Drive to cut spending bites into gift biz

She has run a pu'er tea business in Maliandao, one of Beijing's largest tea markets, for five years.

Zhang said that some of her regular customers, who usually bought high-end tea for gifts, are now failing to appear.

Still, she's in favour of the cost-cutting policy, which she said would push the industry to rely more on the general public, instead of just those with higher spending capacity.

Compared with high-end tea, the ordinary tea market witnessed growth last year.

"The sales volume of ordinary tea rose 10 percent to 15 percent year-on-year in 2013," said Wang.

The government's policy has also pushed up the price of ordinary tea while causing higher-end prices to decline.

The output value of ordinary tea rose 20.7 percent in 2013 to 31.5 billion yuan, while that of high-end tea was up just 9.6 percent to 79.1 billion yuan, according to a report from the tea association that cited Feng Huaisong, an official from the Ministry of Agriculture.

"I think the effect on the national tea market from the government's policy is beneficial for the whole industry," said Wang.

It encourages an adjustment in the industry structure, Wang said. It also discourages the practice of excessive packaging for tea products, which is healthy for the whole market, said Wang.

Liquor sales drain

The high-end liquor market dived in 2013, with prices almost halved and sales reduced greatly.

Liu Yueyue, executive manager of a leading liquor group, said their top liquor, priced at 1,880 yuan, now is available at the market price of 900 yuan.

"The better the quality, the larger reduction in the price," she said.

The government austerity campaign had also affected the prices of lower- and middle-end liquor products, she said. "Our best seller now is priced at 300 yuan," she said.

The impact is being felt throughout the industry. The inventories of 14 listed enterprises involved in the white spirits (baijiu) industry surged 23.6 percent to 35.6 billion yuan in the third quarter.

Meanwhile, their revenue fell 12.25 percent to 5.72 billion yuan and net profit slid 50.9 percent to 8.44 trillion yuan.

Zhao Ping, deputy director of the department of consumer economics at the Chinese Academy of International Trade and Economic Cooperation, which is under the Ministry of Commerce, said that excess production and high prices were behind the sliding performance.

But top-quality liquor is still selling.

Liu, who is in charge of marketing high-end liquor to collectors, said that private buyers continue to purchase the company's best bottles because the price has fallen

"Liquor quality isn't affected by age. It only gets better. There are many people who consider now a good time to collect," she said.