Bai Jiu (Moutai)

[GeneChing]

China’s ‘Firewater’ Liquor Sells for $1.4 Million at Auction in London

Thy Nguyen
5 seconds ago

A famous Chinese liquor known for being consumed by former Presidents Richard Nixon and Barack Obama during visits to the country sold for over $1 million at an auction in London.

The auction: Kweichow Moutai set the record for the “highest price ever paid at an auction for a single lot of Moutai outside China” on June 18, according to CNN Business.

Although the identity of the buyer was not disclosed, the winning bid reportedly came from an Asian collector.
The bid was estimated to end between $278,500 and $626,800, but the case sold for $1.4 million among 14 bidders. This was also the first case of Moutai to ever be presented at an auction by Sotheby’s in the United Kingdom.
The lot included 24 bottles of Moutai under the “Sun Flower” brand.
The line was first introduced in 1969, but it was “highly sought after” in 1974 due to its “relatively limited production.”
Moutai’s history: Moutai, named after the small town of Maotai in the southwestern Chinese province of Guizhou, is rare since it can only be produced in that specific town. The company is part state-owned and part publicly traded, and has grown to be China’s most valuable firm outside of technology and is worth more than the country’s four biggest banks.

The drink is a clear spirit that has been described as “firewater” because it is 53% alcohol. The brand is viewed as a “luxury status symbol” as some consumers buy the bottles to keep as investments or collectibles, reported CNN Business. Some bottles sell for as high as $400,000 each.
Moutai was allegedly used during the Red Army’s “Long March” in China in the 1930s as a way to disinfect their wounds and used to “knock themselves out before surgery,” according to China Daily.
It is the favorite drink of Mao Zedong, the founder of Communist China. It was also used to welcome former President Nixon during his trip to China in 1972, and in 2013 when Obama met with Chinese President Xi Jinping.
The liquor sells at approximately $209 for a half-liter bottle, which is considered cheap in China because of how quickly it sells out. Moutai is valued at $421 billion and is worth more than Coca-Cola, Toyota, Nike and Disney.
What people are saying: Westerners have described Moutai as “drinking liquid razor blades” and as a “fiery, throat-tingling liquor” by CNN Business.

Ben Cavender, the managing director of China Market Research Group states that it will be gone “almost instantly” and that people will be “clamoring” for it.
“I think if we drink enough Moutai, we can solve anything,” said U.S. Secretary of State Henry Kissinger at a state dinner in 1974.
Another Chinese local Qi Wang states that “Kweichow Moutai is the leader of Maotai” and that it “influences all aspects of the town’s development.”
Featured Image Via Moutai China

I have a bottle of Moutai stored in my cabinet. Wonder how much it's worth now?

[GeneChing]

Meet China's Sorghum Spirit Baijiu
Whether you're into natural wine, sour beer, or funky Jamaican rum, baijiu is basically lightning in a bottle, and unlike anything else in the world.

By Andrew Parks Updated on August 21, 2023


PHOTO: GETTY IMAGES
If there's one stop that stands out along Jordan Porter’s top-rated Chengdu Classics tour — aside from a heavily spiced and deeply savory heap of shredded, barbecued rabbit — it's the alley that's full of the longtime expat’s favorite pungent and pickled foods, including peanuts, mustard greens, garlic, radishes, and a fermented tofu that strikes fear in the hearts of most Westerners. Even more novel in the flavor profile department is a nearby stall that specializes in paojiu, a DIY form of infused baijiu. For those who are unfamiliar, baijiu is a vast category of clear yet complex spirits that’s played a prominent role in China’s drinking culture since the Ming Dynasty. Fermented sorghum is often the root of its secret recipes, although other grains — including rice, wheat, corn, and millet — pop up in proprietary blends throughout the country.


CHENGDU FOOD TOURS - PHOTO BY ANDREW PARKS
Due to its distinct smell, baijiu is categorized by its bouquet: strong, light, sauce (as in soy), and rice aromas make up most of the market. Paojiu softens the Sichuan province's steady diet of strong aroma baijiu with sugar and fruit (sour plums, cherries, persimmons), medicinal herbs (ginseng, cinnamon, ginger), or more beastly additives, like ants, snakes, and animal *****es. Aside from making baijiu more palatable — they often cut ABV percentages down to the level of a strong wine — these infusions often have bigger health benefits, from balancing one's chi to aiding digestion after a marathon meal. Think of it as a tincture that gets you twisted, but everyone's writing their own prescription.

"The thing about paojiu is it isn't dominated by brands," explains Porter, who also runs a local Baijiu Club with his business partner, Chengdu native Anita Lai. "Its glory is in its myriad homemade forms. Restaurants and families all do their own styles and it changes a lot regionally. I love to just explore what different places use and how that ties to the geography and agriculture of a place."


SORGHUM - PHOTO BY ANDREW PARKS

What is baijiu?
This inherent sense of terroir is what makes China — the Sichuan province especially, due to its fertile agriculture and high levels of humidity — such a thrilling place for adventurous drinkers. Whether you're into natural wine, sour beer, or funky Jamaican rum, baijiu is basically lightning in a bottle, and unlike anything else in the world. Outside of what is commonly called erguotou — which includes popular, inexpensive brands like Red Star and Niulanshan — baijiu is not the "Chinese Everclear" far too many foreign press features have made it out to be. In fact, it's quite the opposite: the epitome of a liquor that's truly alive and eludes any easy descriptors.

"Baijiu has an undeserved reputation among non-Chinese drinkers," says New York bartender Justin Lane Briggs. "That reputation certainly has some of its roots in ignorance and fear of the unknown, which is a real problem (and arguably linked to racism). Thankfully, I think people are starting to investigate some of their assumptions about 'other' places. Mainstream America has become more and more comfortable with broadening their palates, and with that, there has been a huge emphasis on food and drink that reflect a place, a people, a culture."

A similar line of reasoning could explain the meteoric rise in the stateside popularity of mezcal in recent years — while it once occupied the domain of a very particular palate, it's now something everyday customers expect on left-field drink lists and major cocktail menus. Baijiu has a similar appeal: it's a spirit that tells a story — and evokes an environment.

"Sichuan is a hotbed for bacteria," explains Porter. "Whether you’re making paojiu or baijiu, it’s the same idea. There’s lots of stuff lying around, and if you can figure out how to harness it, you’ve got flavor. That’s the magic and mythology of baijiu, really: These simple [ingredients] produce a wonderful, unquantifiable array of flavors and aromas. It's hard to articulate, really."

Shui Jing Fang
One way to get a handle on how baijiu differs from other spirits is to see how it's made firsthand. Most visitors do this by requesting an English-speaking guide at Shui Jing Fang. The only distillery located in the heart of Chengdu (most baijiu comes from rural and/or remote areas), it's essentially a living museum, with spotless exhibition spaces in front and a closely monitored workspace out back.

Here's the thing about Shui Jing Fang, however: It's kind of like those commercials about John Jameson and the Captain Morgan. The brand's only been around since 2000, but it's been declared "the oldest distillery in China" because its parent company, Quanxing, stumbled upon the ruins of a 600-year-old facility when they were undergoing renovations in 1998. Since its mud pits — an old-school reservoir for fermenting grain — were still intact, along with its corresponding yeast cultures, the claim that it's "had more than 600 years of continuous production" isn't false so much as a convenient truth.

Diageo — the British multinational behemoth that has a hand in Hennessy and owns Smirnoff, Johnnie Walker, Baileys, and Guinness — capitalized on this tall tale in 2003, forming a partnership with Quanxing and establishing Shui Jing Fang as its own independent entity. Once the brand earned top-shelf status among strong aroma fans, Diageo ramped up its investment and established a controlling stake in the company. This explains why a Shui Jing Fang tour feels like a carefully orchestrated hour of history lessons and thinly veiled marketing routines. Rare bottles of Shui Jing Fang are lit up and displayed like archeological findings in a natural history museum, and there's an entire room devoted to Western spirits Diageo happens to sell on the side.

Luzhou Laojiao


PHOTO BY ANDREW PARKS
Striking a slightly less staged balance between mythmaking and mirth is Luzhou Laojiao, a state-run distillery located about three hours southeast of Chengdu. It's one of the country's top five brands, and the guides here let you linger over the production floor longer. Sure, everything is seen through a glass window, but the folks keeping LL's beloved 1573 brand in circulation look far more laid-back and loose than the ones at Shui Jing Fang.

Our hosts at Luzhou Laojiao a few months back were the co-founders of Ming River, a new brand that's distributed in the U.S. and Europe but produced somewhere on the company's secretive campus. During our walk through, we were able to watch Luzhou Laojiao's signature "1,000-year pit, 10,000-year mash" process from start to finish. It begins with steaming locally sourced sorghum. The grains are left out to cool, raked alongside previously distilled piles of sorghum, and sprinkled with qu, a unique blend of bacteria, yeast, and other naturally occurring microorganisms that converts starch to sugar and sugar to alcohol at the same time. Also known as solid-state fermentation, this procedure is only found in baijiu factories, and it's what sends the spirit on its way to achieving spellbinding flavors.

“They're basically making a sorghum kimchi," explains Derek Sandhaus, Ming River's education director and the author of Baijiu: The Essential Guide to Chinese Spirits.

Once everything is properly mixed, the mash of fresh and spent grain is shoveled into sealed mud-lined pits — four of which date back to 1573 — and left to ferment for two to three months before undergoing distillation and the rest of baijiu's production routine.

"They form a symbiotic relationship," explains Sandhaus. "The pit itself starts participating in the fermentation process, as it absorbs more yeast and microbes from the mash. With pits this old, you can achieve flavor combinations you can't get anywhere else really, because there’s nothing else as old as these pits.”

He pauses, smiles, and adds, "I hope that wasn't too confusing."

continued next post

[GeneChing]

SHUIJINGFANG - PHOTO BY ANDREW PARKS

GuShu
That's the thing about baijiu, though; since there are so many ways to go from a mound of inoculated grain to a bottle of bold liquor, it can be confusing. Especially once you start drinking it. When we visited the GuShu distillery in Qionglai — a mountainous region west of Chengdu known for white-label baijiu (raw distillates sold to other factories for blending) — we weren't struck by the centuries-old science of distillation. Aside from such modern innovations as cranes and cooling fans, and an enormous facility that felt like the world's yeastiest airplane hangar, GuShu was following the same fermentation steps as Shui Jing Fang and Luzhou Laojiao. The main difference was its business plan: as one piece in a major pie of baijiu conglomerates.


GUSHU - PHOTO BY ANDREW PARKS
Where things got interesting with GuShu was our lazy susan lunch with its sorghum buyer. A native of Harbin, he used to watch people drink from noon to night to stay warm in the aptly named "Ice City" (it's right near the Russian border). For people in Harbin back then — and the rest of China, for that matter — baijiu wasn't a status symbol or subtle form of bribery so much as something you shared with loved ones.

At one point in our conversation, the buyer started talking in proverbs, many of which relate back to the beloved Chinese poet Li Bai. They're phrases that frame drinking as a form of creative inspiration — things like "drink more, feel more" or "drink to feel up, not down." More importantly, our translator — Ryan Gage Friesen, a Canadian who is one of Porter’s oldest employees — explains, is how baijiu can bring people closer together. "'When you drink with people you don't really know, a little bit [of baijiu] seems like a lot,'" he says, "'but when you're with your friends, one thousand cups isn't enough.' That's the drinking culture in China in essence."

The problem for baijiu companies is how that culture became co-opted by Western drink trends over the past couple decades, with younger Chinese people turning toward craft beer, cocktails, and other spirits instead of the strong aroma shots they associated with old dudes and their grandparents. Folks like Luzhou Laojiao and Moutai — the world's most valuable distiller — were fine with this at first because they could rely on major business meetings and China's gifting culture moving big money bottles every month.


LUZHOU LAOJIAO - PHOTO BY ANDREW PARKS
Or as Sandhaus put it, "I was talking to this distiller once who sold a standard baijiu at $100 and the next step up at $3,000. I said, 'It's just you and me here; let’s be real. There can’t be a qualitative difference between what you’re selling for a hundred dollars and what you’re selling for three thousand.' And he was like, 'You don’t understand; when I price something at three thousand dollars, I get calls from customers who say it's not expensive enough. Putting a three-thousand dollar bottle on the table is saying this is how much I like you.'"

President Xi Jingping destroyed this dichotomy by enacting a crackdown on corruption about five years ago. The sudden move caused a downward spike in sales and forced established brands to finally go after two groups they'd long ignored: women and millennials. One person who's helped with this transition is Yuchen Zhong, the co-founder of the baijiu education firm Yuan Kun. A Chengdu native, he studied management information systems at Ohio State and worked at a software company in Shenzhen and Beijing before deciding to move back home and focus on consulting baijiu companies.

Baijiu evolves
"Baijiu is a huge industry," he explains, "but in many ways, it's still a young one. Most distilleries don't know how to build or manage a modern company, and they have no idea what wine, sake, or whiskey brands are doing."

That's starting to change, however. "Distilleries have been shifting the palate of their products in recent years," Zhong says, "towards a lighter flavor and body, and a lower ABV. They also started developing sub-brands that employ more fashionable designs. Even traditional baijiu is trying to look prettier. The question is what happens when millennials become the center of society? Will they still accept baijiu, a drink that is heavily associated with unpleasant business dinners?"

Lordrew Jor has a unique perspective on this. He grew up in the Sichuan city of Kangding but studied and worked in Canada for six years before moving back to China and starting a new career in Chengdu. In late 2017, Jor co-founded a brewpub called Nanmen, an ironic move considering his family owns a 50-year-old baijiu brand, Tan.

"There are two reasons why baijiu is a drink for older people," he says. "One: The alcohol level is very high, usually around 45 to 53 [ABV]. Two: Great baijiu is usually very expensive. For instance, my favorite brand, Moutai, is around $250 per bottle. Young people simply can't afford that. The market needs to lower the price without sacrificing quality. They also need to figure out what young people want in baijiu; it could be something as simple as package design and a little twist in flavor or something as complex as making baijiu the next cocktail spirit."

Baijiu cocktails
Capital Spirits was one of the first bars to do this in Beijing, offering flights to foreigners who wanted to drink baijiu straight and well-balanced cocktails to Chinese customers looking for a fresh take on an old-fashioned spirit. Two high-end hotels in Chengdu now offer baijiu cocktails at their bars as well: Cube at the Fairmont and Jing at The Temple House. We tried the latter recently and discovered two new drinks bar manager Layla Wang is developing for the Chinese New Year. While one was a dark and brooding take on a Manhattan, the other was fruity and floral, with a tinge of sweetness and a creamy strawberry finish. When we pointed out how easy it was to drink without masking the baijiu, she laughed and smiled, saying, "I'm not hiding it; it's called balance."

A similar approach has taken hold in the U.S. over the past year, as emerging stateside brands like Ming River and Ganbei join Portland's nearly decade-old Vinn distillery in pursuit of the country's most open-minded consumers.


MING RIVER BAIJIU - PHOTO BY ANDREW PARKS
"When we first started, it was a foreign thought to put baijiu in a cocktail because that was never done in our household," says Vinn president Michelle Ly. "But we were fortunate enough to meet a creative mixologist (Botanist Bar PDX owner Robbie Wilson) that had a strong understanding of how to mix rice spirits in a cocktail. That was an eye opener, for sure. His cocktails didn't hide the flavor of our baijiu; it showcased it."

Vinn's rice aroma baijiu is based on a family recipe that's seven generations old and reflects their roots in both China and the Quang Ninh Province of North Vietnam. It holds the distinction of being the only Chinese spirit distilled within our borders, forsaking pit fermentation and steamer baskets for brewer buckets, pot stills, and a scratch-made qu that revolves around rice flour and a hush-hush mixture of herbs and spices.

Ganbei's founders, Andrew Hoogerwerf, Alec Fotsch, and Kockyo Xiong, launched their strong aroma baijiu in the United States' Twin Cities at the tail end of 2018 after nearly two years of product development and searching for a distiller that could toe the line between accessibility and tradition. They eventually found the latter in the autonomous Chinese region of Inner Mongolia; led by a master blender named Hetao, Ganbei's production team honed its recipe down to a "full-bodied, fruit-forward spirit with subtle, earthy tones, notes of stone fruit, anise and elderflower, and a crisp, light finish."

"Most people who have tasted our product love it," says Hoogerwerf. "Especially in cocktails. One of my favorite things to do is bring it to a bartender at his/her location. I can see the creativity flash in their eyes; it is as if a painter just discovered an entirely new color, opening up flavor possibilities that simply weren't there before."

Matthew Voss, the head bartender at Marvel Bar in downtown Minneapolis (now sadly closed), was one early adopter, incorporating Ganbei in both a gimlet and a Manhattan. "It's the first spirit in a long time that really made me question it," he explains. "Like what is this and where does it belong?

He continues, "Everything that makes it a challenge is what makes it special, though. Maybe because of the saturation of upstart breweries and distilleries — many of which are putting out similar things — people will start looking for something new. And they can be led to baijiu. It's one of my favorite things to put in front of people because it’s a button-pusher. People have strong opinions for and against it, but a lot of the people who love flavor in particular are really challenged by it. That’s not something we get to experience much anymore."

This article was quite informative

[GeneChing]

China's Moutai, Luckin launch alcohol-tinged latte to woo young Chinese consumers
China | 4 Sep 2023 4:20 pm

An advertisement promoting a Kweichow Moutai liquor latte is seen at a Luckin Coffee store in Beijing. (Reuters)
Kweichow Moutai and coffee brand Luckin Coffee on Monday launched in China a latte advertised as containing the fiery Chinese spirit baijiu, as the Chinese luxury liquor maker aims to pull in younger consumers.

The 38 yuan (US$5.23) "sauce-flavored latte", which Luckin discounted to 19 yuan on the first day of sales, was one of the most discussed topics on Chinese social media platform Weibo, with several users saying they had placed orders.

Moutai, known as the national liquor of China, is a potent, colorless spirit that is usually served at banquets in China, and drinkers say that the flavor and aroma of Kweichow Moutai's version are similar to soy sauce. The companies said the latte alcohol content was lower than 0.5 percent of its volume.

The launch comes amid a slowing economy and as Kweichow Moutai, whose alcohol sells at an average market guide price of 1,499 yuan, has been looking for ways to be more accessible and pull in a new generation of users. The company, based in China's southwestern Guizhou province, also launched a baijiu-infused ice cream last year.

Chinese social media users posted videos of themselves picking up cups of the drink and being told by sales staff that they should not drive after drinking it. By Monday afternoon in Beijing and Shanghai, Luckin's app showed that the drink had sold out at several stores.

Independent food industry analyst Zhu Danpeng said the collaboration would most likely benefit both brands.

"Moutai and Luckin are the leading enterprises in the domestic liquor and coffee sectors, respectively," Zhu said. "On the one hand, Moutai accelerates its brand rejuvenation through cooperation with Luckin and on the other hand, for Luckin, its cooperation with Moutai also helps to improve its comprehensive strength and brand tone in the coffee industry."

Luckin has been aggressively expanding its store portfolio in China after surviving an accounting fraud scandal in 2020 that forced it to withdraw from the Nasdaq exchange and brought it to the brink of collapse.

(Reuters)

I'm not sure this would taste good.

Coffee
Bai-Jiu-(Moutai)

[GeneChing]

China's Moutai launches boozy chocolates with Dove in diversification drive
By Casey Hall
September 13, 20239:40 PM PDTUpdated 22 days ago


[1/2]An advertisement promoting a Kweichow Moutai liquor latte is seen at a Luckin Coffee store in Beijing, China, September 4, 2023. REUTERS/Florence Lo/File Photo Acquire Licensing Rights

SHANGHAI, Sept 14 (Reuters) - Chinese luxury liquor-maker Kweichow Moutai (600519.SS) is again looking to diversify from its fiery baijiu spirit core business to attract a new generation of consumers via a sweet collaboration with Mars, Inc.-owned Dove.

The companies jointly announced on Thursday they would release limited edition alcohol-infused chocolates, available from Saturday.

Within an hour, a hashtag about the collaboration had leapt to the top of the trending topics list on China's Weibo social media platform.

This announcement comes only 10 days after the launch of a baijiu-infused latte from Moutai and domestic Starbucks rival, Luckin Coffee (LC0Ay.MU), which generated enormous interest online and sold out in cities around China.

"This demonstrates Moutai's desire to broaden their appeal more to younger consumers," said Jason Yu, greater China managing director of market research firm Kantar Worldpanel. "They fear their current base is too concentrated on older consumers and that makes them worry about the future of the brand."

Moutai, known as the national liquor of China, is a potent, colourless spirit that is usually served at banquets.

The company, based in China's southwestern Guizhou province, began its run of collaborations last year with domestic dairy Mengniu. The resulting series of alcohol-infused ice-creams also caused a stir among Chinese consumers.

In part, the attraction for younger Chinese of these quirky product tie ups lies in the novelty of buying into the Moutai brand for a small fraction of the cost of buying a bottle of its liquor, which has an average market price of 1,499 yuan ($206) for 500 mls.

Though details of the price of the upcoming liquor-infused chocolates Moutai is releasing with Dove haven't been released yet, the Moutai-infused Luckin lattes were made available for as little as 19 yuan with coupons and a small tub of the alcoholic ice-cream was priced at 60 yuan.

Shares in the company were little changed on Thursday, having gained 5% this year.

($1 = 7.2735 Chinese yuan renminbi)

Reporting by Casey Hall

Casey Hall
Thomson Reuters
Casey has reported on China's consumer culture from her base in Shanghai for more than a decade, covering what Chinese consumers are buying, and the broader social and economic trends driving those consumption trends. The Australian-born journalist has lived in China since 2007.

Bai-Jiu-(Moutai)
Coffee

[GeneChing]

Are You Supposed To Drink Baijiu Straight?

BY*KAT LIEU/APRIL 22, 2024 9:30 PM EST

Baijiu, the best-selling alcohol*in the world, is a clear and rather strong-tasting Chinese grain spirit, averaging 50% to 65% alcohol by volume (ABV). Pronounced "bye-j'yo,"*baijiu (or*白酒) means "white spirit" in Chinese.*Outside of China and Asia, baijiu has grown in popularity among both younger drinkers and Western crowds in recent years. The baijiu industry in China is valued at billions of dollars, with one of the most popular labels, Kweichow Moutai, being worth over $40 billion. Its Moutai raked in nearly $50 million in 2023 alone, as per Brand Finance.

As early as 2016, Tasting Table predicted that*baijiu would be the new mescal. We've also discussed extensively how you're supposed to drink baijiu. Traditionally, in China, you'd find baijiu served neat in shot glasses at the dining table alongside food, where it*should be served*neither cold nor warm but at room temperature.*One often enjoys baijiu with others, either during holidays and celebrations, or after work with coworkers and superiors.*

But is drinking baijiu straight the only way to enjoy this strong spirit? The answer is no. It's the traditional way of drinking baijiu, but the younger generations in China don't enjoy taking this spirit neat and straight. They prefer to dilute baijiu, infuse it with inclusions like fruits and spices, or enjoy it in cocktails.

Making baijiu cocktails

For years, especially among*China's youth, baijiu has been seen as retro and unexciting*– or viewed as an older person's drink, similar to bourbon in the United States. Thus, it's surprising to see baijiu's resurgence, especially among younger drinkers.*Across American bars and restaurants, cocktails made with baijiu are also trending. Search "baijiu cocktails" on TikTok, and you'll find plenty, from Baijiu Coladas*to Baijiu Old Fashioneds*to a Baijiu Basil Smash.*


Baijiu can also be used to make margaritas and sour cocktails. For instance, a Sichuan Sour*can be made from a mix of lime and pineapple juices, rum, passionfruit liqueur, and baijiu, all mixed and strained into a glass. It's good to learn the*four main types of baijiu before drinking it or making a cocktail with it, as the spirit comes in different flavors, much like rums or whiskeys.*Some baijiu, like the sauce aroma type, may taste*too strong and overpowering in a cocktail, and drinking it straight might still be the best way to go.*

Light aroma baijiu, with its smoky and somewhat grassy notes, works well in cocktails that include fruits, mezcal, or fennel. On the other hand, strong aroma baijiu tends to work*better with spices and tangy inclusions, like lime or pineapple juice.*While baijiu cocktails are trending, they're still relatively new to the bar scene in both the West and China.*Therefore,*the world of baijiu cocktails is a bartender's oyster.*

I've only drank it straight. I'm not big on cocktails in general.

[GeneChing]

Luckin’s chocolate-flavoured Moutai latte shows what Chinese consumers want
Ross Hindle
February 2, 2024



Luckin Coffee and Kweichow Moutai have released a chocolate-flavoured alcoholic “latte” with 0.5% ABV

This is one of two collaborations announced on the same day for Luckin, showing how important “novelty” is for coffee consumers

This shows how the chain is focused on coffee being an ingredient, rather than a beverage in its own right

ON 22 January, Luckin Coffee and Kweichow Moutai, the producer of Maotai baijiu liquor, launched a chocolate-flavoured alcoholic latte in celebration of the Chinese Lunar New Year. Moutai is a spirit that contains 53% alcohol, with each serving of Luckin’s beverage containing less than 0.5% alcohol by volume.

The Maotai-flavoured chocolate drink uses whole milk and Maotai-infused thick milk/cream, meaning Luckin can avoid adding Maotai baijiu bottles to their stores.

This marks the second collaboration between the two brands, following the “sauce-flavoured latte”. This first product of the partnership emerged as one of Luckin’s most important revenue sources over the last year, at one point selling 5.4 million cups in a single day.

This partnership is part of Kwiechow Moutai’s strategy to reach younger audiences. Conversely, for Luckin, this allows them to associate with a historic heritage brand which is well-known across the country.

This is also further evidence that hard coffee could be making a comeback. Dunkin’ Donuts and Starbucks have both notably recently added alcoholic beverages to their menu. However, there is one definitive difference with Luckin’s latest release.

Is coffee now just an ingredient?

The Maotai-flavoured chocolate drink doesn’t contain any coffee – much like a matcha or chai latte.

For some time, there has been a growing trend for developing drinks where coffee is a component or ingredient rather than the singular focus. We can see this in the growing trend of customisable coffee beverages using flavoured syrups, which are far more prominent in branded coffee shops than high-scoring single origin lots.

There is plenty of evidence to support this shift in consumer behaviour. For example, ready-to-drink (RTD) coffee is among the fastest-growing segments in the industry – and many products are mixed with plant milks and a wide range of other ingredients to achieve certain flavours.

Similarly, a growing demand for customisation, largely driven by Generation Z and young millennial consumers, is leading coffee shops to add more flavours and syrups to their menus.

“Generation Z sees coffee as an ingredient – something that can be mixed with many things, rather than something standalone,” says Felipe Cabrera, general manager at Ad Astra Consulting. “Southeast Asia’s coffee sector more widely is following [customisation] trends too, as mostly their new coffee consumers are millennials and Gen Z. That’s the future for the coffee market in China.”

Not only are the flavours being introduced becoming increasingly unconventional, but comparisons with the growing number of flavours of milk teas and a wider range of plant milks show that customisation clearly resonates with younger consumers.



Younger consumers want novelty and customisation

This product release demonstrates another trend for Chinese coffee shops: coffee shop chains don’t think single origin coffees are cool anymore – the focus is instead on Instagrammable, customisable beverages.

This reflects a broader trend in the coffee industry, where the experience and novelty of the product are often just as important as the product itself. Luckin’s approach isn’t just about offering something unique that can’t be easily replicated at home or found in other traditional coffee shops – it also aims to make their customers feel like they are experiencing something new and exciting, with an air of exclusivity around the limited edition product.

In line with this, Luckin announced two other collaborations on the same day as releasing the chocolate-alcohol beverage, including the release of Jackson Yee-related merchandise – the coffee chain’s global ambassador.

Felipe reiterates that this is being driven by younger generations in China – but that it reflects a wider shift in the industry. Newer consumers aren’t chasing traceable, high-scoring coffees and innovative brewing methods – they want a never-ending chain of new experimental drinks mixed with a huge range of ingredients.

“Coffee isn’t an ‘aspirational’ product in this way any more,” Felipe says. “Customers are more interested in a wider range of flavours being added to coffee; fruit syrups, a mix of milk teas and coffee, and so on.”

But ultimately, this collaboration doesn’t just symbolise the direction that Chinese coffee culture is going in – it also reflects what we’re seeing on a global scale with the explosive growth of RTD, plant milks, and other similar categories associated with novelty and customisation.

It does, however, indicate that consumers in China are excited by a wider range of more unconventional flavours as far as customisation is concerned. Even though the last 12 months have seen Starbucks mix coffee with olive oil and mushroom coffee gathering speed around the world, this coffee-free alcoholic “latte” is a different direction.

Altogether, this shows that Luckin is focused on coffee as an ingredient – and that approach is clearly something which resonates with the Chinese coffee market. But this trend is becoming more present outside of China too. The real question is how long coffee can remain the star of the show – or if the rest of the world will follow suit in time.

Coffee
Bai-Jiu-(Moutai)

[GeneChing]

Kweichow Moutai Raises Payout After Posting Profit Jump
Published: Aug. 8, 2024, 9:03 p.m. ET

By Jiahui Huang

Kweichow Moutai's first-half net profit rose more than expected, with the liquor giant increasing its payout ratio and joining the list of a few Chinese companies whose financial performance remains sound.

China's most valuable liquor brand said late Thursday that its first-half net profit came in at 41.70 billion yuan ($5.81 billion), up 16% from a year earlier.

Revenue rose 18% to CNY81.93 billion for the period despite subdued consumer sentiment in China.

The results were a positive surprise, Citi analysts Xiaopo Wei and Vincent Young wrote in a note, reflecting the company's efforts to keep selling prices stable by slowing direct retail sales and providing more support to distributors.

Kweichow's move to lift its regular dividend payout ratio to 75% from 52% is also a welcome surprise, Citi said. That could draw in more long-term investors amid market volatility, it added.

Write to Jiahui Huang at jiahui.huang@wsj.com

Moutai's growth has got to be a barometer of some trend...