New | Curbs leave alcohol firms in low spirits
Outlook for the high-end wine and spirit sector remains gloomy as the mainland cracks down on lavish spending at official banquets
Spirits, and prices of spirits, are low for many local and foreign alcoholic beverage companies with operations on the mainland after a challenging year marked by depressed demand as a result of restrictions on lavish spending at official banquets.
Expensive wine and spirit brands such as Moutai, once a darling of the wealthy Chinese, have fallen out of favour. The Chinese Luxury Consumer Survey this year of individuals with personal wealth of more than 10 million yuan, found that high-end baijiu brand Moutai had dropped out of the Top 10 preferred gift items by male millionaires.
Silver Base Group, the biggest global distributor of Wuliangye and Moutai, recently posted interim losses of HK$771.4 million, a 335 per cent jump year on year, amid slumping sales and prices.
The firm announced it is adjusting its product mix, from 90 per cent of the bottles at the top end a year ago to an even split by launching several low- to mid-tier ranges.
The last six months in China were tough and things are not going to get much better in the near future
Although Silver Base chairman Liang Guoxing said at a press conference recently that he believed the worst was over for the company and that the industry as a whole had made the proper price adjustments to suit the drop-off in consumer demand, others are not so optimistic on the outlook.