Moutai price hike, the logic has changed

Ask AI · Why did Moutai choose to squeeze distributor profits when sales slowed down?

Just now Moutai released an announcement: starting March 31,

the ex-factory price will rise from 1169 to 1269, an increase of 100 yuan
the retail price of its self-operated system will rise from 1499 to 1539, an increase of 40 yuan

Behind this round of price hikes, that logic has really changed.

In the past, Moutai’s playbook for price hikes was: the manufacturer raises the ex-factory price, and the retail price follows suit. The distributor’s profit margins basically don’t change. Everyone still has something to make, and it’s a win-win-win situation. At that time, Moutai didn’t worry about sales—channel partners could lie back and still earn money, making three to five hundred yuan per bottle with ease.

Now Moutai’s logic for price hikes is: the ex-factory price goes from 1169 to 1269, up 100; the retail price goes from 1499 to 1539, only up 40. When you do the math, the distributor’s gross margin per bottle drops from 330 to 270—60 yuan of profit margin is cut off to the bone. Where does that 60 yuan go? It goes into Moutai Group’s financial statements.

This is the first change: Moutai has started to cut into profits from the channel.

In the past, everyone shared the incremental market cake together. Now sales can’t grow, and the cake is still the same size. If the manufacturer wants its performance to look good, it can only claw its way out from the channel’s plate.

The second change is even more critical—it’s called “削藩” (curbing vassal power).

In the past, Moutai had thousands of distributors. With quotas in hand, it was like holding a money-printing machine. The manufacturer still had to appease them. But now the industry is in a downturn, and terminal prices are easing—yet the manufacturer, instead, has taken the initiative.

I squeeze your profit margins to 21%, and in the future maybe to 15%. Do it or don’t; if you don’t, the quota gets reclaimed. That’s when you clear out channel merchants and regain control of the market—with the lowest cost.

The core of Moutai’s price hike this time is that it’s recalculating with the channels. In the past, the biggest share of Moutai’s profits was outside the manufacturer, sitting in the hands of the distributors. Now, by raising prices and compressing channel spreads, Moutai moves this portion of profits back into the manufacturer little by little—back into the group’s financial statements. Sales growth not being possible doesn’t matter. I take the channels’ profits, and performance can still grow.

Also, Moutai’s direct channels (i Moutai, self-operated stores) are becoming more and more prominent, so it can sell liquor according to guidance prices on its own. The logic shifts—from “everyone earns together” to “I’m taking back the money that belongs to me.”

The era when distributors just lay back and made money is really over.