China's top alcohol brand Kweichow Moutai saw its sales revenue jump by 16.64 percent year-on-year in the first three quarters of this year, according to the company.
Its sales revenue during the period reached more than 60.93 billion yuan ($8.6 billion), with net profit exceeding 30.45 billion yuan, up 23.13 percent year-on-year.
The company's share price reached 1,183.3 yuan on Thursday, pushing its market value to 1,486.49 billion yuan.
However, net profit growth in the third quarter reached 10 billion yuan, up 17.11 percent, which is a drop from 31.91 percent in the first quarter and 20.29 percent in the second quarter this year.
Its third quarter revenue of 22.3 billion yuan exceeded the second quarter with a growth of 13.28 percent year-on-year.
The company has conducted reforms of traditional distribution channels. The first three quarters saw a reduction of 586 domestic distributors out of its total of 2,401.
According to Dongxing Securities, high-end liquor will continue to see strong momentum and has potential to expand.
He Qi, an analyst from Huatai Securities also holds a positive opinion on the company's performance and further growth given its dual increase in volumes and prices boosted by strong demand in the festival season this autumn.
Kweichow Moutai's recent strategy to fuel its direct distribution to major retailers and to its commerce platforms has given the company more say in pricing.
The company's plan is to supply 1,500 metric tons a year to its directly operated stores. Among them, Wumart, China Resources and RT-Mart had quotas of 600 tons in total in June. In September, e-commerce players including Tmall and Suning received 400 tons.
However, its direct distribution channels have not yet met expectations, as the first three quarters saw direct sales channel revenue reach 3.1 billion yuan, down 767 million yuan from the same period last year. The fall in revenue from directly operated distribution channels is a result of its postponed reform in directly operated distribution channels in the first quarter.
Moutai's direct distribution channel reform was carried out by Moutai Group's marketing company, which was only founded in May this year.
The company explained that the reform of the direct distribution channels still has a long way to go to achieve high potential growth.
Yang Yongsheng from China Merchants Securities Co Ltd said there was still potential for sales to grow in the fourth quarter.
The liquor brand saw its sales revenue in the overseas market reach more than 1.9 billion yuan during the period, according to the report.
In 2018, Moutai saw its output reach about 70,200 tons, with sales revenues reaching 73.6 billion yuan and net profit 35.2 billion yuan, up 26.49 percent and 30 percent year-on-year respectively.
Distilled in the town of Maotai in Southwest China's Guizhou province, Moutai is one of the country's leading liquor brands and often served at State banquets.
Xinhua contributed to the story.
wangzhuoqiong@chinadaily.com.cn
(China Daily 10/18/2019 page16)
