Liquor-maker optimistic on sector stability amid consumption upgrade trend

Kweichow Moutai Co Ltd, China's signature high-end spirit maker, has reported booming profit growth in 2018, and a robust growth plan for 2019.

Last year, Moutai, a distiller from Maotai town in Southwest China's Guizhou province, achieved whole-year sales revenue of 75 billion yuan ($10.9 billion), up 23 percent year-on-year.

In the same period, its profit exceeded its annual growth plan, totaling 34 billion yuan, jumping 25 percent over the previous year, according to a company statement released on Wednesday.

In 2018, the company produced 49,700 metric tons of Moutai liquor, and 20,500 tons of Moutai series wine, the statement said. In 2017, it produced 42,700 tons of Moutai liquor.

"This year, we aim to achieve sales revenue of 100 billion yuan, growing 14 percent, and reach a net profit of 45 billion yuan. Our good performance last year indicates that the growing power of Moutai is strong enough to drive further gains," said Li Baofang, chairman of Moutai.

"We will continue to expand the capacity of Moutai liquor and series wines, raise the proportion of direct sales, and upgrade our product structures. The company will endeavor to maintain the prices at a stable level," he said.

Last week, Moutai said at its meeting with nationwide dealers that the company will not raise the prices of Moutai liquor and its series wines this year, and even in the next few years. It also plans to establish a more comprehensive sales system, and introduce more distinctive and tailored services for its member customers.

"This year, the pace of price rises in the high-end liquor sector is expected to slow, and the sector is expected to maintain a moderate growth rate by maintaining stable prices and continually increasing sales volumes," said Minsheng Securities in a research report.

Shanghai-listed Moutai edged up 8.97 yuan per share to close 1.52 percent higher in Wednesday's trading, while the index and liquor sector saw lukewarm performances overall.

The company's valuation now stands at 752 billion yuan. Earlier, it became the first consumer stock with a market value exceeding 1 trillion yuan.

Moutai's rivals Sichuan province-based Wuliangye Yibin Co Ltd and Luzhou Laojiao Group, in addition to Anhui province-based Gujing Group, among others, saw their shares fall in Wednesday's trading.

Investment bank BOC International (China) Co Ltd said that from 2019 to 2020, despite slower overall growth after more rapid growth previously, market demand for liquor products will remain robust, fueled by the ongoing consumption upgrade trend in the country.

A 500-milliliter bottle of Moutai's classic Feitian 53 percent liquor that left the factory in 2015 now carries a price tag of 2,388 yuan on online shopping platform JD.

Contact the writers at zhuwenqian@chinadaily.com.cn

(China Daily 01/03/2019 page17)