After several peers announced price increases, news of price increases also came from Kweichow Moutai; however, the price increase was not Flying Moutai, the market's mentality.

　　At the same time, what is more noteworthy than Maotai's price increase is that many companies in the consumer sector have announced price increases, which will inevitably lead the market to conclude that the transmission of PPI to CPI is accelerating. Against this background, will the consumer sector return to strength again in 2022? Let's take a look.

　　Kweichow Moutai announced price increases

　　According to a report by the Red Star Capital Bureau, starting January 1, the prices of Kweichow Moutai's new treasure Moutai and 15 aged Kweichow Moutai products will increase. Among them, the retail guide price of the new precious Maotai liquor increased by 100 yuan, from 4,499 yuan/bottle to 4,599 yuan/bottle; the retail guide price of Aged Kweichow Moutai 15 increased by 1,000 yuan, from 4,999 yuan/bottle to 5,999 yuan/bottle.

　　It should be pointed out that the price of Flying Moutai, which the market is most concerned about, has not increased. In response, some analysts pointed out that judging from market acceptance and channel profit margins, Flying Moutai's price increases also have a certain market base, and the price increases of the two high-end products this time are also seen as a test of the market reaction.

　　As for the impact, the price increase of treasured liquor accounts for a very small share of sales, making it difficult to contribute much to performance; it is more just a sentiment benefit.

　　At the same time, Kweichow Moutai also issued an announcement on production and operation in 2021.

　　According to the announcement, in 2020, the company will produce about 56,500 tons of Maotai liquor base wine and 28,200 tons of base wine; it is expected to achieve operating income of about 109 billion yuan (including Maotai's revenue of about 93.2 billion yuan and serial wine business revenue of about 12.6 billion yuan), an increase of about 11.2% over the previous year; it is expected to achieve net profit attributable to shareholders of listed companies of about 52 billion yuan, an increase of about 11.3% over the previous year.

　　In addition, news of product price increases came from many wine companies, such as Shunxin Agriculture, Luzhou Laojiao, Shede Liquor, and Wuliangye.

　　These consumer companies have announced price increases

　　In addition to liquor, many other consumer goods companies have also intensively announced price increases. In chronological order, several consumer goods companies, such as condiments, cooking oil, dairy, and mustard, have announced price increases.

　　On October 13, 2021, Haitian Flavors announced that the factory prices of some products such as soy sauce, oyster sauce, and sauce will be adjusted. The adjustment range for the main products will range from 3% to 7%.

　　On November 3, 2021, the research minutes disclosed by Tianwei Foods showed that in mid-October, the company had already raised prices for two products, and the other products were being thoroughly sorted out. Hengshun Vinegar, Yasui Foods, and Haixin Foods also announced price increases for their products.

　　On the same day, Arowana revealed the latest research records showing that the company adjusted the prices of different types of oil at the end of 2020 and March to April 2021. According to various factors of raw materials, market conditions, market competitiveness, and consumption power of each variety, the price increase for different types of oil was different, and the overall price increase was about 10% to 15%.

　　On November 4, 2021, Gaga Foods announced that it decided to adjust the factory prices of Gaga soy sauce, oyster sauce, cooking wine, chicken essence, and vinegar products, with increases ranging from 3% to 7%.

　　On November 8, 2021, Zuming Co., Ltd. announced an increase in the factory prices of some plant-based protein drinks (mainly self-contained bags of soy milk), with factory prices ranging from 15% to 20%.

　　On November 14, 2021, Fuling Mustard announced adjustments to the factory prices of some products, with increases ranging from 3%-19% for each category.

　　On November 18, 2021, Sanquan Foods announced that after the company's research and decision, the promotion policy for some frozen rice and noodle products and quick-frozen surimi products will be reduced or distribution prices will be raised. The price adjustments range from 3%-10%.

　　On December 1, 2021, Qianwei Chef announced that the company researched and decided to reduce product promotion policies or increase distribution prices for some frozen rice and noodle products, with price adjustments ranging from 2%-10%.

　　What is behind the rise in consumer goods prices is PPI

　　So what is the reason for the intensive announcement of price increases for consumer goods?

　　First, from a global perspective, supply chain disruptions due to the pandemic and America's ultra-loose monetary policy over the past period have caused commodity raw material prices to continue to rise.

　　The China Merchants Bank Research Institute pointed out that key links in the global industrial chain, as well as key nodes in transportation and sales, have encountered bottlenecks due to the pandemic and other reasons, causing shortages.

　　As for the first reason, the epidemic still restricts production in local regions. Under the global distribution of the industrial chain, production stagnation in some countries has blocked the entire industrial chain.

　　Second, there is an imbalance between global supply and demand, leading to insufficient shipping capacity, tight containers, and a sharp rise in port load.

　　Third, there was insufficient cyclical investment in the upstream raw materials industry before the pandemic. Combined with global “decarbonization”, there was insufficient investment in fossil energy, and the stability of energy supply declined, exacerbating the current shortage of energy and raw material supplies.

　　The unbalanced recovery of the global economy under the pandemic, combined with “decarbonization” and supply constraints caused by extreme weather, led to shortages and disruptions in the global supply chain, and boosted global inflation.

　　The second is the transmission of PPI to CPI. In terms of transmission reasons, on the one hand, changes in production materials in PPI will inevitably drive changes in any of the weighting factors in CPI. For example, a rise in the price of crude oil, which is used as a means of production, will increase transportation costs for pork, vegetables, etc. which are the weighting factors in the CPI.

　　On the other hand, the content of consumer data in PPI also mostly intersects and overlaps with the CPI factor composition. As can be seen, PPI can not only transfer the price of CPI through the upstream and downstream industrial chains on the means of production side, but also directly cause changes in CPI through changes in consumer goods prices in the consumer data chain.

　　As for the impact of the stock market, Guohai's strategy believes that the 2021 cycle style interprets a recovery market with a sharp rise in volume and price. Looking ahead to 2022, social zero and CPI will rise at the same time as the year-on-year, and the consumption relay cycle is expected to lead to a sharp rise in volume and price.

　　Inflation continues to spread downstream, and the wave of price increases of listed companies in the consumer sector continues to spread. Liquor companies and pharmaceutical companies have raised prices one after another after food processing prices, opening up room for industry profit growth. The upstream and downstream profit patterns in the industry chain have ushered in redistribution. The overall performance expectations of the consumer sector in 2022 are superior to the cyclical sector.