CAT 2024 Slot 3 · VARC · RC passage 3: Moutai's Unholy Trinity

The full passage and all 4 questions (Q11–Q14) from CAT 2024 Slot 3, with answers and solutions.

The passage below is accompanied by four questions. Based on the passage, choose the best answer for each question.

Moutai has been the global booze sensation of the decade. A bottle of its Flying Fairy, which sold in the 1980s for the equivalent of a dollar, now retails for $400. Moutai’s listed shares have soared by almost 600% in the past five years, outpacing the likes of Amazon ...

It does this while disregarding every Western marketing mantra. It is not global, has meagre digital sales and does not appeal to millennials. It scores pitifully on environmental, social and government measures. In the Boy Scout world of Western business, it would leave a bad taste in more ways than one.

Moutai owes its intoxicating success to three factors—not all of them easy to emulate. First, it profits from Chinese nationalism. Moutai is known as the “national liquor”. It was used to raise spirits and disinfect wounds in Mao’s Long March. It was Premier Zhou Enlai’s favourite tipple, shared with Richard Nixon in 1972. Its centuries-old craftsmanship—it is distilled eight times and stored for years in earthenware jars—is a source of national pride. It also claims to be hangover-proof, which would make it an invention to rival gunpowder ...

Second, it chose to serve China’s super-rich rather than its middle class. Markets are littered with the corpses of firms that could not compete in the cut-throat battle for Chinese middle-class wallets. And the country’s premium market is massive—at 73m-strong, bigger than the population of France, notes Euan McLeish of Bernstein, an investment firm, and still less crowded with prestige brands than advanced economies. Moutai is to these well-heeled drinkers what vintage champagne is to the rest of the world ...

Third, Moutai looks beyond affluent millennials and digital natives. The elderly and the middle-aged, it found, can be just as lucrative. Its biggest market now is (male) drinkers in their mid-30s. Many have no siblings, thanks to four decades of China’s one-child policy—which also means their elderly parents can splash out on weddings and banquets. Moutai is often a guest of honour.

Moutai has succeeded thanks to nationalism, elitism and ageism, in other words—not in spite of this unholy trinity. But it faces risks. The government is its largest shareholder—and a meddlesome one. It appears to want prices to remain stable. Exorbitantly priced booze is at odds with its professed socialist ideals. Yet minority investors—including many foreign funds—lament that Moutai’s wholesale price is a third of what it sells for in shops. Raising it could boost the company’s profits further. Instead, in what some see as a travesty of corporate governance, its majority owner has plans to set up its own sales channel ...

In the long run, its biggest risk may be millennials. As they grow older, health concerns, work-life balance and the desire for more wholesome pursuits than binge-drinking may curb the “Ganbei!” toasting culture [heavy drinking] on which so much of the demand for Moutai rests. For the time being, though, the party goes on.

Question 11 · RC Vocabulary in Context

The phrase “would make it an invention to rival gunpowder” has been used in the passage in a sense that is
  1. A
    literal
  2. B
    substantive
  3. C
    metaphorical
  4. D
    synonymical
Pick an option, then check.
Answer & solution

Answer: Option C

Moutai 'claims to be hangover-proof, which would make it an invention to rival gunpowder'. Gunpowder is one of China's famous great inventions; the author compares a hangover-proof liquor to it humorously, to suggest how remarkable such a claim would be. The comparison is figurative, not a real ranking of inventions.

Option 3, metaphorical, fits.

Option 1 (literal) would mean the author seriously ranks Moutai with gunpowder.

Option 2 (substantive) and option 4 (synonymical) do not describe a figure of speech.

Shortcut: when a passage compares something ordinary to something historic or grand in a light-hearted tone, the usage is figurative. Check for humour cues – here 'claims to be hangover-proof'.

Hence, the answer is option 3.

Question 12 · RC Inference Questions

Which one of the following is both a reason for Moutai’s success as well as a possible threat to that success?
  1. A
    Chinese love of liquor filled celebration.
  2. B
    Government involvement in its business.
  3. C
    Its appeal to the rich.
  4. D
    Its appeal to the older age group.
Pick an option, then check.
Answer & solution

Answer: Option D

Look for something the passage names as a success factor and also as a risk.

Option 4 fits both. As a success factor, Moutai 'looks beyond affluent millennials'; 'the elderly and the middle-aged, it found, can be just as lucrative' – this is the 'ageism' in its 'unholy trinity'. As a threat, 'its biggest risk may be millennials': by relying on older drinkers and the 'Ganbei!' culture rather than appealing to millennials, Moutai is exposed as millennials age and drink less.

Option 1 (love of liquor-filled celebration) supports demand, but the passage does not present the celebration culture itself as the success strategy.

Option 2 (government involvement) is presented only as a risk – a 'meddlesome' shareholder – not as a reason for success.

Option 3 (appeal to the rich) is a success factor ('elitism'), but no threat is tied to it.

Shortcut: for 'both a reason and a threat' questions, list the success factors and the risks separately, then find the one item that appears in both lists.

Hence, the answer is option 4.

Question 13 · RC Inference Questions

In the context of the passage, it is most likely that the author refers to Moutai’s marketing strategy as “the unholy trinity” because
  1. A
    there is nothing holy about marketing techniques for liquor.
  2. B
    it profits from Chinese nationalist feelings.
  3. C
    it contradicts the Western strategy of marketing.
  4. D
    it exposes the firm to long term risks.
Pick an option, then check.
Answer & solution

Answer: Option C

The 'unholy trinity' is nationalism, elitism and ageism. The passage opens by saying Moutai succeeds 'while disregarding every Western marketing mantra' – it is not global, has weak digital sales and does not appeal to millennials – and that 'in the Boy Scout world of Western business, it would leave a bad taste'. By Western standards these three factors are 'unholy', yet they drive its success.

Option 3 states this.

Option 1 is a flippant remark the passage never makes.

Option 2 names only one part of the trinity.

Option 4 refers to the risks, which come after the trinity and are not why it is called unholy.

Shortcut: when a label has a moral tone ('unholy'), ask by whose standards. The passage names the standard explicitly – Western marketing mantras.

Hence, the answer is option 3.

Question 14 · RC Inference Questions

In the context of the passage, we can infer that to succeed in the liquor industry in China, a marketing firm must consider all of the following factors affecting the Chinese liquor market EXCEPT that
  1. A
    there is money to be made from marketing to the middle class.
  2. B
    the government may control the pricing of products.
  3. C
    there are few competitors to meet the demands of high end liquor consumers.
  4. D
    the competition for winning over the middle class is very stiff.
Pick an option, then check.
Answer & solution

Answer: Option A

The passage gives these features of the Chinese liquor market: the government 'appears to want prices to remain stable' (option 2); the premium market is 'still less crowded with prestige brands' (option 3); and 'markets are littered with the corpses of firms that could not compete in the cut-throat battle for Chinese middle-class wallets' (option 4).

Option 1 – there is money to be made from marketing to the middle class – contradicts the passage. Moutai succeeded by choosing the super-rich over the middle class, because that market is so brutal.

Shortcut: in an EXCEPT question about factors to consider, the answer is often the option that contradicts the passage. Check each option's direction (good or bad for the firm) against the text.

Hence, the answer is option 1.

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