Labubu and Moutai: The Collision and Integration of New and Old Consumption

Recently, a research report compared the highly sought-after Labubu with the traditional liquor giant Moutai, attempting to explore whether there is a historical repetition of consumption cycles behind these two phenomenal products or if they represent a profound paradigm shift.

Research indicates that although Labubu and Moutai both possess the attributes of social currency, there are essential differences in their social functions. Labubu's social attributes are more based on the common interests and values of the younger generation, while Moutai's social function relies more on power and hierarchical relationships. This difference precisely reflects the fundamental distinction between "new consumption" and "traditional consumption."

However, similar to Moutai, Labubu's parent company also faces the dual challenges posed by the IP cycle and investment attributes. If there is a long gap between Labubu and the next blockbuster IP, the company's global growth may slow down.

In addition, regulatory risks and market congestion are two major factors that investors cannot ignore. The current phenomenon of capital concentrating in the "new consumption" sector is quite similar to the previous trend of funds clustering around consumer blue-chip stocks represented by Kweichow Moutai. The fragility of such crowded trading could have a significant impact on valuations.

!7378492

Intergenerational Differences in Social Currency

The research team believes that while Labubu and Moutai both possess social currency attributes, there are significant generational differences. The social function of Moutai more reflects its role as a productivity tool for "social/business lubricant," while Labubu represents the younger generation's pursuit of emotional value, providing consumers with instant, nuanced, and affordable "dopamine" experiences in the digital social media era.

Analysis indicates that in a digital world where consumers face "meaninglessness" and increasing pressure, Labubu suggests that China is gradually shifting from an investment-driven model to a consumption-driven model. Moutai is deeply rooted in traditional Chinese culture and its globalization process is still in the early stages, while Labubu, which is highly aligned with the global zeitgeist, has already achieved significant global success.

The main differences include:

1. Social Attributes: Moutai relies more on power and hierarchy, primarily serving business occasions; Labubu represents the younger generation's social interactions based on interests and values, emphasizing emotional value and instant gratification.

2. Consumption Motivation: Moutai can be seen as a "productive tool," while Labubu meets the pursuit of emotional value and "dopamine" style consumption among young people in a digital social environment, reflecting China's trend of transitioning from investment-driven to consumption-driven.

3. Globalization Process: Moutai is deeply rooted in Chinese traditional culture and is still in the early stages of globalization; Labubu has already achieved significant success globally, aligning with global trends.

The Double-Edged Sword of IP Cycle Risks and Investment Attributes

While experiencing rapid growth, research has also pointed out the similar challenges faced by Labubu's parent company and Moutai, namely the dual tests brought about by the IP lifecycle and product investment attributes.

Research suggests that it doesn't matter whether the company's net profit in 2025 is 8 billion RMB or 10 billion RMB, as it depends on Labubu's shipping speed. Instead, what is important is how to balance short-term growth with the IP lifecycle.

IP lifecycle risk: Moutai, with a century of history and official endorsement, has proven its ability to navigate through cycles. In contrast, the parent company of Labubu and Labubu itself have histories of only 15 years and 10 years, respectively, making the IP lifecycle a core risk.

The report argues that as an IP platform, the company's diversified IP portfolio can mitigate risks, but Labubu is crucial to its global success. If there is a prolonged gap between Labubu and the next blockbuster IP, its global growth may slow down. Furthermore, the "mainstreaming" of subcultures may drive growth, but it could also dilute Labubu's unique social identity, thereby alienating its core consumer base.

The pros and cons of investment attributes: The history of Moutai shows that "investability" is a double-edged sword, acting as a booster in upward cycles and becoming an amplifier in downward cycles.

The report notes that Labubu's parent company is actively managing the prices in the second-hand market to ensure its appeal to young consumers and to create a favorable environment for the launch of new IP and products. The recent drop in the second-hand prices of Labubu plush toys is seen as a result of the company's proactive management of supply and demand dynamics.

Unignorable Regulation and Market Congestion

The report concludes by emphasizing that regulation and market sentiment are two other major risk factors that investors must confront.

Regulatory Risks: Moutai is always influenced by policies such as price controls and anti-corruption campaigns. Similarly, Labubu's parent company is not in a regulatory vacuum. Recent media reports have reminded the market of the associated risks. However, analysts believe that as the company's consumer base becomes increasingly diversified, "mainstreaming" has reduced its risk exposure to minors in the Chinese market. At the same time, the growing overseas business (expected to contribute more than half of sales by 2025) also helps to hedge against regulatory risks in a single market. However, this risk may still negatively impact the company's fundamentals or trigger "headline noise" that leads to stock price volatility.

The vulnerability of "herd" trading: In every cycle of the capital market, dominant "crowded trades" may emerge. The influx of funds into consumer blue-chip stocks represented by Moutai from 2016 to 2021 is quite similar to the current concentration of funds focused on the "new consumption" track, centered around Labubu's parent company. Changes in fund flows and positions can have a huge impact on valuations — Moutai's forward price-to-earnings ratio was close to 60 times at the beginning of 2021, while it is currently only 18-19 times. Although recent changes in fund flows have put some pressure on "new consumption" stocks like Labubu's parent company, the report suggests that this "crowded" situation may persist for some time against the backdrop of the scarcity of quality investment targets. The real turning point may need to wait until meaningful turning points appear in high-frequency data from overseas markets or until a strong recovery in the Chinese economy provides more options for investors.