Insights

Online Alcohol Sales are Clicking Upward in China as E-Commerce Grows
Article

Online Alcohol Sales are Clicking Upward in China as E-Commerce Grows

It may be a long time before the bulk of China’s population embraces the idea of buying alcohol online, but sales of beer, wine and spirits over the Internet in the country are steadily clicking upward. As consumers become more comfortable with broadening e-commerce, more and more are saving themselves the trip to the store by purchasing their liquor online—something that’s only been an option since 2007.

Most consumers in China, which boasts a very strong market for alcohol, still prefer to shop for alcoholic beverages at physical stores like specialty liquor counters in department stores, supermarkets and hypermarkets. The sales through such off-trade channels take up around 60 percent of the total sales value of alcoholic beverages in China today, with the remaining 40 percent sold via on-premises channels, according to Nielsen.

The convenience of shopping on the Internet, combined with the discounts that online retailers often tout, however, is resonating with a select and growing group of online liquor consumers, according to a recent Nielsen survey.

The findings come from a survey of more than 1,200 respondents from 31 provinces, municipalities and autonomous regions throughout China. The respondents claimed to have regularly consumed alcoholic beverages over the past three months.

Online Represents a Robust Opportunity

Online alcohol sales in China pale in comparison to the country’s industrial capacity of approximately 400 trillion yuan, but 77 percent of respondents in Nielsen’s recent survey indicated that they are willing to purchase more via online channels, highlighting a significant opportunity for retailers. Comparatively, 56 percent of respondents said they’d be willing to purchase more via traditional channels.

So which types of alcohol are consumers most interested in buying more of online? More than 90 percent of consumers who purchase imported spirits are willing to purchase more online, compared with 77 percent for both Baijiu, a popular distilled liquor, and wine, and 55 percent for beer.

Beer has the highest penetration rate at 71 percent, followed by wine and Baijiu, both at more than 55 percent, and imported spirits at 28 percent.

“The high concentration of younger alcohol consumers that shop online, along with the rapidly increasing number of e-commerce users in China, show that online channels will become more important for Chinese liquor consumers in the future, especially in key cities and the developed cities in the north and east,” said Catherine Xu, senior director of Nielsen Greater China.

The survey found that close to 80 percent of respondents surf online at least once every day and 86 percent purchase items online. So what’s attracting consumers to the Web? Respondents said e-commerce channels offer three main benefits over traditional shopping venues: big discounts (58%), home delivery (56%) and a rich diversity of products(52%).

Consumers’ favorite online channels vary among different categories

While general e-commerce websites and specialty online liquor stores are the most preferred online channels for consumers to shop for alcohol products today, Nielsen’s survey indicates that the trend will shift in the near term. Respondents say they may begin favoring websites operated by manufacturers for their wine and Baijiu purchases in the next couple of years, while specialty online stores will remain the most preferred avenue for purchasing imported spirits and beer.

“As more liquor consumers migrate online, it’s important for liquor manufacturers to leverage the online environment as a way to create brand awareness and capture the consumer’s attention,” said Xu. “It’s equally vital to strike the chord from an educational perspective, as China is well known for its profound liquor-drinking culture.”