baijiu Archives - Focus - China Britain Business Council

Why have Luckin and Moutai teamed up for a second time?

Robynne Tindall — Wed, 31 Jan 2024 06:30:14 +0000

Chinese baijiu brand Moutai’s collaboration with Chinese coffee chain Luckin was a blockbuster hit in 2023. But does a second collaboration show that when it comes to co-branding, lightning doesn’t strike twice?

In September 2023, Luckin Coffee launched a partnership with Kweichou Moutai, one of the world’s largest spirits companies, selling a baijiu-infused latte for RMB 38 (£4.27) per cup (although discounts usually made it around RMB 19). Despite many being sceptical of the coffee/baijiu mashup, consumers still flocked to Luckin in their millions. According to Luckin, 5.42 million cups of the coffee were sold on the first day of launch, with sales topping RMB 100 million (£11.2 million).

Now, Moutai has teamed up with Luckin again, this time launching a coffee-less chocolate drink that tastes “just like baijiu-filled chocolate”. The collaboration has been created to coincide with the run-up to Lunar New Year, with campaigns featuring Year of the Dragon imagery and slogans like “The First Cup of the Year of the Dragon”.

The timing is apt, as Lunar New Year celebrations are often accompanied by copious amounts of baijiu, and consumers will often shell out for a pricier brand like Moutai (500ml bottles of Moutai typically retail for upwards of RMB 1,500 (£168)) to mark the occasion.

Yet despite the good timing, the collaboration has failed to drum up the massive interest that the first round attracted. As Dao Insights reported, although the Weibo hashtag “Luckin Moutai collaborate again” (瑞幸茅台再联名) attracted 50 million views, it only reached number five on the Hot Search list – the previous collaboration reached the top spot.

It is hard to say why some campaigns go viral in China when others don’t, but it could be that this second campaign lacks the element of surprise and novelty – Moutai has already released a popular baijiu chocolate with Dove, so consumers could already imagine what the fusion of baijiu and chocolate would taste like.

This underlines the importance of keeping co-branded campaigns fresh and exciting and embracing collaborations that push the boundaries of your brand’s values – other examples from the China market in recent years include Gucci x North Face and Mac Cosmetics x Honor of Kings (an online multiplayer game).

These collaborations also reflect the continuing relevance of the “guochao” trend. Guochao, which translates to “national trend” (or ‘China chic’), encapsulates the rise of brands that celebrate and promote Chinese cultural identity, as well as the growing popularity of home-grown Chinese brands. Moutai’s recent collaborations reflect both sides of this trend. On the one hand, the decision to partner with Luckin rather than Starbucks aligned well with Moutai’s identity as a Chinese company and resonated with the national pride of Chinese consumers. On the other hand, marrying Western favourites like coffee and chocolate with a traditionally Chinese spirit was a smart way to integrate global tastes with local preferences.

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Why alcohol infused coffee just went viral in China

Robynne Tindall — Wed, 27 Sep 2023 06:30:43 +0000

The Chinese consumer market, ever vibrant and dynamic, has been making headlines again with a recent trend fusing baijiu with coffee and chocolate, writes Robynne Tindall

In September 2023, Chinese baijiu brand Kweichou Moutai, one of the world’s largest spirits companies, launched collaborations with Chinese coffee chain Luckin and international chocolate brand Dove that took the market by storm. What can other brands learn from these popular promotions?

Moutai x Luckin Coffee

Luckin Coffee launched a partnership with Moutai in early September, selling a baijiu-infused latte for RMB 38 (£4.27) per cup (although discounts usually made it around RMB 19). Despite many being sceptical of the coffee/baijiu mashup, consumers still flocked to Luckin in their millions. According to Luckin, 5.42 million cups of the coffee were sold on the first day of launch, with sales topping RMB 100 million (£11.2 million).

Founded in 2017, Luckin Coffee was a venture capital darling, leveraging ultra-cheap prices and quick delivery to win over Chinese consumers. The company took a hit in autumn 2020 after it admitted to fabricating over USD 300 million in earnings and was delisted from US markets, but has since bounced back with a vengeance, surpassing Starbucks in terms of income and number of stores by mid-2023.

Moutai x Dove

Moutai quickly followed up its Luckin partnership with a collab with Mars-owned Dove chocolate. The baijiu-filled chocolates launched on 16 September priced at RMB 35 (£3.95) for a box of two pieces or RMB 99 (£11.12) for a box of six, and sold out within minutes. Since then, unauthorised merchants have been flipping the chocolates on e-commerce platforms for several times the RRP. And the demand wasn’t just due to a trendy product drawing attention online; feedback from consumers was overwhelmingly in favour of the product, with some even suggesting making it a permanent addition to Dove’s offerings in China.

Analysis and implications

These collaborations indicate Moutai’s desire to broaden its market and appeal to a younger customer base. The strong spirit is traditionally associated with formal banqueting and 500ml bottles typically retail for upwards of RMB 1,500 (£168) a bottle, putting it out of the reach of many consumers.

However, the success of these collaborations isn’t just an indicator of Moutai’s willingness of to innovate; it also sheds light on the evolving tastes and preferences of Chinese consumers.

Young Chinese consumers have an experimental palate
The younger Chinese demographic, influenced by global trends yet deeply rooted in their cultural heritage, are always keen to sample new products and flavours, especially when they combine familiar elements in unexpected ways. This is especially true for low-priced products like soft drinks, sweets and savoury snacks, as the risk of purchasing them is significantly lower. Brands in the Chinese market must constantly look for ways to innovate and launch new products to stay relevant.

Guochao isn’t going anywhere

These collaborations also reflect the continuing relevance of the “guochao” trend. Guochao, which translates to “national trend” (or can be more eloquently translated as ‘China chic’) encapsulates the rise of brands that celebrate and promote Chinese cultural identity, as well as the growing popularity of home-grown Chinese brands. Moutai’s recent collaborations reflect both sides of this trend. On the one hand, the decision to partner with Luckin rather than Starbucks aligned well with Moutai’s identity as a Chinese company and resonated with the national pride of Chinese consumers. On the other hand, marrying Western favourites like coffee and chocolate with a traditionally Chinese spirit was a smart way to integrate global tastes with local preferences.

Co-branding is an important strategy
Co-branded partnerships have long been an effective way for high-end brands to connect with a broader consumer demographic. During CBBC’s 2023 China Consumer conference, Sarah Rotherham, CEO of Fontaine Group, which owns the fragrance brand Creed, described how Creed worked on a collaboration with Chinese rap artist Benzo, embedding the fragrance into one of his songs, and with Chinese art toy ROBBi, in which limited-edition collectables were scented using Creed fragrances and sold along with non-fungible tokens (NFTs).

In conclusion, brands aiming to thrive in China’s dynamic consumer landscape need to be attuned to evolving tastes, ensuring they strike the right balance between innovation and cultural sensitivity.

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Why Chinese millennials are saying bye to baijiu

Ran Guo — Sat, 11 Jun 2022 07:30:48 +0000

Alcohol has shaped Chinese culture for thousands of years, influencing art, philosophy, politics and tradition. Recently, alcohol consumption has been tied to changing political and economic conditions, with young Chinese consumers increasingly willing to try drinks such as whisky, beer and wine

Whilst baijiu (a strong colourless liquor usually distilled from sorghum) remains the favourite tipple for many Chinese drinkers, sales are declining as the younger generation continue to associate it with business and banqueting culture. According to Daxue Consulting, only 31% of millennials say they drink baijiu, compared to 91% who say they often drink beer. Nevertheless, a number of major players are reclaiming and reinterpreting baijiu for the next generation.

Traditional Chinese drinking culture

According to Tong Digital’s Tracing the Trend podcast, Chinese drinking has historically been more ritualistic, with alcohol consumption traditionally reserved for events such as weddings, business dinners and banquet-style gatherings.

Today, millennial drinking culture in China is largely moving away from this, and although up to 80% of alcohol is consumed in restaurants or at home, many of China’s young people are opting to visit bars and drink in a more casual setting. It is also important to consider that there are market and government forces at play and these have shaped young consumers’ outlook on the spirit.

Over the past decade, anti-corruption policies have seen a crackdown on government officials expensing highly-inflated bottles of baijiu as gifts and drinks at banquets. The reduced corruption has deflated the price of some major brands on the market — such as Maotai, Shui Jing Fang and Wuliangye — and taken away a huge source of revenue from state subsidies. As a result, this incentivises baijiu distilleries to target younger and more diverse markets and now many bar owners across China are working to encourage baijiu to move into the bar and cocktail scenes.

“When I was younger there was very much this banquet culture with baijiu. It’s business, it’s men usually getting together and being pressured to drink,” podcast host Jenny Zhang explains. “I’m sure that still happens to some degree, [but] I do think that what is really driving this change is younger consumers; it’s the post-80s generation who are more open-minded, who are wanting to try new things.”

Nevertheless, high-end bottles are still a draw in China, with China being one of the few markets where spirits with international status (i.e., spirits retailing at over US$100 a bottle) performed well in 2020 according to an analyst from IWSR Drinks Market Analysis quoted in China Daily. Chinese consumers spent £1.9 billion on spirits with international status in 2020, a large proportion of which was single malt scotch.

Are women driving a cocktail revolution in China?

Today, baijiu cocktails are growing in popularity across China’s cities. Bastien Ciocca, co-founder of award-winning Guangzhou cocktail bar Hope & Sesame and baijiu-focused bar San You, noted that many younger Chinese people have a creative mindset and that these explorative consumers will visit his bars with an increasingly open-minded approach to what they’d like to drink and be seen drinking.

“They [millennials] don’t drink the same way as in the UK or the US, where it is more ‘let’s go for a drink.’ In China, it’s more ‘let’s go somewhere to socialise,’ to be seen, to share on social media,” Ciocca says. “The idea is ‘I’m here, I’m cool, I’m drinking a cocktail’.” As a result, many bars have a fashion or design angle that is as attractive to drinkers as a good cocktail list.

Image: Instagram @hopeandsesame

Ciocca also notes that ten years ago it may have been uncommon for groups made up exclusively of women to go out drinking together. Now, on the other hand, cocktail bars often see an equal gender distribution or are even now becoming female-dominated spaces.

One study found that female wine consumers increased by 5% year-on-year from 2018-2019. The stereotype that drinking alcohol is a male pastime is changing, as educated urban women with high purchasing power are increasingly willing to try new things. Nevertheless, many women still prefer low-alcohol drinks for health reasons, a preference that cocktail bars like Hope & Sesame are well-placed to cater to.

New brands and promising collaborations

China is a clear example of how local tastes can develop and become open to new consumption habits, and there are a number of brands that are driving changing drinking habits in China. A stand-out is Rio, which produces pre-mixed cocktails in cans and bottles that are currently sold in all major convenience stores in China. The drinks are low in alcohol (typically less than 4%) and come in sweet, fruity flavours.

Rio launched a campaign in 2020 starring actress Zhou Dongyu, that encouraged solo or small-scale drinking at home, in contrast with the very public nature of banquets and work events. Drinking at home is an important trend that has ultimately been shaped by the Covid-19 pandemic.

Another recent trend that has reached China is hard seltzer (typically a mix of carbonated water or soda with a neutral spirit), which has become popular among health-conscious drinkers for its low calorie count.

Lastly, up-and-coming baijiu brand Jiangxiaobai 江小白 is attempting to transform the fate of the baijiu industry by targeting younger consumer groups. Founded in 2012, it has attracted investment from Sequoia Capital and Hillhouse Capital Management. Priced somewhere in between high-end brands like Maotai and cheaper baijiu aimed at working-class consumers, Jiangxiaobai is sold in smaller bottles with a slick modern design that can be shared with one or two friends. The brand also produces a range of fruit-flavoured baijiu blended with juices such as white grape or peach that are just 15% ABV. In addition to its more appealing flavour, Jiangxiaobai has also built brand recognition among millennials and Gen Z consumers by maintaining stores on Taobao and JD.com and by sponsoring major hip-hop and music tours.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research and analysis services can provide you with the information you need to succeed in China.

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