The party is over, for now
The Chinese have produced baijiu, a clear alcohol, for over 2,000 years. It’s a national drink, often given as a gift or served on special occasions. baijiu, especially premium brands, has been the preferred drink at government banquets. Brands have enjoyed strong sales and high margins
But the party is over, at least for now. Chinese government policies limiting extravagant spending weakened demand for baijiu. Two premium brands, Moutai and Wu Liang Ye, declined in brand value 19 percent and 66 percent, respectively. In contrast, Yanghe successfully repositioned the brand toward the mid-price part of the baijiu market and made the BrandZ™ listing of most valuable Chinese brands for the first time.
Besides adjusting prices to reach a wider domestic market, baijiu brands sought to build international growth by positioning baijiu as the drink to pair with Chinese food. Marketers hoped that baijiu could succeed with a wider audience in the manner of other national drinks, such as Japanese sake and Mexican tequila.
New government regulations depressed wine sales, too. Sales also felt the impact of imported brand popularity and an erosion of trust when harmful chemicals were discovered in some wines. The brand value of the alcohol category declined 6 percent.