Rumors of A Chinese Alcohol Ban Drives Crash in Liquor Stocks

Rumors of a Chinese Alcohol Ban Have Driven a Plunge in Both National and International Alcohol Producers. Photo: NICOLAS ASFOURI/Getty Images

Speculation surrounding an alcohol ban that would apply to CCP officials and government workers in China has driven a sharp decline in the Baijiu stock market.

Baijiu is the national liquor of China; the nation consumed over 5.1 billion liters of it in 2019 alone. But things soon might change.

Rumors began circulating on Monday after an article was posted to the Chinese internet platform NetEase. The article was titled “Civil Servants Ushered in a ‘New Adjustment’, Began to Implement a ‘Prohibit Order’, and Prohibited Drinking During Off-Duty Hours.”

The contents of the article speculated that the government in Beijing was considering plans to impose alcohol restrictions on civil servants and government officials. These alleged restrictions would apply both on and off the clock.

The news immediately prompted concerns in the stock market. Baijiu distillers Kewichow Moitai Co. and Wuliangye Yibin Co. both reported a 4% drop on Monday, while Tsingtao Brewery Co. reported a 7.4% drop.

International spirits giants Pernod Ricard and Diageo suffered losses as well, their shares dropping by 3.4% and 2.3% respectively.

Though the rumored ban would most immediately impact Baijiu distillers, international spirits producers would have a lot to lose if these rumors come to fruition.

Diageo is currently constructing a $75 million distillery in Eryuan County in Yunnan Province, which is being pitched as the future home of the world’s first China-origin, single malt whiskey. French spirits group Remy Cointreau, a huge seller of Cognac in the Chinese market, makes up almost 30% of its sales from China.

The current stock market woes are driven not only by rumors but by historical precedent as well.

Back in 2020, a handful of cities in China passed similar bans prohibiting civil servants from alcohol consumption after working hours.

Time will tell if those localized bans will be the blueprint for larger plans to come.

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