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Baijiu category beats whisky on value

The global baijiu category has overtaken whisky to become the most valuable spirit by market share, new data from valuation and strategy consultancy Brand Finance shows.

Moutai is the most valuable spirits brand, according to Brand Finance

Baijiu values have surged ahead and now account for 37.5% of total global spirits values, up from 23% in the 2016 Brand Finance Spirits 50 report.

Brand Finance calculated “value” based on business assets that can be bought, sold and licensed, recognising “brands” according to Brand Valuation, ISO 10668 as “a marketing-related intangible asset”. The consultant then applied a “Royalty Relief Approach” to calculate brand strength, brand revenues and future sales post-tax.

According to this year’s report, the world’s top Baijiu brands now have a collective value of over US$22 billion.

Conversely, whisky value share shrank from 37% to 28%, with second place Johnnie Walker seeing its value slip 2% from US$4.6bn to US$4.5bn, the report says.

Moutai is ranked at the top spot, with values climbing by 60% to US$11.5bn in the 2017 report.

The brand historically saw 50% of its sales go to government entities, and was particularly exposed to the crackdown on excessive gift-giving. However the brand changed its strategic focus to private enterprise and individual consumers, and can now command prices of up to RMB1,200 (US$175) per bottle.

Moutai has also increased its focus to export markets and now holds a Moutai Day in both San Francisco and Germany.

Other baijiu brands are also performing well, with Gujing Gong Jiu almost doubling its brand value to US$1.1 billion, and Wuliangye, Luzhou Laojiao and Yanghe growing values by 86%, 73% and 50% respectively.

“These rates of growth support existing evidence to suggest that consumers are trading up to more premium baijius,” said Brand Finance CEO, David Haigh.

“The baijiu market is resurgent but some have suggested this may only be temporary and that Chinese consumers’ tastes will diversify without corresponding growth internationally to compensate. In such a situation, strong brands will be essential to maintain market share.”

The 2017 Brand Finance Spirits 50 top 10 ranks as follows:

  1. Moutai – US$11.5bn
  2. Johnnie Walker – US$4.5bn
  3. Yanghe – US$4.3bn
  4. Jack Daniel’s – US$3.1bn
  5. Hennessy – US$2.7bn
  6. Luzhou Laojiao – US$2.5bn
  7. Bacardi – US$2.2bn
  8. Smirnoff – US$2.0bn
  9. Wuliangye – US$1.9bn
  10. Absolut – US$1.6bn

In January 2017 the Financial Times predicted Moutai parent Kweichow Moutai would overtake Diageo for the title of most valuable alcoholic drinks firm due to a share price surge.

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