Spirits market in China
The spirits market in China is flourishing as the income level of Chinese consumers is increasing. High-end spirits, such as Moutai, Chivas, and Martell, are common guests on Chinese tables. Besides Baijiu, the local spirit of China still dominates the Chinese spirits market; while western spirits like whiskey and brandy have more and more influence on Chinese consumers’ alcohol choices. Western alcohol culture is becoming popular among the younger generation, and the rise of e-commerce platforms (e.g., Taobao, JD, etc.) enable western spirits brands to enter China’s alcoholic beverage market more easily. Nevertheless, the regulations of China’s alcoholic beverage market suffered changes for a long time, and the legislative body has still not reached consensus on how to regulate alcoholic drinks in China.
Spirits regulations in China
Various regulations of alcoholic beverages in China, including spirits regulations in China, are in place. The Ministry of Commerce of China (MOFCOM) issued the new version of the Food Safety Law of Chinain 2009 and amended it in 2018 as the document to regulate the Chinese spirits market. In 2015, MOFCOM also issued two standards, Management standard for alcohol commodities retailing and Management standard for alcohol commodities wholesale, to instruct alcohol business entities to undertake the purchasing, selling, distributing and storage of alcoholic drinks in China. At the same time, regional administrative bodies, such as provincial governments, also issued local spirits regulations as complementary documents to China’s alcoholic beverage market.
As for exporting alcohol to China, there are spirits regulations which exporters must become familiar with. The State Economic & Trade Commission, which is known as MOFCOM, issued Administrative Rules for Imported Alcohol in Chinese Market for all alcoholic beverages in China that are imported from other countries and areas.
In 2017, MOFCOM also mentioned that it would set up a comprehensive institution to guide and monitor the production, distribution, and consumption of alcoholic drinks in China. This institution would include unified spirits regulations in China as the guideline for the Chinese alcoholic beverage market.
Chinese spirits market size
[Data source: taosj.com “Sold item of spirits on Taobao/Tmall”]
Seven kinds of spirits are on sale in China, respectively are Chinese Baijiu, Whisky, Brandy, Vodka, Rum, Gin, and Tequila. According to the data on Taobao and Tmall, which are the e-commerce platforms run by Alibaba Group, Chinese Baijiu sold most bottles in China compared to the other spirits. Considering the representations of Taobao and Tmall, it is clear that Chinese Baijiu still beverage of choice in the spirits market in China.
Another thing to be noticed is that Whiskey performs better than western alcoholic beverages in China: about 2 times more than Vodka, 3 times more than Brandy and Rum, and 10 times more than Gin and Tequila.
Consumption of alcoholic drink in China
Spirits brands sell their products mainly through Taobao/Tmall and JD as online channels. These brands set up their official stores on the platforms and attract consumers by multiple discount activities. Some of these brands also build up their own e-commerce platforms or utilize their websites as part of their online sales channels. Among these platforms, JD is the most prevailing online channel for spirits brands. Baijiu brands on JD are 630, which is about 3 times more than those on Taobao/Tmall. Brandy and Whiskey, the other two prevailing spirits in China, both have more brands in JD than Taobao/Tmall as well.
Offline sales channels are also crucial for promotion of to alcoholic drinks beverages in China. Spirits mostly are sold offline in bars, specialized alcohol stores, wholesales market, restaurants and supermarkets, and currently there are a lot of these spots. Taking Shanghai as an example, there are 670 specialized alcohol stores, 2581 bars, and 220 wholesale markets in total, exposing the spirits to more consumers. However, as bars are exotic and cocktail culture seldom includes Chinese Baijiu, bars are usually not the places to sell Chinese Baijiu with other western spirits.
Brands that are famous in the Chinese spirits market are Moutai for Baijiu, Martell for Brandy, Absolut for Vodka, Chivas for Whisky and Bacardi for Rum.
According to Baidu index, around Chinese new year in 2019 is the time when spirits were mostly searched by Chinese consumers. Chinese Baijiu had not as many increments in searching as other spirits; one explanation could be Chinese consumers are not as familiar with foreign liquors which warrant more research before buying, which reflects the desire of buying western spirits grows stronger.
Search results of specialized tobacco and alcohol stores and bars, which are the main spots that Chinese consumers buy alcohol beverage in China, in Baidu map and Dianping show that a good deal of these spots exist in Shanghai: there are about 744 specialized tobacco and alcohol stores and 2519 bars (including night clubs) where provide spirits sales in Shanghai, which are the same places as other cities in China. These alcohol stores and bars consist of Chinese spirits market and boost the sales of alcoholic drinks in China. One point is Chinese Baijiu is mostly sold in specialized stores while western spirits are mostly sold in bars and night clubs as bar culture is more compatible with western spirits, and cocktails are made by western spirits instead of Chinese Baijiu
source: DAXUE cousulting
