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China Focus: From luxury to mainstream, National Liquor's transformation under frugality drive

(Xinhua)    18:20, July 10, 2015
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GUIYANG, July 10 -- Once a staple at Chinese government banquets, high-end liquor Moutai has been pushing for mainstream appeal after the country's anti-graft campaign.

In an outlet store in Guiyang city, Guizhou Province, Moutai products are presented on shelves. Customer Wang Qun spent 999 yuan (163.4 U. S. dollars) on a 500 ml bottle of 53-degree Feitian Moutai, the brand's flagship product.

"This is for family dinner. In the past when it was sold for more than 2,000 yuan, I was reluctant to buy. Now the price is much more acceptable," she said.

Dubbed the National Liquor, the sorghum-based drink produced by Kweichow Moutai Co., Ltd., located in Guizhou, is China's top luxury brand of baijiu (white alcohol) which has long been a popular gift and banquet necessity among official and business circles.

The liquor has been in a shortage of supply for a long time, and its prices climbed to 2,000 yuan per bottle in 2012.

However, demand among elites has plunged since December 2012 when the central government initiated a frugality campaign and started to clamp down on luxury spending by officials.

Consequently, distributors of Moutai were forced to slash the prices by more than half, putting it within reach of average consumers.

"I sold out six cases of Moutai during the week before the Dragon Boat Festival (this year's festival falls on June 20)," Sun, owner of Shicai Supermarket in Guiyang, said.

Customers have been buying Moutai almost every day in June, mostly for family dinners, he said.

Liu Dafu, a Moutai distributor in Guiyang, was facing huge pressures after losing several of his long term clients, mostly public organizations, due to the anti-extravagance drive in 2013.

But as prices lower, sales have picked up, he said.

The price of Feitian Moutai dropped from around 2,000 to 1,800 yuan during the first half of 2013. The price further decreased to 1,200 yuan during the second half and it is now stabilizing between 900 to 1,100 yuan.

"I sold 30 tonnes of Moutai last year, which is the same amount as the years before 2013. The difference is most are now being sold to individuals and private companies now," Liu said.

As the products gain popularity in the mass market, the company has seen a growth in profit. Statistics show sales in 2014 increased by 1.2 percent from 2013, and the profit has grown by 2.3 percent.

"The shrinking of government spending has taken a toll from the white liquor industry, but Moutai would like to take this as an opportunity to transform and thrive," Moutai's chairman Yuan Renguo said.

"Since Moutai is a national brand, it should be enjoyed by the general public."

The company expanded its production lines to target different consumer groups, launched around 200 new products over the past three years. .

Moutai has also opened online stores on several e-commerce platforms,recorded 81 million yuan in online sales since 2012.

The company is also eyeing the global market. During the past three years, it sold 2,880 tonnes of liquor overseas. The company said it plans to open agencies in Russia, the U.S., France, ROK and Japanin the following five years.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Kong Defang,Bianji)

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