Moutai penalizes dealers, ends two contracts amid supply crunch

Updated 2017-08-23 10:00:18 Global Times

Leading domestic distiller Kweichow Moutai Co on Monday penalized 54 dealers, two of which had their contracts terminated, domestic news website 163.com reported on Tuesday.

The dealers, Shanghai-based Xinfuminghang International Trade and Yulin Xinfulong Commercial Trading Co in Northwest China's Shaanxi Province, have seriously hurt consumers' interests and damaged the liquor brand's image despite Moutai's repeated demands, according to a document released by the company on Monday night as saying.

Also, the two dealers' distribution and sales models breached the terms of their contracts and disrupted market order, which prompted Moutai to cease dealing with them and confiscate their performance bonds, said the report. The contracts won't be renewed next year.

The other 52 dealers had such problems as substandard management of franchise stores, lack of promotional campaigns for holidays, and inability to provide complete sales records, the Securities Times reported on Tuesday.

Moutai has issued statements in recent years dealing with penalties for dealers who violate contract terms, but this is the first time the company has formally terminated any contracts. The move reflects the company's determination to stabilize prices and ensure market supply ahead of the National Day and Mid-Autumn holidays, which are traditional peak periods for demand.

Some Moutai retailers have run out of stock while others have imposed purchase limits, the Beijing Youth Daily reported on Monday. In some extreme cases, dealers have taken advantage of the supply crunch and added several hundred yuan to the market price.

"The supply shortage has become a norm in the market, so we need to strengthen supervision and crack down on scalpers," Moutai's general manager Li Baofang said at the company's mid-year work meeting on Monday.

Moutai's online e-commerce platform emaotai.cn started to sell a Feitian brand on Monday.

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