China's liquor multi-billion business
Baijiu, which literally means “white liquor”, is a national treasure of China. The birthplace of the “white liquor”, which can range from 35% to 60% alcohol by volume, can be placed in Central China, in the Provinces of Sichuan and Guizhou, where the most important and reputable manufacturers are established. Still, its popularity is spread all around the country. It is possible to find baijiu at every banquet and celebration in China, from wedding receptions to social gatherings. Baijiu is also an essential part of the Chinese business culture and is traditionally served during intense business dinners to build trust and friendship. Besides, high-end baijiu also represents a prestigious gift offered to foreign presidents. It has been used for toasting during official diplomatic events, including the 1972 historic visit of US President Nixon to the Peoples’ Republic of China.
The production and consumption of this grain-based distilled spirit, made from sorghum, wheat, rice, corn, and fermented by using an agent called qu, can be dated back more than a thousand years and is the most consumed alcoholic drink in China. According to the latest data released by CADA, the China Alcoholic Drinks Association, the sales of baijiu accounted for 70% of the revenue in the alcoholic drinks manufacturers industry in 2020, followed from afar by beers and fermented wines.
Baijiu comes with different and rich flavors, such as the strong aroma (that accounted for more than half of baijiu’s sales in 2020), the sauce aroma (27% of the sales in 2020), and light aroma (15% of the sales in 2020), and differs across the different geographical regions: Sichuan is the largest baijiu manufacturer, with a total output of almost 3.7 million kiloliters, accounting for half of the country total production, and 53 manufacturers among the top 200 are established in the Province.
The total production output decreased from 13.6 million kiloliters in 2016 to 7.4 million kiloliters in 2020. The sales revenue in the industry reached 584 billion RMB in 2020, up from the 562 billion RMB sales in 2019. The number of manufacturers reduced from 1,600 in 2017 to 1,040 in 2020 due to the increasing consolidation and concentration of the market. Among these, 19 are large public companies listed in the Shanghai and Shenzhen stock markets, which together account for 41% of the market share.