LUO XIAOGUANG UP FOR GRABS: A bottle of Moutai liquor is displayed at an auction held by China Guardian Auctions Co. Ltd. on December 9, 2010 (LUO XIAOGUANG)
Spring Festival, the most important festival for the Chinese, is a time for celebration—and what would a celebration be without bottles of holiday liquor. As gifts for family and friends, Chinese liquor sales peak in the run-up to the Spring Festival and sales this year are likely to be even higher than last year.
"Every year before the Spring Festival, sales volume grows, but the prices increase too. I think liquor sales are one of the things that are immune to fluctuations, even after the financial crisis," said Li Mei, a staff member at the Beijing Shuntianfu Supermarket.
There are currently more than 8,800 certified liquor producers in China, including state-owned enterprises, Sino-foreign joint ventures and private companies. Combined, they produce nearly 10,000 different products whose prices range from less than 10 yuan ($1.5) to more than 1,000 yuan ($150) per bottle.
Figures from the China Alcoholic Drinks Industry Association showed that in the first half of 2010 the total liquor output in China was 4 million kiloliters, up 23.1 percent year on year; the aggregate sales revenue was 120 billion yuan ($18.21 billion), surging 41.96 percent; and profits totaled 18 billion yuan ($2.73 billion), a year-on-year increase of 45.18 percent.
A luxury item
In China, 53-degree Moutai, a renowned domestic liquor brand, is sold for 1,800 yuan ($277) a bottle, higher than the monthly income of many Chinese people. But Moutai liquor sales are solid, and in many supermarkets it is often out of stock.
Including Moutai, there have been more than 20 high-end liquor brands in China, whose price per bottle is above 500 yuan ($77).
Figures from the China Alcoholic Drinks Industry Association show that gatherings, banquets and business dinners are the major occasions for high-end liquor consumption. Among all high-end liquors consumed, 70 percent are for government and commercial purposes, 19 percent are for individual consumption and the other 11 percent are for gatherings, wedding feasts and gifts.
But the figures only show that the major force of high-end liquor consumption is the high-end, upscale groups, with pricey liquor tending to be an item of luxury. Common people are loath to buy these kinds of expensive drinks for their homes.
Zhong Dajun, Director of the Economic Observer Center at Peking University, said the sustained economic development in China has upgraded the country's consumption. The consumers are segmented and high-priced products have their markets.
In China, no domestic product has yet been defined as a "luxury;" all luxury brands are from other countries and regions. Zhu Mingxia, Director of the Cheungkei Research Center for Luxury Goods and Services at the University of International Business and Economics, said liquor is the most probable to become a luxury good in China. She thinks in China there are six types of products that are likely to become global luxury goods: porcelain, liquor, silk, tea, jewelry and garments.
Globally, garments and cosmetics are the biggest luxury brand categories, but similar Chinese products don't quite make the cut.
"I think Chinese liquor, having a culture of thousands of years and many century-old brands, can become a luxury good in time," Zhu said.
Zhu said among all of China's liquor producers, high-end liquor brands, represented by Moutai and Wuliangye, are the most probable to become luxury brands, because they have all the criteria of luxury goods: excellent quality, scarcity, uniqueness, long history and tradition, and legendary brand story. At the 1915 Panama Pacific International Expo, Moutai ranked second among world liquors.
"These famous liquors have become outstanding not because they are brewed with grain, but because they are fermented with culture," Zhu said.
An investment tool
At an auction on September 5, 2010, a 4,750-ml bottle of liquor by Fenjiu Group was sold for 2.09 million yuan ($317,147), with a reserve price of 95,000 yuan ($14,416). On December 13, 2010, a bottle of Moutai liquor made in 1958 was auctioned at 1.456 million yuan ($221,548), a Moutai liquor auction record. In 1958, this bottle was sold for 4.2 yuan ($0.64). At an auction on December 19, 2010, a bottle of 9.9999 kg of Wuliangye liquor was transacted at 5.09 million yuan ($772,382).
The trend is noticeable: As a bottle of liquor ages, its price multiplies.