| SHANGHAI, March 24
SHANGHAI, March 24 Kweichow Moutai Co Ltd
, whose premium, fiery liquor "baijiu" has been hit
by a fierce luxury crackdown in China, is winning back investors
with cut-price deals and online tie-ups, even as it braces for
its weakest ever growth when it reveals full-year earnings on
China's top baijiu maker has seen its stock rise by a third
this year, far outpacing the wider Shanghai index. But
even with the increase the shares are down by close to 40
percent since China's leaders launched the crackdown in 2012.
The fate of China's baijiu segment, a potent white liquor
that outsells vodka worldwide, reflects the wider challenge for
luxury brands in China as they seek to adapt to slower growth
and price-sensitive shoppers increasingly looking downmarket.
"There's not going to be the same growth as before, but
people feel that it's reached a bottom," said Torsten Stocker,
Hong Kong-based partner at consultancy firm A.T. Kearney, adding
Moutai's iconic name in China would help it muscle out rivals.
The liquor maker is set to reveal profit growth of 10.3
percent to 14.7 billion yuan ($2.36 billion), according to
Thomson Reuters SmartEstimates, a sharp drop from 52 percent
growth last year and the slowest ever since it listed.
Close rival Wuliangye Yibin Co Ltd posted a 20
percent loss earlier this month, its biggest drop since 2002.
President Xi Jinping has cracked down on official banquets
and gifting - which analysts said accounted for around half the
sales of high-end baijiu - as the new leadership tries to calm
public anger over corruption and restore faith in the party.
Once the tipple of China's generals and political elite,
Moutai was famed for its high prices, often pumped up by the
company itself to stoke the brand's exclusive image among the
officials, military and executives who would serve the drink at
banquets and give it as gifts as a sign of prestige.
But prices have halved, with Moutai's famous "53° Feitian"
brand dropping from over 2,000 yuan ($320) in 2012 to around
1,000 yuan now. The firm has also launched more affordable,
mid-range products to attract mainstream shoppers.
"Feitian's price is very favourable now. I used to drink
Moutai only at banquets, but now I can buy my own. It makes me
look so good," posted one shopper on online liquor retailer
Jiuxian.com, adding that online channels made it easier to buy.
The lower prices and a more diverse consumer base will raise
costs and squeeze margins for Moutai, meaning the sky high
growth rates of the last decade are unlikely to be repeated.
Moutai has pushed increasingly online, opening an official
store on Alibaba's Tmall at the end of last year, as well as
offering cut price deals on domestic online liquor retailers
Jiuxian.com and GJW.com.
The firm is looking to deepen ties with e-commerce firms
Alibaba, Tencent Holdings Ltd and IPO-bound JD.com,
according to recent local media reports citing leaks from
Moutai's parent group, as it seeks to broaden its online sales
channels to target a wider range of private drinkers.
"In past they were reluctant to move to e-commerce because
they thought it would disrupt the other channels, make
wholesalers unhappy and risk disrupting the price, now they see
there is frankly no choice," said Waldemar Jap, Hong Kong-based
managing director at Boston Consulting Group.
($1 = 6.2275 Chinese yuan)
(Reporting by Adam Jourdan; Editing by Matt Driskill)