Testing New Product Launches on Moutai's DTC Platform

On January 1, 2026, iMoutai, Kweichow Moutai’s direct-to-consumer platform, made its flagship product, the 500ml Feitian, available in limited quantities on its App. For context, the standard 500ml Feitian is Moutai’s core and highly sought after product, accounting for over 85% of revenue. This is a landmark change I found very exciting as a consumer.

I have been closely studying the Chinese liquor industry over the past four years and, as part of product due diligence, have purchased various types of high-end liquor to taste. From my own experience, Moutai’s Feitian has been one of the hardest bottles to obtain. I will explain the reasons later in this article.

The Company hinted at this DTC change during its distributor meeting in late December 2025, where management indicated a more market-oriented approach to sales in 2026, including ending its multi-layer downstream distribution model and shifting to direct sales plus authorized distribution. The meeting itself was not broadly covered by the media, and most details came from informal sources. The product additions made on January 1 indicated the Company’s seriousness in making changes.

Moutai’s Access Problem

We view one of Moutai’s historical issues to be access. Walk into a typical liquor counter and Feitian is almost never available. When Feitian is available, retail prices can at times rise as high as RMB 3,000, materially above the RMB 1,499 officially guided retail price.

Additionally, unlike a Louis Vuitton bag, where authenticity is guaranteed through a controlled retail network, Feitian has many counterfeit products even through formal channels. Consumers cannot be fully confident that a bottle purchased through ecommerce channels or in a supermarket is authentic.

This discourages curious and casual drinkers from even trying. The decision process is straightforward: if I am spending a couple thousand RMB on a bottle of liquor, I would rather buy an authentic RMB 800 bottle of Wuliangye, the next in-line high end brand.

Historically, there have been mostly three reliable ways to purchase authentic Moutai: (i) access to trustworthy distributors, (ii) international duty-free airports (where counterfeit cases have also been reported), or (iii) overseas stores like Costco.

Consumption patterns have evolved over time as well. Prior to 2014, main consumption came from the government sector. Post the 2012/2013 anti-corruption campaigns, it was the businessmen in the real estate and banking sectors who brought bottles of Moutai to dinner tables. Historically, Moutai has been widely used in relationship-based exchanges, reinforcing its symbolic and social value far beyond consumption.

Access to genuine Moutai has long been associated with knowing the “right” distributor, reinforcing the perception that Feitian is not simply a product, but a privilege. Using a bottle of Moutai as gift signals respect from the gift giver.

This is why making standard Feitian available through iMoutai is a big deal. If executed right, this gives every consumer the ability to buy Feitian without worrying about authenticity and requiring special access.

iMoutai: A Controlled Step Towards Consumers

The iMoutai platform, launched in the early 2020s, was an effort to increase exposure to consumers and reduce reliance on traditional distributors. It historically focused on selling non-core products: lower-priced Series liquor, limited-edition Zodiac bottles, and non-standard sizes of Feitian such as 100ml mini bottles.

Access to the 500ml Feitian was restricted to a daily lottery system. Statistically, even if a user applies every day for a full year, they might only receive one to two bottles annually at the suggested retail price of RMB 1,499.

In theory, the smaller bottles such as 100ml and 200ml contain the same type of liquor as Feitian and are more accessible. Since the iMoutai launch, over 45% of the company’s overall revenue comes from the DTC channel, reflecting strong end-consumer demand. Based on my own experience, mini bottles were difficult to obtain prior to 2024 but became readily available in early 2025.

Why Now and Not Earlier?

If the logic seems straightforward, it raises an obvious question: why hasn’t Moutai done this earlier?

The answer lies in the distributor network. Moutai’s distributors historically enjoy extraordinary economics and are often individuals with high social or political standing. To illustrate this point, Moutai has increased ex-factory price at ~5% per year over the past decade, most recently at RMB 1,169, but end-retail prices have reached as high as RMB 3,000. The difference between the ex-factory price and the retail price is pocketed by the channel. This group has strong incentives and influence to resist the evolution towards a more market or direct-to-consumer model that threatens their position.

Evaluating the DTC Shift: A Decision Tree

Conceptually, Moutai’s DTC expansion can be evaluated through a simple decision tree.

First, does broader access damage the brand’s exclusivity and symbolic value?

Second, if exclusivity holds, can the distribution system continue to function smoothly?

Only if both conditions are satisfied does DTC become a structural positive rather than a short-term experiment.

Risks and Opportunities with DTC Expansion

Our own store visits in early 2025 highlighted the challenge. Moutai has only 42 self-operated retail stores nationwide. Even including authorized distributors, the overall retail footprint remains relatively narrow.

On the upside, a successful expansion into DTC means the average consumer gets to enjoy a bottle of Moutai, which was historically associated with power and status. It could also mean improved margins (i.e. Moutai sells to retail at RMB 1,499 and to distributors at RMB 1,169). The public company can capture more profit from increase in retail prices during good times. Historically, when Feitian’s retail price rose to RMB 3,000, it was the distributors who took the profit beyond the RMB 1,169 ex-factory price.

On the downside, scaling DTC meaningfully requires significant capital investment and operational capability. It also introduces potential conflicts with the existing distributor base. Many Western consumer brands have struggled with DTC execution and ultimately relied on large retailers such as Amazon. Nike’s experience is instructive: despite heavy investment, mismanaging the balance between direct sales and wholesale partners created meaningful friction.

For Moutai, the challenge is greater. Its distributors are not only economic intermediaries but could have powerful connections to local authorities making it harder to balance the conflict of interests. Additionally, while compressing distributor economics may improve margins in the near term, it can weaken the company’s ability to absorb shocks during downturns. Long-standing distributors often act as stabilizers when demand softens, protecting pricing, relationships, and brand continuity.

Does Access Destroy Moat?

I have repeatedly debated the source of Moutai’s moat. Is it primarily taste, built through decades of disciplined production? Or is it a combination of taste, emotion, aspiration, and controlled access, reinforced through history, ritual, and institutional positioning with the Chinese government?

If taste were the primary moat, broader accessibility would only strengthen the brand. What the Company is doing now will be positive for the company overtime. Feitian’s soy-aroma flavor is an acquired taste, and many consumers may never develop a preference for it. Soy-aroma flavored baijiu comprises only ~10% of overall baijiu consumption, behind strong-aroma baijiu of 50-60% and light-aroma of 15-20%. It is a stronger flavor hard for casual drinks to accept but draws loyalty from long-term liquor drinkers.

However, if Moutai’s real moat lies in its emotional and social value with scarcity and status as a moat, then opening Feitian to the broader consumer market risks diluting this exclusivity. In this case, easy access through the iMoutai app would undermine the mystique that may have historically driven demand.

Over the past 12-13 years, Moutai has spent an average of less than 10% of its revenue on SG&A (of which only half is on sales & marketing). In comparison, LZLJ spends over 30% of its revenue on SG&A. Smaller liquor brands spend even more. This speaks to the strength of Moutai’s historical brand. Post the 1949 formation of People’s Republic of China, Moutai had been the designated liquor at national banquets, which sent a powerful marketing message — a symbol of respect for the giver and status for the recipient. When I went on the research trip, people speak of Moutai as a brand that is beyond the reach of regular consumers, an aspiration. If this mystique is undermined, would this mean that the company would need to spend more in sales & marketing, potentially diluting its margins and profitability going forward?

From a timing perspective, given the current macroeconomic downturn in China, including a soft real estate and banking sector and the alcohol-ban by the public sector, this is the right time to make changes to the distribution channel. If done successfully, Moutai the Company will get to enjoy better pricing power than their historical annual pricing growth of 5%. Ten years from now, Moutai may be a liquor brand readily enjoyed by consumers for its premium quality. We will continue to monitor the impact of the “loss of exclusivity” on the sales volume and pricing power.

Back to App Testing

Our initial test of the iMoutai app suggests the Company is still not yet fully prepared to meet the DTC demand. Granted, it is still in the early days as the products have only been marketed three days ago. As seen from the screenshot below, Feitian was marked as sold out, with inventory scheduled to refresh at specific times. We contacted customer service and learned that orders can only be picked up at 42 self-operated locations, all in major cities. Consumers in smaller cities are effectively excluded for now. None of the distributor-operated stores have yet been given allocations to the 2026 Feitian to be sold DTC.

This shopping experience reminds me of purchasing Labubu through Pop Mart’s app where supply is controlled carefully. This could suggest that either Moutai is not opening the floodgates and experimenting slowly or that it’s not yet set up to handle large volumes of individual consumer demand.