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Rising cost of raw materials causes Moutai's price jump

(Xinhua)
Updated: 2011-03-10 09:38

BEIJING - The governor of Guizhou province said Wednesday that the latest price hike of Moutai, a famous Chinese liquor, was reasonable due to rising production costs.

China Kweichow Moutai Distillery Co Ltd raised Moutai's price by 20 percent on January 1, 2011. The wholesale price of a bottle of Feitian Moutai with an alcohol content of 53 percent rose from 499 yuan ($76) to 619 yuan after the latest price rise.

"I saw a company document showing that the cost of raw materials increased by 28 percent. This is the main reason behind the price jump," said governor Zhao Kezhi.

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A supply and demand gap is another reason for the price increase. Moutai's quality depends on its unique local environment, making it impossible to increase production quickly, said Zhao.

"To ensure its quality, the spirit that is produced now has to be stocked for five years before it can hit the market, therefore, the quantity of Moutai available in the market now was decided by the output five years ago," Zhao said.

The consumer price index (CPI), the main gauge of inflation, rose 4.9 percent year-on-year in January. Moutai's price hike raises concerns about a new round of increasing liquor prices, adding to consumers' woes over inflation.

Zhao also called on the public to battle against those who produce and sell fake Moutai.