Core Viewpoint - The New Zealand wine brand Cloudy Bay, owned by LVMH, is adjusting its pricing strategy by reducing channel rebates to distributors, effectively leading to a price increase of 4.5% for its flagship Sauvignon Blanc wine, despite the official purchase price remaining unchanged at 231 RMB per bottle [1][2]. Group 1: Pricing Strategy - Cloudy Bay's Sauvignon Blanc will see a price increase of 9 RMB per bottle after the May holiday, translating to a 4.5% rise [1]. - The reduction in rebates from 50 RMB to 41 RMB per bottle is perceived as a covert price increase, as the official purchase price remains at 231 RMB [2]. - The historical pricing trend shows that the distributor price has been declining, with a peak of 250-260 RMB in 2022, dropping to a range of 240-250 RMB in 2023, and stabilizing around 235-240 RMB in 2024 [2][4]. Group 2: Market Dynamics - The reduction in channel rebates is attributed to an oversupply in the market and weak consumer demand, which necessitated a change in the rebate policy to maintain distributor profitability [4][6]. - The competitive landscape for New Zealand white wines in China has intensified, with many new brands entering the market, making it challenging for Cloudy Bay to pass on price increases to consumers [7]. - The current pricing situation indicates that while the wholesale price for distributors is 181 RMB, the retail price on e-commerce platforms is around 190 RMB, suggesting a tight margin for distributors [6][7]. Group 3: Company Actions - LVMH is not only reducing rebates for Cloudy Bay but is also implementing broader cost-cutting measures, including a global workforce reduction of over 10% to address declining sales and rising costs [7].