong Liquor had plummeted by more than 8%; Gujing Gongjiagong Liquor, Jinhui Liquor, and Alcoholic Liquor had fallen more than 5%; Luzhou Laojiao's price was 244.80 yuan/share, a drop of 6.13%. Wuliangye and Kweichow Moutai also plummeted by more than 4%.

　　This is not the first time that the price of the company's products has been raised, but the stock price has plummeted.

　　Since December, Luzhou Laojiao has issued several price adjustment notices. On December 14, Luzhou Laojiao Tequ Liquor Sales Co., Ltd. issued a notice on the proposed price adjustment for the 2018 edition of 52-degree Luzhou Laojiao Tequ Liquor (old brand). On December 16, news of a price increase also came. As a result, the next day, the company's stock price plummeted 3.63%.

　　Liquor ushered in a wave of price increases at the end of the year

　　Tianfeng Securities once pointed out that the core logic of the high-end sector is to raise prices. High-end wine companies have always been able to raise prices. The only way for long-term development is for enterprises to steadily raise prices - control - stabilize prices according to their own pace of development.

　　It seems to be to confirm their ability to raise prices. Recently, all major wine companies have begun a price increase model.

　　Since the end of November, the wave of price increases by wine companies can be described as wave after wave. Earlier, there was news that the price of Wuliangye is about to increase. The price of the new contract signed by Wuliangye dealers next year will change. The unplanned price of 52-degree eighth-generation Wuliangye will increase from 999 yuan/bottle to 1,089 yuan/bottle.

　　On December 12, Xi Liquor Company said it would raise the prices of all products; on December 13, Shede Liquor issued a price adjustment notice to adjust the price system for the Shede Collection series products from January 1, 2022; on December 21, Bozhou Gujing Sales Co., Ltd. issued a notice to adjust the group purchase price of Gujing Gongjiu's original pulp · 30 products per year; on December 23, the rice wine giant Guyue Longshan also joined in. It was decided to adjust some of the prices of some products, reaching a maximum increase of 20%; on December 24, Shunxin Liquor Agricultural released a partial price increase of 20%; on December 24, Shunxin Liquor announced that it would adjust the prices of some products, with a maximum increase of 20%; on December 24, Shunxin Liquor announced that it would adjust the prices of some products, reaching a maximum increase of 20%; on December 24, Shunxin Liquor announced that it would adjust the prices of some products, reaching a maximum increase of 20%; on December 24, Shunxin Liquor announced that it would adjust the prices of some products, reaching a maximum increase of 20%; on December 24, Shunxin Liquor announced that Product price adjustments According to the announcement, the price of the Niulanshan liquor series has increased by 20 yuan to 50 yuan/bottle.

　　However, product prices have continued to rise, yet the company's stock price has gone through a bipolar reversal.

　　The performance of the liquor sector in the second half of this year has been lackluster. The liquor index has shown a slight decline since the beginning of June. Judging from the excessive decline in liquor stocks, the stock prices of many individual stocks such as Golden Seed Liquor, Shuijing Fang, Jinhui Liquor, Qingqing Liquor, Wuliangye, Yanghe Co., Ltd., and Shunxin Agricultural all fell by more than 20% from their high during the year. Although the average increase in the liquor sector reached 20% in terms of the whole year, outperforming the market, the performance was far below that of 2020.

　　Maotai will host a new product launch

　　The year-end sprint is not only about increasing prices; releasing new products is also a common strategy.

　　According to reports, Maotai will release a new Maotai liquor product at the end of 2021. The press conference for the launch of the new upgraded 53% vol 500ml Kweichow Moutai Liquor (Treasure) will be held on the evening of December 29 at the “Source of Maotai Liquor” in the Maotai Distillery Industrial Heritage Complex, under the brand slogan “Baifu Gu Zhen”.

　　Some industry insiders analyzed that with the launch of a new version of Maotai's precious Maotai liquor, the main camp under Maotai, which is in the period of high-quality development, is gradually taking shape. “Precious Product” may take its own corner and become a competitive main product in the high-end product line.

　　However, at present, the market's recognition of Maotai is mainly due to Feitian Liquor. The release of the new product also did not seem to have boosted the stock price. As of the midday market closure, Kweichow Moutai's stock price had dropped by more than 4%.

　　There are still many opinions in the market about whether Maotai will raise prices this year. After much discussion, the conclusion is still “depends on market conditions.” However, if Maotai persists in not raising prices, brands that have already raised prices this year probably won't have a very comfortable life.

　　Maotai's failure to raise prices may affect the market

　　This year, especially since the second half of the year, the liquor capital market has remained tepid. First, because a lot of capital has been diverted to new energy, double carbon, etc.; second, after a sharp rise, the liquor sector is more undergoing valuation repairs and returns. In particular, the fact that Maotai's price increase has never been implemented has also had a certain impact on the performance of the liquor capital market.

　　Everyone knows the high Maori of liquor, and its premium ability mainly depends on brand awareness. This actually means that wine companies can afford to increase costs. Therefore, in this wave of liquor price increases, the popularity of alcohol brands is fundamental to the company's premium rights and market competitiveness.

　　With Maotai's brand influence, if they insist on not raising prices, then the rest of the liquor price increases may just be “self-destructing trucks.”

　　Because liquor has strong social attributes, if the price of Maotai is relatively cheap, consumers probably won't consider second-tier liquor. Analysts said that Maotai's current price increase should not be entirely due to other considerations. In terms of its market position and profit margin, doing so not only gives enough room to absorb cost pressure, but also puts more pressure on competitors — because if rivals can't hold up price increases, customers are likely to turn to Maotai.

　　How is the liquor sector going next?

　　As can be seen, when industry leaders are not moving, the price increase of liquor is not necessarily an inevitable benefit, let alone think that enterprises can obtain a significant increase in performance by simply relying on price increases. Factors such as brand influence and market recognition all need to be considered.

　　Furthermore, the current overall valuation of the liquor sector is not that low. According to the data, the current dynamic price-earnings ratio of the liquor sector has reached about 48 times, and the dynamic price-earnings ratio of Maotai is no more than 52 times. It's hard to say that the current value of the liquor sector is excessively underestimated.

　　Regarding the subsequent trend, Tianfeng Securities pointed out that high-end liquor leaders have strong barriers and superior business models, and it is expected that 2022 performance will remain relatively steady. Currently, valuations are in a reasonable position, and in the short term, they may enjoy the market brought about by the valuation switch; in the medium term, the return of capital to the consumer sector may prefer high-end liquor; in the long run, the ability to raise prices for high-end liquor still exists, but it is still a high-quality core asset that is suppressed by external factors in the short term. The core logic has not changed, and it is still a high-quality core asset that is promising in the long term.