Jan. 1 (NBD) -- Kweichow Moutai Co., China's biggest and most valuable liquor maker, announced at its annual conference with dealers last Thursday that it plans to raise the factory-gate price of Moutai's signature liquor, the first price hike in five years.

According to the announcement, the factory-gate price of Kweichow Moutai's signature grain liquor Feitian, which has traditionally been the drink of choice among the country's elite, will rise by 18 percent from current 819 yuan (125.3 U.S. dollars) per bottle, starting from Jan. 1, 2018.

Yuan Renguo, chairman of Kweichow Moutai, explained that the price hike is aimed to realize sustainable development, maintain market order, protect dealers' interest, adjust supply and demand, and balance market prices.

At the annual meeting with dealers, Yuan also announced that the company's aggregate market value reached 864.4 billion yuan (132.3 billion U.S. dollars) as of Dec. 25, 2017, topping the global liquor makers.

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Fueled by the price hike buzz and the profit growth, shares of Shanghai-listed Kweichow Moutai soared by 8.21 percent on Thursday, the most since July 2015 and closing just short of an all-time high.

A dealer at the annual meeting said to NBD that the news was not surprising, adding that against the background that lots of liquor makers had raised the factory-gate prices, it would be unreasonable for Kweichow Moutai not to follow up.

Kweichow Moutai's General Manager Li Baofang warned that speculation is not allowed and will face serious penalty.

Li said at the conference that prices of Kweichow Moutai's signature Feitian 53 percent liquor started to take off in the 4th quarter of 2016 and climbed increasingly fast in March 2017. With Moutai liquor products having entered a stage of the seller's market from the buyer's market, to effectively curb the price hikes became a major task for the company, Li noted.

Yuan acknowledged the improving market environment but emphasized the importance of reasonable pricing for Feitian liquor, saying that the company will give priority to steady development and market share maintenance and that Moutai liquor is not for speculation.

Ever since 2017, propelled by scarcity in the market, Feitian liquor's price has been going all the way up. To stabilize the price, Kweichow Moutai Co. in March imposed a retail price capping of 1,299 Yuan (198.8 U.S. dollars) per bottle on Feitian Liquor.

Yuan said that any dealer that violates the ceiling price regulation will not only be disqualified but also prohibited from applying for the license again.

A dealer agreed with the actions that Kweichow Moutai has taken to stabilize the market prices, saying that exorbitant prices will bring damages not only to company's brand image but also to customers, which will eventually hurt the long-term benefits of Kewichow Moutai and its dealers.

Speaking of China's liquor market, Yuan estimated that in 2017, the liquor output in China will total 14 million kiloliters with sales income surpassing 700 billion yuan (107.1 billion U.S. dollars) and profits breaking 100 billion yuan (15.3 billion U.S. dollars).

The spirits industry will embrace growth in production, sales as well as benefits, overall structure, and development vitality, Yuan added.

Email: gaohan@nbd.com.cn