Frugality campaign hits luxury goods sales
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E-mail CNTV, April 4, 2013
China's frugality and anti-corruption campaigns seem to have had an effect on the sale of luxury brands of imported liquor, as government officials and the public scale back on spending.
When luxury meets frugalit, sales of high-end imported liquor is drying up.
Chu Xiaohui, general manager of C&D Wines Group Beijing, said:"In the first quarter, our sales went up by 4.6% compared to last year. But compared to previous years, we used to see 30% increases in this period, so our sales are slowing down."
This wine trading company says sales of liquor costing more than 15-hundred yuan per bottle is down sharply. Previously, 30% of the sales went for government uses. The remaining was mostly bought up by private businessmen and companies.
But sales of regular priced liquor is doing fine. And other dealers in Beijing are seeing the same thing.
Liu Ruixiang, sales director of Long Lu Hong Shun Liquor Trading Company, said:"Expensive liquors, those usually selling at several thousand yuan per bottle have been affected. Like these gift cases. People seem to be very cautious about giving liquor as gifts now."
Analysts say the declines reflect the central government's new push to promote frugality among officials and to clamp down on corruption, as numerous calls have been made to ask officials to cut conspicuous consumption.
Figures show that since the campaign was launched, sales at high-end restaurants have dropped 35 per cent in Beijing and 20 per cent in Shanghai. Sales of luxury goods have also plunged.
Cao Feng, associate prof. at School of Public Management, Tsinghua University, said:"First there is the government's frugality and anti-corruption campaign, then we see the decline of sales of luxury goods. It could reflect that certain part of our public expenses went to the luxury goods market. "
But liquor dealers are optimistic, expecting the market to be more rational.
Chu Xiaohui, general manager of C&D Wines Group Beijing, said:“The government's frugality and anti-corruption campaign are affecting our high-end liquor sales, that's a fact. But if we look on the bright side, it's also smoothing the market, making dealers and consumers more rational. I think it'll attract many foreign liquor makers to bring more good quality products to China."
China has been a booming market for premium imported liquor and other luxury goods in recent years. Analysts say, China's frugality and anti-corruption campaigns may send a shiver to high-end goods market in short time, but it's helpful for building a healthy market in the long run.
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