White Paper

Chinese Millennials: A Driving Force in the Alcohol Market

Share on facebook
Share on twitter
Share on linkedin
Share on email
Executive Summary

Chinese millennials are a highly influential group that is a driving force behind the consumption growth in the Chinese alcohol market. Numbering more than 400 million and with high spending power, these young consumers will reshape China’s commerce and retail sector.

Compared to previous generations of Chinese consumers, millennials have a vastly different lifestyle and aspirations. They enjoy a higher standard of living and spend a bigger portion of their discretionary income on “retail-tainment.” With their global mindset, millennials will be critical for the future of foreign brands in China.

If you are looking to appeal to Chinese millennial consumers, it is 

important to (1) understand their different lifestyle (2) identify their spending patterns, and finally (3) adapt your marketing strategy accordingly to fit their specific preferences. Businesses must be relatable, personable, fun and creative to gain the attention of this consumer group.

The experience of Harbin Beer and Wolf Blass demonstrates the value of investing in analyzing and understanding the market. Their success in China shows the return firms can enjoy when they accurately assess the market and competition and in Wolf Blass’ case, employ the time and due diligence necessary to develop strong relationships with suitable local partners who can help them establish reliable sales channels.

Market Overview

Chinese Millennials: Who Are They?

China’s Main Drivers of Consumption

Chinese millennials, or those born between 1981 and 1996, will be the consumer group with the greatest spending power in China in the coming years. At 451 million, they represent over 31% of the current population and account for 65% of growth in China’s total consumption spending. By 2024, their average annual income will increase to US$13,000, further boosting consumer spending. 

Having only experienced economic growth and prosperity, these consumers are tenacious about having experiencing the best the world can offer. They are also well-educated and worldly. 25% of them hold a bachelor’s degree or higher, while more than half are passport holders. With money to spend as they wish, they are confident, independent minded, and determined to display it through consumption. 

The Big Spenders

Chinese millennials are part of China’s one-child generation. Unlike their parents, they spend more and save less. They enjoy greater financial freedom and have the desire for quality and experience. Millennials are known to be big spenders. They seek the instant gratification they feel after making a large purchase. 

Their appetite for “experiential luxury,” however, outshines the desire to own things. They spend more on travelling and gourmet dining than shopping for designer clothes and bags. For alcohol, they go for beverages that will provide them with a unique drinking experience, like unusual wines and handpicked craft beers. 

Millennials’ preference for unique purchases is an expression of their individuality. The products they buy must be an extension of their experience and a means to stand out among their peers. Overall brand image is important and this includes product quality, price, consumer experience, and even company values.

Spending Patterns

Top Spending Markets

Common
Challenges
and Solutions

Evaluating Competition

Chinese millennials are set to become the most influential consumer segment, not only in China’s alcohol market, but in other industries as well. Brands, both domestic and imported, are scrambling to cater to this group and win their attention and trust. Competition is high and without proper planning, many are bound to fail.

For companies, a detailed analysis of the market is vital to better understanding the existing competition and overall potential for their product. This includes inspecting growth outlook, market size, product strengths and weaknesses and competition in their target price range and for the product type.

Determining Market Pricing

Chinese millennials are notoriously demanding and expect brands to provide value for their money. They tend to be very brand-aware and typically associate foreign goods with superior quality. While they may not be particularly price sensitive, they often compare prices across multiple e-commerce platforms.

A successful pricing strategy will allow your products to stand out among competitors’ and match consumers’ willingness to pay. It is important to examine how your product’s pricing profile or estimated local retail price in the market compares to the average national price. 

Finding Good Sales & Distribution Partners

Chinese millennials are a complex group. Understanding their preferences, habits and values takes time. Having a sales partner who is reliable, trustworthy and capable will help you navigate this market. Foreign companies, however, have difficulty assessing the true capabilities, trustworthiness, and suitability of individual local distributors for their company and product(s).

Carry out due diligence before any contracts are signed so you save time, trouble, and money in the long run. Find businesses with a track record in the industry confirming key details about their business, capabilities, potential risks, and providing clear recommendations as to whether they are right for you, your product, and goals.

Geographic & Demographic Targeting

Most Chinese millennials have, to date, preferred to stay in China’s first-tier cities due to better employment and lifestyle opportunities. The rising living costs, however, mean that a huge number of them are struggling to survive in big cities like Shanghai and Shenzhen. 

With home prices surpassing salary growth, migrating to smaller cities may be the best option for some of them. For instance, second-tier cities, such as Chengdu and Wuhan, have been enjoying rapid economic growth. With relatively stable living costs, these places will likely attract more millennials in the future. 

Brand Positioning

Chinese millennials prefer brands that they can relate to, those that understand their needs and desires. They respond to sincere, more personalized approaches that they can resonate with. To enjoy long-term growth, brand recognition and added brand value, a company needs to check if their branding is right for the millennial market.

Look at your labelling, packaging, messaging and other brand assets and measure how it compares to competitors. Through careful analysis, you will be able determine the best course of action to differentiate your brand and make it appealing to both your likely sales partners and target customers.

The Case of Harbin Beer

Company Profile

Harbin Brewery, founded in 1900, is China’s oldest surviving brewery. After going through several ownerships, including the Russians, it was returned to the Chinese government in 1950 when Joseph Stalin ordered the return of Chinese assets. In 2013, SABMiller bought 29.6% of the company. A year after, it was taken over by Anheuser-Busch, its current owner. 

Anheuser-Busch helped to export Harbin beer to Europe and North America, but compared to other giants like Tsingtao Beer or Zhujiang Beer, its share in these markets is minor. Harbin products are also sold in other neighboring countries in Asia. With an annual beer production capacity of over 1 million tons, it has become a giant in China’s beer industry. 

 
The Case

According to Kantar’s BrandZ, Harbin Beer enjoys the strongest following and increase in loyalty among the Chinese millennials among the top 10 selling brands in the country. In recent years, it has been targeting China’s younger generations, working hard to change consumer brand perception from old and boring to fun and playful. 

Harbin Beer is determined to prove that the younger consumers are open to old Chinese brands, as long as these brands can connect with them. Its “Happy Together” sales and marketing campaign and partnership with celebrity endorsers and hip-hop musicians are effective in engaging its young clientele. 

In 2017, the brewery collaborated with China’s eSports in its bid to win over engage with an elusive audience – young males aged 18-29. Just last year, it featured the Brazilian footballer, Neymar, in its summer campaign. For many years, Harbin has been an official sponsor of NBA China. It is also the first Chinese beer brand to sponsor the World Cup.

 

The Case of Wolf Blass

Company Profile

Wolf Blass is an Australian winery based in Nuriootpa, South Australia, within the Barossa Valley wine region. From its humble beginnings, it has emerged as one of the most successful wineries in the world, the recipient of more than 8,000 medals and trophies from different organizations and award-winning bodies.

World Blass wines are exported to over 50 countries around the world. In China, the brand is included in the list of the top 5 best-selling wines from Australia, which includes Penfolds and Rawsons Retreat. In the first half of 2019, Wolf Blass’ parents company, Treasury Wine Estates Ltd, reported an increase of 32.4% in its Asia sales, including China.

The Case

Wolf Bass enters the global market by offering a variety of flavors, from soft and sweet-tasting to the dry and firm-tasting wines. It uses color-coded wine ranges depending on the price, making it easy for consumers to decide what to buy depending on their budget. This works particularly well for young Chinese drinkers who are adventurous with their purchases. 

In 2015, Wolf Brass launched its “#After6” campaign. It taps into the young Chinese wine market, motivating them to embrace a modern lifestyle filled with fun and colorful moments. Aside from driving brand awareness, the campaign also encouraged consumers to see wine as an everyday occasion.

The brand also formed multi-year partnership with NBA in Greater China which includes mainland China, Hong Kong, Taiwan and Macau. Wolf Blass promoted its entire range to the millions of Chinese fans via in-store and online competitions. It was also active in NBA Mitan, a weekly streaming program aired on Tencent, China’s biggest online TV channel.

 

By finding a professional and flexible local partner, companies will have better chances of success in China.

John Doe

Affluent, tech and digitally savvy, and open to new experiences, Chinese millennials have been dubbed as China’s “super consumers”. They are an empowered group with high expectations of the products they buy. 

Knowing where and how to connect with the millennials are critical for businesses planning to sell alcohol in China. To appeal to this group, you must understand their different lifestyle and spending patterns. It is also vital to determine the cities they stay and evaluate the

 

competition in these local markets. Existing branding and marketing strategies must also be reconsidered.

By finding a professional and flexible local partner, companies will have better chances of success in China. They will be able help you better tailor your products to meet the needs of local consumers, as well as guide you through the cultural and logistical hurdles in this fast-changing market.

 

Chinese Millennials Alcohol Drinkers

Insight’s, Challenges and Solutions

Share on facebook
Share on twitter
Share on linkedin
Share on email