Luxury fans in China chase neat shot of investment with vintage Moutai liquor

By Sophie Yu and Brenda Goh
BEIJING / SHANGHAI (Reuters) - As luxury spending rises again in China, consumers with money to burn have a new habit that goes beyond fancy bags and watches: a penchant for collector's editions of the fiery domestic liquor Moutai, not to drink, but to hold on to quickly appreciate investments.
Amid China's recovery from the coronavirus pandemic, Moutai shoppers such as Beijing technician Yang Nan have seen resale prices on vintage and limited editions of the Baijiu spirit made by the K Weichow Moutai rocket as demand boomed. And they want to join in before it's too late.
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"I have a feeling that more and more people are entering the Moutai collection market and making it harder for people like me to afford it," Yang told Reuters. Hailing from southwest Guizhou Province, home of Moutai, the 30-year-old was raised to learn the value of the drink: Her parents sold 12 bottles for 250,000 yuan ($ 38,000) for a down payment for her apartment in the capital to collect.
According to the Taobao marketplace of e-commerce giant Alibaba, a special “Year of the Rat” bottle that Yang bought for 1,699 yuan in early 2019 is now worth almost twice as much, around 3,000 yuan - typical of general price growth that according to beverage specialists, this is the highest in its history.
K Weichow Moutai strictly controls the supply of beverages. Retail prices for bottles, which have been the first choice of China's elite government and business circles for years, start at around 1,500 yuan. It promotes a luxury image in the country's vast Baijiu sector, valued at more than $ 300 billion - the most valuable publicly traded company in China.
According to analysts and shopkeepers, demand for vintage bottles that are beyond the company's reach has hit staggering heights this year thanks to a flurry of new buyers looking for safe investments during the uncertainty of the pandemic.
"The macroeconomic environment has been bad lately, anything that has the potential to add value is popular," said independent spirits analyst Cai Xuefei. Fine international wines and spirits have long been a destination for wealthier Chinese.
"Moutai isn't just for drinking, it's also a social tool, an identity indicator. Since people believe that older moutai are only more valuable, there is little risk of hoarding (bottles)."
The rampant prices have now also lured many liquor stores into trading in collector's bottles. Cai estimates that up to 20% of stores in China that were not previously in the market during the COVID-19 outbreak have been amassed.
Also, some customers are more likely to trust brick and mortar stores as they are less likely to sell counterfeit moutai, which police have cracked down on in recent years.
K Weichow Moutai did not answer repeated calls from Reuters.
"Makes me chew"
The investment opportunities available to the Chinese public are limited due to strict controls on outbound money transfers. The valuations of alternatives such as real estate or stock markets have been slowed by government controls or earlier bursting bubbles.
"The financial trait of Moutai as an investment became apparent to many during the pandemic, and the price of the old Moutai rose steadily and is now at an all-time high," said Guangzhou-based independent analyst Zhu Danpeng.
Moutai's beverages, which are properly consumed and often drunk in shots, initially sell quickly on the primary market, even at already high prices.
The signature Feitian 53 series - known as the "Flying Fairy" with 53% alcohol by volume - starts at 1,499 yuan and is heavily traded by speculators. Last year, US retailer Costco sold a supply of 10,000 bottles in just two days when it opened its first China store in Shanghai.
But Moutai also makes special editions, colorful bottles like the annual Chinese zodiac series, and even a commemorative bottle named after Hong Kong action movie star Jackie Chan and launched in 2012.
The company lost some of its luster during a high profile anti-corruption campaign launched by President Xi Jinping in 2012 that curtailed lavish entertainment spending by corporate and government officials.
But Moutai recovered after an internal purge that arrested some top executives and overhauled its sales network.
It has always been difficult for some consumers and collectors to drink high alcohol alcohol - and the rising prices only add to their reluctance.
"I don't like the strong taste. It makes me cough," said Beijing buyer Yang, adding that she prefers champagne or wine.
"It's getting harder and harder to afford, but the good thing is that my collection is increasing in value."
($ 1 = 6.5759 Chinese yuan renminbi)
(Reporting by Sophie Yu in Beijing and Brenda Goh in Shanghai; editing by Kenneth Maxwell)

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