While China’s spirits market remains dominated by local powerhouse baijiu, there are increasing opportunities for international brands to grow and expand in the upcoming years. At the heart of this development is the rise of the country’s luxury consumer base among the urban population.
Growing Demand for Imported Spirits in China
As China’s middle-class population grows, so is the demand for new tastes and variety of alcoholic beverages available in the market. Even though imported spirits account for less than two percent of the overall alcohol consumption in the country, international spirits producers are already seeing the many potentials that the market can offer to their businesses.
Traditionally, China is a brandy market, but other hard spirits have been making huge inroads in the past years. Imports of brandy remained stable in the first half of 2017 at 14.88 million liters. Whisky import is currently enjoying a year-on-year volume increase of 11.2%, while vodka and rum total import volumes have reached 2.64 million and 1.26 million liters, respectively. Compared to other spirits, tequila and gin imports remain small but still showing significant growth.
While imported spirits are not normally part of the Chinese culture, certain changes in the consumers’ lifestyle have served as catalysts for the shift. China’s middle-class population is rising and with increasing incomes, many people are able to afford foreign brands of alcohol.
Who are the Spirits Drinkers in China?
The Chinese drinking population is becoming younger. More young people are drinking for personal/casual consumption. They are more adventurous, exploring new tastes that fit the palate. Although six out of ten spirits consumers in China are male, the number of female drinkers has been steadily increasing.
Compared to rural areas and lower-tier cities, spirits consumption is high in higher-tier cities, where a lot of hypermarkets and supermarkets serve as channels of distribution. For instance, consumers from Shanghai drank around 4.85 million liters of whisky in the first quarter of 2017.
Social status still plays an important part in the Chinese’s choice of spirits. They drink spirits during important business meals. Giving out spirits as luxury gifts is also a tradition that is very much present today.
As China’s market becomes inundated with fake alcohols, consumers have come to trust imported brands in terms of quality and safety as opposed to local ones.
How Can Foreign Brands Break into China’s Spirits Market?
Businesses that are targeting the millennial market have begun to recognize the importance of product packaging. The younger generation is extremely imaged-based. The aesthetic appeal is just as important as the spirits itself. If the product is not Instagram-worthy, is it worth shelling out cash for?
The digital revolution is now and is here to stay. This is why online marketing has become an integral part in reaching out to consumers. The Chinese people age 20-39 spend an average of three hours to surf the web. Companies get good results in getting their attention by placing online ads and engaging them through social media, like WeChat and Weibo.
E-commerce platform is a great opportunity for imported spirits brands to sell their products. In China, 55% of Chinese alcohol consumers order online, where there is a wide selection of spirits to choose from. Offering rewards like free shipping may also boost sales.
Of course, brand reputation remains an important criterion in the Chinese’s choice of alcoholic beverages. Consumers tend to only trust brands with good comments and recommendations. Just like in other products they purchase, the Chinese value authenticity and quality in their spirits.
In-store tasting is also a tried and tested method in generating brand awareness. This aids in building rapport and personal relationships with potential clients. Sponsoring local community outreach is also good for networking.
Although China’s spirits market is still primarily ruled by local spirits, the changing consumer landscape is brimming with opportunities for imported brands. To break into this niche market, having a reliable marketing plan is a must.