Liquor dealers destock as bubble deflates

Around 80 percent of China's baijiu (white liquor) wholesale dealers have begun clearing out their inventories recently, and a bubble in the country's high-end liquor industry is gradually being squeezed out, the 21st Century Business Herald reported Wednesday.

"To boost sales volume, many baijiu dealers have competed to cut prices," a saleswoman surnamed Lin at Jinghuang Liquor Trading Co, was quoted as saying.

"The sales price of Wu­liangye has declined to 1,500 yuan ($241) per bottle, a 10 percent drop compared with the previous year," Lin noted.

The retail price of Moutai recently reached 1,800 yuan for a 500ml bottle, 700 yuan lower than last year.

"We (the baijiu dealers) all hold pessimistic attitudes toward the outlook for the baijiu market," the owner of Junkai Liquor, Tobacco and Tea Dealer, surnamed Zhang, was quoted by the newspaper as saying.

And many baijiu dealers are trying their best to clear out their inventories, Zhang noted.

Dragged down by the central government's recent calls to reject extravagance, as well as by previous scandals over baijiu products containing excess plasticizers, the price bubble that had been building in the baijiu industry over the past two years is gradually being squeezed out, the newspaper reported.

"The consumption of baijiu was mainly driven by banquets for officials and businessmen," Wang Yiyang, president of Songhe Liquor Co, was quoted by the newspaper as saying.

However, the number of government banquets and the average spending on each have declined dramatically since Xi Jinping, General Secretary of the Central Committee of the Communist Party of China, introduced eight guidelines for fighting formalism and bureaucracy on December 4.

Xi called again on January 22 for all Party organs and members to make determined efforts to reject extravagance, which had an immediate effect on official spending. And many sectors, especially the catering and high-end baijiu industries, have noticed a sharp drop in orders, according to the newspaper.