Market Overview

Spirits Market Share in China Growth and Research Overview 2014

Spirits Market Share in China Growth and Research Overview 2014

Most up-to-date research on "Spirits - China - September 2014" to its huge collection of research reports.

The forty percentage point increase in the spirits market in 2010 seems to be a distant memory now. The golden ten years of the spirits market ended in such an abrupt way that few could ever have rightly predicted it happening. The shrinking high-end segment and the subsequently over-crowded mid-range have made life difficult for spirits brands in 2012/13, with the growth rate of spirits market in value terms shrinking to only 13%. Mintel’s 2014 forecast puts the growth rate at merely 6.4%, just a couple of percentage points above the inflation rate, making it the worst performance since the start of the golden ten years at the beginning of 2000.

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Baijiu is under pressure from both the regulatory perspective and the competition from its main rivalry, Western spirits. Although baijiu maintains 98% of the market share, its core user base, men in their thirties and forties and consumers from tier one cities, are showing signs of decline. In order to shield itself from the competition, baijiu brands will need to address consumers’ concerns over its health implications and strong taste by offering milder and lighter versions of baijiu. An original liquid concept could also be utilised to solidify baijiu’s presence in lower tier cities.

Western spirits are facing different types of challenges. Lack of knowledge makes adoption of Western spirits a slow and costly process. With the initial hype dying out, Western spirits brands are in the right place to nurture the market to achieve more sustainable growth in the future.

Table of Content



Executive Summary

The painful reshuffle leads to a sustainable growth in the future
Figure 1: Best- and worst-case forecast of China retail value sales of spirits, 2009-19
Gender barriers most pronounced in baijiu category
Figure 2: Reasons for not drinking baijiu, June 2014
Lack of knowledge stops consumers from drinking Western spirits
Figure 3: Reasons for not drinking Western spirits, June 2014
Spirits users’ willingness to trade up is high
Figure 4: General attitudes towards drinking spirits, June 2014
The eagerness to see product innovation is high in the baijiu category
Figure 5: Attitudes towards production innovation concepts for baijiu, June 2014
What we think

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Insights and Issues

Is the knowledge barrier of Western spirits breakable?
The facts
The implications
Is drinking at home showing potential in the spirits market?
The facts
The implications
Are milder, healthier baijiu products showing potential among the young?
The facts
The implications
How to make baijiu more suitable for women?
The facts
The implications

Trend Applications

Make it Mine
Guiding Choice
Prove it

Market Drivers

Key points
Rising disposable income encourages consumers to trade up…
Figure 6: Disposable income per capita household in urban China, 2005-13
… but the ongoing anti-extravagance campaign will drive spirits prices down
Rising food prices further squeeze baijiu brands’ profits…
Figure 7: Wholesale prices of key staples in China, 2009-14
… but the consumption tax reform is likely to ease the pressure

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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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