Bloomberg News

China Liquor Maker JiuGuiJiu Declines 10%: Shenzhen Mover

November 23, 2012

JiuGuiJiu Co. (000799), a Chinese liquor- maker, fell by the daily limit on resumption of trading in Shenzhen after a halt related to quality concerns over the finding of excessive levels of a plasticizer in its drinks.

JiuGuiJiu dropped 10 percent to close at 42.82 yuan, the largest decline since May 2010, following a four-day trading halt. Rivals Wuliangye Yibin Co., Jiangsu Yanghe Brewery Joint- Stock Co., Kweichow Moutai (600519) Co. and Sichuan Swellfun Co. (600779) rebounded after declines yesterday.

The Jishou, Hunan-based spirits maker yesterday apologized to consumers and investors and said it’s cooperating with requests from the provincial quality watchdog to run strict checks on distribution and packaging processes to rectify the issue. JiuGuiJiu was suspended from trading Nov. 19, and the company said at the time it was looking into a media report that its liquor contains excessive amounts of a plasticizer.

“The company continues to strengthen its quality supervision infrastructure in order to produce safe and high quality products for buyers,” JiuGuiJiu said in the statement. “At the same time, we extend our sincere apologies to consumers and investors over this recent issue.”

Inspections showed as much as 1.04 milligrams a kilogram of dibutyl phthalate, or DBP, in some JiuGuiJiu samples, China’s official Xinhua News Agency said, citing the General Administration of Quality Supervision, Inspection and Quarantine. The health ministry set a limit of 0.3 milligram a kilogram of the substance used to soften plastics, Xinhua said.

Meets Standards

JiuGuiJiu said its products met the relevant national standards in China and didn’t pose a health risk.

Wuliangye (000858), China’s biggest liquor maker, rose 1 percent to 27.71 yuan at the trading break in Shenzhen, while Jiangsu Yanghe, the nation’s third-biggest distiller, climbed 2.1 percent to 97.97 yuan.

Kweichow Moutai, the world’s second-largest distiller by market value, gained 2.3 percent to 222.23 yuan in Shanghai trading, and Sichuan Swellfun, part-owned by Diageo Plc (DGE), added 1.8 percent to 19.40 yuan.

The Administration of Quality and Technology Supervision of Hunan Province asked the company to investigate the findings, the regulator said on its website.

Ingestion of dibutyl phthalate may cause gastrointestinal irritation, nausea, vomiting and diarrhea, according to the website of the Scottish Environment Protection Agency.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net


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