CHINA/UK: Diageo keen to up baijiu footprint

The head of Diageo's operations in Europe has reiterated that the company is looking to increase its presence in China's baijiu market.

In 2010, Diageo moved to up its stake in China's Sichuan Chengdu Quanxing Group, which holds 39.7% of ShuiJingFang, a producer of the domestic white spirit that accounts for around 99% of the country's total spirits market. Regulatory approval was granted a year later.

Since the closure of the transaction, Diageo has completed a token tender offer for the remaining shares in ShuiJingFang and has launched the brand in the UK.

Speaking at the IGD Convention 2012 in London earlier today (9 October), Diageo's president for Europe, Andrew Morgan, highlighted the importance of the Chinese market for future growth.

“If you're a global player with global competitors, you've got to really compete hard in China because of the size of the market today and in the future,” he said. “It needs to be a well thought-through commitment. You need the organisational capacity to go and compete, and you need the financial commitment - it takes a long time.

“China is very different both to more mature markets and even to other emerging markets.”

Morgan also highlighted that the company remains on the acquisition path in the country. “We've finally got 51% of ShuiJingFang, one of the leaders in an enormous category,” he said. “It's taken us about six years to get to having control.

“We can now use this to go and acquire other brands within that very profitable category.”

Speaking to The Times newspaper in March, Diageo CEO Paul Walsh said that the company “may have the opportunity to broaden our footprint” in the baijiu category.