When Li Ke was studying accounting in the U.S. Midwest, he frequently would relax at a bar serving trendy cocktails. He noticed that the cocktails were mixed with a variety of hard liquors including vodka, gin and rum. But none of them used baijiu, the traditional Chinese hard liquor known for its high proof value. That gave him an idea.
“I wanted to integrate traditional Chinese culture, the spirit baijiu into our modern Westernized lives” says Li. Three years after he graduated, Li opened En Vain, a Beijing bar and restaurant in the trendy Sanlitun Soho neighborhood. The bar offers more than 40 types of mixed drinks, all of them mixed with baijiu, and the restaurant offers Chinese lunch boxes to office workers in the area. The names of the cocktails are derived from old literature and the 24 solar terms (a sector of the Chinese lunar calendar).
The wall behind the bar displays hundreds of bottles of baijiu. A replica of a terracotta warrior from Xi’an greets customers at the door. But the bar doesn’t feel like a museum. Its tree trunk tables and rustic furnishing provide a touch of minimalism to the traditional décor. Li says he wants the place to feel like a mix of east and west. He chose to hire his architects from Singapore because he believes that the Asian city-state has a unique perspective on how East meets West.
Li was born and raised in Jiangsu Province. His father was a baijiu distributor and began selling it online to businesses as the world of ecommerce took off. His father wanted to open a bar and asked Li to run it. Li had always dreamed of opening his own business so he agreed. Li credits his father for his extensive knowledge of baijiu as well as Chinese traditional customs.
Li starting working on the concept for En Vain, an upscale baijiu bar, in May 2013. He studied the market of baijiu consumers and selected a location. The bar and restaurant opened in November of that year.
In June this year, two of Li’s friends came on board. James C. Lee, who was born in America to Chinese parents, is now a co-owner of En Vain and oversees business operations while still holding his position as an investment manager at Lee World Group.
Lionel Hong, who met Li rehearsing for a musical last year, is now in charge of marketing and building relationships with advertising and media firms such as The Beijinger and Time Out Beijing. Hong has a background in movie production and education that has come in handy. Hong is a frequent guest speaker at international schools across Beijing, talking about the importance of Chinese culture and identity.
All three partners are American educated with Chinese heritage, giving them an advantage compared with many non-Chinese bar owners in a country where the success is often dependent on interpersonal relationships with local officials and media.
Li is not the only one picking up this trend. Capital Spirit, a baijiu bar situated in the Gulou area also serves baijiu mixed cocktails. There is even a baijiu bar in Greenwich Village in New York called Lumos Bar.
In comparison with En Vain, Capital Spirit is much smaller and more intimate. Li says: “It would be hard for them to organize events because it is so small. Most customers there still choose to have Western cocktails, unlike En Vain, we only serve baijiu cocktails. Plus, it (Capital Spirit) is opened by a foreigner, so we have the advantage of knowing the Chinese market and culture better.”
Despite competition, Li’s business seems to be on the right track. Macquarie investment bank reassured investors that baijiu, the Chinese Spirit has a bright outlook:
“After three years of declining sales growth, we believe China’s baijiu industry has largely bottomed out. We have been observing a recovery in both industry sales growth and profitability since the second half of 2014. We see huge potential for product mix upgrade in the mid to long term, given we estimate basic products dominate 60% of China’s baijiu sales volume.”
It was never just a business for Li though. Li has always had a strong appreciation for Chinese culture, but not all young people share his appreciation for Chinese traditions. “Baijiu drinkers are typically 40+ year olds, and I don’t know that demographic well. So I decided to make my drinks young and hip, to attract a younger crowd.”
Though the business is taking off and the industry is seeing an upward facing trend, the company is still not profitable. Customers on average spend around 40 yuan for lunch, and 80 yuan at night, which is equivalent to the price of two cocktails. Profit margin can reach as high as 70 percent but the business still has not yet to breakeven.
A rough revenue estimate of 20,000 yuan a month cannot cover rent in one of Beijing’s most expensive commercial area.
Li says the biggest challenge he has faced is actually not the economic burden but rather his lack of experience. He has self-taught himself the basics of culinary art, bartending, interior design, marketing and business operations.
The baijiu industry has been impacted negatively by the anti- corruption crackdown but Li sees this as an opportunity for En Vain to give baijiu a new identity. Many baijiu suppliers are already trying to rebrand and make baijiu more fashionable.
An analyst at Macquaire Bank expressed his optimism on baijiu in a report:
“Baijiu, as an integral part of Chinese culture, enjoys the highest growth among all major alcoholic beverages. While overall alcohol industry growth has slowed down since 2012 as a result of the Chinese government’s strengthened anti- corruption measures, the baijiu market has managed 7% volume growth per annum, (beer at 4.5-5% growth), indicating a strong customer base of baijiu at more affordable prices.”
The co-owners of En Vain are considering in paying for advertising in the new year. Looking forward they say they will eventually introduce some western spirits to accommodate a wider range of customers, but still keep a distinct Chinese twist to everything served.
“Bai da, En Vain has two meanings in Chinese. The first word bai (白), means white (the color of the spirit) and da means “to mix”. The second meaning, bai da (白搭) means “doing it for nothing” so this is a constant reminder to myself that if I don’t give it my all, it will all be a waste. I chose En Vain because I studied French for many years and it is the literal translation of White (spirit) – Mix and I like the sophisticated sound of French. In the end, I just want to have a successful business and my business mission is to provide people with a place to appreciate baijiu and Chinese traditions.”