On Brand Value
Criticizing Moutai and Pien Tze Huang’s Brand Management:
Diluting Brand Value for Incremental Gains
I have been reading about successful brand management cases in Europe and the United States. The key takeaway is that a brand is a company’s most significant intangible asset, and it must be carefully managed across production, marketing, sales, and after-sales service—especially for high-end consumer brands—to maintain premium pricing. This is inherently difficult and not something just anyone can do.
Many luxury brands have chosen to purchase, rather than lease, their global storefronts. Although the purchase price is extremely high and may seem uneconomical, they consider it a strategic investment rather than a real estate play. By owning permanent property rights in prime locations, they can invest in renovations and control every step from production to the final consumer experience.
I once saw Burberry trench coats on display at Costco, treated like surplus military apparel, heavily discounted and lacking any service or proper display. This kind of wholesale approach is a serious misstep in brand management and damages brand value. If I were a customer who paid a large sum for a trench coat, only to see it sold like a street-market item—yet still authentic—I would question whether I had really received value for the premium I paid. I would feel like a fool and might not come back next time.
This principle applies not only to luxury goods but also to everyday products like Crocs. Their management refuses to discount; they will not sell excess inventory to discount stores, preferring to buy back surplus from distributors rather than resorting to clearance sales. They aim to maintain stable pricing and a strong brand image, then raise prices gradually. Once consumers suspect there is plenty of supply, they lose any motivation to pay full price.
Turning to Moutai, what exactly is Moutai ice cream? I noticed a stack of them in the freezer at a local supermarket, rock-solid and unsold. There is also Moutai wine, Moutai hotels, and iMoutai—these expansions are distracting management’s focus and cheapening the brand, company’s most valuable asset. Moutai should reclaim its distributor channels, set up direct sales outlets, closely track actual terminal demand, reduce supply, steadily increase prices, and strictly combat counterfeiting.
As for Pien Tze Huang, I have previously criticized its consumer goods lines. Toothpaste and cosmetics do not align with its core brand image. It is laughable that many analysts once touted these categories as a hundred-billion-yuan opportunity. Such ventures dilute the brand. If Pien Tze Huang’s products sit on a supermarket shelf for a few yuan, how could it justify its aggressive price hikes in recent years, and who would buy them? The company should invest more in advertising and consumer education, then launch limited-edition traditional remedies to bolster brand value.
Overall, this is second-rate management operating in an economy undergoing structural transformation, yet commanding a first-rate valuation, which is too high.
Follow Up (2025):
Moutai has since closed all their ice cream division.
Pien Tze Huang consumer product revenue declined by 19% in 2022 and margin also dropped. There have also been reports of quality issues citing the number of bacteria in its toothpaste exceeded the regulatory limit by 14 times. It’s just not worth it.
