Competition in China’s Alcohol Market

Introduction

China’s alcohol market has grown massively in recent years and it shows no signs of slowing down any time soon. Sophisticated consumers with high levels of disposable income are happy to pay premium prices for quality drinks. As more foreign labels enter the market, competition becomes more stiff and cut-throat.

Competition in China’s Alcohol Market

Many companies have made the mistake of not thoroughly analyzing the market before selling their products. It pays to know the size of the target local market, existing competition and current consumer trends to have better chances of success in China’s huge alcohol market.

Spirits

Accounting for 90-95% of all spirits sold within China, domestic spirits remain a dominant force in the market. This, however, is set to change over the next five years. Western spirits are benefitting from the rising incomes of young and curious middle-class Chinese. The premiumization of the Chinese spirits market has also created a huge opportunity for foreign brands.

Most of the purchases of China’s liquor consumers are from on-trade channels when they expensive drinks in bars, restaurants and lounges. Currently, the most effective avenues to reach these drinkers are through television and digital advertising. When it comes to packaging, they prefer strong yet simple color schemes and unique designs.

Wine

China’s market is diversifying rapidly, opening up prospects for all wine-producing countries. Consumers are gradually becoming younger and they have adventurous and eclectic tastes in wine. Meanwhile, vintages of all price points are popular, but there is a growing demand for middle-priced and higher-priced wines.

For Chinese wine drinkers, those with classy expensive looking designs are the best. This gives them a sense of class and luxury. Meanwhile, beverage makers who conduct seminars and wine tastings are much appreciated by the new consumers who want to broaden their knowledge of wine. It is also important to note that almost half of the wine drinkers in China buy products online.

Beer

In China, beer represents 75% of the total amount of alcohol consumption in terms of volume. Though domestic breweries have a controlling share of the beer market, foreign brands have been gaining grounds. As consumers trade up quality over quantity, they are acquiring a taste for international premium products.

In recent years, there is an increasing preference for premium lager and dark beer with a stronger taste among Chinese consumers. Among the different beer types, wheat and craft beer are the ones with the highest penetration rates. Meanwhile, more consumers are appreciating the convenience brought about by e-commerce and home deliveries.

Parting Thoughts

While China’s alcohol market is highly lucrative and ever-growing, the presence of many brands, both local and foreign, means the competition is high. It is essential for businesses to carry out a target market analysis that will enable them to identify the best local markets, as well as the ideal customers, for their products.

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