President Xi Jinping’s anti-corruption drive has lasted longer than everybody expected, hurting high-profile drink manufacturer Moutai hard. The drink is unfortunately “synonymous with corruption and hedonism”, tells retail analyst Shaun Rein Reuters.
Baijiu has rocketed in price over the last five years, boosted by its traditional use by officials and executives as a gift to help smooth business ties. However, this has brought it under the spotlight of China’s new government as it looks to clean up corruption.
“It’s clear that President Xi Jinping’s crackdown on corruption has been longer and deeper than many analysts had expected. He’s really trying to cut to the bone to ensure the legitimacy of the party,” said Shaun Rein, Shanghai-based managing director of China Market Research Group.
Moutai reported net profit growth of 3.6 percent in the first six months of the year. This compared to 43 percent for the same period last year and 58 percent in 2011.
“It has hit Moutai especially because it’s just such a high-profile brand. It’s synonymous with corruption and hedonism. A lot of officials and enterprises are shying away from purchasing or receiving gifts of Moutai because it’s just too high profile,” said Rein.
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