How Kweichow Moutai became the largest Chinese producer of baijiu
China’s Kweichow Moutai is one of the country’s top ten listed companies by value. It is also one of the world’s most expensive alcoholic beverage producers. The company’s main product is baijiu. This drink is often called Chinese vodka. You can get it by distilling fermented grain, traditionally sorghum. The result is an alcohol with a strength of 35-60%.
History of Kweichow Mouta’s foundation
Kweichow was founded in 1951 following the merger of three of China’s largest alcohol beverage producers. In 1999, it established a subsidiary, Kweichow Moutai Limited, which includes soft drink and food production businesses. The company also produces baijiu from grain grown in its fields. Importantly, the sorghum used in the drink is all organic. The production process is clearly under control.
In 2001, Kweichow Moutai went public on the Shanghai Stock Exchange, giving it the opportunity to scale up. As a result, the company’s market capitalisation rose to nearly USD 71.6 billion in 2017. Kweichow overtook the UK’s Diageo Corporation, which owns the Johnnie Walker and Smirnoff brands. Kweichow Moutai products became the most expensive alcohol in the world.
Kweichow’s financial performance:
– in 2019, the company’s revenue reached USD 10 billion;
– the company’s revenue grew to more than USD 17 billion, with operating profit up nearly 12% in 2021;
– in 2022, the company’s value was USD 108.5 billion, placing it among the top three in brand value in China.
Moutai alcohol belongs to the category of premium drinks and is practically unaffordable for people with an average income. Chinese vodka, of the highest category, is the drink served at important events and meetings with foreign guests. Cheaper versions are also available, but their quality and taste bear little resemblance to baijiu in the classic sense.
Baijiu culture
Thanks to Kweichow and its Moutai brand, baijiu has become well-known outside China. Traditionally, the drink’s base ingredient is sorghum, but wheat is also common. The alcohol tastes like medical alcohol, but according to a New York Times journalist, it can replace JP-4 jet fuel.
The company’s strategy involves more than just producing traditional Chinese alcohol. Kweichow is making efforts to promote the drink outside the country. To this end, the company has opened a sommelier training school to teach people about the history and uniqueness of the drink.
There are several types of baijiu, the most popular of which is Mutai’s Kweichou. It has a subtle taste of berries and hot sauce.
