Here’s How a Rival to Moutai Plans to Go Global
Here’s How a Rival to Moutai Plans to Go Global
(Bloomberg) -- Most drinkers outside of China aren’t familiar with the fiery liquor called baijiu that’s considered the country’s national tipple. But one of the nation’s premier distillers wants to change that.
Wuliangye Yibin Co. is looking to tie up with some of the world’s biggest beverage companies to introduce its baijiu -- a white spirit made from sorghum that’s popular at banquets in China -- to drinkers from America to Russia, according to Chairman Li Shuguang. The rival to baijiu king Kweichow Moutai Co. is seeking other avenues of growth after the drink’s popularity at home propelled both companies’ shares by more than 60% this year.
“It will greatly help Wuliangye to go global,” Li told Bloomberg in an interview in Hangzhou, Southeastern China.
“We need to cooperate and communicate with the top players in the industry across the world to make Wuliangye an international presence,’’ he said. When asked whether he would consider collaborating with European liquor titan Diageo Plc, which has floated making further investments in baijiu, Li said Wuliangye “certainly will consider such an opportunity.”
A Diageo spokeswoman had no immediate comment. The owner of Johnnie Walker whisky and Tanqueray gin has a strong presence in China, and has its own baijiu label, Shuijingfang, acquired in 2011.
Marketing Centers
Wuliangye, which got all its revenue from China last year, plans to set up three major marketing centers in Europe, America and the Asia-Pacific region, and target countries with local advantages. Li sees Russia as a strong possibility for growth.
“We are considering making investments and building plants in certain countries to combine China’s brewing technique with local resources,” Li said. “We’d like to sell westernized Chinese baijiu to more customers.” He didn’t provide a time frame for the investment plans.
Shares of Wuliangye slipped 0.5% on Wednesday, while Moutai fell 0.8%.
Wuliangye’s stock, which is included in the MSCI China Index, has more than doubled this year to an all-time high as baijiu is increasingly coveted by the country’s rising middle class. But selling baijiu’s unique flavor to drinkers in London and New York isn’t so easy.
Distillers, including Diageo, have tried in the past to make baijiu trendy across the globe, offering the drink at nightspots in major cities and sometimes mixing it with 7-Up to make it more palatable to non-Chinese. Baijiu can come in many styles, from light and floral versions to those with the bold characteristics of sorghum, with alcohol levels exceeding 50% by volume.
Chinese baijiu production accounts for nearly 40% of global hard liquor production, but the international market share is less than 8%, according to the state-backed People’s Daily newspaper. Bloomberg Intelligence analyst Catherine Lim said Wuliangye’s products could find buyers overseas.
“While it is too early to gauge at this juncture if more non-Chinese drinkers will appreciate baijiu over time, more Chinese are traveling overseas and they can create new sales opportunities for wholesalers and distributors in international markets,” she said.
Wuliangye’s Li is hoping to boost baijiu’s profile by promoting standard certifications on baijiu’s brewing technology across the globe. As for Wuliangye’s rivalry with Moutai, Li downplayed the competition with the world’s most valuable spirits distiller, which surpassed Diageo’s market capitalization in 2017 and recently became China’s first 1,000-yuan stock.
“We don’t want to make simple comparisons with Moutai,” Li said, saying the two represent separate parts of the industry as the brands have different flavors. “The two of us can join hands to significantly promote China’s baijiu.”
A representative for Moutai declined to comment.
To contact Bloomberg News staff for this story: Haze Fan in Beijing at hfan40@bloomberg.net;Jinshan Hong in Hong Kong at jhong214@bloomberg.net
To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Jeff Sutherland, Bhuma Shrivastava
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With assistance from Bloomberg