Baijiu, a traditional sorghum-based liquor which originated mostly from Guizhou, and drunk for centuries, is now making its comeback in a huge way – now with better packaging and branding.
Recently, Kweichow Moutai has surpassed UK-based Diageo to become the world’s biggest spirit brand with a market capitalisation of US$69.2 billion. Analysts estimated that the Chinese high-end liquor could become a US$25 billion dollar industry by 2029.
Baijiu is often cited as the world’s most frequently consumed liquor, thanks largely to the country’s huge population of 1.4 billion.
Kweichow Moutai has also retained its position as the world’s most valuable spirit brand with a brand value of US$373 billion. The 2nd most valuable brand, Wuliangye, is also Chinese and also a maker of baijiu which stands at US$144 billion. Some analysts however viewed them as being overpriced in the stock market.
Looking at the tremendous success of traditional liquor companies, Diageo decided to join into the bandwagon as early as in 2013 by acquiring 40% stake in Shui Jing Fang, known as one of the oldest baijiu distilleries in China. Diageo has upped the stake to 60% in recent years.
Kweichow Moutai has long been regarded as a luxury status symbol with a bottle sold at a Christie’s auction at anywhere from US$290 to a staggering US$43,600. The demand for high-end baijiu such as Moutai is higher than the supply, which explains why there is still room for price increases.
Another major brand, Sichuan-based Luzhou Laojiao is planning to expand its reach with a classic strong-aroma variant – Ming River – exclusively targeting consumers outside mainland China. Derek Sandhaus, Co-founder of the Ming River brand said, “We have created a name and packaging that is more accessible for the international market, but respects the product’s heritage. Our sales numbers confirm that many more people are drinking baijiu in the US in the past couple of years. Typically, Americans like their liquor in cocktails, and that’s how most bars and restaurants serve our product.”
Lina Zhu, a representative for Tangniang, a smaller distillery based in Mao-tai town in Guizhou province, highlighted that baijiu status has now been elevated beyond a dinner drink and it is now a symbol of a generous and sincere gift as well as a mark of the Chinese culture.
Smaller brands are also now repackaging to target a younger age group. GlobalData highlighted that in 2018, young adults aged between 25 and 34 years, or alternatively categorised as Millennials, accounted for the highest consumption of the spirit. With stronger interest coming from the younger generation, baijiu producers will also focus more on innovation and spin-off products such as cocktails and canned mixed drinks.
Meanwhile, Chinese producers are also partnering with global spirit companies to build strong awareness among younger and overseas consumers. For instance, Diageo has developed a ‘new-to-world whisky’ in 2019, as part of a new joint venture with Jiangsu Yanghe Distillery, China’s 3rd largest baijiu distiller. The whisky was made through a unique production method which includes ‘softening’ whisky through Chinese ceramic pot maturation.