Baijiu producer hit hard by mainland China crackdown

Baijiu producer Silver Base's interim loss jumped 335 per cent from the same period last year as it continues to reel from Beijing's drive to check the practice of giving expensive gifts as part of a crackdown on corruption.

The high-end liquor and cigarette seller said losses widened to HK$771.4 million from HK$177.1 million a year earlier.

The company has been repositioning itself by diversifying its product mix to incorporate more lower to mid-tier products but that has yet to stem losses.

Chairman and chief executive Liang Guoxing said he believed the worst for the industry had passed and the firm had made the proper price adjustments.

"It's not a new industry but one with thousands of years of history. From 2012, we've been increasing our low-end brands of baijiu and there's a lot of growth in that," Liang said, pointing to the mainland's urbanisation push and growing middle class.

The company has launched and developed lower-end products such as Guizhou Yaxi Cellar and Red Fen Shijia.

Before the onset of the austerity campaign, Silver Base, which sells brands such as Wuliangye Yongfu Jiangjiu, would mostly sell liquor priced above HK$2,000 a bottle. Prices of some varieties had been brought down to about HK$200 a bottle, Liang said.