Moutai: Stock Story

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Tell us about the company

Ben Buckler: If you haven’t visited China you likely haven’t poured a glass of Baijiu at dinner, so it’ll surprise you to know it sells more in volume terms than vodka, whisky, gin, rum and tequila combined. 
 
It’s China’s national drink with a history that goes back over 2000 years. The market is big, fragmented and complex. Brand value and cultural importance are key, particularly in the high end, where bottles sell for hundreds of dollars. And this is where Moutai operates, with the most iconic, and arguably the most valuable, Chinese consumer brand.

What makes this stock special?

Moutai is the leading premium brand in a market where a growing middle class and rising wealth is set to drive growth for many years.
 
The long-term potential lies in the enduring value and heritage of a luxury brand, which can be missed by a market focused on short-term outcomes. Baillie Gifford's experience in holding global brands over extended periods demonstrates the potential benefits for patient, long-term investors.
 
And while we pride ourselves on our investment horizons, our focus on the next 5-10 years is put to shame when listening to management talk about their vision for the next hundred years. 
 
So while tradition, culture and heritage are key ingredients that make up the brand, the company isn’t standing still. It has a big opportunity to boost growth by restructuring its distribution, and its direct-to-consumer app is already showing promise, helped in part by initiatives like aligning with China’s leading coffee and ice cream companies to appeal to a wider customer base.

What could the future hold?

This is a unique brand and product, with Moutai controlling the whole supply chain to protect the local ecosystem and ensure consistent quality. When we visited the town where Moutai is made, locals kept telling us, the drink is inseparable from its natural environment: the soil, the water and the air, none of which can be replicated elsewhere. That’s why the local government are so supportive. 
 
So Moutai is now the biggest drinks company in the world. With scarce supply, a loyal customer base and limited competition, Moutai can price at a premium, making it a highly profitable business. 

Risk factors

The Funds are distributed by Baillie Gifford Funds Services LLC. Baillie Gifford Funds Services LLC is registered as a broker-dealer with the SEC, a member of FINRA and is an affiliate of Baillie Gifford Overseas Limited. All information is sourced from Baillie Gifford & Co unless otherwise stated.

As with all mutual funds, the value of an investment in the Fund could decline, so you could lose money. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. These risks are even greater when investing in emerging markets. Security prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. Currency risk includes the risk that the foreign currencies in which a Fund’s investments are traded, in which a Fund receives income, or in which a Fund has taken a position, will decline in value relative to the U.S. dollar. Hedging against a decline in the value of currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. In addition, hedging a foreign currency can have a negative effect on performance if the U.S. dollar declines in value relative to that currency, or if the currency hedging is otherwise ineffective.

For more information about these and other risks of an investment in the Funds, see "Principal Investment Risks" and "Additional Investment Strategies" in the prospectus. There can be no assurance that the Funds will achieve their investment objectives.

This communication was produced and approved in April 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.

As at April, 2025, Baillie Gifford held Moutai. A full list of holdings is available on request and is subject to change.