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Kweichow Moutai sees profits rise 16%
The world’s biggest alcohol group, Kweichow Moutai, saw its first-quarter net profit rise 16% on strong sales despite lacklustre consumer momentum in China.
The group made CNY24.065 billion (US$3.32 billion) on quarterly revenues of CNY45.78 billion, which were an 18% increase on the same quarter in 2023.
That means the group has started well on track in its goal to achieve 15% growth in 2024.
It made net profits of CNY74.73 billion ($10.33 billion) in 2023.
Baijiu, which already accounts for 95% of the country’s alcohol market, is enjoying the benefit of the Chinese consumer’s reluctance to spend on imported Western premium spirits while the economy remains in the doldrums.
After a buoyant early part of 2023, high youth unemployment and a deepening property price crisis have prompted consumer caution.
Lunar New Year
Both Pernod Ricard and LVMH commented on the softness of Chinese demand in their latest figures which encompassed the key sales period of the celebrations of the Lunar New Year in mid February.
But that pattern was not repeated at Remy Cointreau, whose figures for the January to March quarter showed “significant growth” in China which helped to drive performance at its Cognac division well above expectations.
Remy Cointreau leads the market for Cognac in China, where it is the largest category of imported spirits.
In the latest quarter Moutai’s sales to distributors surged by 26% compared to 2023 to CNY26.3 billion, outpacing direct sales growth of 8% for the first time in the past 18 quarters.
Expansion
The news follows reports earlier this year, where db reported that despite sales increasing, the drinks giant has still lost its top spot as China’s most valuable company.
Kweichow Moutai has been expanding its product range to appeal to younger age groups in China, and according to financial analyst group Caixin Global its latest range extension is a partnership with privately-owned chocolate giant Mars to launch an alcohol-infused chocolate.
The chocolate, which has received bullish reviews, is Moutai’s latest effort to give its products extra appeal through partnerships with well-known consumer brands.
Last autumn China’s Luckin Coffee chain collaborated with Moutai on a new product called “soy sauce latte” that spikes Luckin’s coffee with baijiu.
The coffee chain said that on launch day it sold more than 5.42 million cups of Moutai alcohol-infused lattes, worth more than 100 million yuan (US$13.69 million).
In 2022, Kweichow Moutai opened its first ice cream store selling up to 14 flavours infused with baijiu.
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