You can smell the soy sauce-like scent. It is the Chinese grain alcohol baijiu and it permeates the main street of the picturesque town of Maotai, China. This is home to the world’s most valuable liquor company, and they’re running out of liquor.
There’s a Buying Frenzy
Inventory shortages abound in the local shops that carry the distiller’s main brands. Line ups can be seen wherever the bottles are available. Simply put, it’s a buying frenzy.
The fiery flavour and the potential to appreciate in price is driving demand of this very popular drink. It’s market value has been pushed to more than $145 billion, well past British whisky giant Diageo Plc.
Flying Fairy is the main brand of this distiller and each bottle’s suggested retail price is 1,499 yuan (approximately $235) yet can be found to sell for double online. And it’s currently out of stock. An 80-year old bottle was found online for 196,888 yuan ($30,000).
So Pure That It Prevents Hangovers
Moutai’s baijiu for its complex flavour and a purity that prevents hangovers, say the Chinese buyers. Production is limited due to the special manufacturing process. The water and grain used to must only come from the town of Maotai. Once produced the brew is buried in urns for a minimum of 4 years before it can be sold.
China’s Kweichow Moutai has become the most valuable distiller in the world due to such hot demand. Moutai’s chairman, Yuan Renguo, now has the challenge of trying to sustain growth while they are literally running out of liquor. The introduction of other products is being considered to secure future growth.
Integrated into National Myth
Although there are very few people outside of the country who buy this liquor, Moutai baijiu is integrated into national myth. It’s said to be the drink of choice for Communist Party leaders. It’s the drink that was used to toast the founding of the People’s Republic in 1949.
This past Thursday Moutai shares increased 2.3%. Goldman Sachs Group Inc. upgraded Moutai’s shares fourteen times last year, according to data by Bloomberg.
Moutai’s sales are expected to stay constant next year with the addition of more premium products. Revenues in 2018 are expected to rise more than 10% over the 60+ billion yuan that was recorded in 2017.
Next time you’re in China, imbibe on some Flying Fairy, if you can afford to get your hands on a bottle that is.