CHINA

 
China needs to build Brand Awareness for its famous Baijiu, Snow beer

China often prides itself on its baijiu, which is the most consumed liquor in the world. Unfortunately, consumption of baijiu is limited within the territories of mainland China and in Asian countries with large Chinese population.
There are so many distilleries and varieties of baijiu in China that no single company commands more than 6% market share.
Despite its popularity in China, in most Western countries, no one has even heard of it. One baijiu producer, Luzhou Laojiao Co. is planning to penetrate the western market by joining with US and European partners in a venture called Ming River. This will be a difficult feat considering that Baijiu is virtually unknown outside China, and its strong alcohol content, usually 50% or more, limits its appeal even to China’s younger drinkers.
Strangely enough, Baijiu recorded US$103 billion in retail sales inside China last year, more than double the size of the whisky market and triple the vodka market globally. However, its sales growth has slowed down, partly due to a corruption crackdown which cooled a longtime practice of business people giving expensive bottles of baijiu to government officials.
Despite the pessimistic review, Luzhou Laojiao's initial $6 million all-cash investment in Ming River is small for the US$9 billion company, but if successful, it could help open new markets for baijiu in the West.
Adam Rogers, Research Director at The IWSR said, “This category is underdeveloped and has yet to cater its marketing approach to the US consumer.”
Ming River's strategy is to promote use of baijiu in mixed drinks, tapping into the West's cocktail culture. Recently, Ming River Chief Executive William Isler and several partners had succeeded in introducing baijiu cocktails at a bar they opened in Beijing 4 years ago called Capital Spirits.
Ming River's baijiu tastes a bit like tropical fruit, peppercorn and anise, and retails for about US$34 for a 25-ounce bottle in New York.
The success of baijiu is yet to be seen in the international scene, as compared to Korea’s soju and Mexico’s mescal, which were once unfamiliar to the US palate, but have now taken off, according to Euromonitor. It needs more than one player to enter the international market in order to build consumer awareness.
Another popular Chinese brand is Snow beer, owned by CRH Beer Limited, the country’s largest brewery. It was estimated that more than 101 million hectolitres of Snow were sold worldwide in 2017 making it the most popular beer in the world. In comparison, Budweiser, the No.2 brand in the world, sold only 49.2 million hectolitres. Despite being the No.1 beer brand, Snow beer does not receive good ratings outside China, and most US consumers have never heard of the brand. In fact, reviewers on RateBeer.com gave Snow an average rating of just 1.76 out of 5.
Depite the poor international rating, Snow is inexpensive and cost less than US$1, and it is drinkable with 4% ABV and 120 calories per can.
The success of Snow is mainly due to the sheer size of China market. The country is by far the largest beer market accounting for 25% share (493 million hectolitres) of the global beer demand. But outside China, Snow brand is relatively unknown and a lot of branding and marketing effort need to be done to build consumer awareness.