Moutai targets 9 pct sales growth

Kweichow Moutai Co Ltd plans to expand production to 100,000 tons this year, up 25 percent year-on-year, said the company's chairman. Provided to China Daily

Liquor maker's goal is lowest in 5 years amid govt austerity campaign

Kweichow Moutai Co Ltd, maker of what is known as the "national liquor" of China, announced on Wednesday it was lowering its sales target this year to 43.9 billion yuan ($7.16 billion) - which, at only 9 percent growth, is the first time the company has projected a single-digit rise in the past five years.

In mid-January, the company said it was anticipating 12.5 percent growth in 2014 and that it expected to break 45 billion yuan in sales.

Then President Xi Jinping's crackdown on corruption and lavish consumption began being felt as Spring Festival galas and parties were canceled.

However, Yuan Renguo, chairman of the Guizhou-based manufacturer for white spirits, said: "The growth rate is not what we are looking at. The most important thing is to maintain a steady growth..

He added the company is expanding its customer base from the public sector to individual and corporate consumers.

Yuan, also a member of the National People's Congress, said the company plans to expand production to 100,000 tons this year, up 25 percent year-on-year.

"We can't simply rely on sales to government departments; in fact, our sales from the public sector accounted for a mere 7 percent last year," he said on the sidelines of the ongoing national two sessions.

Moutai, a staple of lavish Chinese banquets, dates back to the Song Dynasty (960-1279) and is often served at high-level functions or given as a preferred gift for government officials.

But its price tends to be beyond the reach of the average person.

At upscale locations such as Beijing's Ritz-Carlton hotel, a bottle of the 50-year-old blend can sell for as much 78,888 yuan.

But the high price tag, which made it an easy target for the government spending campaign, has been slashed. A bottle of Kweizhou Moutai, which cost close to 2,000 yuan in 2011, can now be had for less than 1,000.

How quickly fortunes can change. In 2013, Moutai raked in 40.2 billion yuan in sales, an increase of 13.8 percent year-on-year.

To battle the hard times that the entire distilling industry has endured, Moutai launched a customization marketing company last year, shifting its focus away from the government and the military to the wealthy and the top 500 companies, both international and domestic.

Meanwhile, Moutai - which is China's top brand for baijiu, a sorghum-based spirit of various "fragrances" - is also planning to expand its overseas network to Europe, North America, Australia and major duty-free ports in China.

The company bought a property in Paris for about 8.79 million euros ($11.8 million) as its focus on the European market for business development.

"With the alcohol content of 52 to 54 percent, we will adjust our products and sell customer-made spirits for foreign consumers who prefer low-alcohol liquor," Yuan said.

The company exported nearly 1,000 tons of Moutai liquor in 2013 with sales revenue of more than $160 million.

Ma Yong, deputy secretary-general of the China National Food Industry Association, said Moutai had a good performance last year and should continue to maintain its position as industry leader with its new strategies.

The inventories of 14 listed enterprises involved in the white spirits industry surged 23.6 percent to 35.6 billion yuan in the third quarter of last year, while revenue dropped 12.25 percent to 5.72 billion yuan.