A cocktail made with
Individuals, groups and small firms are spreading the Chinese liquor culture overseas
Baijiu, the Chinese liquor distilled from grains including sorghum, wheat and rice, is the most consumed spirit in the world. Yet, the colorless drink remains virtually unknown outside China.
Several foreign entrepreneurs have been trying to popularize the spirit globally.
In the summer of 2014, four expatriates — William Isler, Simon Dang, Matthias Heger and Johannes Braun — opened a small bar in a historic hutong in central Beijing, and claimed it is the world’s first bar dedicated to baijiu.
Named Capital Spirits, it has soon became a hotspot among the expatriates, thus challenging the notion that baijiu is failing to attract foreigners and young Chinese.
This it did by simply changing the way the traditional liquor is consumed. Instead of offering the drink by the bottle as is customary, Capital Spirits sells the fiery liquor by the glass and mixed in stylish cocktails.
The bar created such a buzz in the capital that executives from the country’s main baijiu producing regions in Sichuan and Guizhou provinces travelled to Beijing to see the phenomenon with their own eyes.
“Several baijiu executives came here to ask if we could replicate what we do here on a larger scale, especially outside China,” explained Isler, co-founder of Capital Spirits. “The funny thing is that the bar started as a hobby and now we see a real business opportunity here.”
The quartet decided to setup a consulting company to help Chinese baijiu companies with their internationalization plans so that the clear liquor could start the conquest of foreign markets.
Their main focus is to select baijiu brands with taste profiles that are more acceptable to theWestern palate and then rebrand them for the internationalmarket. The consultancy also helps producers to establish an accessible market price to lure novice drinkers in the West.
“Baijiu can be a very successful international drink. In fact, the current trend in the global spirits market is selling craft premium products with unusual flavors,” added Isler. “Baijiu ticks all the boxes but you still need someone that presents the product toWesterners.”
Although they refuse to disclose the names of the companies they have signed contracts with, they hint that big baijiu producers are ready to expand to newmarkets.
“We are in a very crucial phase of the business. We are exploring to have ownership rights to the newbaijiu brands that we are creating together with the producers,” noted Heger, co-founder at Capital Spirits.
Last year, total retail sales of baijiu reached508billionyuan ($78.7 billion), according to market research firmMintel.
The huge size of the domestic demand has traditionally discouraged local producers to pursue other markets.
However, a nationwide austerity campaign that started in 2012 had impacted sales of the high-end liquor in the domestic market, forcing manufacturers to look at foreign markets. Additionally, the domestic market is expected to shrink in the coming years as young Chinese tend to prefer imported spirits such as whiskey.
Although growing slowly, exports of the distilled drink are still insignificant compared with national consumption.
In the January-September period of 2015, China exported baijiu worth 2.9 billion yuan, according to national statistics. It mainly exports to countries in Northeast Asia and Southeast Asia through distribution centers in Hong Kong and Singapore. Industry experts calculate that exports of the fiery drink represent only 1 percent of the total production.
Making the drink popular in the West remains a crucial strategy for baijiu producers to win the hearts of Chinese millennials back home.
“The end-goal is certainly to sell some volume of baijiu outside China,” explained Isler. “The real opportunity still lies here in China. They want the drink to be cool internationally so that young consumers here will purchase it.”
Matt Trusch, CEO of Byejoe, an American producer and distributor of baijiu mix drinks, is among the increasing number of foreigners involved in spreading the baijiu culture overseas.
Trusch setuphiscompany in 2013 to take on the mission of placing the high-alcohol drink in every international bar.
“I look at a bar as a mini United Nations. Every country has its own representative. There isMexican Tequila, Russian Vodka and French Champagne,” pointed out Trusch. “Then, how come Chinese culture with 5,000 years of influence on the world stage is missing in the bars?”
Trusch, who lived in Asia for 15 years, importsalight red sorghum baijiu base from China and then re-filters it in a distillery in Houston to take away impurities and to mix it with other ingredients.
The company’s bestseller is Dragon Fire, a baijiu drink containing dragon fruit, lychee and hot chilies.
Although Byejoe’s initial goal was to convince Westerners to drink baijiu, Trusch realized that many young Chinese consumers were also interested in trying the mix drink.
For this reason, Byejoe started introducing its creations into Chinatowns across America. Nowadays, 50 percent of its customers are Chinese living overseas.
Although Byejoe refuses to disclose annual revenues, the company says the business is expanding quickly, registering an annual average growth of 300 percent.
Their drinks are now distributed to restaurants, bars and liquor stores in 15 states in the US, including a supply agreement with Disney World in Florida. The company is also reaching 50 states in the country, thanks to online sales.
Byejoe, which has already expandedtoHongKong, says it hasalso received expressions of interest from importers in Switzerland, the United Kingdom and Spain.
Los Angeles-based CNS Imports, one of the oldest and largest baijiu suppliers in the US, has been importing top baijiu brands from China for over 35 years.
The importer prides itself in having more than 200 products in its portfolio, from the ultra premium Moutai brand to HKB, a special blended mix drink designed for Western palates.
Steaven Chen, COO at CNS Imports, explains that when his parents started the company in the 1980s, they mainly focused on selling the liquor within Chinatowns.
Chen and his sister took up the baton to focusoneducating the West on the high-proof spirit, noting that US consumers are increasinglykeenonthe drink.
CNS anticipates positive sales growth of the liquor among both the Chinese community overseas and the mass market, with the general market carrying a much higher long-term potential.
“From our sales, we do know that baijiu is expanding in the United States,” argued Chen. “The largest spirit category in the world certainly has a place in America.”
A bartender mixes a baijiu- based cocktail at Capital Spirits in Beijing.