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China Liquor Makers Slump on Excessive Plasticizer Levels

Nov. 22 (Bloomberg) -- Chinese liquor-maker shares slumped in Shanghai and Shenzhen trading after the nation’s quality watchdog found excessive levels of plasticizer in drinks made by JiuGuiJiu Co.

Wuliangye Yibin Co., the country’s biggest liquor maker, fell 4.7 percent to 27.46 yuan, the lowest in more than two years, at the close in Shenzhen. Jiangsu Yanghe Brewery Joint-Stock Company Co., China’s third-biggest distiller, dropped 3.4 percent to 96 yuan, while shares of Jishou, Hunan-based JiuGuiJiu remained halted in Shenzhen.

“It’s a blow to consumer confidence,” said Liu Hui, a Shanghai-based analyst at CSC Securities HK Ltd. “The whole sector will be under pressure in the short term.”

Tests found more than three times the permitted level of dibutyl phthalate, a chemical used to flavor drinks and in plastic containers, in some samples, according to Xinhua. The report adds to a series of food and beverage scandals in China spanning melamine-tainted milk to reprocessed cooking oil.

Concerns over food and beverage quality have spurred the government to pledge greater consumer protection. Milk tainted with melamine, a toxic chemical used to make plastic and tan leather, was blamed for the deaths of at least six babies in 2008, with tens of thousands of children hospitalized.

Calls to the office of JiuGuiJiu, Li Hongfang, a spokeswoman for Kweichow Moutai Co., and Yue Song, a secretary to Wuliangye Chairman Tang Qiao, weren’t answered. Moutai, the world’s second-largest distiller by market value, dropped 0.6 percent to 217.29 yuan in Shanghai trading. Sichuan Swellfun Co., part-owned by Diageo Plc, lost 4.1 percent in Shanghai.

Wuliangye has lost 16 percent this year, while Moutai has climbed 12 percent and Jiangsu Yanghe has dropped 11 percent.

Drink Flavoring

Inspections showed as much as 1.04 milligrams per kilogram of dibutyl phthalate, or DBP, according to the General Administration of Quality Supervision, Inspection and Quarantine. The health ministry had set a limit of 0.3 milligram per kilogram, Xinhua said.

Tests show that almost all Chinese liquor products contain plasticizers, at an average 0.537 milligrams per kilogram, Xinhua said, citing the China Alcoholic Drinks Association. The alcohol industry is discussing limits for plasticizers in liquor, according to the agency.

JiuGuiJiu, maker of the Xiangquan and Jiugui spirit brands, halted trading in Shenzhen on Nov. 19, pending a response to news reports that its drinks contain excessive amounts of plasticizer, according to a company filing on that day.

The Administration of Quality and Technology Supervision of Hunan Province said on its website yesterday that it asked the company to investigate the findings.

“Ingestion of dibutyl phthalate may cause gastrointestinal irritation, nausea, vomiting and diarrhea,” according to the website of the Scottish Environment Protection Agency.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net; Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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