China’s baijiu brands look to chocolates, coffee and NFTs to attract young

Recently, in a collaboration with chocolate brand Dove, China’s top baijiu brand Kweichow Moutai launched alcohol-infused chocolate truffles that were snapped up online within seconds.

Elizabeth Law

Elizabeth Law

The Straits Times


A Luckin Coffee store in Beijing advertising a Kweichow Moutai liquor latte. PHOTO: REUTERS/ THE STRAITS TIMES

September 25, 2023

BEIJING – First, it was baijiu-flavoured ice cream. Then, a liquor latte that sold more than five million cups on its first day.

Last weekend, in a collaboration with chocolate brand Dove, China’s top baijiu brand Kweichow Moutai launched alcohol-infused chocolate truffles that were snapped up online within seconds.

More commonly associated with state banquets and business meals, Kweichow Moutai – China’s second-most valuable company by market valuation – is on a quest to make itself more accessible to a younger crowd.

Likewise, other makers of baijiu, China’s national liquor, are also toasting fun ways to cultivate new customers.

A fiery grain liquor that is 53 per cent alcohol, Moutai was known to be the favourite drink of Chairman Mao Zedong, who famously used it to welcome then United States President Richard Nixon on his historic trip to China in 1972.

Current Chinese President Xi Jinping also used it to toast his American counterpart Barack Obama in 2013.

Largely associated with male and older drinkers, the brand – renowned for its “sauce” fragrance – found it hard to attract younger consumers, but this changed with the launch of its baijiu ice cream in 2022.

Now, consumers can readily buy a cup of baijiu, plum liquor or boozy vanilla ice cream for 59 yuan (S$11), a far cry from the 2,500 yuan for a bottle of Flying Fairy, Moutai’s signature line.

Like wine and scotch, aged bottles of Moutai can cost up to 300,000 yuan.

“I bought the original baijiu-flavoured ice cream out of curiosity because everyone was talking about it and it looks quite cute in a retro way,” said designer Sonya Fu, 28.

Other than regular cups with the Moutai branding, the ice cream is also available in a cup shaped like a tiny baijiu bottle, or as a popsicle.

Curiosity also led her to splurge on a bottle of Moutai to share with her friends, whose interest in the typical old man’s drink was similarly piqued after first trying the ice cream.

Now, she and her friends are eager to try Moutai coffee and chocolates as well.

“I suppose since it’s a local brand that’s trying to innovate, why not support it?” she told The Straits Times.

Kweichow Moutai, which originated in the town of Maotai in south-western Guizhou province, had taken a hit in 2013 when Mr Xi launched an anti-corruption drive. Under the campaign, any sign of excesses among officials, including expensive liquor at state banquets, had to be stamped out.

The campaign led to “unprecedented pressure” on the alcohol industry, Moutai noted in an earnings report that year. Its sales grew by only around 17 per cent, a steep drop from 44 per cent the previous year. By 2014, this plunged to about 2 per cent.

Moutai has since bounced back due to a combination of the brand’s enduring appeal and efforts to market directly to the consumer, and now has a market value of US$315 billion (S$430 billion), just behind Internet behemoth Tencent. In 2022, it reported business revenue of 124 billion yuan, a nearly 17 per cent increase from the previous year.

Other baijiu makers are also turning to innovation in a bid for the elusive youth market.

Wuliangye, another of China’s biggest alcohol brands, earlier in 2023 launched W Planet, an online community in the metaverse hosted on Alibaba’s e-commerce platform, Tmall.

Users could learn about the brand’s history and click on an interactive about the production process while also winning discount vouchers.

It was also within this community that the liquor brand released 2,500 non-fungible tokens (NFTs) for purchase in the virtual world. Each NFT is meant to be a unique one-of-a-kind digital design that cannot be replicated.

Meanwhile, Luzhou Laojiao, believed to be China’s oldest operating distillery going back to 1573 during the Ming Dynasty, launched a new line of alcohol called Ming River in 2018 in collaboration with American Derek Sandhaus, the author of Baijiu: The Essential Guide To Chinese Spirits.

The line, which is distilled in Luzhou town in south-western Sichuan province, has a distinctly different branding and is marketed as being good even in cocktails.

With the local market increasingly saturated, China’s baijiu makers have been looking to export more overseas but brand awareness of the liquor remains low. According to a report from state media outlet China Daily, just under 1 per cent of China’s total baijiu production was exported in the first half of 2023.

Ms Allison Malmsten, China market analyst at Daxue Consulting, said that compared with the Chinese market – which accounts for nearly 96 per cent of Moutai’s baijiu sales – the global market has been a tough nut to crack because of the very specific taste of baijiu.

While the liquor is mostly drunk straight in China, it is different in the West where hard liquor is often consumed with a mixer, like gin with tonic water or rum with coke.

In China, brands constantly have to innovate to give consumers novelty and memorable experiences, Ms Malmsten noted, and customers have a significantly more experimental attitude towards food and beverage products.

“China’s coffee market is one prime example of this – in China, you can find coffee of all flavours, including osmanthus, rose, cucumber and even tomato, but the same experimentation with coffee in European countries is unthinkable,” she said.

This allows for greater co-branding opportunities and more experimental flavours, such as local chain Manner Coffee’s collaboration with whiskey maker Jim Beam, offering a “highball Americano” and an Americano with tonic water.

While baijiu is currently China’s most consumed alcohol, younger people prefer wine and beer, with local wine and craft beer makers also starting to gain international recognition.

“The baijiu consumer base could age out, and it’s up to brands like Moutai to reignite the enthusiasm for Baijiu,” said Ms Malmsten. “This is precisely what co-branding aims to do.”

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