Is Chinese Baijiu the World’s Biggest Distilled Spirit? An Overview of the Size and Structure of China’s Sprawling Baijiu Industry

Baijiu, the distilled spirit produced and almost entirely consumed in China, is a major component of world distilled spirit production, but little is known about fundamental economic considerations such as production, consumption, and market structure. This paper brings together widely used production and consumption data, with the limited number of field surveys examining consumption, all of which were conducted to address public health questions rather than economic analysis. The paper provides a brief description of baijiu’s unique production process, and also of the different categories of baijiu by price point. The paper finds that the time series often used to describe China’s baijiu production and consumption has clear inconsistencies when compared to independent survey findings, and that a major portion of baijiu in China is consumed regularly with meals and in rural areas, much of which is unrecorded. This is counter to the popular belief that baijiu is predominantly consumed at banquets. We assess the claim that baijiu is the world’s largest distilled spirit by volume, and conclude this is likely true, but inconsistencies in the data make it impossible to say for certain.