Chinese liquor firms outpace global rivals

Chinese liquor firms outpaced companies in the United States in terms of brand value, as the country’s liquor makers are tapping into increasingly affluent consumers here, a recent industry report said.

Kweichow Moutai Co Ltd, with a brand value of 218 billion yuan ($30 billion), topped other leading liquor producers across the world, followed by UK liquor maker Diageo and US beer manufacturer Anheuser-Busch, a report released by the China National Association for Liquor and Spirits Circulation and the China Brand Strategy Research Institute said.

Among the world’s top 10 liquor brands, Chinese brands account for half of the total with five positions. The other brands from the country are Jiangsu Yanghe Winery Co Ltd, Sichuan Yibin Wuliangye Group Co Ltd, Gujing Group and Fenjiu Group.

“The excellent performance of baijiu has contributed to the Chinese liquors’ success over US liquors, mainly driven by the large base of the drinking population in China,” the report said.

Baijiu is a type of Chinese white liquor, playing on the pronunciation of the numbers “eight” plus “nine”. The flavor and aroma of baijiu though are different from Western drinks and the alcohol content of baijiu is much higher at 52 percent or above.

“Chinese consumers also favor more high-end baijiu given upgrades in consumption, which has helped increased companies’ profits,” the report added.

China is the largest distilled liquor producer and consumer in the world, with the annual average production accounting for about 30 percent of the world’s total distilled liquor production and about 28.5 percent of the total distilled liquor sales globally, official data showed.

Since the beginning of the year, major liquor brands have witnessed an increase in sales revenue because of rising demand for high-end liquor from global consumers.

In the first half of this year, Wuliangye reported its net profit hit 9.3 billion yuan, up from 7.1 billion yuan year-on-year in the same period a year ago, its interim results report said.

Another leading firm Kweichow Moutai saw its net profit soar 26.56 percent year-on-year in the same period to reach 19.95 billion yuan. Its sales revenue stood at 39.49 billion yuan. In 2018, the company produced 49,700 metric tons of Moutai liquor, and 20,500 tons of Moutai series wine.

Kweichow Moutai chairman Li Baofeng is optimistic even better times are ahead.

“We aim to grow by 14 percent to achieve sales revenue of 100 billion yuan this year and reach a net profit of 45 billion yuan. We will continue to increase the capacity of Kweichow Moutai liquor and series wines, raise the proportion of direct sales, and upgrade our product structures,” he said.

The country’s liquor companies are also gearing up in foreign markets as they hope to gain leads outside of China.

In April, Jiangsu Yanghe inked a strategic partnership with Diageo where both will cooperate in liquor-making techniques, products, distribution channels, as well as brand and market management.

The two sides will form a joint venture, although both companies did not disclosed further details about the plan.

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