Ebbing demand for China’s favourite firewater adds to debt concerns

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Thickness: In the Chinese village Maoi, local firewater is not only an important source of income in the name of the city, but it is also a barometer of the country’s consumer market and the economic misfortune of its province.

In the weeks before the lunar New Year, tourists traditionally come to the city, located in the mountains of the southwestern province of Guyzhou, to buy Biju, or the white soul as a gift – this year, the crowd was particularly small.

The locally manufactured premium spirit through Kucho thickness has been a reality in decades of weddings, business dinners and state functions, but in the past two years, its sales have been suffering from poor consumers and business confidence.

Victor Sheh, a professor of political science at the University of California, San Diego, says the strong cash flow of thickness has been an important part of the strategy to help Gauzo’s official debt, which is coming permanently.

This means that any contraction in the thickness of the thickness is a problem for the government, which “needs this money to pay for their loan and run the government.” The Kuchu thickness listed in Shanghai is owned by the majority owned by the thickness group, resulting in the full property of Gizu, the second most debtor of China.

Its contribution to Guizo’s economic development is very high, not only as a major employer but also to the province as a vehicle to receive and pay the debt. For a long time, the demand for Chinese consumers has been considered, its retail performance in recent years has been squeezed by widespread deflationary pressure.

“Earlier, people used to fly thick bottles from Beijing every year to buy more than 3,000 yuan (2 412),” said a shopkeeper a lot of wine in the Maoi village.

“Now you can find a bottle of less than 1,699 yuan, but the environment is so bad, no one wants to buy.” The world’s largest alcoholic company and China’s most valuable listed firm, which is the most valuable listed firm of China with a market value of up to $ 400 billion, clarify its clear spirit and has a special place in the history of the nation.

Premier Zhou Anili tossed US President Richard Nixon on a visit to China in 1972 with thickness. But the continued decline in sentimentality has removed the air from the cost of shares of the coach thickness and the price consumers are ready to pay this product.

After targeting a record height in 2021, the firm’s price fell to about HALF half, and its flagship 53 % of the 500 ml bottle market price fell from 2,700 yuan to 22 % at the beginning of 2024. Kuchu Moti refused to request an interview. Gaizu’s provincial government did not respond to the requests.

The disturbance of change

To ensure, Kuchu thickness revenue is not linked to the product market price, but to the factory gate price that pays its distributors’ network.

According to the preliminary results of January, at the end of 2023, the rise of thickness of factory gate for Fetin helped keep revenue more than a 15 % increase in sales in 2024.

But there are questions as to how long this growth will last.

Estimates by brokerage and company executives suggest that at least 50 % of the company manufactured by the company has not been used over the past decade, but rather often as inventory, often as alternative investments.

Some analysts have warned that a large inventory sale can have a greater impact on the thickness market and share prices. UBS Research has predicted that by mid -2025, the price of the fetin market could fall below the 2,000 yuan benchmark.

The decline in prices, as a result, affects the luxury brand of thickness. “If you are served thicknesses, it means that you are important and successful,” said George Liu, a private equity manager in Beijing. “If it’s cheaper, what is the benefit of drinking it?”

According to Ben Kinder, Managing Director of the China Market Research Group based in Shanghai, the thickness is also facing population challenges. “Bye Geo is traditionally an old man’s beverage and most consumers under the age of 35 do not taste it,” he said.

Pursuing small drinkers, thickness has supported cheap products such as lattes and ice cream, tricks, which Kyinder says has not had much effect. The company’s executives have flagged an international expansion for potential growth, though domestic slowdown is unlikely.

Provincial giant

All this raises questions about support for the Guyzhou Gauzo. The company’s red, white and blue logo is bright on public works across the province. In addition to employing more than 30,000, the company is a fifth of the province’s tax receipts and 5.0 % of its GDP.

Guizu has not only used the company to increase revenue and pay loans, but also guaranteed local highway makers and participated in public works like roads, railways, airports and hospitals.

Four years ago, the thickness group issued a 15 billion yuan bond to buy the expressway. It then transferred $ 14 billion shares to the company for free to the Gizu government. By the end of 2023, Gozo’s state -owned provincial debt reached 1.5 trillion yuan, 26 % compared to the previous year and 72 % of GDP.