The Shout Magazine (New Zealand)

Penfolds to produce a Chinese spirit

The Chinese white spirit baijiu will come with a Penfolds label from September.

Parent company Treasury Wine Estates confirmed the addition to The Australian Financial Review, while insisting such a stretching of the brand would not harm the iconic wine label.

The Penfolds version of the country’s national drink will be ‘wine enlivened baijiu’ – a red version that is 21.5% BV rather than the full 50%.

Rumour has it that the new tipple will sell for $155 a bottle and will be known as Penfolds Lot 518.

Treasury is not saying who they are partnering with to produce the baijiu, but the strong tip in the industry is China’s state-owned baijiu maker, Luzoulaojiao.

The speculation is that a partnership with the Sichuan-based company on baijiu would also involve it distributing Treasury’s wines.

“The Chinese are always dreaming up new ways to get the world to drink baijiu and they can’t understand why it has not taken off like vodka,” said one person in the industry.

“Unfortunately what they don’t realise is that no wine or mixer is strong enough to mask the taste of baijiu.”

That review suggests the Penfolds baijiu may not have much appeal outside China, but that may not matter.

The baijiu market within China is already the world’s largest alcohol category by value and accounts for around half of all the country’s booze sales.

This year the luxury baijiu segment alone is forecast to be worth more than $US150 billion ($204 billion), while the most famous company in the space, Kweichow Maotai, is the world’s largest liquor producer with a market value nearing $US130 billion.

Mark Tanner, a Shanghai-based brand expert, said it’s highly competitive and traditionally Chinese consumers are reluctant to embraced brands designed only for the mainland market.

“Blackmores tried to do it with infant formula and failed,” said Tanner, who is chief executive of consulting firm China Skinny.

“That said, if they can carve out a little niche for themselves it could be very lucrative, but they will need to support it with some serious marketing dollars.”