Vats of locally made wine called baijiu are seen at a distillery on the Chishui River, on Sept. 23, 2016, in Maotai, Guizhou Province, China. (Photo : Getty Images)
While baijiu is widely known as one of the expensive Chinese liquors in the market, prices for this drink have soared in some retail stores just before Chinese New Year. Industry insiders share that the sector is yet to fully recover.
In some stores in Beijing, a 500ml bottle of Kweichow Moutai's classic Feitian 53 percent alcohol is being sold for as much as 2,000 yuan ($290). This an increase of almost 40 percent compared to a few weeks back. Meanwhile, if you try buying the same bottle online, you can get it for as low as 1,288 yuan on JD.com.
According to analysts, the greater demand for the premium liquor during the Spring Festival coupled by the limited supplies caused the surge in prices.
Premium baijiu is an extremely profitable business. It is estimated that the top four baijiu producers in China account for 27 percent of earnings before interest and taxes of the global spirits industry.
"With more disposable income, consumers are willing to spend more, and their mindset is to buy liquors when prices are going up," shared Ding, a distributor from the Ningxia Hui autonomous region. He added that despite the recovery, the prices haven't rebounded to the levels before the government's austerity drive and anti-graft campaign.
Retail store prices for baijiu in 2012 have peaked above 2,000 yuan. It dropped to 1,800 in early 2013 then decreased later to 1,200 before stabilizing at about 1,000 yuan.
"After a few years of market volatility, the baijiu, or white spirits, industry is gradually recovering, and the demand has expanded as consumer spending has risen," said Wang Chonglin, deputy manager of Kweichow Moutai Co.
The baijiu sector has helped drive stock gain this year, leading the country's consumer staples stocks. With things going quite well for this sector, baijiu continues to attract investors because of its stability amid the volatile situation in the markets.
With how things are going in the spirits market, the baijiu sector will definitely be able to gain ground and recover from the effects of market volatility in the previous years.
