Bloomberg News

Moutai Slumps on Product Testing Speculation: Shanghai Mover

December 06, 2012

Kweichow Moutai Co. (600519) fell to the lowest in nine months on speculation samples of its drinks were tested by an external food safety agency after excessive plasticizer was found in a rival’s products.

Kweichow Moutai, the biggest producer of baijiu liquor, dropped 1.2 percent in Shanghai trading today, the lowest close since March 7. The shares are being hurt by speculation that some consumers sent samples of its white spirit to a food safety agency run by the Hong Kong government to test for plasticizer levels, according to Liu Wei, an analyst at Masterlink Securities Corp. (2856)

There is speculation the results on the Moutai tests may be “out very soon,” Shanghai-based Liu said in a phone interview today. “It might have caused some panic selling in the market.”

Elizabeth Au, media officer at the Hong Kong government’s Food and Environmental Hygiene Department, said the agency didn’t conduct any checks on Moutai products. The company’s drinks as well as the materials and equipment used during production meet national standards, the company said in a statement to the Shanghai stock exchange today. The Guizhou- based company doesn’t add additives during production, it said.

Some drinks made by Chinese liquor-maker JiuGuiJiu Co. (000799) were found to have more than three times the permitted level of dibutyl phthalate, a plasticizer used to flavor drinks and in plastic containers, the Xinhua News Agency reported on Nov. 21.

Jishou, Hunan-based spirit maker JiuGuiJiu apologized after the Xinhua report, saying that it would run strict checks on its distribution and packaging processes to rectify the issue.

The Moutai stock decline was also due to signs that baijiu demand will remain weak as the slowdown in the economy and a government clampdown on public spending on cars, dining and travel weighs on the sector, Liu said. Prices have remained flat this year, when year-end demand usually drove up prices of high- end liquors in the past, she said.

To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net

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


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