NewChina’s distillers say ganbei as banquets and parties resume
Distillers are the best-performing stocks this year as rising wealth among Chinese consumers reversed the sales slump triggered by President Xi Jinping’s 2013 frugality campaign
The recent rally in local Chinese liquor producers is likely to continue, with industry earnings for the country’s very own distilled clear spirit, baijiu, expected to well outpace demand for other types of hard alcoholic drinks.
Major Chinese liquor makers, including market leaders Kweichow Moutai and Wuliangye Yibin, are all expected to post average profit increases of 26 per cent this year, according to projections by Shenwan Hongyuan Group. That’s almost twice as fast as the consensus estimate of 14 per cent growth for all Chinese mainland-listed companies.
The group of stocks is the best-performing industry group this year as rising wealth among Chinese consumers has reversed a slump in sales in the industry, triggered by President Xi Jinping’s frugality campaign in 2013.
Distributors have raised their retail prices of Moutai and Wuliangye this year amid rising demand for the high-end Chinese liquor, which is distilled from traditional grains such as sorghum and rice.
“The industry’s prosperity is expected to carry on,” said Hu Chunxia and Ou Shaoping, analysts at Guotai Junan Securities.
“Lots of funds are still looking for opportunities to add more to their holdings.”