A town that wants people to drink to its success

Beverage with global reputation puts Moutai on the map, Qiu Bo reports from Guizhou province.

Fu Yao, 26, a professional blender of spirits and rising star in Moutai, displays a delicate touch at his lab as he combines the various ingredients to produce the distinctive taste. Zhang Wei / China Daily

Yang Guangze, 35, drives 12 kilometers every day from his home in Renhuai to a nearby town where he sells the spirits made there in his family factory. The mellow fragrance of the town's famous liquor intensifies as he draws nearer.

"The locals usually tell people from outside that every driver here will fail the drunken driving test as the alcohol already hangs thick in the air," he said. "Of course, it's a joke."

Guizhou province, in the southwest, ranked last nationally in per capita gross domestic product in 2009. But the town where Yang works came first in output value per mu (0.067 hectare) at 35 million yuan ($5.6 million), its publicity department said.

Every day some 10,000 vehicles carrying cargo crowd the town's few narrow streets. The booming industry they support, a particular type of Chinese liquor, has a fragrance like soy sauce. Its most renowned brand has the same name as the town, Moutai.

In 1972, when Premier Zhou Enlai hosted a state banquet for US President Richard Nixon in Beijing, the American inquired about the mellow fragrance lingering in hall. The scent emanated from Moutai that Zhou had handpicked.

According to Chinese lore, Zhou had drunk 25 cups of such strong liquor, more than 1.25 kilograms, in one sitting during the Long March (1934-35). Nixon reportedly was impressed by Zhou's capacity.

The legendary beverage has a long history in Renhuai, where liquor pottery and cups made in the Shang Dynasty (16th-11th century BC) were unearthed. Nowadays, it plays a significant role in locals' lives. Whether at weddings or funerals, festivals or sacrificial ceremonies, the liquor is irreplaceable.

The local call most of what they drink Moutai generically, for where it is made. The well-known brand, however, is made by Kweichow Moutai Distillery Co, the parent of one of the world's largest listed distillers by market capitalization. It has a worldwide reputation and is listed as a top distillate spirit alongside Scotch whisky and French cognac.

The current liquor culture emerged in Moutai in the 1930s, when the town was a transport hub for salt trade along the Chishui River.

"The salt dealers from Shaanxi and neighboring Sichuan province traveling along the river found this wonderland, spread the liquor culture and even settled business here," said Ni Kelong, the town's publicity official.

Strictly speaking, he added, most of current local residents are immigrants.

An open secret

Liu Wenke, an official with the town's economic development office, believes Moutai's unique setting and climate account for the taste of the liquor, which is classified according to its soy sauce-like fragrance.

The town is surrounded by three mountains, and the Chishui divides the basin into two parts. This natural "cage" produces the proper humidity and temperature that make it an ideal venue for liquor manufacturing.

Sauce-fragrance liquor generally is produced from rough alcohol made with high-quality wheat, locally produced high-quality sorghum and water from the Chishui. The traditional method involves at least eight cycles of fermentation and nine rounds of high-temperature distillation under strict conditions, before the batches are stored in jars.

Normally, a qualified batch of sauce-fragrance liquor must be held more than five years - one year for production, three for storage and one for storage after blending. Sauce-fragrance liquor is mixed only with the same type of liquor, not with alcohol or another flavor.

"Every local believes drinking the proper amount of sauce-fragrance liquor is good for health," said Zhao Yingcong, 34, who lives in Zunyi, 200 km from Renhuai. "It may get you drunk, but you never have a headache the next morning."

He said, however, that no other workshop can duplicate the taste of the company's top product, 53-degree Flying, the real Moutai.

Liu said, "Kweichow Moutai has its secret recipe in distilling but it's an open secret."

Some other producers have acquired the recipe but none has matched the quality, he said. A key reason is that Kweichow has an exclusive hoard of Moutai reserve, aged for more than 50 years, to use in blending.

In the 1970s, following a State Council order to increase production of Kweichow Moutai, the local government attempted to build a duplicate factory. It employed the identical ingredients such as sorghum and water, built the workshops using identical bricks from the town and hired the same employees. But the new factory couldn't reproduce the original's quality.

"Experts concluded that the microbes in the town are crucial in producing Moutai," said Fu Yao, a local liquor master. "For all the years, other producers have been dedicated to working out quality and taste infinitely near the real Moutai, but they know they will never make the same ones."

The makers of sauce-flavored liquor in Moutai town adhere strictly to traditional methods. These workers at Tianchangdi factory are loading sorghum into a cart, which will deliver it for the next step in the process. Photos by Zhang Wei / China Daily

'Crazy' growth

Yuan Renguo, Kweichow Moutai's general manager and board chairman, told China Business News last January that the company expected to produce some 26,000 tons of Moutai in 2011. That would be a 15 percent increase from 2010.

Most of the company's output goes to governmental institutes, armies and overseas consumers. It is treated as a luxury item, not as something ordinary citizens could afford.

In 2008, the market price for a half-kilogram bottle of 53-degree Flying floated around 1,000 yuan. Now it is double.

The industry in Moutai town also has been undergoing "crazy expansion", said Ni, the publicity official.

Twenty years ago, he said, 20 or 30 producers in town made sauce-fragrance liquor. The number started growing in 2000, and since 2008 has increased 40 percent annually. The expansion of industrial capacity in just the past three years equals Kweichow Moutai's annual yield, Ni said.

The local government reports there are 144 licensed production manufacturers with more than 500 workshops. Those are the official figures, but a local insider who didn't want to be identified said more than 1,000 plants, some working in secret, turn out more than 70,000 tons of sauce-fragrance liquor in town each year.

"Some 10,000 people are working for those plants and the labor number is even bigger than Kweichow Moutai Co's," the source said.

Costs up, too

The market price has been driven up more than reputation. The cost of production in town also has soared.

Pan Qiang, 36, works in a small plant and said he earns about 3,000 yuan monthly. He also said his pay doubled and redoubled over the past several years, and "that doesn't count the year-end bonus".

Liu, the town's economic development officer, said the price of locally produced high-quality sorghum has tripled in three years, from 2.4 yuan a kilo to 7.2 yuan.

To help regulate the markets, local government instituted a range of measures including establishing a 1-km liquor cultural street based on Huaimao South Road, one of the town's three main streets. It opened in April and has attracted about 200 sauce-fragrance liquor wholesale dealers.

One of them is Yang Jin, 37, who sells family-made liquor in his 20-square-meter store and who said retail sales run about 20,000 yuan a month.

"My family produced annual output of 800 tons," he said. "The biggest groups of customers are wholesale dealers from outside."

Some dealers bought a large quantity of Yang's liquor to sell outside Guizhou. Others paid Yang for his product but planned to pick up the reserved jars a few years later.

"They expect the value of the liquor jars to increase in several years, as the climate of Moutai town is optimal for reserving the liquor," Yang said.

Other money has flowed into town as well, and some investors established their own liquor-producing factories. "It is estimated that hot money from outside has taken up half of the industrial assets value in the town," Ni said.

At an August wine fair in Guiyang, Guizhou province, purchase contracts worth about 44 billion yuan were signed. More than 80 percent of the deals' value came from sauce-fragrance liquor.

The ingredients are mixed with bare feet, in much the same way as wine grapes were stomped for centuries. This Tianchangdi worker just called a break and is waiting for a wash.

Wealth spills over

The explosive liquor industry not only boosted Moutai's economy but also has affected surrounding areas. Ni said the town covers about 22 hectares, 12 of which belong to Kweichow Moutai.

"We have limited land resources," he said. "You see vehicles running through and wealthy people working here, but life-related facilities don't match the business scale here."

Decent service facilities such as restaurants and hotels are rare in town. There's a movie theater, but it's shabby. "Life is simple here," Ni said. "If you don't drink, sometimes it's boring."

Most older-generation residents have moved to Renhuai, which has livelier amenities. The highway system has eased concerns for those who make the 15-minute drive to work in Moutai, and recently developed public transportation serves the rest.

"People who have made money from the liquor business have sought a more comfortable life," Ni said. Most local farmers and laborers have stayed in Moutai.

Those who moved the 12 km have made Renhuai a more expensive city. The city government's annual report said its GDP per capita was expected to reach $6,500 in 2011, and tax revenue to be 6 billion yuan ($952 million). Both figures are outstanding amid all 88 cities and counties in Guizhou.

Garment dealer Yu Mei, 41, came from Luzhou, Sichuan province, 10 years ago and has experienced the dramatic increase. "Labor cost was negligible in the year 2000, but I have to pay 4,000 yuan a month for an experienced worker now."

Shi Xianmin, a professor with the Center for Sociological Research and Development Studies of China, in Beijing, said that once the high-consumption group surpasses 20 percent of the population, the living cost will increase to fit the rich group.

The hierarchy

At the end of 2011, Moutai had 40,000 registered residents, half of them in the liquor business.

"The hundreds of liquor producers and dealers earn the most, ranging from 100,000 yuan to millions of yuan a year," Liu said. A new employee at Kweichow Moutai Co earns 60,000 to 70,000 yuan a year, he said, and a workshop team leader some multiple of that.

Others, including government employees and people working in the service industry, earn more than farmers. But all type of workers make more than their counterparts in the province's other counties.

Chen Ju, 51, a hawker selling fried potatoes, is one of the lower-earning groups in town. She insisted she is poor and the government should help her and her family in their nearby village, but she said all that with a smile.

Her neighboring hawker said Chen earns at least 1,500 yuan a month. "She never worries about the living."

Write the reporter at qiubo@chinadaily.com.cn.