BIZCHINA / 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.
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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.
(For more biz stories, please visit Industry Updates)
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