Agriculture & Food

While baijiu still dominates alcohol consumption in China, whisky is capturing young people's demand for spirits consumption.

Although the domestic imported wine market is sluggish as a whole under the epidemic, the import data shows that the domestic whisky import value still maintains a growth of nearly 20%. At the 2nd China International Consumer Goods Expo to be held on July 26, 2022, well-known international wine brands including Pernod Ricard, Eddington, Bacardi and other well-known international wine brands will take whisky brands as one of the focuses of the display.

Whiskey remains hot during the pandemic

2021 is known as the first year of whisky, and domestic whisky import data also ushered in an explosion. From January to December 2021, the Chinese market imported a total of 135 million liters of spirits, a year-on-year increase of 30.9%, and the import value of spirits reached 2.5 billion US dollars , an increase of 66.9% year-on-year, of which the import value of whisky was 460 million US dollars, an increase of 91.7% year-on-year, and the import volume also increased by 43.8%.

However, the new round of epidemic that started in early 2022 has brought a series of difficulties to the growth of the domestic spirits market. In particular, some eastern coastal cities have been affected by the epidemic, and nightclubs and bars cannot operate normally, and the domestic imported liquor data has also declined.

According to the "Imported Liquor Market Situation in January-May 2022" issued by the China Chamber of Commerce for Foodstuffs, Native Produce and Animal Husbandry, and Liquor Importers and Exporters, the import value of spirits was US$661 million, a year-on-year decrease of 15%, and the import volume was 42.73 million liters, a decrease of 17.3%. %. In contrast, the whisky category still maintained growth, with the import volume and value of whisky from January to May increasing by 9.6% and 19.6% year-on-year.

The growth momentum of whisky can also be seen from the performance of international wine giants. Recently, Pernod Ricard announced the report for the first three quarters of fiscal 2022 as of March 2022, and achieved sales of 8.41 billion euros in the first three fiscal quarters (approx. 59.3 billion yuan), of which sales in the Chinese market increased by 12%. Although the epidemic has weakened the Chinese New Year market, whisky brands such as Glenlivet and Royal Salute have grown strongly.

Guo Binchen, managing director of Pernod Ricard China, said that the epidemic has indeed brought some challenges to Pernod Ricard’s business in China, including logistics and ready-to-drink places affected by the epidemic, but Pernod Ricard’s business will be affected by the epidemic from January to March 2022. Sales in China are still up 8%, and management is confident that the growth momentum will continue. At present, imported spirits maintain a good momentum and potential in China, and product demand is also diversifying. This is due to the steady development of China's economy, the continuous expansion of middle-income consumers, and the continuous opening of the overall environment. The next step is Pernod Jia will also introduce more whisky product portfolio in the Chinese market.

Some imported wine practitioners said that the import data does not directly reflect the changes in the market, because some whisky may become channel inventory after import, but the whisky import data increased against the trend under the epidemic, which also reflects the channel and the market's interest in this category. confidence in the future.

It is understood that the orders of some popular whisky distilleries have been unable to keep up with the demand of consumption in the Chinese market, and there are still queues to place orders for bottling. The orders of individual Japanese whisky distilleries have been placed in three years.

Penetrate the liquor consumption market

China is the world's largest spirits market, but liquor has always dominated the consumption of spirits. According to the report of IWSR, an international wine and spirits research institute, the proportion of liquor in China's spirits consumption in 2021 will even exceed 99%. %.

However, with the continuous growth of whisky in the domestic market, it has gradually begun to penetrate the domestic spirits consumption market. The author’s market visit found that whisky consumption is gradually moving out of the night market and beginning to appear in scenes such as families and drinking parties, and in some business gatherings, a separate whisky bureau has also begun to appear.

Cai Xuefei, general manager of Zhiqu Consulting, said that the consumer group of whisky used to be relatively small in China, but judging from the current import data, the market increment is very considerable, especially with the rise of young consumer groups, their imitation of the Western lifestyle has led to The diversification of alcohol consumption, while the whisky itself has stronger pop culture attributes, easier drinking methods, and more thorough product licensis, which has also accelerated its growth in the younger generation of consumer groups.

According to the "2021 China Whisky Annual White Paper" released by Baibo, a comprehensive whisky community platform, nearly half of the whisky consumers are Gen Z users, accounting for 47% of the total users.

In order to speed up the capture of the Chinese market, two major international wine giants, Pernod Ricard and Diageo, have successively built their first whisky factories in China to speed up the popularization of whisky culture.

Guo Binchen said that at present, Pernod Ricard has shifted from a trading company to a comprehensive company to speed up its localization in China. On the same day, he also revealed the progress of Pernod Ricard’s first whisky factory built in China in November 2021. The distillery will be officially put into operation in the summer of 2021. It is expected that the visitor center will be officially opened in 2023. Attract 2 million tourists in ten years.

In addition to the international wine giants, more and more domestic enterprises are joining in. According to incomplete statistics, there are currently whisky factories under construction or have been put into operation in Shandong, Yunnan, Sichuan, Fujian and other regions, and many of them are Yiyuan Liquor (08146.HK), Bairun (002568.SZ) and other listed wine companies. In addition, domestic beer giant Tsingtao Brewery (600600.SH) also said in response to investors on June 23 this year that it will launch whisky products in the future.

According to the company's data, there are 476 whisky-related companies in my country. From 2017 to 2021, my country will add 48, 66, 84, 84 and 90 whisky-related companies respectively. Since 2022, my country has added 52 whisky-related companies.

Yang Zhengjian, Dean of WBO Wine Business School, said that the domestic whisky consumption market is currently expanding rapidly, gradually expanding from the first-tier market to the second-tier and third-tier markets, and domestic whisky production enterprises have also begun to emerge. There is a more pronounced growth curve.

It is worth noting that spirits consumption is a squeeze consumption, and in the competition for young consumers, whisky seems to have a slight upper hand. The increase in the popularity of whisky is also a new challenge for liquor companies that have not yet achieved the goal of rejuvenation.

The 2022 Taobao Tmall wine industry trend white paper shows that from 2019 to 2021, the compound growth rate of Taobao whisky sales scale will reach 65%, far higher than 35% of the total category of foreign wine; and in the consumption scene, in the scene of friends gathering, consumers The preference for foreign wine is higher than that of white wine; in business banquets and gift-giving scenarios, foreign wine is also the second choice after white wine; and in new scenarios such as camping that are popular this year, foreign wine occupies the mainstream choice.

Guo Binchen said that Pernod Ricard has also noticed that the younger generation and female consumers have become the main groups of wine and spirits consumption. many young consumers.

In Cai Xuefei's view, in the long run, domestic spirits consumption will still be dominated by baijiu, but when the Chinese wine table culture begins to loosen and the younger generation of consumers begin to gain the freedom to drink, the trend of diversification of domestic alcohol consumption is changing. Obviously, "foreign wine" such as whisky will also usher in more market opportunities.