Mersol & Luo Insights

Millennials: A Driving Force in China’s Alcohol Market

Overview

Chinese millennials are a highly influential group that is a driving consumption growth in the Chinese alcohol market. 

Numbering more than 300 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, 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 Growth

Chinese Millennials: Who Are They?

China’s Main Drivers of Consumption

Chinese millennials, or those born between 1981 and 1999, are fast becoming China’s highest spending consumers. They 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 grown up only knowing economic growth and prosperity, these consumers are tenacious about 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 express this 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 desire quality and experiences. 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, such as 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 personality and a means to stand out among their peers. Overall brand image is important, including product quality, price, consumer experience, and even company values.

Spending Patterns

Top Spending Markets

The Case of Harbin Brewery

Company Profile

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

The brand’s beers are exported globally, but their largest footprint outside of China is in neighboring Asian countries. With an annual beer production capacity of over 1 million tons, it is 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 Chinese millennials compared to the other 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 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 partnerships with celebrity endorsers and hip-hop musicians are effective in engaging young consumers.

The brewery has struggled to win over young males aged 18-29. These are one of the largest beer-drinking groups. In 2017, the brewery collaborated with China’s eSports organizations and in 2018 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 Robbie Bird Wines

Company Profile

Wolf Blass is an Australian winery based in Nuriootpa, South Australia, within the Barossa Valley wine region. 

Wolf 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, reported an increase of 32.4% in its Asia sales, including China.

THE CASE

Wolf Blass offers a variety of wines with different profiles, 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 Blass 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 drinking as an everyday occasion.

The brand also formed multi-year partnership with the NBA in Greater China which includes Mainland China, Hong Kong, Taiwan, and Macau. Wolf Blass promoted its entire range to 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.

Key Takeaways

Affluent, tech and digitally savvy, and open to new experiences, Chinese millennials have been dubbed China’s “super consumers”.

They are an empowered group with high expectations of the products they buy. 

Knowing where and how to connect with China 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 where they are and evaluate the competition in these local markets. The suitability of existing branding and marketing strategies must also be reviewed.

By an expert and experienced local partner, brands will minimize their risks and maximize their chance 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.