19 July 2019
On some online auction sites, a bottle of Moutai often goes for over a million yuan. Photo: Bloomberg
On some online auction sites, a bottle of Moutai often goes for over a million yuan. Photo: Bloomberg

Why Chinese pay over a million yuan for a bottle of Moutai

When North Korean leader Kim Jong-un visited Beijing recently, Chinese President Xi Jinping threw him a state banquet, during which two bottles of rare and premium quality Moutai were served, according to photos released by state media.

The two bottles of liquor were said to be worth 1.28 million yuan (US$203,500) each. The news provoked a fierce backlash among mainland netizens, who voiced dismay over what they considered an extravagance on the part of the Chinese officialdom.

Some netizens have even mockingly referred to the two luxury bottles of booze as “bleeding Moutai”, noting that their price would have been enough to cover the cost of building several primary schools in the countryside.

The average production cost of a bottle of authentic Moutai, a traditional Chinese strong liquor distilled from fermented sorghum, only stands at around 50 yuan, but it could go for over a thousand yuan in retail outlets or even above a million yuan on online stores.

People are willing to pay such big bucks for Moutai probably because it is so scarce: the alcoholic beverage is not only a hotly sought-after item for drinkers, collectors andspeculators, but is also a symbol of wealth and social status.

Like the authentic Champagne, which is produced exclusively in the Champagne region of France, authentic Moutai is also produced exclusively in the small town of Moutai in Guizhou province by the state-owned Kweichow Moutai Co. Ltd.

The company can only produce about 40,000 tons of authentic Moutai every year, and that amount is lagging far behind the soaring demand across the country.

Much of the Moutai supply has already been pre-ordered by the rich and powerful even before it is bottled. Authentic Moutai that is on sale on the open market is certainly limited, hence the skyrocketing price.

The great demand has also given rise to an entire industry of producing, bottling and distributing fake Moutai across the country.

Some experts estimate that 90 percent of the Moutai now circulating on the open market is fake.

In Guizhou province, stores have mushroomed from Renhuai to Moutai selling fake versions of the famous liquor. There a bottle of fake “premium Feitian Moutai” only goes for 200 yuan, while the genuine one often costs more than 1,800 yuan, if you can ever find one.]

But such is the nationwide craving for the fiery grain spirit that even those “high-quality” fake Moutai products would often run out of stock during important occasions such as the Spring Festival.

This article appeared in the Hong Kong Economic Journal on April 6

Translation by Alan Lee

[Chinese version 中文版]

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Hong Kong Economic Journal contributor

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