China’s Kweichow Moutai Co (貴州茅台) posted a nearly 4 percent increase in revenue as demand for products from the world’s most valuable distiller climbed in the run-up to the Mid-Autumn Festival.
Revenue climbed to 19.72 billion yuan (US$2.84 billion) in the quarter that ended on Sept. 30, and net income rose almost 3 percent to 8.97 billion yuan, the Guizhou-based company said in a statement yesterday.
While the liquor giant has so far benefited from its leadership position in the luxury segment, the company could face headwinds from a downturn in consumer sentiment.
China’s economy, which in the most recent quarter grew at its slowest pace of 6.5 percent annually since the aftermath of the global financial crisis in 2009, is facing worsening trade tensions and a slumping stock market.
“Slower economic growth in China could hurt sales and earnings growth in the coming 12 months,” Shen Li and Kai Tung Pang, analysts at Bloomberg Intelligence, wrote in a note before the earnings announcement. “Weaker consumer sentiment associated with the property market and trade war may slow demand for luxury goods such as Moutai, and hinder the company’s ability to raise prices in 2019.”
In the third quarter, Moutai’s sales were boosted by two Chinese public holidays, traditional peak demand periods for baijiu, a distilled liquor made from fermented grains.
Its inventory remains scarce, which helps prop up demand for the fiery liquor.
The premium alcohol is the toast of choice among China’s leaders and has found popularity among the middle class as they embrace a more affluent lifestyle.
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