Kweichow Moutai works with Costco to curb speculators

Cut price Kweichow Moutai twice drew enormous flocks of people to the new Costco shop in Shanghai before this year’s Mid-Autumn festival and the brand thinks allocations through the outlet could help fight counterfeiting and speculation problems.

Costco opened its first brick-and-mortar store in China two weeks ago and tens of thousands of shoppers queued for as much as three-hour-long lines to get in.

On the opening day, the outlet was overwhelmed and had to shut its doors early in the afternoon due to, “heavy traffic and customer flow”.

What attracted the crowds were the discounted products offered under the Costco membership programme. One of the major draws was Kweichow Moutai liquor priced at 1,498 yuan, whereas the market price for the same bottle can easily be over 2,500 yuan. Other popular items included luxury branded handbags sold at bargain prices.

The membership programme had seen success from the outset. The annual membership fee is priced at 299 yuan and the outlet received 160,000 applications swiftly after the doors opened.

However, less than a week after opening, there was a wave of membership termination with customers left disappointed some key products, including Kweichow Moutai, were out of stock and the warehouse also hiked the prices of most of the items after the opening promotion.

Two days before the Mid-Autumn festival on 13 September, the euphoria was back with long lines seen outside of the store again as Costco restocked 10,000 bottles of Moutai. The amount was double the amount of the first batch of stock, yet was also sold out within two days.

This time, each member was restricted to one bottle only. After purchase, they were given a ticket to be used for collection iat a separate counter. Shoppers who purchased Moutai from Costco excitedly shared their hauls on social media. A shopper claimed, “Today I’m the Costco winner!” along with a picture of three bottles of Moutai.

Kweichow Moutai is reportedly keen on working with Costco as it sees the value of the membership programme. It believes most Costco members belong to the middle-income group with great purchasing power. These people are buying Moutai for gifting or personal consumption and Kweichow Moutai thinks “accurate allocation” via direct sales can cut out speculation and other disruptive activities in the market, and let true Moutai lovers access reliable bottles at an affordable price.

The brand is China’s leading premium white liquor but has been facing a long-standing problem of counterfeits and speculations, where the price has been pushed to irrational highs with little benefit to the brand. With the new cooperation with Costco in Shanghai, Kweichow Moutai may have found a new solution.