Ginseng pills and ginseng whiskey: Wisconsin growers seek new customers amid trade war

WAUSAU - It has a square bottle, and inside a brown, knotted ginseng root is suspended in amber liquor.

The ginseng bourbon stands out among a shelf full of whiskeys at at the Trig's Grocery Store in Wausau. 

The product, called American Ginseng Whiskey, is made by Plover-based Great Northern Distilling. It hit shelves for the first time last year, around the same time as the Central Wisconsin Convention and Visitors Bureau hosted the first-ever International Wisconsin Ginseng Festival in Wausau. 

Ginseng is most commonly taken in tea. That's the way Chinese devotees of the root have enjoyed it for centuries. It's also used as a spice in food. And in Marathon County, which grows more than 98 percent of all U.S. ginseng, ginseng exports are an $8-million-per-year industry. 

That business now faces what could be an existential threat. New tariffs in an escalating trade war with China will raise the price of U.S. ginseng to Chinese consumers by 15 percent. That price hike has already begun to threaten exports, and growers don't yet know whether the trade war will escalate.

That's where ginseng bourbon comes in, along with ginseng beer, ginseng extract pills, and ginseng herbal energy drinks. The products themselves aren't necessarily new; some have been in development for decades. But for ginseng growers and distributors such as the Wausau-based Hsu Enterprises, the newfound diversity of ginseng products could be the key to unlocking new customers in America — and weathering the storm brought on by President Donald Trump's trade policies.

That is, if enough American consumers decide ginseng whiskey is worth buying.

Trade war pressures raise stakes on new ginseng products

At Hsu Ginseng, evolution isn't a foreign concept.

The company has been pioneering ways to deliver ginseng to consumers both foreign and domestic since the 1970s. Ginseng is said to improve overall health and well-being, though scientific study of the root's effects have been inconclusive. 

Traditionally, Will Hsu said, ginseng would have been purchased as a whole root, then taken to a traditional Chinese medicine shop or pharmacist to be sliced. But that wasn't exactly conducive for busy families or individuals, Hsu said. So Hsu's, which was founded in Wausau by Will Hsu's father Paul in 1974, started to sell pre-packaged slices of ginseng. After a period of having to convince the consumer that the slices were, in fact, not bad roots or a lesser product, the company moved into making ginseng tea bags in the 1990s. It was just another step in making ginseng more accessible, said Hsu.

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Next came ginseng capsules, which brought even more convenience. Consumers could take three or four a day, without having to taste the earthy flavor of the root.

But the biggest leaps in innovation at Hsu's have been in the last few years, first with the introduction of GinMax. The supplement is made of double-concentrated extract powder from the ginseng plant, and allows the consumer to take only one pill a day of the ginseng supplement, Hsu said.

"It was meant to simplify the process," he said. "But also get into once-a-day type of capsules, which are very approachable for the American market."

Last year, at Wausau's International Wisconsin Ginseng Festival, Hsu's released its newest products. There was ginseng beer and the ginseng bourbon. And one of the most promising new products, Hsu said, is Shangnergy, an herbal energy drink containing several natural ingredients.

"It's something that's very local, it's different and nobody else is doing. And that's currently what the attraction is," Hsu said. "It gets (consumers) to think differently about the product."

These types of health products allow Hsu to target a whole new type of consumer: the health-conscious American. 

"The stereotypical American consumer is not super familiar with ginseng, but probably knows it might be good for them," he said. "But because they didn't grow up with the product ... they don't know the benefits. And so you're really marketing to a group that is actively seeking lifestyle or health changes." 

For products especially like the beer and bourbon, which are made with Bull Falls Brewery in Wausau and Great Northern Distillery in Plover, respectively, they're more unique and lend themselves to also being great gifts, as well.

"It's more unique and more personal," Hsu said. "Anybody can buy ginseng."

Ginseng growers are braced for large losses in the wake of new tariffs

In response to increases the Trump administration tacked on to steel and aluminum coming into the United States from China, China chose to implement a 15 percent tariff on ginseng, along with several other U.S. exports.

China is by far the largest consumer of American ginseng. Since almost 90 percent of the crop is exported, a new 15 percent tax on the product is a serious concern to local ginseng farmers, said Hsu. And though the normal buying season for ginseng is after harvest, which typically happens in late September, his company has started to feel the effects of the tariff already. Hsu's has already lost one order due to the tariffs causing an uptick in price.

"(The buyer) knew that if the product was being shipped on the ocean, they'd be subject to the tariff. So they told us to hold for a second and then eventually cancelled their order," Hsu said. "This is the first time in a long time that we've had an order like this cancel."

He said the last time the industry saw cancellations was about three years ago, when the price of ginseng spiked dramatically.

"The customer just decided that they didn't want to buy it or that they couldn't afford it at that price," he said.

Of course, this isn't the first time the market has fluctuated, Hsu said. Over the 114 years that ginseng has been cultivated in the area, numbers have risen and fallen. The USDA has only been tracking the root since 1992, but at that time, there were 649 farms in Marathon County, with over 1,200 acres of farmland, producing 1.4 million pounds of ginseng, according to a report from the agency. 

Since then, though, things have changed. Prices remain the same for the root, between $35 and $40 for a pound of ginseng, though prices are rising to farm it, Hsu said. Still, the weather and the soil in Wisconsin — and specifically in central Wisconsin — make it ideal for ginseng production. The state is still producing 98 percent of the ginseng grown in the United States, said Bill Kaldunski, the president of the Ginseng Board of Wisconsin. 

The full effects of the tariffs aren't known yet. Harvests start in the fall, and export declines will take a while to measure. But the ginseng industry in central Wisconsin is braced for a large effect, said Kaldunski. Because the tariffs went into effect at a time when the industry isn't typically making a lot of sales, most of the ginseng meant to head overseas had already been shipped.

"But we're hearing more now, and buyers are being more aggressive," he said.

Most growers exist at the mercy of the market, and for ginseng that still mostly means an international market. For Hsu's, the hope is that products like Shangnergy and GinMax will make new inroads with American consumers as well as international audiences. These products can work as a hedge against the tariffs — but also an attempt to anticipate new markets for the Wisconsin-grown root.

"You have to be willing to invest money behind (the new products)," Will Hsu said. "You have to be willing to experiment and try it. It costs time and money. And sometimes it doesn't work, but you have to be OK with failure."