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Nielsen China Forum Will China’s Expanding Alcohol Beverage Sector Drown Traditional Baijiu
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Nielsen China Forum Will China’s Expanding Alcohol Beverage Sector Drown Traditional Baijiu

While China’s total alcohol sales volume is extremely high, its per capita level remains far behind that of the US and neighboring places like Japan and Taiwan.

Baijiu has been a favorite alcoholic beverage in China for centuries. The white liquor, which is similar to Japanese sake or shochu, comes in a range of varieties that differ by where the drink is produced. But as China’s economy continues to grow and its populace becomes more affluent, the alcoholic beverage sector is likely to expand and develop in kind. With greater exposure and access to imported beers, wines and spirits, will Chinese consumers forsake the country’s traditional drink? Or can the traditional makers of the potent and highly fragrant spirit retain—or even expand—their place in the market?

In China, Russia and France, spirits play a more prominent role in the marketplace than in the United States, England, and Germany, where beer and wine dominate. China’s high-grade alcohol market boasts the largest volume worldwide. But, while China’s total alcohol sales volume is extraordinary, its per capita level remains far behind that of the US and other neighboring places like Japan and Taiwan.

Prophetic Past

In the past 25 years, imported alcohol has had little impact on traditional Chinese baijiu consumption. As China’s economy expands, consumers across the country will be exposed to more international alcohol products. In Japan, where foreign alcohol permeated the market much sooner, imported alcoholic consumption is responsible for 80% of the total alcohol purchased. Cheaper sparkling wine, light beer and mixed drinks have eroded regular beer sales volume. But while these “new” products have become popular, the traditional Japanese alcoholic beverages have remained strong, with manufacturers evolving to suit changing consumer desires—an experience that should serve as an inspiration to the Chinese baijiu industry.

Looking at China, its demographic structure is currently close to that of Japan’s in the 1980s and the traditional Chinese baijiu market is flourishing. Considering the demographic structural trends, Chinese alcoholic beverage companies have ample time to implement strategies to prevent the same sort of sales decline seen in Japan.

By fully understanding the drinking habits of Chinese consumers, what they want and how they shop for alcoholic beverages, baijiu makers can evolve with the market. By gaining the upper hand now, they should be able to prevent an erosion of market share in the future as the populace ages. Whether it is the inexpensive and strong Erguotou or the bamboo-infused Zhuyeqing jiu, baijiu has had an important place in Chinese culture for hundreds of years. With the correct actions by manufacturers now, it is likely to maintain that position for many more centuries to come.