Wuliangye climbs value chain

• Published 25 Jun 2009

White spirit producer attempts to rival the prestigious Kweichow Moutai by setting its sights firmly upmarket.

In China's baijiu, or white spirit, market, it seems that less is more. Shanghai-listed Kweichow Moutai (600519:SHA) produced only 25,078 tonnes of the high-strength liquor in 2008, at least three times less than its key competitor Wuliangye Yibin (000858:SZ), yet its total sales revenue exceeded that of Wuliangye and its earnings per share in 2008 was eight times higher than its rival. This is because Moutai is firmly positioned at the top end of the market (its high-end brands account for more than 90% of sales) where profit margins are considerably higher. Wuliangye on the other hand still has around 50-odd baijiu products, of which around 65% of them are mid end.

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