Jiugui halts some production (2)

Though Jiugui Liquor does not plan to recall its products, some distributors in Shanxi are refunding buyers, Shanxi Evening News reported Sunday.

The Jiugui brand faces a critical moment, as other liquor firms may seize the chance to court its distributors if Jiugui fails to handle the problem with them, Zhao Yong, a liquor industry analyst with Shanghai-based Haitong Securities, told the Global Times Tuesday.

"Jiugui performed amazingly when the whole sector was suffering a demand slump, partially because it massively expanded its distribution network by lowering criteria for who could distribute its product," Zhao said. "And its financial sheet looks good because its liquor products are currently overstocked by distributors."

The plasticizer scandal caused stocks of domestic liquor companies to slump seriously last week after the China Alcoholic Drinks Association said most domestic liquor products contain plasticizers, but the amount they contain is within food industry standards.

"The negative impact on other brands will be short-term, but last at least three months for Jiugui," Liu Hui, a senior analyst at Capital Securities, told the Global Times Tuesday.

The liquor sector is less vulnerable to safety scandals in general than other sectors such as dairy, due to its low concentration ratio and wide variety of products, Liu said.

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