Moutai's Leadership in Premium Baijiu Underpins Robust Profit Outlook

As China's most distinguished spirit brand, Kweichow Moutai has remarkable pricing power, premium product quality, a long history, and unparalleled brand strength. Its premium position is reflected in its 67% operating margin and 74% return on invested capital over the past five years between 2018 and 2023. The Chinese government’s sweeping anticorruption initiative since 2012 has squeezed short-term sales of premium spirits in 2014-15. However, Moutai has recovered quickly from 2016 with an average of 16% net profit growth over the past five years. Moutai remains a leading brand in China's culinary and consumption culture, and we believe it will continue its premium position over the long term.