The future of the Chinese consumer—in three glasses
Live MintTo Western palates baijiu is an acquired taste—and most never acquire it. Over the course of a week the biggest, Kweichow Moutai, gained nearly $90bn in market value—equivalent to a whole Diageo, the West’s top distiller, washed down with a Kirin. In terms of operating margin, Nongfu bests digital titans like Alphabet, Google’s parent company, and Tencent, China’s most valuable firm, let alone rival water-pedlars such as Danone, owner of Evian. Kweichow Moutai’s mastery lies in maintaining scarcity and a nationwide distribution network, recently bolstered by a digital platform that enables it to respond to demand from retailers and other buyers in real time. Their recent reluctance to spend has worsened China’s deflation and spooked investors fearful of its dampening effect on earnings; the three firms’ share prices remain below their highs of four or five years ago despite the latest surge.
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