A recent report that found liquor plasticiser levels to be more than 260% above the standard set by Jiugui Liquor Co Ltd, a famous liquor maker in China's Hunan province, has tarnished the company's image and sent waves through the industry.

A Jiugui liquor product is seen at a supermarket in Xuchang, Henan province, Aug 11, 2012. [Geng Guoqing/Asianewsphoto]

The scandal has resulted in the company's stock being suspended from trading and has sent the whole industry reeling, with companies in the sector losing about 32.7 billion yuan ($5.25 billion) at stock markets.

In response, the China Alcoholic Drinks Association has made a declaration, claiming that the report has been twisted and irresponsible. Although tests show that alcoholic drinks do contain plasticiser, the percentage is lower than the standard for food.

Investigations have revealed that the plasticiser comes from production equipment such as latex tubing, explaining why plasticiser, which is not a necessary ingredient, is found in alcoholic drinks.

Experts say that excessive intake of plasticiser can negatively influence the immune system. But according to the association, during the past 40 years, no negative cases have ever been reported involving the material.