Building the World's First Baijiu Bar

An American in China always remembers her first baijiu encounter.

I was in China’s Inner Mongolia Autonomous Region on my first trip to the country, and it was lunchtime. I hadn’t had my coffee, and it didn’t matter: My host poured me a shot of baijiu in a tiny metal goblet and raised his to toast mine. "Ganbei," he said, bottoms up. And we drank.

It was nasty. The spirit whacked me with its stench before I even put cup to lips. Baijiu—a clear liquor distilled from fermented grain that clocks in at over 50 percent ABV—is the pungent, smelly and strong drink of choice in China which is traditionally downed in tiny shot glasses and tastes sickly sweet, rotten and spicy all at once.

Needless to say, it was an aggressive lunchtime beverage.

Over the next few months of settling into China, getting baijiu-drunk at the insistence of my elders became, like, a thing in my life. No matter how many months I lived in the country or Mandarin words I learned, my blonde hair and blue eyes marked me as the obvious foreigner, and people I had never met before came out of the woodwork at banquets to ensure that I experienced the literal spirit of their country. This was most often at work banquets—getting drunk is a major part of Chinese corporate life, it would appear—and my sheer politeness towards my well-meaning superiors catapulted me into stinky, heavy drunkenness. My acquaintances and colleagues were well intentioned. But despite all the practice, the first shot never got easier.

The spirit whacked me with its stench before I even put cup to lips.

And yet, one year later, I found myself repeatedly paying out of my own volition for baijiu sours.

Enter Capital Spirits, a tiny, stylish bar in central Beijing that has made the drink of old Chinese men—for lack of better words—cool again.

Last year, a group of expats living in China raised eyebrows when they opened the world’s first-ever baijiu bar. There were naysayers and skeptics aplenty, but one year in, Bill Isler, Matthias Heger, Simon Dang and David Putney have only made headlines for one reason: success.

"When Starbucks came to China, people were saying the same things they said to me when I opened the baijiu bar: Expect to go out of business very soon," says Isler. "They said Chinese people drink tea, they don’t drink coffee, it’s not going to work."

If you’ve ever been to, say, any street corner in Beijing, you’ll know the whole Starbucks thing ended up working pretty well. And like Starbucks, Capital Spirits also bucked expectations.

Although baijiu is the most commonly consumed spirit in the world, there are (or were) no bars dedicated to the stinky stuff. That’s because, according to Derek Sandhaus, baijiu expert and author of Baijiu: The Essential Guide to Chinese Spirits, it’s "not traditionally used in cocktails." Baijiu is, instead, consumed alongside meals, and it’s often a status symbol—the higher you advance in your career, the more often you’ll be expected to sit around food-filled negotiation tables, getting baijiu-drunk with clients.

"China is the only country in the world that has its heaviest drinking in middle age," he says, which explains why the drink is associated with old men, and more often Communist Party members than young, hip partiers.

Hence Isler’s naysayers. "A lot of people said, ‘How can you put baijiu in cocktails?’" he states. And yet, Capital Spirits now sells baijiu cocktails not only to young Chinese, but young foreigners as well.

Killer cocktail recipes help. Capital Spirits’ Baijiu Sour is a drink anyone can get behind—a base of rice-aroma baijiu (the spirit is divided into four categories based on "aroma"), mixed with Cointreau, orange bitters, lime concentrate and fresh-squeezed lime juice.

...baijiu is the most commonly consumed spirit in the world...

But more importantly, the team’s success is due to its educational approach. "What Capital Spirits is trying to do is educate people, particularly Westerners, that there’s as much variety within baijiu as there is within Western spirits," says Isler. When one orders an intro flight (RMB40, that’s less than $10), an informative, boozy lecture is served alongside. The bar stocks over 50 baijiu labels, and uses flights to expose its customers to their variety.

"Baijiu is an umbrella term for distilled spirits made in China," Isler continues, giving me the same definition he shares with customers over sample flights.

If you think that sounds broad, as Isler explains, that’s because it is. There is a tremendous amount of variety within baijius, more than people realize. This may be one of the reasons why baijiu is the most commonly consumed spirit in the world (the other reason being that China’s population is, well, huge).

To make baijiu, producers employ solid-state fermentation, in which they place solid bricks of previously fermented grains and yeasts, called qu, into underground mud pits or traditional ceramic jars to ferment. Because the wheats and ingredients are mixed up, baijius can have upwards of 25 strains of yeast in them (Western spirits usually just use a single yeast powder).

L to R: Snake-infused baijiu, Baijiu: The Essential Guide to Chinese Spirits.

"Qu is able to convert the starches directly into alcohol," explains Isler. "This is what gives it its unique flavors—it’s not necessarily the sorghum or the wheat or the rice, but it’s actually the yeasts and molds that are active in the fermentation process."

From a Westerner’s perspective, the whole process is complicated and confusing. According to Putney, that’s exactly why foreigners don’t appreciate it like they should: They don’t understand.

"Before I ever serve the baijiu to somebody, I explain to them what it is, how it’s made differently and why it tastes the way it does," he says. "Then, when they approach it, they have a sense of appreciation and they have more of a palette for what they’re about to encounter."

Putney adds that while most people who enter the bar have either never tried baijiu or never had a positive experience with it before (I’m in that latter camp, hi), 90 percent of people who try it at Capital Spirits leave, as he says, "converted."

But baijiu’s aggressive taste is just one reason why Capital Spirits’ success story is surprising. From an industry perspective, what’s most miraculous is the time period in which the bar took off—a time of crisis for the country’s baijiu producers.

Traditionally, the Chinese government had been the fuel beneath the industry’s fire. While all sorts of baijius had been drunk for centuries, it became especially important under Mao, whose Communist Party popularized the brand Maotai—a savory baijiu requiring a complicated nine-month production process. (There’s a portrait of Richard Nixon drinking Maotai during his state visit to China on display in Capital Spirits.) For generations, government officials threw parties with expensive bottles of the stuff to show off their wealth—and non-government officials gave them to Party members as bribes. But in 2012, president Xi Jinping cracked down on lavish government banquets, and much of this came to a screeching halt.

... the higher you advance in your career, the more often you’ll be expected to sit around food-filled negotiation tables, getting baijiu-drunk with clients.

Just a dozen or so months later, Isler and Heger attended a talk by Sandhaus. "There were like 30 foreigners there that were there to learn about baijiu," says Isler. "That’s when I thought, maybe this could work in a bar."

The duo plus Dang found a tiny 100-year-old building in a less-trafficked hutong, a residential alleyway traditional in old Beijing. The team opened their space to the public in August 2014. The novelty of a baijiu bar attracted a fair amount of press, yet according to Isler, the most common comment on online articles was: "Expect to go out of business very soon."

But they didn’t. Capital Spirits became a hit with Westerners and Chinese in their 20s and 30s, and soon enough, different baijiu executives flew in to meet with the guys at their bar.

"The bigger picture is demographics," explains Isler. "Any baijiu company that’s growing is doing it in a shrinking market anyway because the typical baijiu consumer is about 45 or older, Chinese and male."

The team’s success in a previously unpopular age bracket convinced them, as well as Sandhaus, with whom they’ve since grown close, that baijiu could work with young non-Chinese. And now they’re trying to convince hospitality professionals, both inside and outside of China, the same. This includes everything from persuading bartenders in New York and L.A. to stock baijiu, to helping Chinese baijiu producers market themselves to younger audiences. "People are looking to develop products aimed at non-traditional baijiu markets," explains Sandhaus.

"People are looking to develop products aimed at non-traditional baijiu markets..."

And he’s right. Baijiu is picking up steam even here in the U.S. Just one year after Capital Spirits became the first baijiu bar in the world, Lumos opened in New York City, making it the first baijiu bar in the States. Lumos specializes in baijiu cocktails, and the Chinese firewater is paired with Western liqueurs, teas, fruit juices and tonics. Meanwhile, Chinese restaurant Peking Tavern in L.A. has been serving baijiu cocktails for a couple years, and Portland's Vinn Distillery is the only liquor producer brewing baijiu domestically.

This gives Isler hope. He rattles off a bunch of cities: "New York, San Francisco, L.A., Boston, D.C., Chicago, Portland, Seattle ... I think within five years, the average sort-of hip bargoer will know what baijiu is. And people will have tried it."

"We were the first baijiu bar in the world," says Heger. "We see there’s another baijiu bar in Beijing now, baijiu bars springing up in other parts of the country, one in London, one in New York now, and it’s slowly becoming part of the cocktail culture."

Potentially, baijiu has an exciting future in the States. But in China, drinking baijiu is a more simple decision. He may be biased, but Sandhaus advocates that all visitors in Beijing at least try the polarizing spirit.

"If you take that defensive posture that so many visitors to China take, you’re going to be missing out on a lot of Chinese life," he says.

And that—more than baijiu—would really stink.