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 open a consulting company to help Chinese baijiu companies with their 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 the Western palate and then rebrand them for the international market. 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 to Westerners."
"We are in a very crucial phase of the business. We are exploring to have ownership rights to the new baijiu brands that we are creating together with the producers," noted Heger, co-founder at Capital Spirits.
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.
Making the drink popular in the West remains a crucial strategy for baijiu producers to win the hearts of Chinese millennials back home.
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, who lived in Asia for 15 years, imports a light 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.
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.
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 focus on educating the West on the high-proof spirit, noting that US consumers are increasingly keen on the 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.