Market analysis: Alcoholic beverages in mid-China

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The consumption of alcohol drinks in mid-China grew steadily and rapidly during 2011. Due to China’s new drunk-driving regulations, there have been adjustments in the local alcohol market. Due to growing health concerns in China, more and more consumers are choosing drinks with a low alcohol content. Generally speaking, the local market in mid-China behaves in accordance with national occurrences and trends, as shown by the recent drunk driving regulatory changes. Although the sales quantity of alcoholic drinks decreased after these changes, there was also a rise in the price of drinks and the total sales value of alcoholic drinks in mid-China.

In mid-China, the drinking habits of the new young generation has played a large role in influencing the market. This generation seeks fashion and personality in drinking. This gives the impetus for a bar culture to develop in big cities like Wuhan (武汉 ) and Changsha (长沙). Since young consumers in mid-China prefer imported beer and spirits compared to the older generation, the total consumption of imported wines and spirits increased in 2011. Another reason for the increased popularity of imported drinks is the advertisements that claim that they have added health benefits.

Imported grape wine, from places such as France, Australia, or California, is saw the biggest growth in mid-China. This growth can be attributed to growing disposable incomes and a bigger emphasis on health in the region. The rising average income in the region allows consumers to splurge on alcohol. Also, people are now becoming more concerned about their physical health and grape wines have a reputation for being beneficial for health. Moreover, grape wine producers have noticed the market potential in mid-China, and are investing more into product development and marketing.

 

Prospects

With the influx of foreign investment, China’s alcohol industry has become highly competitive. Also, foreign wine brand culture is penetrating the domestic market of China. Foreign investors are also buying stakes in domestic beer companies, particularly smaller second tier brands. With the economy continuing to develop, people will put a greater emphasis on the quality of the wines they buy, so it is predicted that foreign wines will gain a larger market share in the near future.

As people become more accustomed to different types of alcohol, the wine market will become more and more subdivided. Since consumers in mid-China prefer light spirits, Fenjiu(汾酒), with its light flavor and special fragrance, will gain a larger market share in mid-China. Also, second tier brands such as Langjiu(郎酒) are also likely to gain popularity due to their low price and high quality.

Daxue Consulting Market Analysis

Sources:

Credit Photo:Wanzui

 

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