Why a Yorkshire brewery began producing China's national drink

If you like stories about selling ice to Eskimos, or sand to Arabia, you’ll love this one.

Masons Yorkshire Gin launches Gin TrailTwo Yorkshire entrepreneurs have taken China’s national spirit, called baijiu, added its essence to their own craft beer, and are shipping it back to China.

Welcome to Rare Bird in Malton - Yorkshire's first gin schoolSo far, they’re doing rather well, selling about 25,000 bottles a month, but that’s just a drop in the South China Sea compared with the potential they see in the business.

Craig Butler and Chris Spencer, both from Sheffield, have just formally completed the £1m purchase of a brewing facility at Cropton, in Ryedale, and through their company, The Baijiu Society, are planning nothing less than the rejuvenation of the Chinese baijiu industry.

That’s no mean ambition. Although it’s little known in the West, baijiu (pronounced ‘by-jo’) is already the world’s most popular spirit by volume. According to China’s national statistics bureau, the country produces 12.9 billion litres of baijiu annually – more than the world’s next most consumed spirits, vodka and whisky, combined.

Out of fashion

The snag is that baijiu has an image problem in China. It’s still popular with the older generation, and is the staple drink for lubricating business deals in restaurants and for toasts on special occasions. But the younger generation has had its head turned by western drinks, threatening baijiu with redundancy.

The Baijiu Society’s answer is to give baijiu a shot in the arm by reinventing it, providing young Chinese drinkers with a sophisticated combination of East and West.

Craig Butler, who previously spent over a decade working in Hong Kong, project-managing factory construction, first unveiled baijiu beer at Food and Hotels China (FHC), a huge annual exhibition in Shanghai.

“We went there with DIT (Department for International Trade) and a group of a dozen or 15 other craft brewers, and baijiu beer just stole the show – the response was just startling,” he says.

“That gave us an idea that we’d got something – we were on the right track. And it was at that time that we started talking to people I’d known for years in Hong Kong who formed the base of the investor group. It just happened organically, really.”

A new wave of interest

In fact, Chinese investors have been so bitten by the baijiu beer bug that they have already stumped up £1.5m, and there appears to be plenty more where that came from.

As a result, The Baijiu Society has opened offices in Hong Kong and Shanghai and has plans to ramp up production to meet increasing demand.

“This year we’ll probably ship and sell 350,000 to 400,000 bottles, between Hong Kong and China – and actually that’s a fraction of what we could make here,” says Mr Butler.

“There’s absolutely no way that I can’t see us getting 12, or 14 or 15 million bottles of baijiu beer out of this facility in three to five years.”

What makes that prospect all the more mouth-watering is that baijiu beer retails at between £8.50 and £12 a bottle.

It may be made in small batches in Yorkshire from premium ingredients, but nevertheless, that’s quite a margin.

“We’ve developed a whole system of how the beer sells and how it works, and also we wanted to maintain an absolute ultra-premium approach to the market,” says Mr Butler.

Expensive tastes

“We’re not interested in selling beer to the 7-11 in Hong Kong – it’s just pointless. So if you look at our customers in Hong Kong and where you can buy baijiu beer, you’re looking at some of the most premium outlets in the territory – the Mandarin Oriental Hotel, Peninsula Group, Ritz Carlton, three-star Michelin restaurants and places like that. We don’t sell it to ordinary bars or supermarkets – it’s all high-end.

“Where we sell in Hong Kong, quite often, remarkably, we’ve got sommeliers in really high-end bars and restaurants that have actually looked at this and said ‘we’ll take that off the bar staff; we’ll deal with the baijiu beer’.

“The conversion rate for us selling baijiu beer in Hong Kong is just ridiculous compared to other beers. Every time we make a presentation we get an order. Every time, without fail – it’s a 100 per cent conversion rate.”

But baijiu beer is by no means the company’s sole product. It also produces pre-mixed baijiu cocktails, as well as a range of infused baijius cleverly branded for the Chinese market. For example, one is infused with peach, a fruit which in Chinese culture has connotations of longevity, so it is marketed as the Spirit of Life. The baijiu infused with cherries, which symbolise romance, is the Spirit of Love, and so on.

Mr Butler says: “Baijiu websites tend to have pictures of mountains and streams and sparkling, babbling brooks. It’s very traditional. The way it’s branded has been the same forever. No efforts have been made to bridge the gap between one generation and another. And we’ve just suddenly flipped it all.

"Not being Chinese is an advantage"

“It sounds crazy – but the big advantage we’ve got is that we’re not Chinese. We’re in a unique position, because we’re taking baijiu and messing things up a little bit where they can’t. They know it’s the right thing to do – they know that there’s a huge market for them globally – but they haven’t got a clue how to access it.”

But although what Butler and Spencer are doing is innovative, isn’t it something that could easily be copied – not least by a Chinese company with deep pockets and even deeper cultural understanding? What’s to stop them?

“Absolutely nothing – they can have a go themselves,” says Mr Butler. “It would be naive to say they couldn’t. But if it got to the stage where any of the big producers in China were trying to make baijiu beer we’d probably be selling billions of bottles before they’d even worry about it.”

The market, the margin, the first-mover advantage – it might all seem too good to be true. So surely there are vulnerabilities? What could possibly go wrong?

“Probably a thousand things,” says Mr Butler after a long pause. “Legislation in China could cause us a problem, because you just never know. It’s somewhat unpredictable.”

If it did all go wrong, he says, the US market offers considerable potential, and then there’s also the UK domestic Chinese restaurant sector.

Intriguingly, baijiu’s star seems to be rising in the West. Last year, the Surrey-based IWSC (International Wine & Spirit Competition) named baijiu as one of the hottest drinks trends of 2019.

In the meantime, The Baijiu Society is channelling all its resources into cracking the Chinese market and creating a full-blown brand phenomenon.

The next stop on Mr Butler’s itinerary will be Shanghai – again – this time for the Queen’s birthday celebrations on June 13.

“All around the world British consulates and embassies celebrate the Queen’s birthday, and the one in Shanghai is huge,” he says.

“There are about 400 people and they invite CEOs from all the top drinks companies in China. That’s going to be our launch – the first time really publicly that people will see the infused baijiu. And of course, the place will be absolutely swamped with baijiu beer.”

Baijiu: A history of China's national drink

The earliest known evidence for human alcohol production comes from China, where people were making a type of wine from rice, honey and fruits 9,000 years ago.

Baijiu, which has been made for hundreds of years, is usually distilled from fermented sorghum plus a fermentation agent of molds, yeasts, and bacteria called qu.

The grain and qu create a mash from which liquid is drained and then distilled using giant steamers. The distillate is then aged in an underground pit or buried jar for between one month and 30 years, and this ageing environment helps give each baijiu its own character.

There are believed to be around 14,000 baijiu distilleries in China, and many, such as the famous Maotai, are government-owned.

As a result of this variety, there is a bewildering variety of baijiu, but there are four main categories: strong aroma, light aroma, sauce aroma, and rice aroma, as well as lesser-known types, such as medicine aroma, phoenix aroma and special aroma.

Premium baijiu is strong, with an ABV of 50 per cent or more, yet baijiu is the world’s biggest-selling alcoholic drink, and makes up a staggering 99.6 per cent of the Chinese spirits market.

Nevertheless, it is an acquired taste and its strength and unusual flavour make it a challenging drink for many western palates.