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chinadaily.com.cn
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China Daily Website

Bright future for white spirits

Updated: 2013-06-17 03:08
By LI WOKE ( China Daily)

Other major obstacles also exist, said the consultancy.

At the end of last year, the central government unveiled a series of anti-graft rules called "The Limitation of the Three kinds of Government Consumption". They include the regulation that receptions for high-ranking military officials should no longer include liquor or luxurious banquets, which has led to a sharp decrease in the purchase of white spirit by government and business organizations. Some high-end white spirit brands have faced a sharp decrease in demand and sales volume.

It did not take long for the stock market to feel the effects.

Just two days after the announcement, shares in Chinese distillers such as Wuliangye Yibin Co and Kweichow Moutai Co fell.

Shares in Moutai fell 5.55 percent on the Shanghai Stock Exchange, while shares in Wuliangye slid 3.02 percent on the Shenzhen stock market. Moutai's market value shrank by 12.5 billion yuan on the same day.

"Moutai and another two high-level alcohol brands, which are popular with government officials and military officers, account for 20 percent of the total liquor market," said Jian Aihua, a researcher with CIConsulting, a leading industry research institution.

Yuan Renguo, Kweichow Moutai's chairman, said recently that the company will slow its growth rate to reach an 18 percent year-on-year rise by the end of this year.

"There has been a slump in Chinese liquor sales and in the catering industry since late last year, mainly caused by the government's anti-corruption calls," said Su Qiucheng, head of the China Cuisine Association. "Restaurant sales in some big cities even posted negative growth, such as Beijing and cities in Jiangsu and Zhejiang provinces."

Duan Kaiyun, assistant secretary-general of Beijing Cuisine Association, said: "The difficult time will last for a long time because it's a key part of the new government's vow to curb corruption."

But Bian Jiang, assistant director of the China Cuisine Association, said the habit of pleasing business clients with extravagant banquets has been deeply rooted in Chinese culture and will not be reversed overnight.

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