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Kweichow Moutai is a producer of liquor, with business activities including the procurement of raw materials, production, and sale of products. The procurement of raw materials division involves the production and sale plan for purchase of products, while its products division provides storage, blending, and packaging services. The company was founded on November 20, 1999 and is headquartered in Renhuai, China.
The company is a partially publicly traded, partially state-owned enterprise in China. It specializes in the production and sale in the liquor Maotai baijiu. As of 2021, the company was the largest beverage company in the world and China's most valuable non-technology company. The company is listed on the Shenzhen Stock Exchange and is known as an industry giant in China. The company's flagship alcoholic product is popular in China's cold northeastern and inland areas, with the country's entire baijiu market in 2013 standing around 10 trillion yen (USD $80.3 billion).
The popular liquor offered by Kweichow Moutai, baijiu, is known as a "national" liquor distilled from a grain called red sorghum at company's famous baijiu (Chinese Spirits) distiller. The drink is served at all Chinese state banquets and is often presented as a gift. The drink became a national liquor in part as it was the favorite drink of Mao Zedong, and is considered the "drink of diplomacy," which was famously used to welcome former US President Richard Nixon.
Image of Richard Nixon with Mao Zedong toasting to Kweichow Moutai.
The spirit is a clear, potent spirit, which ranges between 35 to 60 percent alcohol by volume; in the case of the product offered by Kweichow Moutai, it is 53 percent alcohol by volume. The red and white bottles of the Kweichow Moutai product are considered a staple at Chinese state banquets and at business events.
The Kweichow Moutai has been considered a prestige liquor brand, as the favorite drink of People's Republic of China. Doing shots of the liquor is considered an important part of political banquets, and is a part of the business culture, used to accelerate building trust and friendships. This has associated the brand with the elite of Chinese society, and made the liquor a must-have at business banquets and other places where there may be a display of wealth and power. The consideration of the liquor, and Kweichow Moutai's product specifically, has been further driven by the liquor's high price and limited supply, which is believed by some to be part of Moutai's marketing and sales strategy.
The red and white bottle of Kweichow Moutai's baijiu liquor.
Part of the high price and limited supply is the drink's ability to only be called Moutai if it is produced in the Maotai region, more specifically the small town of the name Maotai in the Southwestern Chinese province of Guizhou. This makes the drink similar to champagne. This is in part due to the company's claims that in order to have the right flavor, environmental factors unique to the Maotai area are required, including the water used to distill the liquor.
With the brand's market capitalization making it one of China's largest companies, the company has helped to finance and fund public infrastructure in the Guizhou province, the underdeveloped province in southern China where Kweichow Moutai is headquartered. Further, the company has helped fund underprivileged children in the province.
Despite the prestige of the brand in China, some industry experts believe the reliance on China and Chinese consumers is dangerous, and that for Kweichow Moutai to increase their market share would be to begin selling their liquor products globally and diversifying those offerings. The company had previously tried to push overseas, having started a fan club in the United States, travelling to Africa to find potential business partners, and even launching a social media campaign offering drinkers possible cocktail mixes made with the company's liquor.
In 2021, Kweichow Moutai suffered losses on the company's share price, falling nearly 10 percent in a period of a week, following announcements from China's Central Commission for Discipline Inspection (CCDI) that criticized drinking behaviors in Chinese officers. This came as a broader backlash to drinking culture at Chinese companies occurred, a culture which had been a forced drinking culture, according to some, including Alibaba's chief executive Daniel Zhang. This culture sees people pressure others to drink, and is considered a deeply entrenched behavior in China's business culture, seen by many as essential to striking deals, hosting banquets, and even conducting job interviews.
While the cultural backlash caused some stock tumble, there are concerns that the campaign against drinking culture could cause trouble for Kweichow Moutai, as it coincides with the Chinese authorities cracking down on the power of many of China's largest firms, of which Kweichow Moutai is one. The company has previously withstood regulatory crackdown, during the early 2010s, when Chinese President Xi Jinping launched an anti-corruption campaign that targeted the spending habits of public officials.
The share price took a further tumble, when former Kweichow Moutai chairman was sentenced to life in prison for taking bribes, according to China's official Xinhua news agency and their reporting. Despite the former chairman having left the company in 2018, the news came as the company's shares had tumbled more than 20 percent over the quarter. The former chairman's departure from the company came, according to Chinese state media, as it was dealing with numerous corruption scandals, which saw several top executives leave the company.
