Chinese distilleries eye foreign market

GUIYANG -- Chinese alcohol producers are eyeing foreign markets as domestic sales growth has shrunk amid China's frugality campaign, according to sources with a Chinese alcoholic beverages expo.

The Third China (Guizhou) International Alcoholic Beverages Expo came to a close on Thursday in Guiyang, capital of south China's Guizhou Province and home of China's top liquor brand, Kweichow Moutai.

The four-day expo drew beverage producers from 39 countries and regions.

Data from the China Food Association show that the country's liquor revenues totaled 240.2 billion yuan ($39 billion) in the first half of the year, yielding net profits of 39.9 billion yuan, an annual increase of 10.7 percent in revenues and 0.6 percent in profits.

However, revenue growth was down by 18.2 percentage points year-on-year, and year-on-year growth for net profits plunged 54.5 points.

Ji Keliang, honorary chairman of Kweichow Moutai Group, said the distillery has improved its global sales network and overseas sales have maintained robust growth.

The company exported nearly 1,000 tons of the distilled liquor last year, taking in $175 million -- a yearly increase of 60 percent.

Industry insiders noted China's high-end liquor producers were faced with tough domestic market conditions as the central leadership has maintained a hard line against extravagance. High-end liquors are among the luxuries cracked down on in official spending.

In addition to Moutai, other liquor brands such as Wuliangye have been troubled by piled-up inventories, shrinking sales volume, and falling sales prices.

Although Chinese liquor brands have big potential overseas, they need to borrow foreign marketing experience to build their brand images abroad, said Zhang Zhigang, former vice minister of commerce at the expo.

He advised domestic distillers eyeing overseas markets to attach great importance to setting up standards for their products, manufacturing and packaging, and protecting their intellectual property rights.

Chinese wineries and distilleries, including Wuliangye, Luzhou Laojiao and Zhangyu Wine, have gained initial footholds in overseas markets, but their marketing has developed slowly, Zhang said.

Cai Youping, chairman of Guizhou Dongjiu Winery Co Ltd, said the overseas market requires liquor makers to show ingredient information, which many Chinese distilleries are still unprepared to do.