China Focus: Moutai, Chinese legend to top world's liquor

Leading China's high-end liquor market, Kweichow Moutai has survived the country's frugality campaign and aims to top the world liquor market.

Just as Russia has its vodka, China has its own distilled spirit called baijiu, a kind of white spirit made from sorghum, wheat or rice. And Moutai is the best.

With a history traced back to the 1st century B.C., Moutai first impressed foreigners with its mellow aroma at the 1915 Panama Pacific International Exposition.

The state-owned Moutai distillery was established in a small town in southwest China in 1951, and its rare and extremely complicated production helped the brand prevail over other competitors for decades.

Dubbed China's "national liquor" and dominating the top-end liquor market, Moutai's sales revenue rose more than 30 percent in the first three months of this year, said the corporation's president Yuan Renguo.

"Profits continue surging after we adjusted sales targets and prices." Yuan said, "Moutai's outstanding quality gives us confidence."

However, the picture was not so assured in 2013-2014, when the frugality campaign began to curb extravagance, and government receptions and gift exchanges started becoming less common.

Liquor brands like Moutai catered to unchecked government spending, putting prices out of reach for the common public.

The star product of Moutai -- the 500ml bottle of 53-degree liquor -- climbed to over 2,000 yuan in 2012. That year, the average per capita disposable income for China's urban residents was 2,047 yuan per month. Moutai has now cut the price to less than 1,000 yuan.

Better regarded than its long-term baijiu competitor Wuliangye, Moutai reported a slight 0.25-percent decline in net profits in 2014, recovering a lot from 2013's 13.7-percent loss.

Moutai's timely price reduction helped offset the effect of the austerity drive and avoid great collapse.

The corporation said in August, 2014 that supply exceeds demand in the spirit sector. The whole industry continues to undergo a deep adjustment in a complex environment. Moutai plans to invest 25 million yuan with partners to set up an e-commerce company to broaden its customer base.

The company is also exploring global cooperation with five agencies overseas in an attempt to become the world's No. 1 liquor brand.

China is the leading consumer of spirits. Moutai's brand is worth nearly 2.4 billion U.S. dollars, surpassed only by Johnnie Walker Scotch, according to a 2014 report by consulting firm Brand Finance. Endi