Despite its current relative lack of development, urbanization is growing at a fast pace in northwest China. Along with this change in infrastructure are changes in its citizen’s alcoholic drink consumption behavior. Take middle class consumers as an example. Their disposable income allowed them to afford only local low end spirits and beers. However, the economic boom in China is now allowing them to buy higher-end wines. Also, the penetration of modern culture in the region has increased the popularity of bars in northwest China, contributing to the growing sales volume of grape wines.
Despite this rapid change, Northwest China market has still yet to develop thoroughly. Imported wines are becoming more popular, but most consumers still have low incomes, and tend to purchase lower end wines. Lower end wines still are the most popular in the region as consumers tend to choose local brands and are still unfamiliar with imported products.
In northwest China, wines are very popular for special occasions. For example, for traditional Chinese consumers, banquets are a necessity when welcoming a business partner. In some big restaurants, three glasses are served for each person: one for wine, one for beer, and one for spirits.
Northwest China, just like other parts of China, experienced a rise in raw material prices, transportation and human resource costs. With the effect of market demand and supply conditions, these increased costs inevitably raised the price of liquor.
Also, tourism in northwest China is developing. The natural sight-seeing attractions in Xinjiang(新疆) and Gansu(甘肃) provinces are attracting more and more tourists. This increased tourism has contributed to an increase in the consumption of liquors, wines and spirits in the region.
Imported wines are not popular among most people in the region but is found within its high end restaurants. Despite this lack of popularity these wines are becoming more and more commonplace in big supermarkets.
In recent years in China, luxury French wines are becoming the symbol of social status, and also a means of investment. This industry is not yet developed in northwest China, but this may change in the next few years as popularity is expected to increase
Spirits may remain the standard choice for alcoholic beverages at banquets for the next few years, but Chinese consumers are increasingly aware of the negative effects that it might have on physical health, so the total sales volume may decline. Younger businessmen are welcoming western business routines such as playing golf together instead of having luxury banquets. These factors may diminish the popularity of spirits in the region.
With the increase in brand awareness of people in northwest China, the supermarket sales of wines have great potential to increase.
Daxue Consulting China
Credit Photo: Nipic