(Yicai Global) Nov. 28 -- Kweichow Moutai Co. [SHA:600519], which makes China's currently most sought-after liquor, is opening up the market for other spirits producers as the price of its core products continues to rise, said Zhu Zhenhao, managing director at British alcohol giant Diageo Plc's [LSE:DGE;NYSE:DEO] China division.

Diageo saw net sales rise 25 percent during fiscal 2017 in Greater China, and liquor sales, particularly those of whisky, rose sharply, according to its financial report. However, Zhu believes that the market penetration rate of whisky in China is just 1 percent, a surprisingly low figure, and an increase even just to 5 percent could bring about tremendous growth.

The British firm has been active in China since 1920, and its Johnnie Walker Black Label is allegedly the first foreign whisky brand sold in the country. In recent years, China's whisky market has been developing rapidly. The percentage of high-end consumers in China buying whisky is up around 83 percent compared with five years ago, making it the top foreign spirit, according to research unit Hurun Report.

However, domestic liquor baijiu is still the most popular spirit in the country by a long margin. Diageo is now paying more attention to long-term market promotion and development of whisky, Zhu added.

Kweichow Moutai, which makes baijiu, has had impressive performances in the spot and capital markets since the start of this year. In April, the firm overtook Diageo to become the most valuable liquor company in the world for the first time, with a market value of USD71.8 billion. Its market cap as of close yesterday was CNY780.5 billion (USD118.3 billion).

The current recommended price of a bottle of Kweichow's flagship product is CNY1,299 (USD197), but some sellers are pulling in as much as CNY1,800 a bottle. Many insiders suspect the price will continue to rise next year.