China booze cos defy economic gloom
Kweichow Moutai Co Ltd, China's leading maker of the potent and expensive baijiu liquor, reported a doubling of its third-quarter net income to 3.4 billion yuan ($544.72 million) on Thursday, beating analysts forecasts of 2.4 billion yuan, according to Thomson Reuters I/B/E/S.
Its biggest rival, Wuliangye Yibin Co Ltd, said last week it expects a nearly 90 percent rise in its third-quarter profit on higher production and robust sales. Wuliangye Yibin will report its results next week.
Repeating that success in the current period may be tough.
Analysts said a government clampdown on using public funds to buy luxury items such as baijiu, announced in March, had a limited impact on high-end liquor firms because of private sector demand and stronger sales of lower-end brands.
But Zhao Yong, an analyst with Haitong Securities, cautioned that the impact of the crackdown on luxury gift-giving could be felt in the coming months.
There may not be such a big impact now as most of the gifting occurred from the budget set in the first half of the year. However, moving forward there may be a bigger impact seen, he said.
Kweichow Moutai said on Sept. 4 it had raised prices on some of its products by as much as 30 percent from the start of that month. The hike came late
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