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China New Borun Corporation Message Board

  • about_that_stock about_that_stock Aug 18, 2013 8:45 PM Flag

    The next US alcohol craze may come from China

    White lightning. Liquid razor blades. Chinese firewater.

    These are just some of the phrases used to describe baijiu, the most popular alcoholic drink you've probably never heard of.

    The transparent, highly potent drink is commonly found at banquet tables throughout China, where it is thrown back to cries of "ganbei," Chinese for bottoms-up, in rapid fire, spasm-inducing shots.

    Baijiu (pronounced 'bye-jyoh') is by far the world's largest spirit category by sales-accounting for $92.4 billion in 2012, according to the International Wine and Spirit Research group. That was well above the second-most popular drink, vodka, which saw $48.9 billion in sales. Still, it's tough to find on U.S. shelves.

    That may soon change. London-based beverage giant Diageo (London Stock Exchange: DGE-GB), which acquired a controlling stake in the popular Chinese baijiu brand Shui Jing Fang last year, was granted permission by the Chinese government last month to buy remaining shares from its Chinese partner, and it is looking to break the sorghum-based liquor into the U.S. market. Meanwhile, small distilleries like Byejoe Spirits USA in Houston and Vinn Distillery in Portland, Ore., are pushing versions of the drink.

    Diageo is starting with airport duty-free zones and Chinese tourists, before targeting non-Chinese buyers outside of travel retail locations, spokeswoman Camille Dor said. She added that while the U.S. baijiu market is in "an early stage of development," Diageo sees an opportunity to broaden the drink's appeal to both the Chinese diaspora as well as America and adventurous experience seekers.

    According to Diageo, 10 percent of Shui Jing Fang's sales are made outside of China, and the brand is already sold at more than 40 airports worldwide. Dor says that Americans' lack of a traditional alcohol to pair with Chinese cuisine also represents an opportunity.

    Sentiment: Buy

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