New DEHP woes for Moutai

High-end Chinese liquor producer Kweichow Moutai Co was accused Monday of selling liquor with excessive plasticizer (DEHP) traces that US testing groups confirmed, results analysts said are likely to deepen the gloom of the domestic liquor industry.

An anonymous domestic investor said he sent two bottles of Feitian Moutai liquor separately to two US testing laboratories, Applied Technical Services and Exova, for DEHP testing on December 11, 2012, and on Monday posted the results on xueqiu.com, a communication platform for investors.

The posted data from Exova indicated that the DEHP traces found in one of the Feitian Moutai liquors was 2.6 parts per million, almost twice the national standard of 1.5 milligrams per kilogram (1.68 parts per million).

However, some netizens questioned the motivation of the anonymous act, saying the investor may want to manipulate share prices by posting such test results, and raising doubts about the testing process, as no evidence was given of detailed purchase information about the tested liquor.

Moutai could not be reached for comment by press time.

The allegation came after the Shanghai-listed Moutai reported Friday a prediction of 50 percent year-on-year net profit growth for 2012. At closing time Monday, the share price of Moutai had fallen 5.58 percent, compared to the 2.41 percent growth of the Shanghai index.

In November 2012, investors began losing confidence in domestic alcohol firms including Moutai, Wuliangye Yibin Co and Jiugui Liquor Co, who struggled with scandals regarding excessive plasticizers in their products.

On December 9, Feitian Moutai was alleged to have a high level of DEHP - 3.3 milligrams per liter according to the Center for Food Safety in Hong Kong - which was followed by a temporary halt of Moutai's trading on the stock market.

And on December 21, a government ban on liquor at official functions sent stocks sliding even further.

Data from Beijing-based Qianinfo Consulting indicated that the sales volume of high-end liquors dropped by 20 percent year-on-year in 2012.

Monday's allegation will further Moutai's sales slump and continue to hit China's liquor stock market, Fan Jie, an industry analyst from Adfaith Management Consulting, told the Global Times Monday.

Shu Guohua, a Beijing-based liquor marketing expert, predicted that Moutai's yearly growth in profits will swing between 25 percent and 35 percent in 2013, far less than 2012's growth. He further predicted that Wuliangye liquors will not sell well in 2013 either.

The Shenzhen-listed Wuliangye saw its shares drop by 2.51 percent at closing time Monday and shares of the Shenzhen-listed Jiugui fell by 2.26 percent.

Shu told the Global Times that the disturbances caused by the plasticizer scandal will not last long, but are likely to strengthen authorities' supervision of liquor quality and improve the production process.