China’s spirits market: despite the great demand of foreign spirits, baijiu remains the most popular alcoholic drink in the country

China is a country with a millenarian tradition in brewing and consuming alcohol, which can be traced back to 9,000 years ago. Already in 7,500-7,000 BCE, the first alcoholic drink in China was brewed by mixing rice, grapes, honey, and hawthorn fruits. During all the country’s history, alcohol has touched all the aspects of the Chinese culture, life, art, and philosophy. In 2022, China’s spirits market generated around 319.8 billion USD. Such turnover represents a big opportunity not only for domestic producers, who want to get their slice of the pie in the Chinese spirits market, but also for the foreign investors, who have recognized the huge potential of such market segment.

Baijiu holds the title of Best-Selling Spirit

In China, the world of alcoholic drinks is quite diverse, however, in 2021 the most consumed beverages were spirits and beer, holding respectively 47.8% and  39.1% of the market revenue.

China's spirits market
Source: statista.com, designed by Daxue Consulting, Alcoholic drinks revenue distribution by segments in China

Wine follows third, accounting for 8.2% of the total revenue. As far as spirits are concerned, Baijiu outperforms all the other competitors. Meaning “white spirit”, “Baijiu (白酒)” is produced through the distillation of Sorghum, but can also be produced from rice, wheat, millet, and corn. It is the most common alcoholic beverage in China, in 2021 its sales reached 603 billion RMB (86.5 billion USD) worth of sales. According to the National Bureau of Statistics, Baijiu’s cumulative value of production was 2.02 billion liters in march 2022, with a growth of 60% compared to February. The importance of Baijiu in China was proven last year, when 24 bottles of the premium spirit brand Kweichow Moutai were sold for 1.4 million USD at Sotheby’s, the world’s largest marketplace for art and luxury.

Its market is extremely flourishing too. In 2022, six out of the ten most valuable spirit brands are Chinese, and they all produce baijiu, with of course Moutai on the lead, valued at 43 billion USD. Although baijiu dominates the production and the revenue in China, other spirits have an important role in the Chinese spirits market too, the main ones are Whiskey, Brandy, and Vodka.

Men Drink More Than Women

Although Chinese people have a millenarian tradition in brewing alcoholic beverages, drinking is not one of their favorite activities. In 2022, the average annual alcohol consumption in China was 6 liters per person, which is a little amount compared to other countries like France, where the consumption reaches 12 liters per year. However, alcohol consumption is not equally distributed between the two genders. Indeed, males consume far more alcohol than women, almost 10 liters compared to roughly 3.

men vs women alcohol consumption china
Source: iresearch.com, designed by Daxue Consulting, men tend to purchase more drinks via e-commerce than women

When it comes to age distribution, young people, especially Gen Z, are taking over the spirits market. 57% of people who often go to pubs are aged between 18 and 24 years old. The new generation of young adults represent the main driving force of the alcohol market in China. In order to simplify the process of purchase, several alcohol-delivery platforms emerged. Founded in 1998, “1919” was one of them. In 2018, Alibaba invested 288 million USD to expand 1919.cn presence in China, predicting to open more than 2,000 stores the following year. Its main strengths are promotions and a 19-minutes delivery, but the service only works for certain cities.

The new young people’s trends in alcohol consumption

Young people are the backbone of China’s spirits market. However, despite the rich tradition and the etiquette in drinking alcohol, the new generations would rather stop the abuse of these beverages, especially during working hours. The episode which began the “boozy infamy” among young people happened in 2021, when a Chinese girl working for the giant Alibaba reported her boss for sexual assault. The woman claimed that she was asked to drink during a business dinner and then she was molested. According to the etiquette, young people are expected to give toast to their superiors and clients to show respect and hospitality. The tradition is claimed to be a patriarchal heritage from ancient China, something that the new generations are trying to eliminate. Apart from reducing alcohol at the workplace, drinks consumption between young people is far from over. “Night economy” is a major driver of alcohol consumption. It refers to all activities taking place between 6 p.m. and 6 a.m. It is expected to reach 5.7 trillion USD (40 trillion RMB) in 2022. Night restaurants cover up to 40% of all the night economy, while bars account for 19%. Going into bars represents a key factor for social relationships, especially among Gen Z.

Domestic Products vs Importations

Although China’s domestic spirits market is an ever-flourishing economy, Chinese people are also importing alcoholic drinks that are not locally produced. Such demand of foreign spirits is mainly satisfied by France, which in the first half of 2022 was the biggest alcoholic beverage exporter to China, with a total value of 847 million USD.

China's spirits market
Source: China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal, designed by Daxue Consulting, Main exporters of alcohol to China in the first half of 2022

Foreign liquors are seen as a status symbol in China, for this reason, they are usually used during dinners and social events. Brandy was the largest imported spirit in 2021, covering 68% of all spirits’ import value and having an import volume of 48.71 million liters. France remains the dominant country in brandy imports, topping the import market with a 98.8% (1.68 billion USD) market share in 2021.when it comes to Whiskey, England is by far the largest exporter, covering 80.1% (371.74 million USD) of the 2021 Chinese whiskey import market. The silver medal is taken by Japan, whose whiskey only detained a 10.91% (50.61 million USD) market share in the same year.

However, the Chinese market is not just interested in whiskey and brandy. Vodka also has a big role in importations: China imports vodka from 40 countries, but Sweden is by far the largest exporter. In 2020, the most consumed vodka in China was the Swedish label “Absolut Vodka”, holding the 52.7% share of consumption volume by brand in China. Although these numbers may seem high, they could never outperform baijiu’s huge distribution and popularity. In 2020, for example, the sales value of liquors in China was absolutely dominated by Baijiu, detaining 94% of the sales, while whiskey and brandy combined barely reached 5%.

China’s spirits market, a flourishing business

  • Chinese drinking culture is millenarian and influences nowadays society and social relationships.
  • Baijiu market is a huge chunk of Chinese alcohol economy, and the spirit still represents the most famous liquor in China and one of the most famous in the world.
  • Despite their desire to renew the outdated drinking culture, more young people, especially Gen Z, go to pubs and purchase alcoholic drinks to enhance social relations. Therefore, the market is thriving.
  • The alcohol market is being digitalized thanks to apps such as 1919.cn, which can provide deliveries even in lower-tier cities.
  • As we have seen with brandy and whiskey, China’s spirits market is a gold mine for foreign brands.

Learn more about China’s wine and spirits market