In China, increased exposure to Western lifestyles has paved for the rise of global consumer culture. More Chinese are drinking for leisure, supported by their rising disposable incomes. Most of them are brand conscious and demand only the best in the market.
Consumption of premium alcohol has soared in recent years. This is true especially amongst young consumers in first tier cities where drinking premium alcohol is seen as an indicator of social status. These consumers are willing to pay extra to achieve that kind of experience.
Identifying the Right Market
Premium alcohols are consumed anywhere in China, but there are markets that are more lucrative than others. First and second tier cities hold the most opportunities for companies due to the high density of population and overall wealth of the consumers. These are the people who will not hesitate to shell out money for pricier alcoholic beverages.
Meanwhile, among the consumer groups in the region, the “young elites” are showing the most potential. Many companies have been targeting this particular set because they are adventurous and open to trying new things. For instance, the increase in sales of high-end whiskey in China is attributed to the young high net worth Chinese below the age of 30.
Selecting a Suitable Distribution Channel
While off-trade channels account for most of the alcohol sales in China, they cater to the mass market or those households whose income is enough to cover basic needs. For purchases of premium and higher grade alcohols, most Chinese go to specialist outlets. On-trade channels like bars, restaurants and clubhouses likewise offer beverages that are three to four times more expensive than those sold in the supermarket.
Meanwhile, e-commerce platform has become a great tool for selling imported brands in the region. 55% of Chinese alcohol consumers order online, but their purchasing decisions are driven more by price than quality. Still, there are e-platforms that cater only to famous brands and quality products. Tmall and JD.com, for instance, are selective in their choices in order to keep a high ranking amongst other online shops.
Localizing the Product
China’s drinking habits are changing. Many consumers are looking for pricier, more elusive alcoholic beverages. It is important for companies to pay attention to the trends. In recent years, craft beer has become popular in the region as it caters to diverse taste preferences.
The Chinese are also becoming more health conscious, hence the rise in sales of premium non-alcoholic or low-calorie beer and distilled spirits.
Meanwhile, businesses are also taking the time to localize their product packaging to suit the changing taste of the Chinese. China’s younger generation is extremely imaged-based, preferring classy and expensive looking designs that are Instagram-worthy. Others prioritize alcohol products that are convenient and easy-to-open. Another latest trend in China is the use of metal packaging formats.
While the Chinese are drinking less, they are willing to spend more on premium products for high-grade quality and better taste. This change in their drinking habits presents both opportunities and challenges for beverage makers. For those planning to sell premium alcohol in the region, campaigns must be planned accordingly to avoid loses.