China presents a 'significant opportunity' for international spirits brands
China’s spirit market may be dominated by premium international spirit makers and local ‘baiju' distillers but there is a “significant opportunity” for mid-range brands to steal a slice of the market, according to new research by Global Data.
International premium spirits brands have found success amongst Chinese alcohol enthusiasts, driven by the country’s burgeoning middle class, and at the same time, the market is also highly-penetrated by local spirits like ‘baiju’.
However, there is still an opportunity for mid-range international brands to tap into this growing market, but brands will need “deep pockets” if they want to do so, according to the report.
- Pernod Ricard forms joint venture to make and distribute whisky in Myanmar
- Edrington unveils new £140mn Macallan Distillery
- Starbucks aims to double its China store count by 2022
With its growing luxury consumer base, China was the world’s largest alcoholic market by both volume and value in 2016, with around twice as many alcoholic drinks being sold by volume in China compared to its nearest rival, the US.
International spirits companies are already beginning to see the country’s potential.
Pernod Ricard reported that its revenue rose by 9..3% in the quarter to March 2018, driven by Chinese New Year and the growth of its Martell Cognac brand.
Last year, Champagne manufacturer Laurent-Perrier appointed Hong Kong Entrepreneur Wendy Su to its board, making her the first Asian women to be appointed to the board of any French luxury brand.
Siu’s appointment, marks the effort alcohol companies are making to capture the growing luxury market in Asia.
Amy Walker, Consumer Research Leader at GlobalData, said: “All this luxury international spirit growth speaks of the tail end of the anti-corruption drive, which brought down such sales earlier this decade. A focus on fast growth can exaggerate the reality – which is that the majority of the Chinese spirits market is still dominated by baijiu.
She added: “Retail sales of speciality spirits (including baijiu) in China are well into the hundreds of billions of US dollars. A significant market penetration opportunity would be for mid-range international brands to challenge the local spirit baijiu and this will not be an easy displacement.”