In-depth Analysis of the Moat Logic of Kweichow Moutai

Based on Moutai’s financial data and market discussions, I provide a systematic investment analysis perspective for you.

According to the latest data, Moutai has shown excellent financial indicators [0]:

• Current Stock Price
  : 1402 CNY (December 29, 2025)
• Market Capitalization
  : 1.76 trillion CNY
• Gross Profit Margin
  : 91.30% (First Half of 2025) [4]
• Net Profit Margin
  : 52.56% (First Half of 2025) [4]
• ROE
  : 36.48%
• Operating Profit Margin
  : 71.37%

• Down 5.78% YTD 2025
• 52-week Range
  : 1383.18-1657.99 CNY
• Currently in a relatively low range for the year

This is a widely debated topic in the investment community. Let me analyze from multiple dimensions.

Xueqiu influencer “Fangzhang” believes: Moutai’s moat is mainly based on

(the two characters “Moutai”), not the quality of Moutai liquor itself [1]. His logic is:

• If the moat is based on
  tangible quality
  , it is relatively shallow as it may be copied
• If the moat is based on
  intangible brand
  , it is immeasurably deep and harder to break through

The author of this article (Liang Xiaoyongkang 2017) puts forward different opinions [1]:

1. Quality moat is also immeasurably deep
   : As a loyal consumer, he likes drinking Moutai because the wine tastes good, not just because of the brand
2. Quality is the cornerstone of the brand
   : If Moutai’s quality drops to the same level as other wines, consumers will not pay several times the premium for the two characters “Moutai”
3. Quality barriers are hard to break through
   : The brewing process of high-quality sauce-flavored liquor is complex and cannot be easily copied

Another investor (Xiao Qiaozhi 89) proposed a more systematic analysis, believing that Moutai has

that are progressive [2]:

1. Scarcity created by core property resource monopoly
   : From potentially unlimited supply to potentially limited supply
2. Decades of quality-first trust
   : Established a deep quality moat
3. Brand building reinforcement
   : Brand further amplifies the advantages

From an investment perspective,

:

Dimension	Quality Moat	Brand Moat
Nature	Tangible, perceptible	Intangible, psychological cognition
Establishment Cycle	Needs decades of accumulation	Needs decades of marketing
Copy Difficulty	Extremely high (process + environment)	Extremely high (mindshare occupation)
Sustainability	Strong, but requires continuous maintenance	Strong, with inertia effect
Vulnerability	Quality decline will immediately damage the brand	Brand may temporarily surpass quality

:

• Short-term focus on brand
  : Brand awareness and face needs support current premiums
• Long-term focus on quality
  : Quality is the cornerstone of the brand; a brand without quality support cannot last long
• Inseparable
  : Moutai’s strength lies in the
  multiplier effect of quality × brand

This is the core puzzle of Moutai’s business model. Let me analyze from multiple angles.

:

• Moutai liquor production is strictly limited to the
  15.03 square kilometer core production area of Maotai Town
• The microbial environment, water quality, and climate here cannot be copied
• Even with the same process, Moutai liquor cannot be brewed outside Maotai Town

:

• Limited by geographical environment and production process cycle (5 years)
• Annual output is limited; cannot meet all demand by expanding supply
• This creates natural scarcity

:

• High-quality sauce-flavored liquor requires: Kunsha process + 5-year aging + complex blending
• Time cost: At least 5 years from raw material input to factory output
• Technical threshold: Needs decades of experience accumulation

:

• New entrants need decades to establish quality trust
• Even if they achieve the same quality, consumers are hard to believe
• Liquor is a “slow decision” product; once trust is broken, it is hard to recover

:

• Moutai has become the “universal language” for business banquets and gift-giving in China
• The symbolic meaning of “opening Moutai” far exceeds drinking itself
• Formed a strong network effect: Everyone knows Moutai, so you must use Moutai

:

• Moutai has the function of preserving and increasing value (old wine becomes more fragrant as it ages)
• Dealers and scalpers hoard goods to further push up prices
• Formed a special market where “those who buy don’t drink, those who drink don’t buy” [3]

According to search results, Moutai’s gross profit margin reached

and net profit margin in the first half of 2025 [4]:

:

Logical Misconception: High gross profit margin → Large profit space → Easy to attract competitors
Correct Logic: High gross profit margin → Deep moat → Competitors hard to enter

1. Pricing Dilemma for New Entrants
   :
   • Pricing close to Moutai: No brand support, no one buys
   • Pricing much lower than Moutai: Regarded as “inferior product”, cannot establish high-end image
   • Trapped in “low-price dilemma” or “high-price trap”

2. Huge Brand Building Cost
   :
   • To challenge Moutai, need to invest tens of billions in marketing expenses
   • Success rate is extremely low (history proves: Wuliangye, Guojiao 1573, etc. have failed to challenge)
   • Return on investment is far lower than other industries

3. Channel Barriers
   :
   • Moutai’s dealer system is extremely stable
   • High-end catering and supermarket channels have been occupied by Moutai
   • New brands are hard to get high-quality shelf positions

Comparative analysis explains the problem [4]:

:

• The official guide price of the 8th generation普五 was once the same as Feitian Moutai (1499 CNY)
• But after the ex-factory price was 1019 CNY, the terminal price was
  lower than the ex-factory price
  (price inversion)
• Although the gross profit margin is high, it is hard to convert into premium ability
• Core Reason
  : The threshold for strong-flavor liquor process is lower, and the 1000 CNY price band faces multiple competitions

:

• Luzhou Laojiao (Guojiao 1573), Jiannanchun, etc.
• Although the quality is excellent, they cannot break through Moutai’s brand mindshare
• Can only compete in the mid-to-high-end price band

: Moutai’s high gross profit margin is not a “fat meat” but the “height of the fortress wall”.

Moutai’s moat forms a perfect

:

Geographical Scarcity → Unique Quality → Quality Trust → Brand Premium
    ↑                                    ↓
    └────────── High Profit → Quality Enhancement ←──────┘

:

1. Scarcity supports high premium
   : Uncopyable production area limits supply
2. High premium supports high quality
   : Sufficient profit ensures continuous quality investment
3. High quality strengthens brand
   : Decades of quality consistency builds trust
4. Brand premium protects scarcity
   : High price limits demand and maintains supply-demand balance

Although the moat is deep, investing in Moutai still needs attention:

:

1. Macroeconomic Fluctuations
   : Strong correlation with real estate and infrastructure cycles [3]
2. Consumption Downgrade Pressure
   : Business banquets and gift-giving demand may shrink
3. Inventory Cycle Risk
   : Channel hoarding may amplify price fluctuations

:

1. Changes in Consumption Habits
   : Younger generations have lower preference for liquor
2. Policy Risks
   : Anti-corruption, luxury goods supervision and other policy changes
3. Quality Management Risks
   : Challenge of quality consistency under scale expansion

:

• Price difference between wholesale price and ex-factory price (reflects real supply and demand)
• Channel inventory level
• Growth of series liquors
• Increase in direct sales channel share

:

1. Quality vs. Brand
   : The two are inseparable;
   quality is the cornerstone, brand is the amplifier
   . Short-term focus on brand, long-term focus on quality, but ultimately the multiplier effect of “quality × brand”.

2. Essence of High Gross Profit Margin
   : Not profit space, but
   the height of competitive barriers
   . A gross profit margin of over 90% just proves the depth of the moat.

3. Why No Affordable Substitutes
   :
   • Quality barriers (process + environment)
   • Brand barriers (mindshare occupation + network effect)
   • Pricing dilemma (low price cannot establish high-end image)
   • Channel barriers (first-mover advantage)

4. Sustainability of the Moat
   : Three moats (scarcity, quality, brand) form a closed loop and reinforce each other; it is expected to remain unbreakable in the medium to long term.

:

• Current Valuation: PE is about 19.5x, in the historically reasonable low range
• Suitable Investors: Long-term value investors who can bear short-term fluctuations
• Recommended Strategy: Build positions in batches, hold long-term, and pay attention to wholesale price and inventory signals

Moutai’s moat is immeasurably deep but not incomprehensible. It is the superposition effect of three moats (scarcity, quality, brand), which is the fundamental reason why it can maintain ultra-high gross profit margin and long-term competitive advantage.

[0] Jinling API Data - Kweichow Moutai Financial Indicators, Stock Price and Market Data

[1] Xueqiu - Liang Xiaoyongkang 2017. Column Article “Quality and Brand of Moutai”. (http://xueqiu.com/8094080648/368020341)

[2] Xueqiu - Xiao Qiaozhi 89. “Moutai is not so superficial; three moats: ① Scarcity created by core property resource monopoly…” (https://xueqiu.com/8591380977/368026070)

[3] Zhihu Column. “Moutai Collapse: Twin Birth and Twin Death with Real Estate” (https://zhuanlan.zhihu.com/p/1929343084988204966)

[4] East Money Research Report. “Kweichow Moutai (600519.SH) Moutai’s High-end Position is Stable, Mid-end Liquor Competition is Fierce - Kweichow Moutai 2025 Mid-year Report Review” (https://pdf.dfcfw.com/pdf/H3_AP202508141727213129_1.pdf)