---
title: "IDG Capital's Yan Yisheng in Conversation with Jiangxiaobai's Tao Shiquan: A Toast to Youth?"
description: "As a disruptor in the baijiu industry, Jiangxiaobai spent nearly seven years exploring and secured half a ticket to becoming a national brand—covering about 50% of urban markets—and reached the scale of a national brand. In fact, it took just over a year to expand from Chongqing to the national market. In this dialogue with founder Tao Shiquan, we discuss new brands, category rejuvenation, consumption upgrading, user value, going global, marketing, and brand building."
author: "IDG君"
publisher: "New Distribution"
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published: "2018-12-06"
language: "en"
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# IDG Capital's Yan Yisheng in Conversation with Jiangxiaobai's Tao Shiquan: A Toast to Youth?

> As a disruptor in the baijiu industry, Jiangxiaobai spent nearly seven years exploring and secured half a ticket to becoming a national brand—covering about 50% of urban markets—and reached the scale of a national brand. In fact, it took just over a year to expand from Chongqing to the national market. In this dialogue with founder Tao Shiquan, we discuss new brands, category rejuvenation, consumption upgrading, user value, going global, marketing, and brand building.

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As a disruptor in the baijiu industry, Jiangxiaobai spent nearly seven years exploring and secured half a ticket to becoming a national brand—covering about 50% of urban markets—and reached the scale of a national brand. In fact, it took just over a year to expand from Chongqing to the national market.
In this dialogue with Jiangxiaobai founder Tao Shiquan, we discussed several topics: new brands, category rejuvenation, consumption upgrading, user value, going global, marketing, and brand building. Among China's new generation of brand entrepreneurs, we strongly feel their broad vision, confident self-assurance, enthusiasm, and cool-headedness. They clearly understand that brand building is a long-distance race; to create a century-old brand, you must first have the mental toughness of a long-distance runner. As investors, we are delighted and excited to support such outstanding brand entrepreneurs.
**【Interlocutors】**
**Tao Shiquan, Founder of Jiangxiaobai**
1
**Where do new brands come from?**
**Yan Yisheng:** You spent 11 years in the baijiu industry before founding Jiangxiaobai. In the spirits industry, what are your favorite brands?
**Tao Shiquan:** Absolut Vodka, Johnnie Walker—these are excellent brands. I like brands with a spiritual proposition, because products satisfy functional needs, while brands satisfy emotional needs. Warmth, giving strength, inspiring, having an attitude—these are what bring brand value and create new connections with consumers. This poses a challenge for founders; they need to be schizophrenic. Because making products is a very rational system, but building a brand is very emotional. You have to combine these two, which naturally causes a split and pulls in two directions.
**Yan Yisheng:** We observe that today's post-80s, post-90s, and even post-00s have become the mainstream consumers, and old brands find it hard to communicate with them. This leaves a lot of space for new brands that can connect with young people through products and emotional communication. Of course, if old brands have the ability to innovate and keep up, they can still reconnect with young people. As a new brand, how does Jiangxiaobai view this issue?
**Tao Shiquan:** Behind brand aging, the deepest challenge is cultural generational gaps. Different eras have cultural gaps, so this is an opportunity for new brands to emerge, and also an opportunity for old brands to rejuvenate and bridge the gap. Essentially, it's about deep understanding of the younger generation's culture. The worst is to be young in form but not in substance.
So we see international luxury brands all moving toward streetwear; the whole design and product feel is getting younger. In the century-old automotive industry, a large part of Mercedes-Benz's global growth in recent years is due to its product and brand rejuvenation. Brands cannot rest on their laurels; instead, they should lower their posture and talk to young people. This is very important.
**Yan Yisheng:** I think of Moncler, the luxury down jacket brand we invested in in 2011, which has maintained high growth for years. In February this year, it launched the Moncler Genius series, collaborating with 8 master creative talents including Hiroshi Fujiwara, and it caught fire again. Growth has been faster than in the previous two years, with total revenue up 23% in the first three quarters of this year.
**Tao Shiquan:** Yes, clothing is a typical case. You'll find that street culture and streetwear culture resonate with this generation. I just mentioned Mercedes-Benz's global revival. If you look closely, it's interesting: the old brand logic was to target high-status people, with high-end products and high-end consumer groups, to build high status and brand image. Now it's different. When high-status people encounter the power of youth, they feel they're out of touch and old.
**Yan Yisheng:** They start learning from young people's consumption.
**Tao Shiquan:** Yes, so this is reverse pursuit, reverse momentum, coming precisely from the younger generation. Mercedes-Benz's advertising and brand investment in China mainly targets A-class and B-class cars, which are young users' models. But after capturing young users, it in turn drives the original high-end users.
**Yan Yisheng:** Through various methods, they connect with young people. Conversely, if they disconnect from the main young consumer group, the brand gradually declines. So we are very optimistic about new brands or the opportunity for old brands to renew.
**Tao Shiquan:** While retaining the traditional advantages of the category, we innovate at the brand level with rejuvenation and fashion. Actually, solving these two problems is worth doing in many industries. Because we are more familiar with baijiu, we chose this industry to innovate.
But baijiu innovation faces two major problems.
First, the taste is too strong. Not only young users, but even light drinkers of baijiu find it spicy, strong, and easy to get drunk. So we seek to improve the technology to make baijiu lighter, softer, and lower in intoxication. The small-qu高粱 liquor body just meets these needs. Because we use single sorghum, no auxiliary materials, the brewing process is very clean, so the biggest characteristic of the liquor body is purity and softness. This is to cater to current consumption trends at the product function level; we call it the "Taste+" strategy, taking the differentiated and rejuvenated route of light taste and light aroma.
Image: Jiangxiaobai SLP Taste Principle
Second, at the emotional level, in drinking culture. Since 2000, there have been discussions that post-70s and post-80s don't drink baijiu, and now some say post-80s, post-90s, post-00s don't drink baijiu. The biggest reason comes from the aging image of the category and brand. The social obligations of toasting around a table and interpersonal relationships bring consumers a heavy and burdensome drinking experience.
In ancient times, literati drank and composed poetry. Although this tradition no longer exists, I believe it is entirely possible to shape a liquor brand with modern culture. Traditional baijiu's image is more mature and high-end, but young users need a lighter, simpler brand image with the independent spirit of young people. A cool brand image can attract wave after wave of young people to like the category. I think this is a direction worth pursuing at any time.
Of course, we face another challenge: how existing users, who have formed taste habits, view new products. First, we shouldn't treat them as target consumers, because the churn rate would increase; changing their taste habits is quite difficult. But we must be very confident; the incremental part is enough to build a brand and a company.
Existing consumers often say Jiangxiaobai is different from the baijiu they drank before. This is because strong aroma and light aroma are not comparable, and we fully understand. But ultimately, the new characteristics of Jiangxiaobai products will turn into a major advantage. We see sustained growth in core key markets for five or six years, proving that we have converted some users loyal to the new taste. This requires time accumulation, even a generation's accumulation, so I pursue long-term value.
We cannot use any form of advertising to announce to the world and complete taste guidance. But we are very confident that as time goes on, the taste advantage will show. This is the most valuable thing in running a business; it's very difficult, but once the moat is built, it's hard to shake. This ensures customer retention keeps increasing.
2
**Who drinks Jiangxiaobai?**
**Yan Yisheng:** Have we studied who drinks Jiangxiaobai?
**Tao Shiquan:** The user profile and brand positioning target urban young people, roughly 25-35 years old, and geographically in big cities. From a market strategy perspective, we are not doing "rural surrounding cities," nor will we position as a brand for second-, third-, or fourth-tier markets. We position as a "quality at a fair price" product loved by urban young people, with brand fashion and youthfulness, while pricing is affordable for young people.
**Yan Yisheng:** Do existing users have the motivation to drink Jiangxiaobai?
**Tao Shiquan:** For existing users, the user value lies in the youthful and fashionable feeling the brand brings. Also, some existing users don't like the traditional strong liquor that makes you uncomfortable and sick the next day. Jiangxiaobai's products are mainly small bottles, which behind it advocates a drinking culture concept—drinking in small amounts, leisure drinking, rather than mainly business social occasions.
**Yan Yisheng:** It changed the consumption scenario of baijiu.
**Tao Shiquan:** If we further segment scenarios, drinking includes solo drinking, paired drinking, and group drinking. We tend to focus on solo and paired drinking scenarios. We hope to advocate and change Chinese drinking culture and old social habits, such as urging others to drink, forcing drinks, and heavy drinking. We hope to create a new trend, truly treating drinking as an interest or something enjoyable and relaxing. Users get true self-enjoyment and physical and mental relaxation. Our advocated user value is "small gatherings, small sips, small moments, small moods."
Small gathering is a scenario, small sip is the action in the scenario, and small moments because urban young people face high pressure and fast pace, needing relaxation and a slight buzz. Looking at the traditional baijiu industry's practices, they treat the liquor as the subject and people as the object. We care more that people are the subject and liquor is the object. So this is a big difference.
**Yan Yisheng:** Young people's social methods have also changed. Young users post Jiangxiaobai's heartfelt copy. Or they post a scene of cooking a table of dishes and drinking a bottle of Jiangxiaobai expression bottle alone.
**Tao Shiquan:** Yes, the traditional expression of baijiu was to toast others, leaders, and clients. In Jiangxiaobai's brand spirit, it's more about "toasting yourself," more self-oriented.
**Yan Yisheng:** Like current palace dramas, they used to endure humiliation, but now they let themselves go.
3
**Users or competitors, how to choose?**
**Yan Yisheng:** Some traditional baijiu brands have also launched new small-bottle products, with aggressive promotion. Do you feel pressure from this?
**Tao Shiquan:** The more user value we create, the better the company does. In the first half of this year, we completed the evolution of our "competition view" in culture. We don't follow competitors, or rather, we don't treat anyone as a competitor or enemy.
Why do I say this? First, Jiangxiaobai is a sufficiently cutting-edge and innovative company. What I need to do is inherit the industry's fine traditions, craftsmanship, and long-term value. But we shouldn't, in tactics or strategy, follow others' pace. So essentially, Jiangxiaobai sets the pace, not follows others.
2018 Jiangxiaobai YOLO Youth Culture Festival, with popular rappers like GAI, Ai Re, Bridge, C-Block, Jony J, Jiangxiaobai brought a wave of hip-hop rhythm. GAI even wrote a super hot song for Jiangxiaobai called "Long River," MV click above 👆
Second, there is a widespread practice in the business world of amplifying competitive awareness, often internally encouraging or externally promoting that industry competition is fierce. This is actually due to human animal nature, always guarding against others taking your rice bowl, so you keep staring at opponents. I think this is wrong.
I think the more correct methodology is truly "user-centric." First, think about who gives you the rice bowl. For a company, especially a consumer brand, the rice bowl is given by users. So I need to constantly think about how users can give me more rice bowls. If others take a little, let them; it's not important.
In Confucian thought, there is a saying: "Those near are pleased, those far come." Continuously improving the loyalty of old users will make the company bigger. This is also implemented in our operations: let customers who have already dealt with us get benefits and make money, and naturally more and more customers outside will be willing to cooperate with us. So the earliest restaurants and supermarkets that cooperated with Jiangxiaobai can sell the product and generate value.
As a consumer brand, I don't want the company's growth curve to be particularly steep; I prefer it to be like a high but not steep mountain—high and far, so it goes up gently. Over time, we can reach a height. But we don't want to rock climb. "Near pleased, far come" is also our customer philosophy.
4
**The correct posture for Chinese companies going global?**
**Yan Yisheng:** Going global is a hot direction in the past two years. How is Jiangxiaobai's progress in going global?
**Tao Shiquan:** This relates to how new brands achieve their growth strategy path compared to traditional advantageous enterprises. The logic is to find asymmetric areas.
There are two. One is the e-commerce path; the starting point for new and old enterprises is the same. In terms of e-commerce operation level and results, we are definitely better than traditional advantageous enterprises; the overseas market is the same, which is the second asymmetry. Everyone is at the starting stage; the difference lies in whether you truly have the genes and practices of a global brand.
If you treat it as a pure export trade sales behavior, it's meaningless. My understanding is that it's an output rooted in Chinese food culture. This involves the issue of translation. Translation doesn't mean turning Chinese into English, but how to turn Chinese food culture into a cultural symbol or cultural behavior that is globally acceptable, understandable, spreadable, and even able to create trends. That's what translation means.
**Yan Yisheng:** What if overseas users can't understand the slogan printed on the bottle?
**Tao Shiquan:** That's cultural background. Overseas young people haven't formed a fixed perception and image of Chinese culture, so they are more likely to be curious. For example, you see young people with Chinese character tattoos, T-shirts with Chinese culture, and eating hot pot is fashionable.
We must have sufficient cultural confidence. Today, Chinese food culture represents Chinese culture and is at the initial stage of becoming popular worldwide. I am optimistic about this; it will come quickly. For example, in Mumbai, India; Seoul, South Korea; and European markets like the UK, France, Germany, we have entered mainstream restaurants, supermarkets, and bars.
In fact, every liquor has regional characteristics. Wine may represent Bordeaux, France; whisky is Scotland; each place has regional features. Overseas users will be willing to try because they are interested in Chinese food culture and Chinese culture. The problem we solve is the same: the spiciness of traditional Chinese baijiu may make foreigners resist and give up after the first try.
Image: Jiangxiaobai London "Old Taste New Life" Tasting Event
**Yan Yisheng:** Does Jiangxiaobai mainly enter Western restaurants?
**Tao Shiquan:** If abroad we only sell to overseas Chinese, I think that's export imitation, not truly global thinking and operations. So it must be sold to the local market to be interesting.
In terms of globalization, we mainly did two things.
First, at the product level. Jiangxiaobai participated in internationally recognized strict and fair spirits competitions, such as the IWSC International Spirits Challenge and the Brussels International Spirits Competition. At the 2018 Brussels Spirits Competition, Jiangxiaobai's "Pure Sorghum Liquor," "Jiangji Winery Blue Five Star," and "Black Label 168" won gold medals, and "Jiangji Winery 408" and "Luxi Brand Jiangjin Shaojiu Laozihao" won silver medals. Three golds and two silvers prove that our taste is highly recognized by international expert judges. In Chongqing, Jiangxiaobai has 5 national-level baijiu judges, and its Jiangji Winery has a professional technical team represented by 12 senior tasters, 8 senior brewers, and 8 Chongqing baijiu experts.
Image: Jiangxiaobai series products won awards at the 2018 Brussels International Spirits Competition
Second, consumption habits. We need to do cultural translation and also consumption habit translation. For example, Chinese drinking habits are basically with meals; eating and drinking happen together. In foreign markets, there are two types: pure drinking and mixed drinking, where liquor is mixed with beverages. So in overseas promotion, such as in London, we guide local consumers to drink Jiangxiaobai with British local beverages, similar to cocktail drinking. This is how we create user value from the perspective of international users. If we use the old Chinese way—pouring a glass and toasting—overseas users definitely won't accept it. So we are firmly confident, patient, and will focus on the international market in the long term.
5
**Consumption upgrading or downgrading?**
**Yan Yisheng:** In terms of price range, will Jiangxiaobai move up in the future?
**Tao Shiquan:** Yes, for example, our product "San Wu Zhi You" is a high-end liquor specially used to entertain distinguished guests. It selects small-grain red sorghum from Chongqing, handcrafted, only taking the middle 10% of the original liquor, and stored in earthen jars for more than 3 years.
Image: Jiangxiaobai high-end product "San Wu Zhi You"
**Yan Yisheng:** How has the market reacted to this product?
**Tao Shiquan:** We haven't started nationwide promotion yet. We hope the brand is upgrading, and it must rely on quality upgrading. For us, it's important but not urgent.
**Yan Yisheng:** From your perspective, is consumption upgrading or downgrading now?
**Tao Shiquan:** In the long run, we must have firm confidence. In the five-to-ten-year trend, China is undoubtedly a consumption upgrading market. Therefore, better quality and better brands are definitely right.
**Yan Yisheng:** Agree. Whenever people have more money, they aspire to better products and services. Even if they don't have strong confidence in income growth in the short term, they still tend to prefer higher cost-performance, so essentially it's still upgrading, just more affordable. Like in Japan in the 1980s, many affordable brands emerged—Uniqlo, MUJI, Nitori, etc.—brands that are affordable yet have quality and style. Because people's hearts always aspire to upgrade, just in different forms at different stages.
**Tao Shiquan:** Yes, in the medium to long term, consumption upgrading is certain, but the manifestation is quality at a fair price. Part of the product price is actually a brand tax charged to users. Luxury goods are typical conspicuous brand taxes. Removing conspicuous brand taxes will happen simultaneously with affordability.
In the model of removing brand tax, one is e-commerce; e-commerce can reach users directly, shortening the channel. Second is social media; decentralized consumer cognition, users have a deeper understanding of product quality and value, and information asymmetry is weakening. Third is cultural change; as the economy moves from poverty to developing to developed stages, vanity and conspicuous brand consumption will decrease, while lifestyle, spiritual expression, and niche brand spirits will increase. Many industries develop this way.
**Yan Yisheng:** International consumer brand giants are all this type; MUJI, Uniqlo, ZARA are all affordable positioning.
**Tao Shiquan:** In any industry's big trend analysis, the big growth curve must have small fractals. As a company, are we doing a big trend? No. Microscopically, each enterprise, based on its own endowments and capabilities, can only achieve one fractal, one wave. In the overall consumption upgrading, there is a segment of consumption downgrading. So enterprises should do things that suit their own endowments.
6
**Is Jiangxiaobai just a marketing company?**
**Yan Yisheng:** There is a saying: "Jiangxiaobai is just a marketing company." How do you view this issue?
**Tao Shiquan:** How does management guru Drucker define a company? The two basic functions of a company are innovation and marketing; these are the primary management functions. If you lose one of the two, what happens if the company doesn't do marketing?
**Yan Yisheng:** Both product and brand are important.
**Tao Shiquan:** Like a person needs to eat and drink water; can you only eat without drinking? So this is a statement with cognitive bias, thinking that good companies only make products and don't need marketing. Actually, some companies do marketing in a way that is subtle and invisible. Apple and Mercedes-Benz have excellent products, but their marketing is also great. Good marketing and good products don't conflict or contradict each other.
I can proudly say that we are indeed a company that does marketing, but we are not only marketing. Doing marketing well doesn't prevent us from being a company that makes good products and operates well. I said earlier that brand founders are schizophrenic, with both rationality and sensibility.
Image: Jiangxiaobai animation "I Am Jiangxiaobai" Season 2
7
**Where will Jiangxiaobai and others go?**
**Yan Yisheng:** In August this year, you released the full industry chain "+" strategy, laying out core capabilities across the entire chain with Farm+, Winery+, Taste+, Market+, and Brand+. What is the deep consideration behind this strategy?
**Tao Shiquan:** Standing in a broader view of time and space, and expanding the time scale, it's about where the company goes. Doing such forward-looking analysis is nothing more than listing the variable and invariable conditions in the environment for analysis.
The so-called variable is our innovation value; the invariable is the moat accumulated over time, long-term value. Ultimately, it's our product value and brand value, making friends with time; these are two areas that will generate long-term value.
Brands will likely age one day, or today's e-commerce platforms and new retail may strengthen channel discourse power in the future. Brand business is essentially charging users a brand tax; it's just a question of how much. If we pursue the long-term value of the enterprise and ensure one thing doesn't change, then no matter how new retail, e-commerce platforms, community e-commerce, or content e-commerce develop, a high-quality supply chain will always be one of the underlying core competitiveness of the entire society.
If in the future we are a company that can provide a high-quality supply chain, first, we may incubate more brands; second, because of the underlying competitiveness, over time it will become more valuable. For example, our "Farm+" strategy, based on the existing 2,000 mu sorghum demonstration planting base, gradually expands the farm scope, builds a sorghum industrial park, and establishes upstream raw material supply. The "Winery+" strategy is to add and expand a 1,300 mu liquor industry park in the next three years on the basis of the two wineries, Jiangji and Luxi.
These expansions to the upstream supply chain require time, talent teams, production capacity, and accumulation of business models and refined management. Once done over a long time, the future high-quality supply chain will be a core capability that is hard to subvert over a long period.
**Yan Yisheng:** From our perspective, it's the same. The future trend for brands in various industries is to move upstream in the supply chain and find ways to deepen the moat. Previously, the moat relying solely on marketing and product innovation will become shallower. Especially for food and beverage, companies with core supply chain capabilities will have stronger competitiveness in the future.
8
**Will China have its own Starbucks?**
**Yan Yisheng:** We often hear such statements or discussions: Can China produce a brand like Starbucks? My view is that Starbucks was founded in 1971, now has over 20,000 stores globally, over 3,000 in China, and each store can be regularly upgraded, with layered concepts and images, constantly launching new products to surprise customers. I think that's the result of long-term accumulation and learning. Many consumer brands invested by IDG Capital have this potential—Heytea, Jiangxiaobai, etc.—they are particularly good at researching, working on products, terminal image, and communication with consumers. But even so, there is still much homework to do to reach Starbucks' level.
The core of a company is the ability to continuously innovate. A one-trick pony can work, but in a few years, without continuous innovation, the brand will die. Many catering companies are like this; they disappear after a few years, fundamentally because they haven't formed continuous innovation capability and methodology. Starbucks' roastery flagship store is a particularly good case; it always stays ahead and always surprises. If a company can do this, I think it can live a long time, but it's difficult.
**Tao Shiquan:** Yes, continuous innovation is an ideal state. I think "not perfect enough" is a normal state of running a business. Founders must have clear self-awareness—that they are not perfect, the company is not perfect, the product is not perfect. This is a natural state. Only by rationally completing this self-awareness and understanding that you are indeed not good enough can you continuously improve and evolve. This is what truly drives a company, and then you can go further than others.
What we need to compare is mental strength and patience, and whether the mental strength to withstand criticism is strong enough. If I do something wrong, I'll change it, but there's no need to shout for justice when wronged; time will give the answer. Only when founders overcome this psychology and always treat themselves as athletes will commentators eventually give fair comments, and some external comments in between, high or low, don't matter.
Because in the long run, the result of the game is determined by athletes, not commentators. During the process, many people will comment, and in the short term it may affect athletes' emotions; but in the long run, the result is brought by athletes.
Our goal is always to be a century-old company. Some people ask whether we will go public. In the short term, listing is naturally not in our consideration. At present, we still need to focus on building the company's scale and foundation, including cultivating continuous innovation capability.
**Yan Yisheng:** Many times, when things are done well, everything else follows naturally. Brand building must not be rushed. IDG Capital has accompanied Jiangxiaobai since investing four years ago, and we can say we have deep feelings. First, it created a light-taste baijiu category, which is a big innovation; the team has over a decade of solid experience throughout the entire industry chain, with clear underlying logic; more importantly, they continuously polish and improve operational execution, insight into innovation trends, and learning ability.
I think having this awareness and patience is quite difficult, and also enduring loneliness, not chasing short-term capital interests. Brand building requires this spirit to ultimately become the greatest enterprise.
**Tao Shiquan:** I think this is a great era for brand building. In a sense, Made in China has become Made Globally. China will inevitably move from Made in China to Chinese brands. The next era is Chinese brands growing into global brands. So we have caught this big wave, and it's very worth doing.
The only sign of brand success is becoming a century-old brand and century-old enterprise in the future. Running far wins, not running fast today. So under this understanding, we think about what we should do today that is correct. Heavy assets, being a slow company, or doing internationalization with difficulty—all are doing correct but difficult things that require long-term persistence and accumulation.
Source: IDG Capital (ID: idg_capital)
**Tenth B-end E-commerce Inspection--"From Product to Scenario"**
Event time: December 10-13
Event location: Wuhu, Nanjing, Changsha
Event schedule:
> December 10 morning: Visit Three Squirrels headquarters + snack store
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> December 10 evening: Visit Nanjing Gao Master Beer Workshop
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> December 11 all day: Nanjing-Changsha, or free arrangement
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> December 12 morning: Community group buying exchange salon
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> December 12 afternoon: Kaola Select Heroes League press conference
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