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Today, it was really tragic. Liquor stocks plummeted. It is very difficult for Moutai to cross 1,500 yuan now. Shanxi Fenjiu, which has the best performance, plummeted 6%. Is the mid-high end also in trouble? Luzhou Laojiao fell nearly 5%, and this year it has plummeted more than 25%; Gujing Gongjiu was even more severe, plummeting 7% in a single day. This is a large-cap stock worth hundreds of billions.

The reason why I pay so much attention to liquor is that I have been doing T intermittently. I bought the bottom yesterday and lost a lot today. Let's analyze why liquor stocks are still fighting even at the bottom, and the decline cannot be stopped, and it cannot be stopped at all.

First, there are the big macro narratives that we have analyzed before: 1) Declining fertility rates and shrinking population; 2) Economic downturn, constant layoffs, and consumption downgrades; 3) Young people do not drink liquor and do not have a high level of recognition for it; 4) Distributors cannot sell their products, such as Moutai distributors’ inverted prices, which have resulted in heavy losses.

Secondly, there is a negative news today, which is consumption tax. In fact, the consumption tax has been rumored for several years, but it has never been implemented. Almost every time the liquor price drops sharply, it will be rumored again. Is this the wolf coming, or will the shoe really fall? Especially at the moment when the tax refund is becoming stricter, this rumor has a breeding ground.

3) Last time it was the high-end that was hit, this time it is the turn of the mid-high-end. Since the beginning of this year, both Fenjiu and Gujing Gongjiu have seen a wave of increases, but as M1 turned negative, the growth rate of M2 continued to decline, and consumption downgrade lingered in the forefront, consumer stocks have not improved.

Some stockholders said that the liquor market has collapsed, not only the stock price has collapsed, but also the sales volume has collapsed. Just ask the liquor distributors and you will know that they are not selling at all. What is even more frightening is that the price of liquor has completely collapsed. Following the high-end liquor, many well-known mid-to-high-end liquors have also begun to slash prices and sell off their stocks. (However, Jinshi checked the second-hand market prices and found that they are still stable.)

4) The growth rate of performance is in doubt. Recently, liquor will announce its second quarter performance one after another, and the market is worried about the growth rate of performance. Taking Fenjiu as an example, Jinshi Zatan found that the price of Fenjiu Qinghua 20 53% is still 350 yuan in the second-hand market, and the price has not changed much. However, in terms of performance, the company's revenue and net profit growth rates continued to decline in the first quarter, especially the net profit growth rate slowed down significantly compared with the previous two years. The second quarter performance forecast will be released in the next two days.

5) Public funds no longer love liquor or passively reduce their holdings of liquor. According to statistics from Caitong Securities, fund managers are moving away from liquor. In the first quarter of 2023, liquor stocks accounted for 8.2% of the total positions of major funds, but as of the second quarter of 2024, it only accounted for 4.1%, just halved, returning to the level of liquor positions in the fourth quarter of 2018.

According to statistics from Cailianshe, the second quarter fund reports show that many fund managers have reduced their holdings in core assets such as Kweichow Moutai and CATL. Compared with the end of the previous quarter, public funds reduced their holdings in Kweichow Moutai by 6.0414 million shares and in CATL by 16.3888 million shares.

Well-known fund managers such as Xiao Nan's E Fund High Quality Strict Selection Three-Year Holding, Jiao Wei's Yinhua Wealth Theme, Lao Jienan's China Universal Value Selection, Wang Chong and Zhang Xuerong's Bank of Communications Selection, etc., Kweichow Moutai has disappeared from the list of the top ten holdings of the above funds. (The following statistics are from netizens)

As liquor prices plummeted, the market was filled with bearish sentiment. Some investors even said, "Liaoning bulls, why don't you surrender?" Other investors said that when prices rise, momentum is important, and when prices fall, quality is important. Except for Moutai, other stocks have begun to look at price-to-book ratios for pricing.

Finally, I have to say that the mentality of investors who bought liquor has collapsed. Take Fenjiu as an example: after 30 years of hard work, they returned to the situation before liberation overnight; they watched Shanxi Fenjiu become Shanxi Crazy Liquor, and now become Shanxi Grave Liquor.