SHANGHAI :
Chinese Liquor Maker Kweichow Moutai's Market Cap Passes USD100 Billion, Dealers Suggest Price Hike Looms
Lv Jinyu
DATE:  Oct 17 2017
/ SOURCE:  Yicai
Chinese Liquor Maker Kweichow Moutai's Market Cap Passes USD100 Billion, Dealers Suggest Price Hike Looms Chinese Liquor Maker Kweichow Moutai's Market Cap Passes USD100 Billion, Dealers Suggest Price Hike Looms

(Yicai Global) Oct. 17 -- World-renowned liquor maker Kweichow Moutai Co. [SHA:600519], headquartered in Guizhou province's Zunyi city, saw its market value reach CNY704.3 billion (USD106.8 billion) as shares closed yesterday at CNY560.42.

The company led gains among first-tier baijiu makers in the capital market, while in the spot market, Wuliangye Yibin Co. [SHE:000858], Jiangsu Yanghe Brewery JSC Ltd. [SHE:002304] and Luzhou Laojiao Co. [SHE:000568] have all hiked prices as the Chinese liquor sector enters a strong sales period.

Kweichow Moutai has kept its retail prices unchanged until now, resisting challenges from other first-tier liquor companies for its market position as the largest baijiu-maker in China.

"Executives at Kweichow Moutai visited dealers during the combined National Day and Mid-Autumn Festival holiday period and conducted price hearings," said one baijiu dealer in northern China. "The factory gate price could be set at CNY999 (USD151.3), rather than CNY819."

Most dealers have heard of Kweichow Moutai's possible price hikes, though the company's executives are still reviewing the situation.

The firm is expected to negotiate contracts with dealers next month and sign agreements for the following year during a dealers' conference in late December, when any possible price rises will be finalized.

The likelihood of a price increase is boosted by recent robust sales, which mean that dealers will still see healthy margins even if the factory gate price increases. However, executives remain hesitant on the move due to the company's unique position in the market.

Wang Chonglin, deputy general manager of Kweichow Moutai and chair of Moutai Liquor Sales Co. has denied that executives are considering a change in price.

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Keywords:   MSCI