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Chinese Spirits - China - June 2016

“The Chinese spirits market developed slowly but is now resilient and shows signs of recovery. Price reduction is not a sustainable tactic for premium baijiu market players to deal with the pressure of anti-extravagance; companies and brands should concentrate on the uniqueness of baijiu to differentiate it from other spirits. To target the next generation of baijiu drinkers, companies and brands should not only opt for packaging innovation, but also diversification such as purchase channels and occasions, to facilitate the decision making of younger consumers. Something to strive for is the progress of customised and personalised baijiu.”

–    Lei Li, Research Analyst

This report looks at the following areas:

  • How to stimulate consumer interest in the declining premium baijiu market?
  • How to utilise customisation and personalisation for baijiu?
  • How to make baijiu to appeal to younger consumers?

The Chinese spirits market can broadly be referred to as baijiu (also known as shaojiu or white alcohol or liquor, is a Chinese alcoholic beverage made from grain, generally between 40% and 60% ABV (alcohol by volume)), as it is the largest and dominant sector within Chinese spirits.

  • There are six main types of fragrances (classified flavours): sauce fragrance (酱香型), thick fragrance (浓香型), light fragrance (清香型), rice fragrance (米香型), layered fragrance (兼香型) and feng fragrance (凤香型).
  • The first four are relatively mature and have been standardised by the industry and typically have hundreds of years of history while the latter two remain as emerging flavours given the fact that they were only listed as baijiu flavours since 1993.
  • The market size of this Report covers all Chinese baijiu in retail channels only.

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Table of contents

  1. Overview

    • What you need to know
      • Products/themes covered in this Report
      • Executive Summary

          • The market
            • Figure 1: Retail sales of Chinese spirits, by value, China, 2011-21
            • Figure 2: Retail sales of Chinese spirits, by volume, China, 2011-21
          • Key players
            • Figure 3: Market share, by value of key players in the baijiu market in China, 2015
            • Figure 4: Market share, by volume of key players in the baijiu market in China, 2015
          • The consumer
            • Great majority of baijiu consumers are married
              • Figure 5: Consumer classification, by marital status, February 2016
            • High tier city residents favour comprehensive shopping websites
              • Figure 6: Purchase channels, online channels, by city tiers, February 2016
            • Socialising with family is the most often baijiu occasion
              • Figure 7: Purchase occasions, February 2016
            • Men prefer fragrance variety while women favour premium packaging
              • Figure 8: Purchase triggers, by gender and age, February 2016
            • What we think
            • Issues and Insights

              • How to stimulate consumer interest in the declining premium baijiu market?
                • The facts
                  • The implications
                    • How to utilise customisation and personalisation for baijiu?
                      • The facts
                        • How to make baijiu to appeal to younger consumers?
                          • The facts
                          • The Market – What You Need to Know

                            • A gradually recovering current market and a moderately growing future market
                              • The challenges and opportunities for diverse baijiu sectors
                              • Market Size and Forecast

                                  • Figure 9: Retail sales of Chinese spirits, by value, China, 2011-21
                                  • Figure 10: Retail sales of Chinese spirits, by volume, China, 2011-21
                                  • Figure 11: Value and volume retail sales for Chinese spirits, 2011-21
                              • Market Drivers

                                • A declining high-end market – premium baijiu
                                  • A rising mid-end market for the masses
                                    • A developing niche market – Xiaojiu
                                    • Key Players – What You Need to Know

                                      • Pricing and product strategies of the leading players
                                        • Product innovation through ingredient varieties
                                          • Marketing innovation through packaging and social media
                                          • Market Share

                                            • Yibin Wuliangye Group
                                              • Yanghe Distillery Co., Ltd.
                                                • Luzhou Laojiao Company Ltd.
                                                  • Sichuan Jiannanchun Group
                                                    • Figure 12: Share of value and volume in Chinese spirits retail market, by company, 2014 and 2015
                                                • Who’s Innovating?

                                                  • Growing varieties with both traditional and new ingredients
                                                    • Figure 13: The ingredient trends of Chinese spirits in China, 2015-16
                                                    • Figure 14: Dong Fang Jiao Zi Jing Niang Grade Rich and Aromatic Chinese Spirit, China, March 2016; Luzhou 8N Nong Xiang Xing Bai Jiu (8N Aromatic Chinese Spirit), China, April 2016
                                                    • Figure 15: Jiu Xiang Fang Tao Zao Tao Ping Shao Jiu (Tu Zao Chinese Spirit in Pottery), China, December 2015
                                                  • Packaging innovation to attract younger consumers
                                                    • Figure 16: Jovo Jiang Xiao Bai S.300 Dan Chun Gao Liang Jiu (Straight Sorghum Baijiu), China, February 2016
                                                  • Marketing innovation via social media
                                                    • Figure 17: The new product develop claims of Chinese spirits in China, 2015-16
                                                    • Figure 18: Ying Jia Jin Xing Gong Jiu (Jin Xing Gong Chinese Spirit), China, April 2016
                                                    • Figure 19: Heng Shui Heng Shui Lao Bai Gan (Heng Shui Lao Bai Gan Chinese Spirit), China, November 2015
                                                • The Consumer – What You Need to Know

                                                  • Baijiu is highly valued in Chinese culinary culture
                                                    • Supermarkets play a dominant role as a purchase channel - foodservice venues in growth
                                                      • Fragrance variety triggers middle-aged men to purchase while premium packaging entices adult women
                                                        • Meet the Mintropolitans
                                                        • Perceptions of Alcoholic Drinks

                                                          • Baijiu has unique competitive advantages and disadvantages
                                                            • Food paring of baijiu as a strategy
                                                              • Figure 20: Correspondence map – Perceptions on alcoholic drinks, February 2016
                                                          • Consumer Classifications

                                                            • Older males and females are the ultimate baijiu drinkers
                                                              • Baijiu consumers are somewhat family-oriented
                                                                  • Figure 21: Baijiu drinkers in the last 12 months, by gender and age, February 2016
                                                                  • Figure 22: Consumer classification, by marital status, February 2016
                                                              • Purchase Channels

                                                                • Supermarkets have the highest penetration – increases seen in on-trade
                                                                  • High tier city residents favour online purchase and comprehensive shopping websites
                                                                    • Figure 23: Purchase channels, February 2016 vs March 2015
                                                                    • Figure 24: Purchase channels, online channels, by city tiers, February 2016
                                                                • Purchase Occasions

                                                                  • Social occasions stimulate the most baijiu purchases
                                                                    • Festival and special occasions are favoured by adult females
                                                                      • Figure 25: Purchase occasions, February 2016
                                                                      • Figure 26: Purchase occasions, by purchase channels, February 2016
                                                                      • Figure 27: Purchase occasions, by gender and age, February 2016
                                                                      • Figure 28: Ying Jia Xiao Ying Jia (Mini Ying Jia Baijiu), China, June 2015
                                                                  • Purchase Triggers

                                                                    • Majority prefer well-known brands with income as a key differentiator
                                                                      • Middle-aged men value fragrance variety while adult women value premium packaging
                                                                        • Figure 29: Purchase triggers, February 2016
                                                                        • Figure 30: Purchase triggers, by monthly personal income, February 2016
                                                                        • Figure 31: Purchase triggers, by gender and age, February 2016
                                                                        • Figure 32: Yibin Wuliangye Fu Gui Ji Xiang Zhen Pin Ji Bai Jiu (Fu Gui Ji Xiang Premium Chinese Spirit), China, January 2016
                                                                    • Buying and Drinking Habits

                                                                      • Flavour and ingredient are main indicators for baijiu consumption
                                                                        • High earners are most likely to buy customised baijiu
                                                                          • Figure 33: Buying and drinking habits in the last 12 months, February 2016
                                                                          • Figure 34: Buying and drinking habits, CHAID – Tree output, February 2016
                                                                      • Mintropolitans

                                                                        • Demographics and characteristics
                                                                          • Lifestyles
                                                                              • Figure 35: Demographic profile of Mintropolitans versus non-Mintropolitans, by gender, age, and marital status, February 2016
                                                                              • Figure 36: Demographic profile of Mintropolitans versus non-Mintropolitans, by monthly personal income, monthly household income, and city tier, February 2016
                                                                          • Appendix – Methodology and Definitions

                                                                            • Methodology
                                                                              • Fan chart forecast
                                                                                • Mintropolitans – Definition
                                                                                  • Abbreviations

                                                                                  Companies Covered

                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                  Chinese Spirits - China - June 2016

                                                                                  £3,273.18 (Excl.Tax)