Spirits players in China continue to suffer

Spirits players in China continue to suffer

Baijiu maker Wuliangye Yibin Co has reported a sharp drop in first quarter profits as China's anti-extravagance crackdown continues to bite, according to local reports.

The Sichuan Province-headquartered group said yesterday (27 April) that net profits in the three months to the end of March fell by 27.8% to CYN2.62bn (US$427.7m), according to news agency Xinhua. The performance marks the first slip in Q1 profits for the company since 2003, it was reported. 

Sales in the three months were also down, by 22.5% to CYN6.72bn. Wuliangye Yibin joins other high profile players operating in China's spirits market, including Remy Cointreau, Pernod Ricard and Diageo, who have been affected by the Chinese Government's anti-extravagance clampdown, which has formed part of a wider anti-corruption initiative. 

Earlier this month Wuliangye Yibin reported a 19.8% drop in full-year net profits in 2013, blaming “restructuring” in the market after a decade of strong growth, Xinhua reported. 

Last year, the company was fined CNY202m for price fixing, it was reported, along with its fellow baijiu maker Kweichew Moutai.