The end of the golden age for Baijiu brands

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The golden age of Baijiu will end soon …

Just to remind it to you  baijiu (白酒 “white spirit”) is the most famous rice alcohol made in China.

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Why baijiu brands are in crisis ?

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Start from 2013, the highest military authorities announced 10 new rules in order to decrease the extravagance of officials and to fight against corruption. According to the new regulations, baijiu consumption during luxury banquets will be “banned”, and restrictions will also be adopted to prevent senior officers to stay in luxury hotels even in business travel.

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In addition, the Beijing public administration has also banned banquets for civil servants who are in Beijing for a mission.  A buffet will be offered instead.

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Aftermath:

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 Baiju Moutai

Following the decision of the Central Military Commission to ban luxury dinners, Moutaï 茅台酒, the largest manufacturer of Baijiu in China has seen a great fall in shares.

 

The share price of the company had lost 5.55% of its value at the end of the year and this is only the beginning.

 

But Moutaï is only one drop in the sea. Other Baijiu manufacturers have seen the value of their shares vaporizing since November.

 

 

– Wuliangye  the second largest producer of baijiu suffered a fall of 3% of its share value.

– Anhui Gujing Distillery:  – 4%

– Sichuan Swellfun  group (partly owned by Diageo) has also declined.

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Other famous brands of the Baijiu are also in bad shape

  • Fen (汾酒)
  • Jiannan chun (剑南春)
  • Lang (郎酒)
  • Luzhou laojiao (泸州老窖)
  • Tuopai that (沱牌曲酒)
  • Xifeng (西凤酒)
  • Zhuye qing (竹叶青)

 

Conclusion

Banquets organised by government officials represented the main source of revenue for Baijiu producers who will have to look after new potential consumers.

The decision to ban dinners Deluxe is then definitely a blow to baijiu producers.  On top of that a scandal revealed the presence of DEHP toxins in Moutai’s baiju, a substance harmful to the human body. All these bad news for the Baiju industry should be an opportunity for foreign wine and spirits brands to gain momentum. But are they going to implement the proper communication strategy ? This will be a serious issue.

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See also cognac in china .

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