April 10, 2013

Baijiu Brands Turn Hopeful Eye Toward Overseas Chinese

As Austerity Campaign Continues, Top Makers Launch Rollouts In Europe, Middle East

Diageo built up a stake in the owner of the Shui Jing Fang brand in 2011

Diageo built up a stake in the owner of the Shui Jing Fang brand in 2011

Looking to recoup domestic revenues lost to Beijing’s ongoing anti-luxury crackdown, some makers of high-end baijiu — traditional Chinese spirits — are setting their sights on tourist and expat Chinese communities abroad.

This is especially the case for brands that are partly or wholly owned by international firms, such as Shui Jing Fang (Swellfun), a unit of Diageo. The UK liquor conglomerate is tapping its global distribution network on the brand’s behalf, starting with a campaign launched this past summer in London. This year Diageo will roll out Shui Jing Fang in Italy, Qatar, Spain and the United Arab Emirates. Indicative, perhaps, of further marketing plans, Shui Jing Fang recently announced the hiring of its first American general manager, LA-born James Rice. Rice sees overseas sales of Shui Jing Fang accounting for up to 40 percent of revenues by 2016, up from roughly 10 percent now. That goal, though, may be unrealistic. Meanwhile, Haitong Securities has predicted an overall decline in Shui Jing Fang sales for 2013.

More prestigious distillers aren’t faring much better. According to the South China Morning Post, shares in top baijiu makers have plunged since the anti-luxury campaign began, with Moutai down 38 percent and Wuliangye Yibin down a precipitous 44 percent since July 2012. Luxury baijiu brands face a particularly daunting conundrum: cutting prices on big-ticket bottles may stimulate limited short-term sales but erode the prestige value of the brand overall.

Business & Finance / Food, Wine, & Spirits / Lifestyle / Market Trends / Marketing & Branding / Policy
Tag: baijiu, china, china luxury, chinese... , More
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