Like many internet marketers and business people, the Chinese market is always of interest. There’s huge spending power there and slowly markets are opening up with improvements in internet infrastructure and delivery systems. The problems though with marketing to Chinese market are as always State intervention and manipulation of markets. One example of this is the market for high end alcohol sales like Scottish whiskey and fine wines both ideal to market globally due to high price and low delivery costs.
China’s disciplinary watchdogs are examining official spending on luxury alcohol as Xi Jinping steps up an anti-corruption campaign, but the move isn’t yet denting the stocks of premium liquor makers.
The Communist Party is asking local cadres to identify all the illegal spending on luxury liquor from January to August, including how much officials have spent and the names of those who attended banquets that included luxury alcohol, according to notices published on government websites.
They possibly have a point, alcohol consumption in developed nations is rising all over the world and represents a huge health concern. There are few reliable treatments for alcohol dependency apart from AA and clinical deprivation interventions. Although recently some trials held in Scandinavia reported over 78% success using a drug called Nalmefene, which you buy as Selincro in Europe.
Sales of China’s premium liquor segment were hit hard after 2012, when Xi’s signature anti-corruption campaign focused on officials’ lavish spending on entertaining. The impact this time is more muted as makers of the most popular luxury brands are seeing a surge in consumption in the mass market and the economy is showing signs of strength.
“The demand for premium liquor is very strong now in China, mainly from family and friend gatherings, and normal business needs,” said Qi He, a Shanghai-based fund manager at Huatai Pinebridge Fund Management Co. “The sales contribution from government consumption has reduced much from more than 50 percent years ago, to less than 20 percent now in China.”
Shares in the high-end liquor segment continued a rally on Thursday, with some of the biggest companies trading near all-time highs. Kweichow Moutai Co. rose for a fourth day, adding 0.5 percent as of 11:46 a.m. in Shanghai, and Wuliangye Yibin Co. advanced 1.7 percent. Shanxi Xinghuacun Fen Wine Factory Co. shares increased 1.1 percent to the highest since its 1994 listing; JiuGui Liquor Co. climbed 4.3 percent.
Kweichow Moutai, the most valuable distiller in the world with a market value of about $90 billion, last month reported first-half profit climbed 28 percent as Chinese consumers spend more on premium products. Its shares have surged 48 percent this year.
Liquor makers are helping push a benchmark tracking the industry to a record. The CSI 300 Consumer Staples Index was up 0.2 percent at 11:49 a.m. in Shanghai, after jumping 2.7 percent in the previous session. Data released on Wednesday showed China’s consumer prices strengthened 1.4 percent in July from a year ago, while retail sales jumped 11 percent in June, the most since December 2015.
The government’s campaign comes as the party prepares for its once-in-five-year leadership reshuffle, in which as many as 11 of the 25 members of the ruling Politburo could be replaced.
BBC and Entertainment Blogger