Diageo eyes Chinese diaspora to boost sales of 'baijiu' spirit
DIAGEO will expand sales of its Shui Jing Fang white spirit to Italy, Spain and the Middle East this year to reduce reliance on the liquor's home market by tapping Chinese abroad.
The Guinness owner, which has its main European base in Dublin, is hoping to boost sales of the spirit among the Chinese diaspora living in Europe.
Overseas sales may rise to 40pc of the company's total as early as 2016, from about 10pc now, said James Rice, general manager at Sichuan Swellfun, the Diageo unit making the white spirit, or baijiu.
Chinese travellers and overseas Chinese will be the core foreign buyers of the liquor in the short to medium term, he said.
"Westerners can acquire a taste for baijiu" in the longer term, Rice added. "Baijiu is the best drink to go with Chinese food. It's a perfect match."
The international expansion by the maker of Smirnoff vodka and Johnnie Walker Scotch whisky comes amid Chinese President Xi Jinping's curbs on extravagant spending by government officials. The crackdown has hurt sales of high-end goods including baijiu from other drinks firms, forcing Diageo to look overseas for growth.
About 50 million people of Chinese origin live outside China, according Li Haifeng, former director of the State Council's overseas Chinese affairs office.
Diageo will leverage its global network to expand marketing of Shui Jing Fang outside China, with sales starting in Italy, Qatar, Spain and the United Arab Emirates this year.
The liquor, originating from a 600-year-old distillery, is already sold in 42 airports and as well as stores in markets such as South Korea.
In Chinese tradition, baijiu is synonymous with lavish banquets and is favoured by the wealthy and government officials as holiday gifts. A one-litre bottle of Shui Jing Fang with 54pc alcohol content in a gift box sells for about $467 (€366).
Sales of baijiu are forecast to rise 4.9pc in 2013, unchanged from the past two years, according to Euromonitor International. An estimated 98pc of China's sales of spirits, which include vodka and whisky, were made up of baijiu last year. (Bloomberg)