Moutai under austerity fire – Shaun Rein

China’s most famous liquor Moutai is the Ferrari among alcoholic drinks. But when austerity is high on the political agenda, that might actually create a lot of trouble, explains business analyst Shaun Rein to Reuters. Although they might be able to circumvent those measures.

Reuters:

Despite healthy financial results for 2012, this year will be tougher, especially for industry leader Kweichow Moutai Co Ltd, whose prestige brand and high prices put it directly in the line of fire for official anti-luxury campaigns.

“Moutai is going to get hit harder because it’s become the ‘Ferrari’ of alcohol. It’s the brand that everyone is sort of scared to buy,” said Shaun Rein, the Shanghai-based managing director of China Market Research Group.

Baijiu, a potent white liquor that outsells vodka worldwide, is prized in China at official banquets and as a gift to sweeten business ties. Sales and bottom lines have surged with China’s luxury boom of recent years…

As often occurs with China’s official campaigns against corruption and excess, however, market commentators say companies and consumers will find ways to skirt around the ban, cushioning the impact on those caught in the crosshairs.

“Actually this year the real estate companies have told us they’re spending more on the hard alcohol sales, and we’ve found when we’ve interviewed distributors, that a lot of the officials are going underground with their purchases,” said Rein.

“They’re finding ways around the crackdown at the local level and it’s very difficult to turn off the switch overnight.”

More in Reuters.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

The China Weekly Hangout discussed in January 2013 why so many foreign firms fail in China. Attending are as panelist Richard Brubaker of Collective Responsibility and Andrew Hupert, expert on conflict management in China. Moderation: Fons Tuinstra of the China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.