Two of the nation's largest alcoholic-beverage producers Wednesday signed an agreement to market a new sorghum-based drink in November. The move may challenge the long-established Kinmen Kaoliang Liquor Inc's (金門酒廠) renowned products.
Under the partnership, Taiwan Tobacco and Liquor Corp (
"This is just the beginning -- we are targeting NT$3 billion in sales, or 20 percent of market share, in the first year as a result of this cooperative venture," said Lee Tong-liang (李棟樑), chairman of Nanlien, the nation's largest alcoholic-beverage distributor, which also imports Budweiser and Michelob beers. "Our long-term target is for NT$4 billion in sales annually."
While Nanlien denied it was attempting to trigger a price war to try to grab market share from Kinmen Kaoliang Liquor, producer of popular Kinmen Kaoliang liquor, it does plan to price its new liquor between NT$400 and NT$500 per 0.6-liter bottle -- about NT$50 less than that of Kinmen Kaoliang liquor.
Nanlien believes its venture with Taiwan Tobacco will create a "win-win" situation because Uni-President has established a strong sales network which includes some 3,000 President 7-Eleven outlets. Taiwan Tobacco is the nation's largest alcoholic-beverage producer, with NT$121 billion in assets and 7,800 employees.
Uni-President is expected to open its first 7-Eleven store in the Beijing area next year through a joint venture with Seven-Eleven Japan Co and a Chinese partner that has yet to be determined.
"We hope to secure a substantial market share in Taiwan's kaoliang liquor market ... and we do not rule out possibility of selling the product in China through Uni-President's distribution network," said Jack Tu (
"Uni-President is one of the largest beverage makers in China and already has a decade of experience there," said Christopher Smith, an analyst at Primasia Securities Ltd in Taipei.
Taiwan Tobacco chairman Sam Wang (
"The market opening after WTO entry has brought in a variety of alcoholic beverages from abroad," Wang said. "In the meantime, our production rate has dropped to 50 percent."
Officials at both companies say they are confident that the liquor will gain popularity in a market which is estimated to be worth NT$15 billion a year.
But with Kinmen Kaoliang liquor dominating in local clear-spirits market and China-made liquor about to be sold by local retailers, such confidence may be overly optimistic, an industry veteran said.
"Kinmen Kaoliang liquor is already a well-established brand, holding around 65 percent of the Chinese-made clear-spirits market in Taiwan," said the insider, who preferred to remain unnamed.
"Moreover, the Board of Foreign Trade may lift the ban on the importation of liquor from China at an Oct. 15 meeting," he said.
"Because of a potential surge in consumer demand, the China-made liquor may grab up to NT$3 billion worth of market share in Taiwan, annually," he said
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