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Liquor firms hit with monopoly fines (2)

By Chen Dujuan (Global Times)

08:52, February 20, 2013

According to Moutai's financial data, its revenue amounted to 35.2 billion yuan in 2012, with an expected net profit of 13.1 billion yuan. Wuliangye's data put its total revenue at 27 billion yuan in 2012, with net profit up to 9.8 billion yuan.

Following the news on Tuesday, Moutai's stock price closed down 0.97 percent to 177.94 yuan and the share price of Wuliangye closed down 1.55 percent to 24.81 yuan.

Moutai said on January 16 that it would halt such marketing policies and had revoked penalties for distributors, and Wuliangye said on January 17 it would also cancel such measures.

The fines are a new blow to high-end liquor firms, which have seen declines in both prices and sales following reports of excessive plasticizer (DEHP) in liquor, as well as the reduction of official banquets due to a nationwide campaign against extravagance in December, Yang Qingshan, an independent liquor analyst, told the Global Times Tuesday.

The current retail price of Moutai is about 1,300 yuan per bottle, compared with 2,300 yuan one year ago, he said, noting that prices of high-end liquor products will further decline because their sales rely heavily on official consumption.

As prices drop, high-end liquor firms, especially Moutai, will gradually change their major customer bases to business banquets and ordinary consumers, Yang said.

The anti-monopoly fines by the NDRC aim for orderly competition, and such fines will be a warning for all sectors, urging them to meet national laws and regulations, he noted.

Following the fines, luxury firms will relax their control on distributors and adjust their marketing strategies, You said.

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