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Strategies Kweichow Moutai Can Use To Grow From A Billion Dollar Company To A Trillion Dollar Company Like Alphabet Inc.

Kweichow Moutai (KM) may be the lesser known alcoholic drinks company compared to competitors such as Diageo. Yet, in 2017, it was China’s most valuable firm, with a market capitalization cap of $71.5 billion

The Wall Street Journal reported in February 2021 that Kweichow Moutai had hit the $500 billion market capitalization putting the company in league with the world's most valuable consumer goods firms.

However, Kweichow Moutai has a long way to go to grow from a billion dollar to a trillion dollar company such as Alphabet Inc., valued at $ 1.7 trillion in 2021.

With the following four strategies, Kweichow Moutai could grow from a billion dollar company to a trillion dollar company like Alphabet Inc :

 Increase presence in the international market

 Increase horizontal acquisitions of related and unrelated companies

 Increase the product portfolio through diversification

 Improve ESG practices

Kweichow Moutai’s Current State

Kweichow Moutai has been steadily growing over the last two decades to become the world's most valuable alcoholic drinks company, ahead of Diageo.

Kweichow Moutai’s Total Assets 2011-2021

Source: Statista

Its signature product, a high-end spirit called baijiu, is made from distilled sorghum and rice. A 500 ml bottle of baijiu costs as much as $580. One of the reasons for the relatively high price of the Chinese spirit is its role as a symbol of Chines pride, patriotism, and luxury.

Kweichow Moutai’s liquor series includes:

Kweichow Moutai's peculiar structure as both a government-owned and public traded company allowed it to become investors' dreams. Interestingly, a considerable percentage of baijiu's market segment once came from Chinese government officials and businesspeople. However, baijiu has become a choice drink for individuals.

1. Moutai Prince liquors

2. Moutai Ying Bin Chiew

3. Laimao liquors

Kweichow Moutai's market has been predominantly Chinese, with China accounting for 95% of sales in 2017. Although Kweichow Moutai has had significant successes, it has a mile to grow from a billion dollar to a trillion dollar company like Alphabet Inc.

1. KM is partially owned by the Chinese government and partially listed on the Shanghai Stock Exchange.

2. KM's baijiu is the preferred drink among the Chinese elite, including government officials.

3. KM is China’s most valuable publicly traded company

4. Baijiu typically has 30-60% alcohol content

Inspiration from Alphabet Inc.

Kweichow Moutai could learn from the ascending of Alphabet Inc. - Google’s holding company, from a start-up to a $1.97 trillion giant. Alphabet Inc. Alphabet Inc. has multiple segments and companies, including:

Company

Google

Verify

Waymo

Capital

Product/Service

Google Search, G-Mail, YouTube, Chrome

Debug, Retinal Imaging & Smart Lens Program

Automatic self-driving vehicles

An equity investment fund

KM’s Quick Facts

The creation of the umbrella Alphabet Inc. was a strategy to ease investors' concerns about Google mixing unrelated business. However, this is not the only strategy Alphabet Inc. has used to grow from a billion-dollar to a trillion-dollar company. Alphabet Inc.:

 Learned to target the international market and make products that meet the needs of a diverse market

 Made over 200 acquisitions worth about $20 billion

 Alphabet Inc. boasts a vast and diverse product portfolio thanks to its many companies, including Google, Calico, and Verify

 Made intentional and strategic efforts to have sustainable business practices

A Quick Comparison of Kweichow Moutai and Alphabet Inc.’s Current Financials

Kweichow Moutai can grow from its current billion-dollar status to trillion-dollar status by implementing the following four strategies that made Alphabet Inc. the giant it is.

Tested And Proven Strategies Kweichow Moutai Can Borrow From

Alphabet Inc.

1. Target International Market

In 2017, 95% of Kweichow Moutai liquor sales were in China. Kweichow Moutai's liquor is like what Tim Horton's is for Canadians, except Tim Horton's has embraced the international market. It is a symbol of Chinese pride and luxury.

In the recent past, Kweichow Moutai has made attempts to penetrate the international market. For example, in 2018, the liquor company tried to penetrate the European market by entering an agreement with the Wine and Spirit Trade Association (WSTA). It was part of a strategic plan to increase international sales to 10% of total sales in 2020.

However, for Kweichow Moutai to grow from the billion-dollar to Alphabet Inc.'s trillion-dollar league, it must embrace the international market as a rewarding market. Alphabet Inc. has made its presence in all major regions in the world.

Closer home, Diageo, with its signature Johnnie Walker is a known product internationally. So Kweichow Moutai does not have to sacrifice its Chinese authenticity to go global. If anything, it could be part of exporting Chinese culture.

2. Acquisitions are the Trillion Dollar Secret

By 2022, Alphabet Inc. had made more than 200 acquisitions. Martin Reeves of the Harvard Business Review posits that making an umbrella company- Alphabet Inc.- made acquisitions of subsidiaries much easier.

Kweichow Moutai Co Ltd. already has a parent company- the Kweichow Moutai Group. Further, it only operates in the liquor business. However, acquiring and buying subsidiaries can grow the company from the most valuable alcohol drink firm to a trillion-dollar giant.

The benefits of acquisitions for Kweichow Moutai include:

 Rapidly increased growth by increasing volume of sales and profit

 Suppress the competitor’s force in the market

 Enable it to reach market saturation quickly

 Increased access to fresh and diverse perspective

 Increase product diversification

Trillion-dollar companies understand that acquisitions are the fuel that blows up growth and propels companies to tremendous success. Kweichow Moutai could learn from Alphabet Inc. and begin making acquisitions.

3. Increase Product Diversification

For some companies, product specialization is the key to success; however, if Kweichow Moutai learns from Alphabet Inc. and grows to become a trillion-dollar company, the merrier, the better.

Alphabet Inc. has more than seven companies. Some the companies, such as Google, have a vast and diverse portfolio giving them an edge over competitors. Further, Google's extensive and diverse portfolio allows it to create a closed ecosystem. Google users find themselves directed from one Google product to another.

Kweichow Moutai can learn from Google and thus create a diverse portfolio that increases its presence in the market. Currently, Moutai liquor makes up the most significant percentage of product offers.

Comparison of Revenue from Kweichow Moutai’s product

Source: Statista

Since Kweichow Moutai has a ready loyal market, it should increase its products and services to give more value to consumers. More value will translate to more sales. If Kweichow Moutai desires to dine with the trillion dollars league companies such as Alphabet Inc., it should evaluate how to have more products on the menu.

4. ‘Go Green or Go Home’: Have Excellent ESG Practices

Some companies have resorted to greenwashing strategies to appeal to a growingly sensitive market. However, a distinguishing mark of trillion-dollar companies such as Alphabet Inc. is a consciousness of the environment and society it operates.

According to a Fortune Sustainability Report, Kweichow Moutai scored an average of 44/100 in governance, 23/100 in citizenship/society, and 16/100 in the environment. Such performance may fly with a billion-dollar company, but to grow to a trillion-dollar company such as Alphabet Inc., Kweichow Moutai must pay attention to its sustainability efforts. Alphabet Inc. has won multiple awards and recognitions for its ESG practices, including being the second most admired company.

Some of the ways Kweichow can improve its ESG ranking include:

1. Paying attention to the graft accusations surrounding Baijiu consumption

2. Having a competitive, inclusive, and fair package for its 36,000+ employees

3. Improve its engagement with human rights controversies

4. Incorporate modern technology to ensure sustainable water use

5. Engage experts to reduce its emissions and lower their carbon footprint

To sum up, Kweichow Moutai Co Ltd. has what it takes to grow into a trillion-dollar company like Alphabet Inc. It has a great return on investment, a loyal market, a valuable product, and billion-dollar assets to launch.

Kweichow Moutai can learn from Alphabet Inc., a trillion-dollar company with a presence in all the central regions of the world. Kweichow Moutai can grow from a billion dollar to a trillion-dollar company such as Alphabet Inc. by the following I's:

 Increasing its presence in the international market

 Increasing horizontal acquisitions by acquiring subsidiaries, start-ups, and competitors

 Expanding the product portfolio through product diversification

 Improving ESG practices, especially its resource use and community engagement