The results revealed that demand for Moutai remains resilient, despite the pressure on the baijiu sector as a whole that led to a 19% year-over-year cut in production volume in the first quarter.  

The robust sales on its iMoutai app are the key growth driver in the first quarter (officially launched on March 31, 2022), bringing in CNY 4.9 billion in sales revenue.  This also drove sales from the direct-to-customer channel channel, up 63.6% from a year ago, and making up 46.0% of total sales.  Sales through the traditional distributor channel remained lackluster, falling 2.2% from a year ago.  The sales mix shifts toward the DTC channel also helped to lift the overall selling price and a slightly widened gross margin of 92.7%, up 0.14 percentage point from a year ago.

Moutai to benefit from the twin drivers of: 1) steady demand growth, underpinned by Moutai’s premium quality and its irreplaceable position in Chinese drinking culture;  and 2) rising average selling prices, driven by a shift to higher-margin DTC channels.  In addition, a more comprehensive product mix upgrade of series products, particularly the expanding sales of high-end series product Moutai 1935, would accelerate sales growth of series products and widen margins.  We think all these would further strengthen Moutai’s competitiveness in the baijiu market and enhance earnings and long-term growth.