Liquor giant Moutai’s sales rise 4pct on festival demand

China’s Kweichow Moutai Co. posted a nearly 4 percent increase in revenue as demand for products from the world’s most valuable distiller climbed in the runup to the Mid-Autumn festival.

Revenue climbed to 19.72 billion yuan (USD2.84 billion) in the quarter ended Sept. 30, the Guizhou-based company said in a statement yesterday. Net income rose almost 3 percent to 8.97 billion yuan.

While the liquor giant has so far benefited from its leadership position in the luxury segment, the company could face headwinds from a downturn in consumer sentiment. China’s economy, which in the most recent quarter grew at its slowest pace since the aftermath of the global financial crisis in 2009, is facing worsening trade tensions and a slumping stock market.

“Slower economic growth in China could hurt sales and earnings growth in the coming 12 months,” Shen Li and Kai Tung Pang, analysts at Bloomberg Intelligence, wrote in a note before the earnings announcement. “Weaker consumer sentiment associated with the property market and trade war may slow demand for luxury goods such as Moutai, and hinder the company’s ability to raise prices in 2019.”

In the third quarter, Moutai’s sales were boosted by two Chinese public holidays, traditional peak periods for baijiu demand. Its inventory remains scarce, which helps prop up demand for its fiery grain liquor even as other luxury companies say that Chinese demand is ebbing as consumer confidence wanes.

The premium alcohol is the toast of choice among China’s leaders and has found widespread popularity among the country’s middle class as they embrace a more affluent lifestyle. A bottle of its core brand, Flying Fairy, routinely fetches more than 2,000 yuan in shops, although the company recommends a retail price of 1,499 yuan. Bloomberg