A customer looks at Luzhou Laojiao liquor in a supermarket in Shanghai. Photo: IC

Sichuan-based liquor firm Luzhou Laojiao Co Ltd reported a drop in both revenue and net profit last year in a filing posted on the Shenzhen bourse Saturday, citing changes in the high-end liquor segment.

Luzhou Laojiao's net profit dived 21.69 percent year-on-year to 3.44 billion yuan ($553.8 million) in 2013, the company said in the filing. Its revenue reached 10.4 billion yuan, down 9.74 percent year-on-year.

After the central government launched an anti-extravagance campaign in late 2012, the country's high-end liquor market has been cooling down, which has caused players in the sector to suffer hard times, Yan Qiang, an industry analyst with Beijing-based Hejun Consulting, told the Global Times Sunday.

Despite this, the company, which ­mainly makes baijiu, or Chinese white spirits, still showed great confidence in the domestic liquor industry largely due to the drinking habits of Chinese people, according to the filing.

However, the firm believes all domestic liquor makers still need a long time to get accustomed to the adjustment in the sector, expecting its net profit to decrease 50 percent to 60 percent year-on-year in the first quarter of this year.

Its rival Kweichow Moutai predicts revenue this year will only grow some 3 percent year-on-year in an annual report posted on the Shanghai bourse late March. The company reported a 16.88 percent growth in revenue last year.

Another high-end liquor producer Wuliangye Yibin Co saw 19.75 percent and 9.13 percent drops in net profit and revenue respectively, according to the company's financial reports released in early March.

In order to cope with the effects of the government's anti-extravagance campaign, domestic liquor makers are not only stepping up more efforts to further their expansion into mid- and low-end liquor markets, but are also embracing more cost-efficient sales channels such as ­online platforms, said Yan.

High-end liquor producers like Moutai and Luzhou Laojiao have all started setting up cooperation with e-commerce websites such as tmall.com and jd.com.

 "Some companies have even cut their selling prices to boost purchases of high-end liquor," Yan noted.

Moutai's New Feitian liquor is priced at 1,159 yuan per 500 milliliter bottle on the company's official selling channel on tmall.com, compared with the original price tag of 1,519 yuan.

Global Times