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Moutai eyes bigger ‘health’ liquor market share in China
Chinese liquor giant Kweichow Moutai has partnered with China’s Xiuzheng Pharmaceutical Group to produce a medicinal liquor, made by soaking herbs and animal parts in alcohol, in a bid to boost its market share in the ‘health’ drinks sector.
The signing ceremony between Moutai and Xiuzheng Pharmaceutical Group (Photo source: Xinhua News)
As reported by China Daily, Yuan Renguo, chairman of the company, said this type of ‘health tonic liquor’ , or Bao Jian Jiu in Chinese, is a major new business for the company’s five-year development plan from 2016 to 2020, and is a response to consumers’ surging demand for health related products.
The liquor, a transparent medicinal spirit, is made by soaking medicinal herbs or animal parts in alcohol, which according to Chinese traditional medicine, is believed to boost blood circulation and nourish health.
Wang Qi, deputy executive director of the China Alcoholic Drinks Association, believes this type of liquor could be a new growth engine for the liquor industry, according to the report.
Having set up a division to develop the niche market in 2005, Moutai’s performance in this sector falls short given its massive Baijiu market share and its newly minted status as the world’s most valuable liquor producer. Its market share is less than 10%, compared with leading brand Jing Brand Co Ltd, which has 40% of the market last year, according to a report by Xiuzheng Pharmaceutical Group.
In the past decade or so, Bao Jian Jiu has seen notable growth in China. From 2005 to 2015, the market value for Bao Jian Jiu, has ballooned from RMB 4.5 billion (US$651.8 million) to RMB 20 billion (US$2.89 billion), according to Asia Food Journal. From January to September last year, China’s medicated liquor market has already reached RMB 24 billion (US$3.47 billion) in value, it added.
The growth is largely a result of the government’s push after it halved consumer tax on the liquor from 20% to 10%, prompting a growing number of Baijiu producers in China to add medicated liquor to their portfolio.
Xiuzheng predicts that the value of Bao Jian Jiu market is expected to exceed RMB 44 billion (US$6.37 billion) by 2020, with an estimated annual growth of 15 percent.