We all know that beverage industry, in general, is lucrative. But of all the verticals, Chinese hard liquor Baijiu, often given as a gift in the country, is a bellwether in terms of profitability. The price of Moutai (茅台), a top baijiu brand in China, varies from thousands to tens of thousands RMB, or even higher.
High-end pricey baijiu like Moutai and Wuliangye (五粮液) were often sold through traditional sales networks in the past. But as the e-commerce industry is taking over China, baijiu industry is no longer an exception. But breaking into the lucrative industry is not easy, nor is it impossible for Chinese online retailers.
JD CEO Liu Qiangdong visited Kweichow Moutai Group recently where the top management of the two companies meet each other to seek possible cooperation (in Chinese). The move comes one year after Moutai reached a partnership with Alibaba Group. The two companies have been working together in cloud computing, AI, blockchain, marketing, payment and new retail.
JD and Alibaba join online liquor retailers who believe that e-commerce is the key to China’s spirits sector. Since the e-commerce sites are recording stagnated growth in more traditional sectors such as clothing and food, the baijiu industry—now worth around RMB 100 billion ($15 billion)—could be a new growth point form them.
Both JD and Alibaba are chasing after Moutai because it’s the largest player in China’s white liquor market. Valued at over RMB 700 billion, it takes nearly half of the total value of liquor sector in China’s A-share market. Driven by the trend, more baijiu brands are seeking cooperation with e-commerce platforms in data sharing, branding, targeted marketing and product tracking.