China curbs luxury liquor spending

As China’s economy slows, luxury drinks sales are shrinking and may not rebound even with recovery. A crackdown on public sector gifting is reshaping demand, hitting brands like Kweichow Moutai. The post China curbs luxury liquor spending appeared first on The Drinks Business.

Jun 18, 2025 - 12:45

As China’s economy slows, luxury drinks sales are shrinking and may not rebound even with recovery. A crackdown on public sector gifting is reshaping demand, hitting brands like Kweichow Moutai.

China’s economy is decelerating and consumers continue to draw back from luxury spending but even when better times return, global drinks companies may not achieve the growth goals they aspire to. That is because Beijing is reinforcing its crackdown on lavish entertainment and gifting in the all-powerful public sector.

Signals from the top: Xi Jinping’s renewed anti-corruption drive

Evidence for this comes not only from President Xi Jinping reissuing the 2012 eight-point code of conduct for public officials but also from the latest trends at Kweichow Moutai, China’s iconic baijiu brand and the centrepiece of gifting and entertaining. Xi’s first rule is: “Working meals should serve ordinary dishes in a home-cooking style. High-end dishes should be avoided, along with cigarettes and high-end liquor.”

Moutai walks a political tightrope

Moutai treads a delicate line between being a company quoted on the Shanghai stock market, but also being majority owned by the state. At the end of the day, however, what Beijing says goes, and Moutai’s leaders are likely to be more compliant than most to demonstrate their compliance with official directives. They know only too well that within the last decade, two previous chairmen, Yuan Renguo and Gao Weidong, were given separate prison sentences for bribery, i.e. being complicit in lavish entertaining and gifting.

Cultural rebranding over decadence

Today’s top managers are distancing themselves from that long-standing culture. Moutai chairman Zhang Deqin recently invoked classic Chinese texts to argue that the liquor must promote culture, health and harmony, so at the company’s recent annual meeting,g attendees missed out on the expected free-flowing iconic Flying Fairy and were served soft drinks.

The ripple effect on global spirits

These developments point to lean times for Kweichow Moutai, and by implication, the importers of high-end Western spirits such as Cognac and Scotch. As a result of the latest crackdown, a report last month from Soochow Securities said Kweichow Moutai’s years of double-digit revenue and profit growth will end in 2025.

Baijiu prices in decline

Notably, prices for its baijiu have been on the slide for several months. Earlier this month, the retail price of a bottle of 25-year-old Moutai had fallen below 2,000 yuan (US$278), half what it had fetched on e-commerce platforms only a couple of years ago.