Baijiu, the Chinese white spirit, is facing challenges in its market this year: on one hand, there is a continuous decline in production. According to data from the National Bureau of Statistics, national baijiu production has decreased from 11.98 million kiloliters in 2017 to 6.71 million kiloliters in 2022, and the situation has not improved in the first half of 2023, with a 14.8% YoY production decrease.
On the other hand, the sales situation is also pessimistic, with a phenomenon known as “price inversion” becoming widespread. Industry reports indicate high inventory levels, slow turnover, weakening expectations, and a three-consecutive decline in the price of the industry’s flagship product, Feitian Moutai.
Although many listed baijiu companies have shown double-digit growth in revenue and profit in their financial reports, and leading brands like Guizhou Moutai and Wuliangye have achieved record-high revenues and profits, the baijiu industry is facing significant challenges due to changing consumer trends.
One of the main concerns for baijiu companies is that young people are not interested in consuming baijiu. To ensure future development, baijiu enterprises are aggressively introducing new products and engaging in cross-industry collaborations to appeal to younger consumers.
For instance, Moutai has engaged in numerous collaborations, such as the launch of Moutai ice cream in partnership with Mengniu in 2022, accumulating nearly 10 million cups in sales. Collaborations with Luckin Coffee, resulting in the “Sauce Fragrance Latte,” achieved over 5.42 million cups in single-day sales. Moutai’s collaboration with Ferrero to produce Moutai Xiaoling liquor-filled chocolates sold out upon launch, garnering significant attention with each collaboration.
Wuliangye also entered into a cross-industry partnership in May of this year with Yongpu Coffee, creating the “Wu Liang One Coffee Bar” and introducing two co-branded coffee-flavored liquors.
In April, Yanghe Stock launched a low-alcohol tide beverage named “Micro Molecule,” marking its strategic entry into the “light baijiu” market, catering to the younger generation’s preference for a mild drinking experience.
Whether taking proactive measures or responding to challenges, baijiu brands are making efforts to connect with young consumers.
Lowering alcohol content and improving taste
The drinking habits of young people, who are becoming a driving force in consumption, differ significantly from the older generation. According to a report on “Young People’s Alcohol – Chinese Liquor Category Innovation” by Ries Strategic Positioning Consulting, only 9% of young people frequently consumed baijiu in the past year, with beer, wine, and fruit wine accounting for 40%, 20%, and 16%, respectively.
In terms of “favorite alcoholic beverages,” baijiu ranks at the bottom among young people. The fundamental reason for the lack of interest among young people is the high alcohol content and the challenging taste profile of baijiu. Young people are indifferent to whether baijiu is “strong aroma,” “strong flavor,” or “light aroma,” and evaluations like “mellow with a lingering aftertaste” from experienced drinkers mean little to young beginners, who often describe baijiu as “bitter, spicy, and pungent.”
While the older generation pursued getting drunk, the new generation prefers a slight intoxication, leaning toward low-alcohol beverages. To meet market demand, many baijiu enterprises have introduced low-alcohol products and focused on iced drinks to enhance the palatability of baijiu.
Regarding low-alcohol products, baijiu companies have adopted two main strategies: one is to create fruit wine or pre-mixed drinks according to young people’s preferences, and the other is to reduce the alcohol content of baijiu to cultivate a taste acceptable to young consumers.
The tradition of making pre-mixed drinks with baijiu dates back to 2015 and 2016 when the pre-mixed drink market surged. Many baijiu companies introduced new products during that time, including Wuliangye’s Dracula, Yanghe’s Dicro, and Luzhou Laojiao’s Super Body, among others. However, the market struggled to absorb the excess production capacity at the time. Combined with uneven product quality due to a lack of R&D experience among manufacturers, the popularity of pre-mixed drinks lasted only for a short period, and baijiu pre-mixed drinks did not penetrate the youth market as expected.
In terms of fruit wine, Moutai launched the sub-brand Youmi in 2017, positioning it as an exclusive fruit wine for middle-to-high-end women. Its main product is blueberry craft wine with an alcohol content of around 13%, offering semi-dry and semi-sweet taste options, priced between 289 yuan and 759 yuan.
Wuliangye’s ecological brand, Xianlin, also introduced several fruit wines targeted at young people, including the Wudiao series and the Xiaozuo Shiguang series. Both series feature 168ml fruit wines priced at 16.8 yuan each. The flagship product of the Xiaozuo Shiguang series, Qingmei wine, is sold in a set of two 500ml bottles for 88 yuan. Some bloggers have noted that although the alcohol content of this fruit wine is reduced, it still retains the strong aroma of baijiu.
Searching for low-alcohol baijiu on the internet reveals that despite the title suggesting “low-alcohol,” most products still have an alcohol content of around 40%, which is considered high-alcohol in the eyes of young consumers.
In response to this, Yanghe Stock launched a new beverage called “Micro Molecule” in April of this year, emphasizing low alcohol content and trendy characteristics. It claims to solve the “intensity” issue of baijiu while retaining the taste of high-alcohol baijiu, creating the concept of “light baijiu.” The most common volume in the “Micro Molecule” series is 338ml, a size suitable for women to hold in one hand. The alcohol content is 33.8 degrees, a reduction compared to regular baijiu.
Emphasizing iced drinks is an adjustment made based on the drinking habits of young people. By adding ice to baijiu, mimicking the mixing style of Western spirits, the stimulating sensation and alcohol content of baijiu are reduced. According to incomplete statistics, several brands, including Luzhou Laojiao, Langjiu, and Guowei, are promoting baijiu iced drinks in various forms. For example, Guowei 1573 collaborated with singer Gic Jieyi in July this year to release the MV “Not as Ice JOYS,” highlighting the unique features of its baijiu iced drink.
Brand rejuvenation challenge: Collaborations are not a cure-all
In addition to product innovation, the key to connecting with young consumers lies in brand rejuvenation.
Cross-industry collaborations can help break through user circles, achieve traffic interchange, and attract new customers. Therefore, many baijiu companies see it as an important channel to enter the youth consumer market.
Taking the recent sensation of Sauce Fragrance Latte as an example, the “contrast” between Moutai and Luckin Coffee ignited emotions. The contrast includes class differences, where Moutai is known as the “unique luxury item in A-share stocks,” and Luckin Coffee targets ordinary white-collar workers. There is also a generational contrast, as the main consumer group for baijiu is middle-aged, while coffee is considered a life-saver for young people. Thanks to Moutai’s national reputation and Luckin’s widespread market penetration, Sauce Fragrance Latte achieved sales of 5.42 million cups in a single day, with single-product sales exceeding 100 million yuan, making this collaboration undeniably successful.
Before the Sauce Fragrance Latte gained widespread attention, baijiu had been engaging in cross-industry collaborations for many years, covering a variety of categories such as perfume, crystal, face masks, and traditional Chinese clothing.
In 2016, Luzhou Laojiao announced a collaboration with the Scent Library to launch custom perfumes. In 2019, it partnered with the traditional Chinese clothing brand “Listening to the Moon’s Small Building” to create a crossover series of traditional Chinese clothing-themed creative fruit wines. In 2020, it collaborated with traditional Chinese medicine cosmetics brand Cangnan Lao Zhongyi to develop a crossover product, the “Jiuzao Awakening and Repair Mask.”
Wuliangye also collaborated with Swarovski in 2017 to launch the “Wuliangye · Destiny Crystal” product, and in 2021, it explored a cross-industry collaboration with Michelin.
After initial exploration, baijiu companies gradually found their ideal collaborators for cross-industry partnerships, mainly in four categories: ice cream, chocolate, coffee, and milk tea.
In addition to Moutai ice cream, Wuliangye collaborated with Hey Tea in 2018 to launch two baijiu-flavored ice creams. Luzhou Laojiao and Ge Bai Longshan also collaborated separately with Zhongxue Gao to release “Broken Slice Ice Cream” and Huangjiu Ice Cream. Recently, Gujing Gong Jiu announced a collaboration with ice cream brand Baixi, claiming that each cup of ice cream would be infused with more than 1.12g of the “Gu 20” series of fine wines to create a richly fragrant ice cream.
In terms of chocolate collaborations, the Moutai Xiaoling liquor-filled chocolate became the flagship product of the “Moutai+” series, adding 2% of 53% vol Guizhou Moutai liquor and attracting a frenzy of consumer demand. In April of this year, Fen Jiu collaborated with Danish chocolate brand Odense Boge to launch the world’s first baijiu-filled chocolate, using Fen Jiu’s high-end series Qinghua 30.
Regarding coffee brands, in addition to Luckin’s collaboration with Moutai, Yongpu joined forces with Wuliangye in May this year to create the “Wu Liang One Coffee Bar” and launched two co-branded coffee-flavored liquors: “Red Cheeks Beach” and “Poetry on the Grain Heap.” However, only the former added Wuliangye’s strong aroma type 39-degree baijiu.
In the milk tea category, one of the most successful baijiu collaborations is the “Zuibu Shangdao” launched by Luzhou Laojiao and Tea Valley in 2020. It became a flagship product at the time. After the Sauce Fragrance Latte became popular this year, many users asked Tea Valley on social media to reintroduce “Zuibu Shangdao,” and there were even many users on Xiaohongshu who bought Luzhou Laojiao themselves to recreate this product.
Most cross-industry collaborations in these four categories occur for two main reasons: these products have high penetration and bring a massive young consumer base on their own, and they are high-frequency consumption products. Not only can they help baijiu companies achieve frequent visibility, but they are also essential channels for quickly understanding the preferences and changing trends of young consumers.
However, the potential drawback of collaborating with other brands is the “doing wedding dresses for others” phenomenon, where baijiu companies consume the brand they have accumulated over the years without achieving the expected rejuvenation.
The main reason baijiu faces setbacks in the youth market, in addition to the objective incompatibility of taste, is the subjective resistance of young people to the baijiu table culture.
Therefore, for the marketing direction of baijiu companies, it is urgent to dissociate from the table culture.
Taking the promotion of Sauce Fragrance Latte as an example, Luckin Coffee produced five documentaries around themes such as the workplace, female friendship, and family. These documentaries not only touched more young people, but also unexpectedly attracted a considerable number of female consumers. By detaching from traditional table culture, Moutai not only reached more young people through this collaboration but also gained attention from female consumers.
After stripping away the old cultural core, baijiu needs to use new content to establish a trend characteristic that fits the development of the times.
For example, after the resumption of offline performances this year, the music market has become a popular choice for many baijiu companies. According to incomplete statistics, more than ten baijiu companies have successively sponsored concerts this year, including Luzhou Laojiao’s “Glory Ceremony” star concert, Wuliangye’s “Renewal and Inheritance” Waterwood concert, Jingshengyuan’s “Guoyuan Wangfeng 2023” national tour, and Yanghe M9’s Taizhou Double 11 concert.
Music, as one of the representatives of pop culture, has a powerful influence among young people. The offline concert market, as the most effective scene to reach young consumers, naturally becomes the first choice for baijiu companies to build a young and trendy brand image.
Overall, baijiu rejuvenation is a complex challenge. Different baijiu types require different methods to achieve rejuvenation, from supply to demand, from brands to channels.
Baijiu rejuvenation itself is a bit of a misdirection—it is not about age, not about young people; it is a path for liquor companies to expand drinking scenes and enhance brand power. These “rejuvenating” brand activities are grand, but they do not mean that liquor companies have to choose “either this or that.” The middle-aged and elderly demographic, which does not have a large voice in public opinion, remains a core audience that liquor companies have not abandoned.
As for the coveted “young people” that everyone wants to attract, it may still be a supporting role in the growth context of baijiu. Like the advertisements of Hermès and LV often appearing in front of ordinary people who “cannot afford it,” brand awareness not only needs to reach the “target consumer” directly but also needs everyone to know. This is the only way to further establish their brand value and firmly grasp the core user base.