Chinese baijiu accounts for about two-fifths of global spirits volumes

Chinese baijiu accounts for about two-fifths of global spirits volumes

A wider-availability of ultra-premium baijiu in China brought on by the country's anti-corruption crackdown could help boost sales abroad, a new report has said.

In 2012, the Chinese government launched a campaign against extravagance among officials, which included bans on costly banquets and gifting. The crackdown hit sales of high-end spirits, with the country's white spirit, baijiu, worst affected.

However, in a note released today, Bernstein analysts said the crackdown has released more ultra-premium baijiu into more traditional sales channels. Previously, ultra-premium stock was reserved for the government and military, which accounted for about 60-70% of the segment, according to Bernstein.

"While expensive, ultra-premium baijiu is now much more widely available for individual consumers to enjoy and we think that this increased availability will translate into increasing volumes finding their way overseas," said Bernstein analyst Euan McLeish.

The findings are part of a new Bernstein report on white spirit baijiu, which accounts for 39% of global spirits volume and 28% of global spirits retail sales. Despite its popularity in China, only 0.1% of baijiu's total volumes are exported. International spirits producers have recently tried to widen baijiu's footprint, with Diageo in 2013 buying a near-40% stake in producer Shuijingfang. The anti-corruption crackdown hampered efforts and in 2014 Diageo was forced to take a GBP264m (then-US$446m) write-down on the asset.

Reports from China in the past few months have hinted at a turn-around for baijiu, and last month, Chinese baijiu producer Beijing Red Star Co said it was to roll out an international brand for the first time.

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Spirits in China

Spirits in China

Other spirits, locally defined as baijiu, is the largest category in spirits....read more