The baijiu industry is pushing "youth liquor" hard, but remaking itself still looks too difficult

Working from the thought that "if we don't start looking for new drinkers now, it may already be too late," they have begun a run of experiments.

Baijiu, an industry with the air of the middle-aged and old, is trying to get young people interested.

"Taohua Zui" ("drunk on peach blossoms"), the liquor poured in the hit drama Eternal Love, comes from Luzhou Laojiao. Moutai got there earlier, with product placement in Ode to Joy 2. And Jiangxiaobai, a new brand, has made its name on a "youth" marketing gimmick — it even put out an animated series, I Am Jiangxiaobai (《我是江小白》), which ran on video platforms including iQiyi and Bilibili.

Go by the numbers alone and this old-guard industry is doing quite well. Moutai booked revenue of 38.86 billion yuan in 2016, up 19% from a year earlier, with net profit of 16.72 billion yuan, up 7.8%. Wuliangye took in 24.54 billion yuan last year, up 13.32%, with net profit of 6.79 billion yuan, up 9.85%. Luzhou Laojiao grew faster still, by 20.34% and 30.89% respectively.

The crisis buried in those numbers is that most young Chinese see baijiu as something their parents drink. And since their lives look nothing like their parents' lives, it seems unlikely they will simply "start drinking baijiu once they reach the age for it."

So the overtures now being made to young people are a sign that the industry has worked something out: if it doesn't go after a new set of drinkers soon, it may already be too late.

Marketing is always the easiest place to start. Baijiu used to advertise mainly on television, above all in the scramble for CCTV's prime-time slots. Kongfuyan and the Qinchi distillery both muscled into the industry's top ranks by winning the title of "bid king" at CCTV's prime-time ad auction. According to the liquor review site Jiupingwang, even in 2013, after CCTV restricted liquor advertising, baijiu brands including Jiannanchun, Wuliangye, Moutai and Fenjiu still bought 25% of the total pre-sale value at that auction — more winning bids than any other industry.

Baijiu has always favored news and current-affairs programming, which takes more than half of its total ad spending. That follows from where its target drinkers get their information: they skew old. A 2013 survey of the age distribution of Chinese baijiu drinkers found that people born in the 1970s made up 40%, those born in the 1950s 34%, and those born in the 1980s only 26%. Nothing structural has changed in the years since.

Which is why the industry, now anxious to reach young consumers, is buying more internet advertising. Figures from the online marketing firm Juxing Media and from iResearch show baijiu's television ad spending falling for three straight years, from 22.5 billion yuan in 2014 to about 18 billion yuan last year. Online ad spending last year came to 246 million yuan, up 1.7%. That is still nowhere near the scale of television, but the more aggressive brands are moving fast: Moutai's online ad spending rose 25% last year, and Wuliangye has been the top online ad spender among baijiu brands for two years running.

But baijiu's image as a category, and the drinking culture around it, make it a hard sell to the young.

High-end baijiu has always been drunk at banquets paid for out of public funds and at business dinners — one big reason the industry spent years racing to work the words for "nation" or "banquet" into its brand names. Cheap baijiu, meanwhile, belongs to blue-collar and rural drinking.

Either way, the flushed, boozy scene at the table is exactly what young people want to get away from.

QDaily interviewed 11 people at random, aged 25 to 30, working in finance, internet operations, cars, English-language education and television directing, plus a few students still in college. The occasions on which they said they drank baijiu came down to a short list: toasting elders at family gatherings over the holidays, and business meals where an older boss or client was present.

"For the older generation drinking is close to compulsory. At a dinner, not drinking means you're not giving face, so people get plied with baijiu until they throw up. But young people have so many career options now that there's no need to damage yourself just to build connections." Xu Xing thinks the old drinking culture is already coming apart. He is 27 and works in operations at an internet company in Shanghai.

Ning Jiayi grew up in a civil servant's household and, shaped by that from an early age, once believed that "holding your liquor is a useful social skill you have to train for." When she was small her family would dip chopsticks in baijiu and coax her to taste it, and drinking gradually became a habit and then a hobby. She still goes out for a drink with friends, but what she orders is imported spirits and cocktails.

In fact there is almost no room for baijiu in the places young people now choose to drink. Traditional baijiu drinking happens over a meal; young people in first- and second-tier cities tend to treat a meal as purely a meal. Their drinking happens somewhere else, on an occasion closer to leisure than to dining.

Ning Jiayi said she and the friends and colleagues around her go to small bars with distinctive design and a comfortable atmosphere — and a wide, good-tasting drinks list matters a great deal too. Those places generally don't carry baijiu at all.

Unlike wine, cocktails, whisky or craft beer, which they study and savor, baijiu is something most young people have no real sense of: they can't say whether it tastes good, and can barely tell one flavor profile from another. What this high-proof spirit delivers, as far as they can tell, is a burning mouth and throat and a heavy head — if what you want is to drink yourself miserable, baijiu will do the job.

At bottom, young people dislike baijiu, some of them are disgusted by it. Nearly every person interviewed, asked for a general impression, brought up childhood scenes of red-faced elders shouting through finger-guessing drinking games in a fog of alcohol. There is nothing dignified about that picture. As a category, baijiu's image is fairly negative.

Young people's rebellion usually means rebelling against their parents' way of living. So while they do buy baijiu, most of the time it is an expression of filial respect or plain etiquette. They are not the ones drinking it.

So baijiu may look untouchable in China's consumer market: in 2016 the 19 listed baijiu companies paid 44.278 billion yuan in taxes, and Kweichow Moutai alone accounted for 39.5% of that; this year Moutai's market value passed 500 billion yuan, overtaking Diageo to make it the most valuable liquor company in the world. Top-tier brands such as Moutai, Wuliangye and Luzhou Laojiao all but own the lists of gifts and banquet fare over Chinese New Year. But all of it sits at a remove from young consumers.

Any industry without future customers has reason to worry. Which, of course, usually also means an opening.

Jiangxiaobai has been one of the quicker movers. A square frosted-glass bottle; a cartoon figure in black-framed glasses and a trench coat, hands in his pockets; the line "I'm Jiangxiaobai, life is simple"; a price of about 20 yuan for 100 ml — all of it points straight at the young. "People born in the 1980s and 1990s are our core users. We chose a differentiated path from the start: giving young people a freer way to let their feelings out," Jiangxiaobai said in an emailed reply to QDaily's interview request.

In a Zhihu thread asking what people make of the Jiangxiaobai brand, nearly every answer is about how good its marketing is; the youth angle and the copy that lands square in the chest really did buy it a lot of goodwill. Our interviews bore that out. "Hey, these little lines are kind of interesting," said Yang Li, from Changchun, remembering that he first saw a Jiangxiaobai ad on a video site and that what stayed with him was the copy on the bottle. Lin Dong, from Anhui, said his Moments feed is full of official accounts picking apart Jiangxiaobai's copywriting, "like it's some kind of gag writer." But almost nobody mentioned how it tastes.

Jiangxiaobai went on sale in Chongqing in 2011. Its founder, Tao Shiquan, came out of marketing and communications, and the company is called Chongqing Jiangxiaobai Liquor Marketing Co., Ltd. A constant stream of fresh ad copy and manufactured talk has made it an "interesting" newcomer in the baijiu business.

Blanket advertising alone wasn't enough. Jiangxiaobai worked hard to get bottles onto the shelves of restaurants and convenience stores in Chengdu and Chongqing, small eateries above all. One reply in that Zhihu thread puts it this way: "The most deranged stretch was probably late 2012 into early 2013, when almost every table in almost every small restaurant in Chengdu had a bottle of Jiangxiaobai on it." It also blanketed restaurants with its own materials, from chopstick holders on the tables to joke warning signs: "Caution, wet floor — mind your balls." Tao Shiquan once said that the method was crude, but it was the only way to put the product within easy reach of drinkers across many occasions.

In Sichuan and Chongqing at least — a region with a long baijiu-drinking habit — Jiangxiaobai's market looks decent. One figure repeated in press reports is that sales reached 50 million yuan in 2013, enough to break even, and that annual sales now stand at 300 million yuan. When QDaily asked the company to confirm it, Jiangxiaobai said the figure was wrong, while declining to give the real one.

"Jiangxiaobai's numbers really have grown fast, but that doesn't mean young people are drinking more baijiu. Jiangxiaobai simply started out with a young crowd," Lin Dong told QDaily. He works in liquor industry consulting in Beijing. Fan Jinyu, deputy general manager of the marketing department at Jiuxian.com, put it like this: "Young people don't necessarily have to drink it, but they're very powerful at spreading the word."

In other words, Jiangxiaobai has not necessarily taken business from the traditional baijiu market, and it still looks stuck at the stage of a regional brand. On price alone it has entered the low-end market — where Niulanshan, with sales of more than 6 billion yuan last year, does business.

Still, Jiangxiaobai has to some degree prodded the old guard, and a segment of the industry called "youth liquor" is now struggling into existence. Besides Jiangxiaobai, the products filed under that label include Luzhou Laojiao's Luxiao'er, Langjiu Group's Waizuilang, Wuliangye's Ganyibei and Yanghe's Yangxiao'er. The companies behind them all rank in the top ten by market share in China's baijiu industry.

Their brands are their biggest advantage. But turning a name young people merely know into one they actually want to buy is still hard.

So the youth liquors are trying to show their faces in front of young consumers as often as they can. Luxiao'er was placed in the youth film Yesterday Once More (《谁的青春不迷茫》). Waizuilang became the official baijiu of Sing! China season two. Yangxiao'er went to market the internet way, launching on JD Crowdfunding. Wuliangye even made a product aimed at bars, Bingbao — though it is a fruit wine, not baijiu.

Fan Jinyu told QDaily that on Jiuxian.com, Jiangxiaobai sells in gusts, clustered around promotions. The same goes for Taohua Zui, the liquor placed in the drama, which hasn't sold especially well either. Luzhou Laojiao's Sanrenxuan, launched in 2014 with bottle artwork commissioned from the designer Xu Liaoyuan, sold more than a million bottles in its first 84 days, for over 70 million yuan — and then turned out to be a one-off hit.

For now, none of these liquors aimed at the young has built steady demand.

The products that do sell well on Jiuxian.com, the ones with real brand power such as Moutai and Wuliangye, are mostly bought by young people as gifts. According to the 2016 China Liquor Industry White Paper, buyers born in the 1980s and 1990s mostly pick the 200-300 yuan range when the baijiu is for entertaining guests, and drop to 80-200 yuan when they are buying it to drink themselves.

Either way, the baijiu brands that sense the danger have all started marketing at a clear target: young people. As a way for an old industry to still be alive in ten or twenty years, that counts as sensible planning ahead. But prying this market open still looks too hard for now.

Baijiu is simply too far from the fashionable "lifestyle" young people chase today.

Then again, who is to say in what form this boozy culture might come back.

(At their request, Xu Xing, Ning Jiayi, Yang Li and Lin Dong are pseudonyms.)

Images in this article come from the companies mentioned, untourfoodtours, chinaculturecorner and others.

Cover image from Zhiwei Wine Magazine.