Moutai brews expansion plans
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China's premier liquor producer Kweichow Moutai Co said it plans to invest 2.5 billion yuan (US$381 million) this year for technology upgrade and production expansion in an attempt to more than double its sales by 2015.
Based in southwest China's Guizhou Province, the up-market liquor maker said the investment will serve its target of lifting output to exceed 40,000 tons by the end of its "12th Five-Year Plan" in 2015, according to its statement to the Shanghai Stock Exchange yesterday.
It also aims to gain a sales revenue of 26 billion yuan over the next five years.
Sichuan Moutai is the country's most prestigious liquor that is often served at state banquets.
In January this year, the liquor producer announced a 20 percent increase in its product prices, the biggest hike over the past 10 years, as cost of raw material surged 28 percent and limited production restrained supply.
Zhao Yong, an analyst with Haitong Securities Co, said higher sales prices played a vital role in Kweichow Moutai's profit rise. "Most of the premier liquor, including Wuliangye and Moutai, is used for business gifts and their consumers are less price-sensitive," he said. "The price increase will not harm Moutai's dominant market position."
Zhao expects the price hike would continue to power Moutai's future business growth and the company will also see higher sales by expanding to mid-level products.
In a separate statement, Kweichow Moutai reported a 17 percent increase in net profit to 5 billion yuan last year. It produced 32,611 tons of Moutai series liquor last year, up 11.42 percent from 2009 while 2010 sales revenue also rose 20 percent to 11.6 billion yuan.
