Baijiu price rebound bodes well for liquor makers, analysts say

Looking for a seasonally themed investment idea? How about buying shares in high-end liquor makers as both consumer demand and prices for spirits are expect to climb ahead of the Lunar New Year.

“December is the peak season for the pricey Chinese hard liquor baijiu,” said Pan Fan, an analyst at SWS Research, adding that the spirit is traditionally given as a gift in the mainland during the spring festival.

Baijiu prices fell to a multi-year low early this year amid excess capacity and a slump in consumption amid President Xi Jinping’s anticorruption campaign.

The price slump helped to spark a wave of industry consolidation, Pan added.

The most watched indicators tracking the liquor segment showed that wholesale prices of the primary Kweichow Moutai Feitian have risen 100 yuan (HK$112) each month since June this year, climbed to 1,000 yuan per bottle by the end of October – typically an off season for liquor sales.

Retail prices jumped to 1,099 yuan per bottle as of December 21, according to the country’s second-biggest web-based retail platform JD.com. The retail price of Moutai could reach 1,200 yuan per bottle, according to one analyst estimate.