Can China's Baijiu Take On Sake And Tequila?

A British drinks company is taking a gamble by attempting to export baijiu, China's national drink, to the world.

Diageo (LSE: DGE.L - news) recently bought Shui Jing Fang, a high-end brand of baijiu based in the Chinese city of Chengdu.

The problem is that while baijiu, a white spirit-based drink, may refresh diners and lubricate business meetings across China, the common perception outside the country is that it is revolting.

However, that doesn't worry Diageo's Asia-Pacific President, Gilberte Ghostine.

He told Sky News: "What you have to remember is that the baijiu expansion has only just started.

"Look at Japan's sake or Mexico's tequila. Sake is consumed in all the Japanese restaurants in the world, not only by Japanese but also by foreigners.

"And if you look at tequila; its expansion started 30 or 40 years ago and now it is being consumed in Western bars."

As a baijiu virgin, I was invited to join a group of diners at a Beijing restaurant.

It was an experience.

The flavour is hard to describe. It is sharp, potent and with a lingering, almost ammonia-like aftertaste. It burns right the way down your throat.

It is usually served at room temperature in a small shot glass and with a meal. It has an extremely high alcohol volume of between 40% and 60% proof.

Most of the encouragement from my fellow diners came from Mr Lee, who clearly loves the stuff. I reluctantly took my fourth shot from him as he explained why he thinks it is so good.

"I often go to parties and drink foreign alcohol and I get a headache afterwards," he said. "I prefer to drink baijiu because I never get a headache.

"I welcome foreigners to drink baijiu... they won't understand real happiness until they do," he insisted.

It is clear that baijiu is a culture in China, not just a drink. In buying into that culture, Diageo hopes to make money that will be pumped back into the British economy.

"When you look at the alcoholic drinks industry in China, you're talking about an industry worth £45bn. Over 50% of that is baijiu. So it is a very important category," said Mr Ghostine.

Shui Jing Fang is now available in 40 airports around the world and in eight domestic markets including the UK.