One town's indomitable spirit

Maotai is the home of the famous Chinese white spirit Maotai. [Zhang Wei / China Daily]

Normally, producing a qualified batch of sauce-fragrance liquor needs at least five years - one year for production, three for storage and another year for storage after it's been blended. The liquor is always preserved in ceramic jars that weigh 15-50 kilograms each. The finished sauce-fragrance liquor is only allowed to mix with the same type of liquor but never with water or edible alcohol, like ethanol. This guarantees a consistent taste, especially when food security has become a top concern in China.

With the production process perfected, the liquor industry has grown in recent years. The town's small- and medium-sized baijiu companies produced some 70,000 tons of the sauce-fragrance baijiu in 2011, nearly tripling the output of Moutai.

Ni says that 20 years ago there were only 20 or 30 producers in town that made the sauce-fragrance liquor. The number has since grown after 2000 and has increased by 40 percent annually since 2008.

The major producer in town, China Kweichow Moutai Distillery, has a market capitalization of approximately 194 billion yuan as of Jan 30. Its closest rival, Wuliangye Yibin Co, which also makes its own style of baijiu, has a market cap of 136 billion yuan.

In the first three quarters of 2011, Moutai's sales reached 13.6 billion yuan, 46 percent higher compared to the same period in 2010.

"Even Australian and South Korean tourists bought my liquor," says 26-year-old local dealer Yu Langhua.

According to the China Alcoholic Drinks Industry Association, sauce-fragrance baijiu makes up 20 percent of China's spirit market, with another type of baijiu, known as heavy-fragrance, dominating at 60 percent market share. But Chinese Wine News, a government-funded paper, said the market for sauce-fragrance baijiu will grow at 40 percent annually and will take up more than 30 percent market share in sales and profits by 2020.

"As long as your product's quality is good, it's zero-risk in managing the sauce-fragrance business as it will definitely appreciate in the market," says Yang Guangyong, 42, who came from Chongqing municipality and has benefited from the baijiu boom. He says many wholesalers from eastern Shandong and Zhejiang provinces have invited him to set up sales outlets in their regions this year.

From Left to right: The mountain waters in Guizhou are a key to quality Maotai. The liquor needs to be stored in ceramic jars for a few years. [Photos by Zhang Wei / China Daily]

Boosted by the strong demand and growth, investors, such as the Tasly Group (an investor in the medical healthy industry) and the Hubei Yihua Group, an investor in petrochemical companies, have established factories in or nearby Maotai to produce baijiu.

Outside investments have reached 10 billion yuan and it is estimated to surpass 50 billion yuan during the period of the 12th Five-Year Plan (2011-15).

"We are considering establishing a sauce-fragrance baijiu production zone to attract more tourists and public attention," says Zhao Shengchun, deputy Party chief of the town of Maotai.

The explosive liquor industry has not only boosted the town's economy but has also raised living costs in surrounding areas such as downtown Renhuai.

"We have limited land resources," Ni says. "You see vehicles running through and wealthy people working here, but the living environment doesn't match the business scale here."

Ni says many residents from older generations have moved to Renhuai, though the highway system between city and town has gradually improved. "People who have made money from the liquor business have sought a more comfortable life," Ni says.

Garment dealer Yu Mei, 41, who came from Luzhou, Sichuan province, 10 years ago, says she has seen the dramatic rises in costs of living in Maotai. "Labor cost was negligible in year 2000, but I have to pay 4,000 yuan per month for an experienced worker now."