Kweichow Moutai Sheds Brands, Products to Stop Copycats

Kweichow Moutai Sheds Brands, Products to Stop Copycats

Lu Jinyu

Date: Fri, 05/04/2018 - 14:05 / source:Yicai
Kweichow Moutai Sheds Brands, Products to Stop Copycats
Kweichow Moutai Sheds Brands, Products to Stop Copycats

(Yicai Global) May 3 -- China’s leading high-end distiller China Kweichow Moutai Distillery (Group) Co. has ditched 163 brands and 2,068 products and kept 51 brands and 321 products since it announced it would simplify its line-up in September to combat fakes.

“A disorderly variety of brands of famous distillers is the main cause of frequent acts of copyright infringement and counterfeiting, while China has few high-quality, highly characteristic brands, and these only make up about 1 percent of all brands, thus showing domestic manufacturers insufficiently cultivate and protect their brands,” Moutai Group Chairman Yuan Renguo said in an internal meeting in February this year.

The popularity of Moutai’s flagship liquor product has prompted many to hijack it. Police in the baijiu maker’s southwestern home province of Guizhou smashed about 7,500 bottles of bogus Moutai in January, state news agency Xinhua reported. The problem prompted the firm to team with Alibaba Group Holding Ltd. affiliate Ant Financial Services Group earlier this year to develop a blockchain-based anti-counterfeiting system, Yicai Global reported in March.

One company unit, Kweichow Moutai Distillery (Group) Xijiu Co., has retained nine brands and 70 products from among an original 22 labels and 320 varieties. Another subsidiary, Guizhou Moutai Distillery (Group), preserved 10 brands and 75 varieties after jettisoning 54 brands and 828 products.

These brand management measures of Moutai Group -- the world’s most valuable liquor producer -- require each subsidiary to hold onto fewer than 10 brands with under 10 products in each. The company thereby culled 155 brands and 1,983 products immediately after the September announcement and has steadily dropped 8 brands and 85 products in the eight months since. This streamlining represents an overall rate of 76 percent of labels and 87 percent of varieties, respectively.

Many in China and beyond favor Moutai’s baijiu. Premier Zhou Enlai toasted US President Richard Nixon with the potent pungent liquor at a state banquet in 1972. A limited edition for Chinese New Year sold out online in seconds this year.

The group has 24 subsidiaries and its business revenue and net profit in the first quarter hit CNY18.4 billion (USD2.9 billion) and CNY8.51 billion, a rise of 32.2 percent and 38.9 percent, respectively. Moutai [SHA:600519], the most valuable stock on China’s main bourses, became China’s first consumer brand to reach a market capitalization of CNY1 trillion (154.8 billion) after its shares rose to a record on Jan 15, as Yicai Global reported that same day. Moutai distilled about 42,700 tons of the sorghum-derived base spirit last year, up 9 percent annually. The company expects total sales to have climbed about 34 percent last year, as Yicai Global reported Jan. 31.

Editor: Ben Armour

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Keywords: MSCI, Brand Reduction, Liquor