WULIANGYE Yibin Co Ltd, the producer of Chinese spirits, said it plans to buy more valuable assets, build distribution centers and focus on developing new products over the next three years to strengthen its core business and streamline operations.

China's biggest liquor maker estimated about 2.5 billion yuan (US$352 million) to 3.6 billion yuan would be needed to ramp up its development this year, according to its filing to Shenzhen Stock Exchange yesterday.

This includes 800 million yuan to be spent on building five distribution centers in Shanghai, Nanjing, Guangzhou, Chengdu and Zhengzhou.

An additional 1.9 billion yuan would be used to buy liquor-related assets from its parent company Wuliangye Group this year, part of a six-billion-yuan purchase proposal by 2010 to further consolidate its business.

The company also considered spending seven million yuan to expand production and develop premium brands that could achieve a sales revenue between 500 million yuan to one billion yuan.

The aggressive expansion plan came after sales volume dropped 48 percent to 97,800 tons last year, causing revenue to dip 0.9 percent.

Its profit, however, rose 25.8 percent to 1.47 billion yuan over the same period a year earlier.

''Wuliangye performed below market expectations because sales of its flagship product were less than estimated,'' said Tong Xun, an analyst from SYWG Research & Consulting.

''Wuliangye has been decreasing production of its low-end liquor as it focuses on the high-end market to lure profit margin,'' he added.

Wuliangye said it has been targeting increasingly affluent consumers by raising prices as well as improving product and packaging quality.

Shares of Wuliangye dropped 4.22 percent to close at 34.91 yuan yesterday.