By Bloomberg News
(Bloomberg) — China sentenced the former chairman of liquor giant Kweichow Moutai Co. to life in prison for taking bribes of 112.9 million yuan (US$17.5 million).
Yuan Renguo, who was arrested in 2019, was found guilty of taking the bribes between 1994 and 2018, according to a statement late Thursday from a court in the southwest province of Guizhou, where Moutai is based. He accepted the payments to help distributors secure work with the distiller and increase allocations of the company’s prized liquor bottles, the court said.
China Kweichow Moutai Distillery Group is planning initial public offerings for three businesses by 2020 as the world's most valuable spirits company expands beyond its core liquor operations.
Yuan, 64, quietly left Moutai in 2018 after 18 years at the helm. His arrest triggered a broader anti-graft crackdown by authorities on the premium distiller’s then-management team, including Nie Yong, the former head of Moutai’s e-commerce unit. There have since been frequent leadership changes at the company, with three chairmen appointed in the last three years, all ex-local government officials.
Moutai produces premium baijiu, the drink of choice for elites in China. In recent years, the company has worked to circumvent its wide distributor network and sell more of its product directly to consumers, a response to regulators’ scrutiny of distributors’ hoarding bottles and bidding their prices up.
An employee arranges bottles of Moutai baijiu at the Kweichow Moutai Co. factory in the town of Maotai in Renhuai, Guizhou province, China, on Thursday, Dec. 14, 2017. Moutai baijiu's fiery flavor and potential to appreciate in price is driving blistering demand. That in turn has pushed its market value to more than $145 billion, well past British whisky giant Diageo Plc.
Yuan once said he sought to build a global liquor investment group and lead Moutai to “become a respected world-class enterprise,” including by planning IPOs for the company’s e-commerce and agricultural arms. His successors have placed their focus on controlling the prices of Moutai’s liquor to avoid regulators’ attention and bypassing its network of distributors.
The world’s most valuable liquor maker, Moutai expects revenue to grow 10.5% in 2021. The company posted its slowest annual sales increase in five years in 2020, as the pandemic affected spending in the world’s largest consumer market. Its shares have fallen 18% this year.
© 2021 Bloomberg L.P.