Liquor firms hung over from luxury dinner ban (2)

"After losing a large source of consumption - the official banquets - high-end baijiu will not do as well as before," wrote Zhang Yanlin, research director for China Investment Consulting.

However, Long from Guosen Securities said Chinese baijiu remains undervalued.

"Look at the high price of red wine from overseas and you will find that Chinese baijiu, with its longer history and greater popularity in the domestic market, has the potential to increase in price," he said.

The decision about luxury dinners is the second blow to fall on makers of Chinese baijiu after headlines began in late November alleging that Moutai products contained toxic levels of DEHP, a substance harmful to human health.