A Most Memorable Birthday

I must be a stock nerd! To celebrate a milestone birthday yesterday, I could think of nothing better than signing up for the monthly presentation at ValueAsia, the group of value-investing acolytes who have been among my closest friends and collaborators over the last decade.

My topic was Wuliangye Yibin (000858 CN), the strong-aroma baijiu distiller from the mountainous region of southern Sichuan province.

Despite successive managements making just about every mistake a luxury brand can make, Wuliangye’s heritage and the popularity of its fiery, fruity liquor have always pulled it through. Wuliangye’s profitability puts Diageo to shame, and as you can see in the charts below, it has been an absolute beast when it comes to growth and cash flow.

Nonetheless, the company faces challenges today, including increased competition, a confusing product strategy and a weak hand over its channel partners. Demand is soft, too, as you might expect, given the economy.

If you’d like to see my slides, you can do so here (link).

Baijiu reflects the environment (terroir) in which it is produced, making each distiller’s liquor - and even each liquor’s vintage - distinct. Premium baijiu should be considered more like a fine wine than a universally consistent, industrialised product like a Jack Daniels whiskey.

Naturally, we had to try some premium baijiu for ourselves!

From the sauce variety, we had Kweichow Moutai’s Feitian Moutai; from the strong variety, we had Wuliangye’s 7th Generation PuWu and Luzhou Laojiao’s Guojiao 1573; and from the light variety, we had Shanxi Fenjiu’s Twenty-year-old Fenjiu Blue & White.  I would personally rank them in that order, too.  Feitian Moutai had the most complex and sophisticated aromas, while PuWu was perhaps the most accessible, fun and enjoyable.

It was a most memorable birthday and I was touched to spend it with so many close friends. 

Thank you to my lovely wife and everyone who came.

Cheers!  Ganbei!

PS: If you’d like to learn more about the history of baijiu and Chinese drinking culture, I highly recommend Derek Sandhaus’ book, “Drunk in China” (link).