Baijiu makers in high spirits on foreign sales | investinchina.chinadaily.com.cn

Baijiu makers in high spirits on foreign sales

By WANG KEJU China Daily Updated: Sept 20, 2023
Workers process baijiu products at a factory in Linfen, Shanxi province, in April. [LI XIANJUN/FOR CHINA DAILY]

Last year, consumers in China guzzled through 663 billion yuan ($91 billion) worth of baijiu — a clear, strong liquor famous in the country — said the China Alcoholic Drinks Association, making it the world's most-consumed spirit. However, the potent potable remains less well-known outside the nation.

Therefore, many Chinese distilleries are increasingly turning their gaze outward to gain a foothold overseas, targeting both the Chinese diaspora and foreign consumers.

Chinese liquor company Jiangxiaobai, located in Chongqing municipality's Baisha township — which has a distilling heritage spanning over 500 years thanks to its climate and topography — is reaching out to consumers around the globe with accommodative flavors, hoping to cultivate consumption among groups seeking to appreciate aspects of Chinese culture.

Back in 2016, the company showed initial export ambitions to South Korea as a first step to kick off an international presence, as it shipped 21 tons of sorghum-made spirits to appeal to its Asian neighbor, where soju is the adult beverage of choice.

"South Korea is well positioned to be the first stop in the company's global expansion strategy as it stands geographically close to China, shares a similar cultural background and has a larger group of Chinese," said Zhang Huihui, head of Jiangxiaobai's international business department.

In addition, the company toned down its strong and pungent flavor, rendering it smoother, milder and more appealing to the mass market, Zhang said, adding that this brings the potency of the spirit to levels similar to soju and thus more approachable for novices.

Baijiu used to chase away many foreign consumers, who, despite being enthusiastic about Chinese drinking culture, were put off by the liquor's strong and fiery taste, said Zhu Danpeng, an independent food industry analyst.

This has been well understood among baijiu producers, who have made great efforts to appeal to overseas drinkers in recent years. Many baijiu distilleries now produce lower-proof or flavored products aimed at them, Zhu said.

Jiangxiaobai, benchmarked against major international spirits including whiskey, vodka and brandy, clocks in at 40 percent alcohol by volume — significantly lower than traditional bottles' dizzying ABV of 52 percent.

"For South Korean millennials who are looking to experiment with new categories and taste China's national drink, it's the perfect beverage to accompany barbecues with a bunch of friends," Zhang said.

Now the company has built up a sales network covering more than 30 countries and regions around the world, including Asia, Europe, North America and Oceania. Overseas sales continue to grow rapidly, especially in South Korea, Zhang added.

Statistics from the General Administration of Customs show that the exports of baijiu stood at some 7,960 kiloliters in the first half, while Chinese distilleries produced, according to the National Bureau of Statistics, over 2 million kiloliters of the colorless liquor during the same period.

Wang Deliang, chief analyst at the China National Research Institute of Food and Fermentation Industries, said less than 1 percent of Chinese baijiu output has been delivered overseas for the time being. Therefore, despite its enormous sales figures, the vast majority of baijiu consumption takes place in the domestic market.

Chinese liquor brand Jiangxiaobai's baijiu is displayed at a supermarket in Nantong, Jiangsu province, in August 2021. [CHINA DAILY]

"There is always a silver lining. In the long run, the current low international presence of baijiu could point to enormous future potential. As baijiu has become somewhat saturated at home, it prompts Chinese distilleries to turn to foreign markets to scramble for new drivers of business growth," Wang said.

In view of the terroir craze that's sprawling across the spirits world, shaping everything from gin and vodka to rum and Tequila, baijiu producers like Shede Spirits are hoping that novel brewing narratives will lure curious consumers.

Zhu Yingcai, general manager of the marketing department at Shede Spirits, said that the brand is distilled in the Sichuan Basin, in the north of the province, which has become the largest baijiu production base in China.

In the 1970s, the company took the lead in developing the concept of eco-brewing and put it into practice, building an eco-brewing industrial park covering 6.5 square kilometers, where the greening rate has reached 98.5 percent, Zhu said.

A total of 32 ecological brewing plants have been set up in the park, including old cellars dating back centuries, which have bacterial flora persevered for thousands of years, Zhu said, adding that all cellars are made of uncultivated and nonpolluting yellow mud from local resources.

Inside these cellars, the mash is continuously fermented in underground mud pits ranging from three to 15 years so they develop their own character, Zhu said, adding that baijiu is a special consumer product that embodies Chinese characteristics and philosophy, as the saying goes that "a good wine matures over time".

More baijiu presence, for sure, has been seen on the global spirits stage, but it's still relatively modest. According to a survey by the United Nations Educational, Scientific and Cultural Organization last year, the awareness of international consumers towards baijiu stands at only 0.7 percent.

During the annual sessions of the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body, Sun Baoguo, president of Beijing Technology and Business University, submitted a proposal on drafting international standards for baijiu and supporting traditional Chinese culture to go global.

Without holistic planning on a national level, it's difficult to foster synergy among domestic distilleries and industry associations to facilitate baijiu expanding offshore, Sun said.

It's urgently needed to formulate international standards for baijiu and put it in an appropriate categorization as part of efforts to help the beverage compete with other spirits on an equal footing, Sun added.

In China, liquor including baijiu does not get special geographical categorization, while spirits and other alcoholic beverages are divided into special foods in regions like Europe and the United States. Region-specific classification leads to strikingly different tariff rates, Sun said, adding that export tariffs on Chinese baijiu are much higher than those of imported foreign spirits.

Zhu from Shede Spirits said that baijiu may be in the early stages of finding audiences outside its home country, but it also has the potential to enter the mainstream cocktail culture — particularly as consumers become more experimental and develop a taste for the new and unique.

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Baijiu makers in high spirits on foreign sales

By WANG KEJU China Daily Updated: Sept 20, 2023
Workers process baijiu products at a factory in Linfen, Shanxi province, in April. [LI XIANJUN/FOR CHINA DAILY]

Last year, consumers in China guzzled through 663 billion yuan ($91 billion) worth of baijiu — a clear, strong liquor famous in the country — said the China Alcoholic Drinks Association, making it the world's most-consumed spirit. However, the potent potable remains less well-known outside the nation.

Therefore, many Chinese distilleries are increasingly turning their gaze outward to gain a foothold overseas, targeting both the Chinese diaspora and foreign consumers.

Chinese liquor company Jiangxiaobai, located in Chongqing municipality's Baisha township — which has a distilling heritage spanning over 500 years thanks to its climate and topography — is reaching out to consumers around the globe with accommodative flavors, hoping to cultivate consumption among groups seeking to appreciate aspects of Chinese culture.

Back in 2016, the company showed initial export ambitions to South Korea as a first step to kick off an international presence, as it shipped 21 tons of sorghum-made spirits to appeal to its Asian neighbor, where soju is the adult beverage of choice.

"South Korea is well positioned to be the first stop in the company's global expansion strategy as it stands geographically close to China, shares a similar cultural background and has a larger group of Chinese," said Zhang Huihui, head of Jiangxiaobai's international business department.

In addition, the company toned down its strong and pungent flavor, rendering it smoother, milder and more appealing to the mass market, Zhang said, adding that this brings the potency of the spirit to levels similar to soju and thus more approachable for novices.

Baijiu used to chase away many foreign consumers, who, despite being enthusiastic about Chinese drinking culture, were put off by the liquor's strong and fiery taste, said Zhu Danpeng, an independent food industry analyst.

This has been well understood among baijiu producers, who have made great efforts to appeal to overseas drinkers in recent years. Many baijiu distilleries now produce lower-proof or flavored products aimed at them, Zhu said.

Jiangxiaobai, benchmarked against major international spirits including whiskey, vodka and brandy, clocks in at 40 percent alcohol by volume — significantly lower than traditional bottles' dizzying ABV of 52 percent.

"For South Korean millennials who are looking to experiment with new categories and taste China's national drink, it's the perfect beverage to accompany barbecues with a bunch of friends," Zhang said.

Now the company has built up a sales network covering more than 30 countries and regions around the world, including Asia, Europe, North America and Oceania. Overseas sales continue to grow rapidly, especially in South Korea, Zhang added.

Statistics from the General Administration of Customs show that the exports of baijiu stood at some 7,960 kiloliters in the first half, while Chinese distilleries produced, according to the National Bureau of Statistics, over 2 million kiloliters of the colorless liquor during the same period.

Wang Deliang, chief analyst at the China National Research Institute of Food and Fermentation Industries, said less than 1 percent of Chinese baijiu output has been delivered overseas for the time being. Therefore, despite its enormous sales figures, the vast majority of baijiu consumption takes place in the domestic market.

Chinese liquor brand Jiangxiaobai's baijiu is displayed at a supermarket in Nantong, Jiangsu province, in August 2021. [CHINA DAILY]

"There is always a silver lining. In the long run, the current low international presence of baijiu could point to enormous future potential. As baijiu has become somewhat saturated at home, it prompts Chinese distilleries to turn to foreign markets to scramble for new drivers of business growth," Wang said.

In view of the terroir craze that's sprawling across the spirits world, shaping everything from gin and vodka to rum and Tequila, baijiu producers like Shede Spirits are hoping that novel brewing narratives will lure curious consumers.

Zhu Yingcai, general manager of the marketing department at Shede Spirits, said that the brand is distilled in the Sichuan Basin, in the north of the province, which has become the largest baijiu production base in China.

In the 1970s, the company took the lead in developing the concept of eco-brewing and put it into practice, building an eco-brewing industrial park covering 6.5 square kilometers, where the greening rate has reached 98.5 percent, Zhu said.

A total of 32 ecological brewing plants have been set up in the park, including old cellars dating back centuries, which have bacterial flora persevered for thousands of years, Zhu said, adding that all cellars are made of uncultivated and nonpolluting yellow mud from local resources.

Inside these cellars, the mash is continuously fermented in underground mud pits ranging from three to 15 years so they develop their own character, Zhu said, adding that baijiu is a special consumer product that embodies Chinese characteristics and philosophy, as the saying goes that "a good wine matures over time".

More baijiu presence, for sure, has been seen on the global spirits stage, but it's still relatively modest. According to a survey by the United Nations Educational, Scientific and Cultural Organization last year, the awareness of international consumers towards baijiu stands at only 0.7 percent.

During the annual sessions of the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body, Sun Baoguo, president of Beijing Technology and Business University, submitted a proposal on drafting international standards for baijiu and supporting traditional Chinese culture to go global.

Without holistic planning on a national level, it's difficult to foster synergy among domestic distilleries and industry associations to facilitate baijiu expanding offshore, Sun said.

It's urgently needed to formulate international standards for baijiu and put it in an appropriate categorization as part of efforts to help the beverage compete with other spirits on an equal footing, Sun added.

In China, liquor including baijiu does not get special geographical categorization, while spirits and other alcoholic beverages are divided into special foods in regions like Europe and the United States. Region-specific classification leads to strikingly different tariff rates, Sun said, adding that export tariffs on Chinese baijiu are much higher than those of imported foreign spirits.

Zhu from Shede Spirits said that baijiu may be in the early stages of finding audiences outside its home country, but it also has the potential to enter the mainstream cocktail culture — particularly as consumers become more experimental and develop a taste for the new and unique.

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