Silver Base taps wine boom

Silver Base Group (0886) has won sole distribution rights in the mainland for 10 years for a white wine produced by Luzhou Lao Jiao.

The Hong Kong-listed firm - which also sells China's top liquor, Wuliangye - said the rights for Guojiao 1573, with 43 percent alcohol content, run until February 2020.

Silver Base has set a minimum annual sales target of 250 tonnes, chairman Liang Guoxing said, as wine sales boom in China on growing incomes.

If sales reach the maximum of 800 tonnes, the wine would make up around one third of Silver Base's expected total sales by next March.

"Our market share in the mainland's high-grade white-wine market will increase to 7 percent from 5 percent with our becoming the sole distributor of the new product," Liang said.

To maintain a 40 percent gross profit margin, the minimum price will be 980 yuan (HK$1,114) per bottle.

The price of the group's key product - Wuliangye - was raised by 40 percent last year, while sales increased 20 percent annually.

Liang said Silver Base will keep up the pace on Wuliangye sales as Guojiao 1573 is aimed at a different segment of customers.