Center

Vodka maker eyes baijiu market

By Jiang Jingjing (China Daily)
Updated: 2007-06-06 10:12

Sichuan-based liquor producer Jiannanchun Group has formed a joint venture with Vin & Sprit (V&S), maker of Absolut vodka, in a bid to develop a portfolio of premium Chinese liquor brands to be sold domestically.

Swedish state-owned V&S said it will own a 51 percent stake in the enterprise, while Jiannanchun will hold the other 49 percent. The two companies did not reveal the size of the deal.

"We have secured a solution which will combine the best of both parties," said Marika Hjelm-Siegwald, a V&S Absolut Spirits spokesperson.

She told China Daily that V&S will contribute its international knowledge and commercial experience from building the Absolut brand, while the Chinese partner contributes its knowledge of the Chinese liquor, or baijiu, category.

"The ambition for V&S with this joint venture is to grow the total business in China, which includes Absolut vodka, the fourth-largest international premium spirit and the largest premium vodka in China," Hjelm-Siegwald said.

She said the Swedish firm sees great potential for the premium baijiu market, which exceeds 80 million cases annually and is growing rapidly.

The two parties aim to have the joint venture operating by October. Insiders said the new company will be headquartered in Chengdu, capital of Southwest China's Sichuan Province.

The new company will initially market and distribute existing Jiannanchun baijiu brands. Some new products will be introduced this year, with others rolled out next year, said Ketil Eriksen, president of V&S Absolut Spirits, according to Reuters.

"We are convinced that the combination of Jiannanchun's quality knowledge of baijiu and V&S's knowledge when it comes to premium vodka will make this joint venture a success," said Yang Dongyun, Jiannanchun's deputy general manager, in a statement.

Related readings:  First foreign firm to buy into baijiu sector  High spirits at Moutai  Wuliangye Yibin change  Americans warm to Beijing brand liquor

Hjelm-Siegwald said Absolut vodka will continue to be distributed through Maxxium China, together with the company's other international premium spirits brands.

She said V&S is pleased with Maxxium China's performance. "The distribution, sales channels and consumption of premium baijiu and international premium spirits are completely different. That's why the joint venture will be run separate from and complementary to our international premium spirits brands," she continued.

China's lucrative baijiu market has attracted the attention of major international players.

Last month, French luxury group LVMH's Moet Hennessy wines and spirits department bought a 55 percent stake in Wen Jun Distillery in China. Jiannanchun, the current owner of Wen Jun Distillery, holds the remaining 45 percent.