Chinese liquor giant Kweichow Moutai Co plans to expand into the health tonic liquor market by partnering with Xiuzheng Pharmaceutical Group. The two companies have signed a strategic partnership agreement to start cooperation production and sale of the liquor. The two companies also plan to set up a joint venture.
Moutai Chairman Yuan Renguo said health tonic liquor was a major new business of the company during the 13th Five-Year Plan (2016-20), in response to surging demand for health-related products.
Lockdown has taken its toll on a number of relationships throughout the world, as couples are forced into closer proximity than ever before. China is no exception, with divorce rates spiking dramatically when the country came out of quarantine.
With this in mind, spare a thought for a now-infamous aircraft passenger known only as, “Ms. Li.” Li was a passenger on Loong Airlines Flight 8528, transporting travellers from Xining Caojiabao in Qinghai to Hangzhou Xiaoshan International in Zhejiang. Ms Li was visibly upset, weeping openly in her seat.
It was believed that she was intoxicated … and so it proved to be. Ms. Li had drunk around half a litre of baijiu before boarding the plane, in the form of two 250 ml bottles.
No matter how ironclad your constitution and tolerance may be, that’s a powerful amount of alcohol. The explanation offered was that her partner had ended their relationship, seemingly immediately prior to the plane departing, and Ms. Li was determined to drown her sorrows.
Unfortunately, things took something of a turn. Upset by the news, and powered by baijiu, Ms. Li began a display of strength comparable to a comic book superhero. As her distress grew, she managed to physically smash an airplane window in mid-flight. Thankfully just the first layer was impacted, so nobody was hurt – including Ms. Li.
As the Coronavirus pandemic continues to rage throughout the world, individual nations are taking steps towards life after COVID-19. Unsurprisingly, China is currently furthest into this process. Acting as Ground Zero for the virus, dealing with its consequences longer than any other country, China has managed to get infection rates under control according to news coming out of China.
As we all know, however, we still need to Be Alert. China is looking at how to reduce the risk of a new, even more decimating wave of the infection. One suggestion, in particular, has caught the eye – and, if enacted, it will have significant ramifications on the baijiu industry.
The city of Hangzhou, located in the Zhejiang province, introduced health codes at the peak of the Coronavirus crisis in February. These codes were installed on citizen’s cell phones via a QR code. In order to enter Hangzhou, individuals were asked to reveal their recent travel history and any potential health conditions they lived with.
The worldwide economy has taken a drastic hit in 2020 following the impact of Coronavirus. It’s arguable that that China has suffered as has the rest of the world, acting as Ground Zero for the events that dominate our headlines. China now seems to be emerging from the COVID-19 nightmare – with baijiu manufacturers leading the charge toward economic recovery.
Wuliangye Yibin Co Ltd owns a major distillery based in the Sichuan province of China’s southwest. The business, best known for its eponymous Wuliangye strong aroma baijiu, has made significant investment into the foundations of the distillery. In excess of £1billion has been sunk into improving infrastructure, ensuring that the strong demand for baijiu from Chinese nationals will be matched by increased production capacity.
Why Moutai commands such a premium price?
There are a number of factors that affect the price of Moutai, below we will highlight the main events in history that are primarily responsible for lending to the aura, mystique and romance created around the Moutai baijiu brand.
Maotai or Moutai which it is also known, is more than just a spirit in China. Maotai is part publicly traded and part state-owned producer and is the world’s most valuable liquor brand by market valuation.
The perception of Moutai is everything
In reality, Moutai’s flavour is not drastically different from any other sauce aroma baijiu brand. It’s not necessarily the tastebud-tantalising properties of Moutai that create such a stir. It’s more the perspective of quality and prestige. To gift a bottle of Moutai, whether as a token of esteem of an act of gentle conviction (some might say soft bribe!) is to show a demeanour of wealth and taste.
In many respects, this is a triumph of marketing and reputation management. There is an aura of wonder and mystery that sounds Moutai. In addition, there is the favouritism for this baijiu brand displayed by the powers that be. This is the spirit served at all state banquets, ensuring that it retains the official seal of approval of China’s ruling classes.
How Moutai Rose to Prominence
Moutai is marketed as the national spirit of China (albeit not officially trademarked as such.) This really became the case in 1949, when Chairman Mao rose to prominence. Mao and his comrades toasted the founding of the People’s Republic of China with Moutai. Perhaps that was because it was the tipple of choice of Zhou Enlai, the Chinese premier and Mao’s second-in-command.
Either way, Moutai has been served and shared at all state banquets since the 1950s. Countless political leaders of all stripes from around the world – including Richard Nixon and Kim Il Sung – have enjoyed this famously potent spirit. US Secretary of State Henry Kissinger was a particular fan, announcing at a peace summit in 1972 that, “I think if we drink enough Maotai, we can solve anything.”
The production process of Moutai was modernised in the 1950s. Chairman Mao dispatched emissaries to the USA to learn how traditional spirits were made in the west. Bringing these learnings home to China, three distilleries – producing a trio of different baijiu brands, Ronghe, Hengxing and Moutai – were merged. An iconic brand was forged from the ashes, and the ascent of Moutai began in earnest.
This distillery is state-owned and operated, too. This means that every yuan earned through Moutai sales puts money back into the central coffers of the nation. When we also consider that Moutai is publicly traded on the stock exchange – and is the most valuable liquor brand in the world – sales at high prices can leave China in a healthy financial position. This does not leave the authorities with any real motivation to drop the price of Moutai. After all, the popularity of the product ensures that it will sell anyway. Why not charge a premium and reap the rewards foir the state?
Moutai baijiu – the blend created, bottled and sold by Kweichow Moutai Co, Ltd in the town of the same name – has long been considered China’s national liquor. So much so, in fact, that you’d be forgiven for assuming that this was an official designation. In truth, this not the case. An attempt to apply a trademark to this effect has been rejected.
Such a status is decided, controlled and ultimately bestowed by China’s Trademark Office of the State Administration for Industry and Commerce (SIAC). Since 2001, Kweichow Moutai Co, Ltd have been launching attempts to trademark their product with appropriately grand registration. Ten attempts have been launched and roundly rejected on each instance. Now, it appears, that the manufactures have accepted their fate.
The consumption of alcohol is a way of life in China. Referred to as, “ganbei culture”, people are encouraged to drink heartily and regularly at social occasions – especially when enjoying baijiu. Unfortunately for one police officer in Mabu Village, part of the Jiangxi Province, there was a heavy price to pay for such decadence.
Chen was a 38-year-old officer of the law attending a party in Mabu. It is believed that Chen initially arrived at his destination on official business, but after concluding his workload, he began socialising with locals. This led to countless cries of, “ganbei!” – loosely translated, “bottoms up!”
If you have never heard of Maotai, you soon will. This baijiu is a pivotal drink in its native land. Let’s take a look at the key facts that surround this most reputable of spirits.
There is no denying Moutai is an incredibly great baijiu.
Moutai is ingrained in Chinese culture, there is nothing more Chinese than Moutai other than the Chinese people themselves. In China Moutai is an institution in its own right, it is a premium luxury brand that oozes opulence. It is considered by many in China as an investment commodity as well as a huge gainer of face. Moutai is the biggest and wealthiest baijiu brand in the world.
Just because your the biggest does not mean your the best…
It is impossible to understate just how valuable Kweichow Moutai is as a brand. It is claimed that annual sales top US$10 billion, with 70,000 tonnes of Kweichow Moutai shipped each year. This is aided by Kweichow Moutai’s reputation as the premier baijiu brand for consumers and collectors alike. This baijiu boasts a 56% share of the premium baijiu marketplace, ensuring that anybody able to afford a high-quality liquor will invariably turn to Kweichow Moutai. Just 9% of sales come directly from consumers, though. The remaining business is conducted with wholesalers and distributors.
So given the sheer size and financial clout of Kweichow Moutai how can any baijiu brand compete with this corporate monster? The short answer is they can’t. No baijiu brand can match Kweichow Moutai’s brands awareness in China and their huge marketing budget.
RONG TAI HE (RTH), the Original Maotai since 1879 and forerunner to Kweichow Moutai started from 1952, unsurprisingly won Double Gold at this year’s International Spirits Challenge (ISC), a highly respected and much anticipated event in international spirits’ annual calendar. Not only did RTH win a long overdue recognition, after receiving Gold at 1915 Panama-Pacific International Exposition, it definitively excelled other baijius, including world renowned brand, from China too.