Kweichow Moutai (600519.SH) had another good start.

On the evening of April 26, Kweichow Moutai released its report for the first quarter of 2024, achieving total revenue of 45.776 billion yuan, an increase of 18.11% over the previous year; net profit attributable to shareholders of listed companies was 24.07 billion yuan, an increase of 15.73% over the previous year.

In a general environment full of uncertainties, Kweichow Moutai earned nearly 50 billion yuan in revenue in just 3 months and 91 days, earning 265 million yuan a day. It must be said that Moutai is Moutai.

In Q1 this year, Maotai's business revenue was 39.707 billion yuan, and system wine was 5.936 billion yuan, an increase of about 18% over the previous year; in Q1, Kweichow Moutai also achieved tax-free income of about 5.342 billion yuan for alcohol through the “i-Moutai” digital marketing platform.

According to channels, the direct sales channel achieved revenue of 19.319 billion yuan; the wholesale channel achieved 26.323 billion yuan, accounting for about 42% of direct sales.

Along with the increase in Maotai's net revenue and profit, its sales expenses have also soared.

According to the data, Maotai's Q1 sales expenses were 1.14 billion yuan, compared to 737 million yuan in the same period last year, an increase of more than 50% over the previous year.

Since 2020, Maotai's sales expenses have increased significantly. From 2020 to 2023, Maotai's sales expenses were 2,548 billion yuan, 2,737 billion yuan, 3.298 billion yuan and 4.649 billion yuan respectively, of which advertising and market development expenses accounted for the majority. During the same period, Maotai's advertising and market development expenses were 2.19 billion yuan, 2,363 billion yuan, 2,888 billion yuan and 3.64 billion yuan respectively.

Liquor industry analyst Cai Xuefei told Blue Whale Finance Correspondent that the increase in sales expenses in Maotai is related to the company's increasing investment in product marketing.

Perhaps affected by this, Maotai's gross margin also declined slightly in 2023. According to the annual report data, in 2023, the gross margin of Guizhou wine was 94.12%, down 0.07% year on year, the first decline since 2018; the gross margin of other wine series was 79.76%, up 2.54% year on year.

According to the Huaan Securities Research Report, the gross margin of Maotai wine fluctuated or was mainly due to rising raw materials and labor costs. The increase in the gross margin of the series was mainly due to the continuous release of Maotai in 1935.

Meanwhile, in the market, the wholesale price of Flying Maotai, the main product of Maotai liquor, also experienced a brief decline and then climbed again.

On April 8, the market price of Flying Moutai fell below 2,600 yuan/bottle. Since the price of Flying Moutai once stabilized above 3,000 yuan in the past two years, the current decline in Flying Sky caused panic in the market.

Chen ****, one of the major merchants in the liquor industry and chairman of Famous Product Family, told Blue Whale Finance Correspondent that the market price of Maotai drops a little every year at this time, and in the long run, market demand for Maotai is still there, and prices will slowly recover later.

Liquor marketing expert Xiao Zhuqing further told Blue Whale Finance Correspondent that insufficient social purchasing power is a common problem facing the Chinese wine industry. Consumer pessimism about future income expectations has had a direct impact on Kweichow Moutai has had a direct impact on consumption contraction and consumption downgrade due to reduced consumption scenarios. After the traditional Spring Festival peak season is the traditional low season in the liquor industry, it is normal for demand to decrease during the off-season. In the long run, market prices are determined by supply and demand, and Kweichow Moutai will be in short supply for a long period of time due to limited production capacity.