(Yicai) Nov. 1 -- Shares in Kweichow Moutai surged as much as 9.8 percent today after China’s leading liquor maker said it is increasing the price of its flagship Feitian Moutai spirit by 20 percent in the firm’s first price hike in six years.

Kweichow Moutai’s share price [SHA: 600519] was trading up 6.5 percent at CNY1,794.44 (USD245) as of 1.15 p.m. today. Earlier in the day it hit CNY1,850.

Kweichow Moutai is raising the ex-factory price of its Feitian Moutai baijiu, which has an alcohol content of 53 percent, today to CNY1,162 (USD158) per bottle from CNY969 a bottle, the Zunyi, southwestern Guizhou province-based distillery said yesterday. The price hike will not affect the rice wine’s recommended retail price of CNY1,499 per bottle, it added.

The price hike is much bigger than expected and should boost Kweichow Moutai’s profits by CNY4.1 billion (USD560 million) this year and revenue by CNY6.2 billion (USD847.2 million), Founder Securities said in a report released yesterday.

It means that Kweichow Moutai will be taking a bigger cut from distributors. The distiller has had to take action before to prevent runaway prices caused by retailers stockpiling amid short supply.

Kweichow Moutai has introduced a direct sales model in recent years to bypass dealers and have better control over prices. Direct sales accounted for almost 45 percent of total revenue in the first three quarters, more than the 40 percent logged over the whole of last year, according to its latest earnings report.

Kweichow Moutai’s net profit soared 19.1 percent in the nine months ended Sept. 30 from a year earlier to CNY52.9 billion (USD7.2 billion), and revenue jumped 18.5 percent to CNY103.3 billion (USD14.1 billion), the report showed.

Editor: Kim Taylor