The report also showed that by 2022, more than 550m people in China will be considered middle class – a figure which would make China’s middle class alone large enough to be the third-most populated country in the world.
So if half a billion Chinese residents are preparing to earn significantly more cash within five years, the demand for more premium baijiu brands will likely increase. Traditionally in China, high-end baijiu brands were bought mostly as a gift for government officials at public events as a way of networking or even bribery.
But now companies such as Moutai will be licking their lips as China’s emerging middle class begins to spend its surging incomes.
In fact, Moutai’s sales in China increased 19% from a year ago to $5.66bn, while its net profit also increased 8% to $2.4bn for the full year ended December 2016.
But there are social and cultural barriers to growth too. For example, in traditional Chinese families, it may be considered inappropriate for an unmarried daughter to be seen drunk in public.
There is also a trend towards healthy living among the younger generations and baijiu’s lack of popularity in bars and nightclubs compared to wine and imported spirits, is another limiting factor.
The internationalism of Chinese cities and the increasing variety of global alcohol brands brought about by an opening culture and increasing western influence, are perhaps baijiu’s greatest threats.
EXPORT TREND
One question that still remains, and has been pondered over the past 10 or-so years, is whether baijiu can infiltrate global markets? According to the China Alcoholic Drinks Association, the total value of baijiu exports in 2016 was US$469m, which represents a 4% increase on the previous year.
Total sales of Diageo’s Shui Jing Fang were up 37.61% from 2015, said a brand spokesperson (Diageo was unwilling to attribute a name).
“With the Chinese government and baijiu industry paying increasing attention to the internationalism of baijiu, Diageo will continue to explore Shui Jing Fang export opportunities and support government and industry stakeholders to promote baijiu culture overseas.
“In the US, sales of Shui Jing Fang have been steadily increasing over the past two years with double-digit growth year on year,” added the Diageo spokesperson.
Furthermore a US baijiu brand, fittingly named Bye Joe, launched in 2015 and retails in three different varieties at $29.99 per 75cl, and Hong Kong Baijiu was launched in the same year by French businessman Charles Lanthier as “the world’s gateway to baijiu”.
The Diageo spokesperson said: “In the UK, where the baijiu market is still relatively small, our priority has been to raise brand awareness rather than driving sales.”
A variety of bars in London’s Chinatown district have, in the past, experimented with baijiu cocktails during Chinese New Year. But the absence of baijiu from menus for the 2017 festival suggests that the spirit hasn’t found traction.
Despite these efforts, baijiu seems largely limited to China’s global diaspora.
Diageo also revealed that duty free is Shui Jing Fang’s largest market for baijiu outside of China, while Gebr Heinemann, a leading company in the travel retail sector, recently showed an interest in adding a baijiu to its product offer.
These developments are hopeful but, in reality most of these sales are a result of Chinese tourists finding their wings, rather than baijiu’s newfound worldliness.
The Chinese are experiencing an exciting influx of wealth and quality of life. And, as a corollary, the same could be said for baijiu. But as far as exports go, this unique category seems a souvenir of a culture, rather than a product of global appeal.
