Cyril Camus, president of Camus Cognac, says brand awareness abroad is now a top priority for China's Moutai liquor. Wang Jing / China Daily

Cognac house helps iconic chinese liquor ramp up expansion abroad

The producer of China's "national liquor" is gearing up to expand overseas with the help of a French cognac house, amid worries over its escalating price and limited supply at home.

China Kweichow Moutai Distillery Co Ltd already has plans to double its output to 40,000 tons of Moutai with annual sales of 26 billion yuan (2.8 billion euros) by 2015.

Ji Keliang, the company's chairman, says the move is part of developing the brand in line with its reputation.

"Moutai is the best distilled wine in the world and has a special place among Chinese people," Ji says. "We're growing the business so that more can enjoy it."

Moutai is a Chinese baijiu, or white liquor, distilled from red sorghum and is valued for its mellow soy-sauce fragrance. It is produced and named after a town in Southwest China's Guizhou province, where a unique climate and geography limit its production. Moutai is served in Chinese State banquets and given by Chinese leaders to foreign dignitaries and luminaries.

But the liquor's popularity in an increasingly affluent Chinese market has also fueled worries over price hikes and fake supplies at home.

The company has already raised the cost of a Flying Moutai blend to 959 yuan (103 euros) from 869 yuan, with retailers selling it for several hundred yuan more because of high demand, even as a bottle of the liquor can be bought for less than 700 yuan overseas.

Many also believe that more than half of the Moutai in the market is fake.

But Ji says it is understandable that Moutai can cost lower abroad.

"Products can be cheaper overseas because of factors like demand and tax systems. The price of gasoline here is higher than in the West and extra costs can also add to delivery expenses in China," Ji says.

He also brushed aside the rumors about fake Moutai. Based on the company's research, only about 3 percent of what is being sold is possibly fake.

"But Moutai is hugely popular in China so I would advise consumers to buy it from certified distributors and large, reputable stores," Ji says.

Still, while its brand awareness in the domestic market is up to 95 percent, Moutai is relatively unknown abroad.

That is also why Moutai decided to enlist the help of French cognac house Camus to push its brand overseas.

Under a renewed agreement with Kweichow Moutai, the 148-year-old cognac house is selling the Chinese liquor in duty-free shops in more than 20 countries and regions in Asia, Europe, America and Oceania.

The French company sells products in more than 140 countries and regions and onboard 50 international airlines, with a network of more than 200 duty-free partners covering more than 4,000 shops worldwide. It has banked on its "similarities" with Moutai, including a time-honored production process that is closely linked with the history and culture of its environment.

Cyril Camus, the president and of the fifth generation of the family-owned company, says brand awareness, not volume, is now a top priority.

"Moutai is a great Chinese national liquor, but it is still not very well-known among foreigners," Camus says. Overseas Chinese, Koreans and Russians still form the bulk of Moutai buyers abroad, he says.

"These are nationalities that are used to aromatic white spirits. If you take the West, a white spirit is vodka, which doesn't have any smell," Camus says. "People are sometimes surprised by having a white spirit like Moutai that is so fragrant. So it takes a bit of time to get used to.

"For Europeans it would definitely be an acquired taste because we have nothing equivalent. In Europe, when someone drinks Moutai for the first time, it will be a surprise. But very quickly comes appreciation, because it is a very well-made spirit," Camus says.

"It is a unique situation in the world to have such a high-quality product that is not so well-known. It's a missed opportunity for a lot of people. Not everyone drinks cognac or whiskey or champagne but everyone around the world has heard of these. That is not so much the case with Moutai," he says.

"Our first step is to make it known, that there is a brand out there, a very old, traditional brand, that is worth trying. The visibility and prestige given by the duty-free platform will help boost the awareness of Moutai internationally."

The bottles of Moutai being sold at duty-free shops come in a distinct packaging and blend, while tastings are also being offered at some of the stores, Camus says.

The efforts seem to be paying off. Camus says Moutai will be among the top 50 best-selling brands at duty-free shops this year. More foreigners are also talking about Moutai on the Internet. Moutai's supplies to Camus have grown more than tenfold in the past few years to more than 10,000 cases (12 bottles in each case) a year and each bottle of duty-free Moutai now sells for about $98 (69 euros).

"There's still a lot of room for growth in Europe," Camus says.

"We are not in London, we are not in Rome and those are significant airports. It is the right time for the brand to become more known internationally."

Kweichow Moutai's Ji says it is important to develop the Chinese brand through channels like Camus, despite worries that limited supplies might not be able to meet rising demand in the domestic market.

"We had specific conditions in our agreement with Camus ... and they seem to be doing a good job at the moment," Ji says.

"Moutai is a brand that can only grow."