Wuliangye fights to stay high

Wuliangye Yibin may be the biggest wine producer in the rapidly expanding Chinese liquor market, but to investors, it is coming across as a fumbling giant trying to defend its territory against more nimble competitors like Kweichow Moutai.

Analysts who track the liquor industry have attributed Wuliangye's problem to its close relationship with parent company, Wuliangye Group, and various inter-group affiliates.

Although Wuliangye's output volume, at 90,000 tons in 2008, was three times that of Moutai's, it trailed behind its archrival in both sales and profit. Moutai's sales, at 8.24 billion yuan in 2008, were 310 million yuan higher than Wuliangye's. And its profit, at 5.39 billion yuan, was nearly double that of its much bigger rival.