Insights

Consumption Boosts Liquor Market in China
Report

Consumption Boosts Liquor Market in China

The world’s leading measurement company, Nielsen, found that as the fast-moving consumer goods market grows steadily in China, consumption upgrade has become the major driving force for China’s liquor market.

Nielsen released the latest 2016-2017 Report on China Liquor Market during the recent Chengdu Spring Candy & Wine Trade Fair, giving a thorough analysis and comprehensive insights on the liquor market in China.

“The Chinese economy has entered into a new normal period, and economic development is gradually shifting from investment-driven to consumption-driven. As consumption becomes the main driver of the economy, competition among FMCG brands is also intensifying, this is also the case within the liquor market,” said Minnie Yu, Director, Nielsen China.

“We are seeing that product innovation, precision marketing and channel expansion as the top three growth drivers in emerging liquor markets,” added Yu.

Nelson data show that compared with the double-digit negative growth three years ago, the current liquor market is in the pick-up stage, in 2016 liquor sales in stores and supermarkets channel has reached  4% of sales growth. From the perspective of alcohol consumers , 51% of the people who drink alcohol in the past year have been drinking liquor. Among them, consumers aged between 26-35 spent most on liquor.

Product Innovation Drives Liquor Consumption

As the FMCG market in China becomes more mature, consumption upgrade is a key driving force for market growth. A recent Nielsen report shows that one-third of Chinese consumers would like to try new products, and 65% of market growth comes from new product purchase.

Nielsen research shows that packaging is a key element for attracting consumers to purchase a new product. Features of successful liquor packing vary greatly depending on the type of product, however strong yet simple color schemes and unique designs targeted at specific consumer segments are effective in attracting attention.

Precisely Targeting Consumers is Essential to Driving Profits

According to Nielsen, digital advertising is an increasingly effective avenue for reaching Chinese liquor consumers, although TV also remains an important channel as well. Consumers working in senior corporate or government positions are likely to see more ads on the internet. 49% of middle class consumers and 55% of people of senior positions see liquor ads on the internet.

However, the type of website also has a clear impact; liquor ads on online purchasing platforms and video sites were more likely to reach middle class consumers when compared with other types of websites. This shows the importance of precisely targeting ads at a specific consumer group and through a specific media channel.

Geography and Platform Optimization is Key to Business Success

The selection of cities and platforms can be key to a liquor brand’s success. Among more than 2,000 cities covered in the Nielsen survey, in cities of the highest growth potentials, brands should consider the local capacity of the market, the number of retail channels, and composition of the population.

“As China continues to develop, consumers are increasingly demanding about quality and are looking to purchase more premium products,” said Minnie Yu. “As for the alcohol market, attention should be paid to new product innovation as this is how consumers will interact directly with your brand. Additionally, precision marketing is the clear option for increasing brand awareness and engaging with potential consumers online. When it comes to on-the-ground execution, determining key geographies and sales platforms are essential for alcohol brands looking to optimize distribution and, ultimately, driving sales growth. “