Chinese liquor giant Kweichow Moutai Co plans to expand into the health tonic liquor market by partnering with Xiuzheng Pharmaceutical Group. The two companies have signed a strategic partnership agreement to start cooperation production and sale of the liquor. The two companies also plan to set up a joint venture…Full Article: China Daily May 2017

Key Points

  • Health tonic liquor is a liqueur that has been infused with herbs or animal products. It is often consumed as a form of Traditional Chinese Medicine (TCM).
  • In 2016, according to a market report by Xiuzheng Pharmaceutical Group, Jing Brand Co Ltd had a 40% share of China’s health tonic liquor market. At the same time, Kweichow Moutai had a market share of under 10%. By 2020, the report forecasted that China’s health tonic liquor market will reach CNY 44 billion [~USD 6.5 billion] in value.
  • In 2005, Kweichow Moutai launched its heath tonic liquor division.

ChinaAg Comments

  • In December 2016, Xiuzheng Pharmaceutical Group (Changchun, Jilin Province) announced plans to invest CNY 1 billion [~US$143.8 million] in their Guizhou business unit over the next five years.
  • In July 2016, Kweichow Moutai (liquor producer) saw its share price increase to its highest level (CNY 317.19 or US$47.41) since the company started trading on Shanghai Stock Exchange in 2001. As of 8 March 2017, its share price had increased to CNY 367.25 (US$53.17).
  • In March 2016, Tan Dinghua was placed under investigation by law enforcement authorities for “serious violations of party discipline” (i.e. corruption). A year earlier, in February 2015, Tan Dinghua had retired as Vice General manager of Moutai.
  • In January 2016, e-commerce liquor retailer VipShop was found selling fake Moutai liquor. As a result, Vipshop stated it would suspend its liquor sales, including Moutai (~CNY 1,000 or US$150 per bottle).
  • In 2015, the price for a 500ml bottle of Moutai 53-degree liquor (the company’s primary product) dropped to CNY 1,000 (~US$161) per 500ml bottle, while in 2012 a Kweichow Moutai 53-degree bottle sold for CNY 2,000 (~US$316).
  • In December 2015, a liquor counterfeiter was sentenced to 5 years in prison in Guangxi Region. The counterfeiter re-filled high-end liquor bottle brands with cheaper alcohol and primarily distributed them in Beihai City, Guangxi region.
  • In October 2015, Kweichow Moutai announced in Moscow that it would begin supplying the Russian market, focusing on Russia’s wealthy and high-end consumers.
  • 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 in accordance with China’s 2008 Anti-monopoly law. Moutai was forcing distributors to sell at high price
  • Established in 1999 in Guizhou province (southwestern China), Kweichow Moutai (SHA:600519) is a state-owned enterprise in China, specializing in the production and sales of Maotai liquor, together with the production and sale of beverage, food and packaging material, and development of anti-counterfeiting technology.
  • Founded in 1995 and headquartered in Changchun, Jilin Province, Xiuzheng Pharmaceutical Group is a producer and distributor of traditional Chinese medicine (TCM) products and other healthcare products. In 2002, the company began developing its healthcare liquor product line.
  • Founded in 1953 and headquartered in Daye, Hubei Province, Jing Brand Company produces and markets “health-care” liqueur and spirits. The company’s alcoholic beverages are typically infused with herbs and extracts such as Asian ginseng (aka Chinese ginseng), Solomon’s seal (aka Huang jing), milkvetch, sealwort, mulberry, roses extract, and sea buckthorns. In June 1998, the company transitioned (privatized) from a state-owned enterprise to a private company. As of 2015, the company had an annual production capacity (healthcare liquor) of 160,000 MTs.

Hong Kong Trends

Similar Posts by ChinaAg

Spread the word. Share this post!