The Chinese wine and liquor industry finally has something to celebrate after going through a revenue drought for more than a year. A report released by UBS Investment Research, part of the Swiss banking group, showed that the liquor sector bounced back in the last quarter of 2014 and the first three months of this year. The steady rise came after six quarters of poor results. Income increased by 1.7 percent in the last three months of 2014 compared to the same period in 2013, the report highlighted. In the first quarter of this year, income jumped 9.6 percent year-on-year. Net profit growth was 2.8 percent and 5.6 percent respectively…Full Article: China Daily May 2015

Key Points

  • In August 2014, baijiu suppliers stopped reducing their inventories which in turn buoyed wholesale prices (i.e. price increase).
  • From 2013 to 2014, Chinese sales of baijiu increased by 5.5%, while vodka sales increased by 5.1%.
  • From 2012 to 2013, Chinese sales of baijiu decreased by 2.7%.

ChinaAg Comments

  • In August 2014, Kweichow Moutai announced forming a joint venture with Yonghui Superstores and Shenzhen Guomaoyuan Commerce and Trade Co Ltd. Through the JV, Moutai would sell its liquor in Yonghui supermarkets. The profit breakdown would be 60% for Moutai and 20% each for Yonghui and Shenzhen Guomaoyuan.
  • In February 2013, China’s NDRC (National Development and Reform Commission) fined Kweichow Moutai CNY 247 million (US$39.5 million) due to price fixing.
  • In January 2013, the NDRC and Price Bureau in Guizhou Province investigated Kweichow Moutai (baijiu producer) in accordance with China’s 2008 Anti-monopoly law. Moutai was forcing distributors to sell at high prices.
  • In November 2012, the new General Secretary of the Central Committee of the Communist Party of China (Xi Jinping) began an anti-corruption and anti-extravagance campaign. As a result, sales of baijiu, a popular liquor served at government-sponsored banquets, plummeted. In addition, in November 2012, Chinese product safety officials found excessive levels of plasticizers in a sample baijiu liquor that was manufactured by Jiugui Liquor Co.

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