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On-trade Alcoholic Drinks - China - July 2016

“Now is a transformative phrase for the alcoholic drinks market. Growth rate will be low but stable over the next five years to 2021. With the rise of an experiential consumption culture and stronger influence from Western lifestyle and purchasing value, Chinese consumers are eager to seek out innovations in products and on-trade experiences.”
– Alina Ma, Senior Research Analyst

This report discusses the following key topics:

  • Shifting from products to experiences
  • Fruit-flavoured alcoholic drinks to fit a healthy lifestyle
  • Looking to max effects 
  • Marketing around occasions and emotions

This Report examines the market of alcoholic drinks through on-trade outlets in China, including beer (eg lager, ale, cider), wine (eg red wine, white wine, rosé wine), Chinese spirits (baijiu), Western spirits (eg whisky, vodka) and Champagne/other sparkling wine (eg Prosecco, Cava).

On-trade outlets include but are not limited to: Chinese full-service restaurants (eg Sichuan cuisine, Guangdong cuisine, Mongolian Hotpot), other Asian full-service restaurants (eg Japanese, Korean, Indian), Western full-service restaurants (eg Italian cuisine, French cuisine, American cuisine), Karaoke clubs/KTVs, nightclubs, bars and pubs (eg hotel bars, wine bars, themed bars, brew pubs) and coffee shops.

Out-of-home drinkers are defined as consumers living in urban areas (tier one to tier three cities) who have drunk alcoholic drinks out of home in the aforementioned on-trade channels in the six months to March 2016.

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Figure 1: Best- and worst-case forecast for on-trade alcoholic drinks in China, 2011-21
          • Market drivers and barriers
            • 20-29-year-olds a dynamic market
              • Blurring line between alcoholic and non-alcoholic drinks
                • Too reliant on “safe” choices
                  • Impact of online retailing
                    • Companies and brands
                      • New opportunities arising from coffeehouses and fast food chains
                        • Packaging design becoming more artistic and portable
                          • Taste and ingredients seen as quality detector
                            • Social media plus fans gathering
                              • The consumer
                                • New potential rising from coffeehouses, KTV and Western restaurants
                                  • Figure 2: Trends in consumer spending on alcoholic drinks in different on-trade channels, March 2016
                                • 20-39-year-old men drink more, around once a week
                                  • Figure 3: Purchasing frequency at on-trade channels, March 2016
                                • Alcoholic drinks categories demanding more transformational changes
                                  • Figure 4: Types of alcoholic drinks purchased at on-trade channels, March 2016
                                • Cider and Champagne show strong linkage with specific occasions
                                  • Figure 5: Drinking occasions at on-trade channels, March 2016
                                • Two big product themes emerging: Health and food pairing
                                  • Figure 6: Importance of product features in decision-making, March 2016
                                • Channel factors only having limited importance
                                  • Figure 7: Factors influencing choice of on-trade channels, March 2016
                                • What we think
                                • Issues and Insights

                                  • Shifting from products to experiences
                                    • The facts
                                      • The implications
                                        • Fruit-flavoured alcoholic drinks to fit a healthy lifestyle
                                          • The facts
                                            • The implications
                                                • Figure 8: Product examples of fruity alcoholic drinks
                                              • Looking to max effects
                                                • The facts
                                                  • The implications
                                                    • Marketing around occasions and emotions
                                                      • The facts
                                                        • The implications
                                                        • The Market – What You Need to Know

                                                          • Sales experiencing negative growth but will recover
                                                            • Relying on “safe” product options is a key barrier
                                                              • A big increase in beer imports
                                                              • Market Size and Forecast

                                                                • Introduction
                                                                    • Figure 9: Volume sales of on-trade alcoholic drinks, China, 2010-16
                                                                    • Figure 10: Segment share of on-trade alcoholic drinks in China, by volume, 2010-16
                                                                    • Figure 11: Best- and worst-case forecast for on-trade alcoholic drinks in China, 2011- 21
                                                                • Market Drivers and Barriers

                                                                  • A dynamic market for 20-29-year-olds
                                                                    • Blurring the line between alcoholic and non-alcoholic drinks
                                                                      • Too reliant on “safe” choices
                                                                        • Impact of online retailing
                                                                        • Market Segmentation

                                                                          • Beer going through significant changes
                                                                            • Figure 12: Volume of imported beer to China, 2011-15
                                                                            • Figure 13: On-trade beer sales in China, 2010-16
                                                                          • Wine gaining popularity thanks to its image
                                                                            • Figure 14: On-trade wine sales in China, 2010-16
                                                                          • Chinese spirits becoming more approachable and adapting to younger generation
                                                                            • Authenticity scrutiny drives Western spirits sold in premium on-trade channels
                                                                              • Figure 15: On-trade spirits sales in China, 2010-16
                                                                          • Key Players – What You Need to Know

                                                                            • New opportunities arising from coffeehouses and fast food chains
                                                                              • Artistic packaging design is on the rise
                                                                                • Power of taste and ingredients
                                                                                • Competitive Strategies

                                                                                  • A new opportunity rising from coffee plus alcohol
                                                                                    • Figure 16: Product examples of Starbucks and Costa
                                                                                  • Expansion to traditionally non-alcoholic venues
                                                                                    • Enhancing experience and connectivity with consumers
                                                                                    • Who’s Innovating?

                                                                                      • Artistic packaging design is on the rise
                                                                                        • Figure 17: Product examples of limited editions
                                                                                        • Figure 18: Product packaging example of Hello Kitty Edition
                                                                                        • Figure 19: Product packaging examples of Jiang Xiao Bai
                                                                                      • Portable is the new innovation?
                                                                                        • Figure 20: Product examples of on-the-go alcoholic drinks
                                                                                      • Power of taste and ingredients
                                                                                        • Figure 21: Leaflet of Evil Twin Brewing’s imperial stout
                                                                                        • Figure 22: Product example of Panda Brew
                                                                                      • Deep dive into specific drinking occasions
                                                                                        • Figure 23: Product example of Jiang Xiao Bai
                                                                                      • The next step for social media – Fans community
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Product requiring changes in KTV and coffee shops
                                                                                          • Alcoholic drinks categories demanding more transformational changes
                                                                                            • Health and food pairing being paid more attention
                                                                                              • Channel factors only playing a limited role
                                                                                              • Spending Trends by Channel

                                                                                                • Chinese full-service restaurants and KTVs remain the key channels
                                                                                                  • Figure 24: Trends in consumer spending on alcoholic drinks in different on-trade channels, March 2016
                                                                                                • Coffee shops have potential to be a hot spot for alcoholic beverages
                                                                                                  • KTV is 20-29-year-olds’ favourite drinking out place
                                                                                                    • Figure 25: 20-29-year-olds who have spent more on alcoholic drinks, by channel, March 2016
                                                                                                    • Figure 26: Product example of Wrigley's 5 Cobalt
                                                                                                  • Females order more alcohol in Western and Asian-style full-service restaurants
                                                                                                    • Figure 27: Spending more on alcoholic drinks at on-trade channels, by age and gender, March 2016
                                                                                                • Purchasing Frequency

                                                                                                  • 20-39-year-old men are key consumers
                                                                                                    • Figure 28: Purchasing frequency at on-trade channels, March 2016
                                                                                                  • Occasions preferences different between light and heavy drinkers
                                                                                                    • Figure 29: Comparison of purchasing frequency of light drinkers (once every 2-3 months or less) at on-trade channels against average, by occasion, March 2016
                                                                                                  • Higher tier cities drink out more frequently
                                                                                                    • Figure 30: Comparison of drinking out frequency (percentage of once a week or more) against average, by city, March 2016
                                                                                                • Preferences towards Various Types of Alcoholic Drinks

                                                                                                  • Beer failing to target middle-income drinkers
                                                                                                    • Figure 31: Types of alcoholic drinks purchased at on-trade channels, March 2016
                                                                                                    • Figure 32: Beer penetration at on-trade channels, by monthly personal income, March 2016
                                                                                                  • Wine getting more appreciated by local businessmen
                                                                                                    • Figure 33: Wine penetration at on-trade channels, by monthly personal income, March 2016
                                                                                                    • Figure 34: Wine penetration at on-trade channels, by company type, March 2016
                                                                                                    • Figure 35: Wine penetration at on-trade channels, by city, March 2016
                                                                                                  • Chinese spirits lacking product innovation
                                                                                                    • Figure 36: Chinese spirits penetration at on-trade channels, by city, March 2016
                                                                                                    • Figure 37: Product examples of ‘new’ sake
                                                                                                  • RTD alcoholic drinks facing downturn
                                                                                                    • Figure 38: Ready-to-drink alcoholic drinks penetration at on-trade channels, by age and gender, March 2016
                                                                                                    • Figure 39: Ready-to-drink alcoholic drinks penetration at on-trade channels, 2015 and 2016
                                                                                                    • Figure 40: Product examples of ‘mature’ RTD alcoholic drinks
                                                                                                • Drinking Occasions

                                                                                                  • Alcoholic drinks mostly consumed in casual social occasions
                                                                                                    • Figure 41: Drinking occasions at on-trade channels, March 2016
                                                                                                    • Figure 42: Selected drinking occasions at on-trade channels, by age, March 2016
                                                                                                  • Beer losing ground among consumers
                                                                                                    • Figure 43: Comparison of beer purchased at on-trade channels against average, by occasion, March 2016
                                                                                                  • Cider getting more consumer attention across various occasions
                                                                                                    • Figure 44: Comparison of cider purchased at on-trade channels against average, by occasion, March 2016
                                                                                                  • Western spirits becoming more popular than Chinese spirits for business occasions
                                                                                                    • Figure 45: Comparison of on-trade alcoholic drinks purchased for business occasions against average, by alcoholic drink, March 2016
                                                                                                  • Champagne for festival occasions
                                                                                                    • Figure 46: Comparison of Champagne purchased at on-trade channels against average, by occasion, March 2016
                                                                                                • Product Features

                                                                                                  • Consumers’ emphasis on health indicates new ways of marketing alcoholic drinks
                                                                                                    • Figure 47: Importance of product features in decision-making, March 2016
                                                                                                    • Figure 48: Product examples of ‘natural’ alcoholic drinks, March 2016
                                                                                                    • Figure 49: Percentage of respondents who think “Good for health” is an important or very important product feature when deciding which alcoholic drinks to buy at on-trade channels, by city, March 2016
                                                                                                  • Food pairing suggestions becoming more important
                                                                                                    • Females desire greater flavour variety
                                                                                                      • Figure 50: Percentage of respondents who choose 'Innovative flavours (eg fruit-infused wine)' and 'Exotic flavours (eg sakura-flavoured beer from Japan)' as an important feature when deciding which alcoholic drinks to buy at on-trade channels, by gender, March 2016
                                                                                                      • Figure 51: Percentage of respondents who choose 'Designed for specific groups (eg beer with light flavour for women)' as an important feature when deciding which alcoholic drinks to buy at on-trade channels, by gender and age, March 2016
                                                                                                      • Figure 52: Product examples of ‘female’ targeted alcoholic drinks, March 2016
                                                                                                    • South of China like locally made
                                                                                                      • Figure 53: Percentage of respondents who choose ‘Locally produced products' as an important feature when deciding which alcoholic drinks to buy at on-trade channels, by city, March 2016
                                                                                                  • Channel Choice Factors

                                                                                                    • Insignificant channel preferences
                                                                                                      • Figure 54: Factors influencing choice of on-trade channels, March 2016
                                                                                                    • Niche brands need to do more
                                                                                                      • Figure 55: Menu display about story-telling marketing
                                                                                                    • 30-39-year-old males feel the strongest need to impress
                                                                                                      • Figure 56: Percentage of respondents who choose ‘Premium alcoholic drinks’ as an important factor when deciding on-trade channels, by gender and age, March 2016
                                                                                                  • Meet the Mintropolitans

                                                                                                      • Figure 57: Consumption frequency of on-trade alcoholic drinks, by consumer classification, March 2016
                                                                                                      • Figure 58: Percentage of consumers who spend more on on-trade alcoholic drinks at on-trade channels, by consumer classification, March 2016
                                                                                                      • Figure 59: Occasions of purchasing alcoholic drinks on-trade, by consumer classification, March 2016
                                                                                                      • Figure 60: On-trade consumption of different types of alcoholic drinks, by consumer classification, March 2016
                                                                                                      • Figure 61: Importance of product features in decision-making, by consumer classification, March 2016
                                                                                                      • Figure 62: Selected factors influencing choice of on-trade channels, by consumer classification, March 2016
                                                                                                  • Appendix – Market Size and Forecast

                                                                                                      • Figure 63: Best- and worst-case forecast for beer in China, 2011-21
                                                                                                      • Figure 64: Best- and worst-case forecast for wine in China, 2011-21
                                                                                                      • Figure 65: Best- and worst-case forecast for spirits in China, 2011-21
                                                                                                      • Figure 66: Volume forecast of on-trade alcoholic drinks, by segment, 2011-21
                                                                                                  • Appendix – Methodology and Abbreviations

                                                                                                    • Methodology
                                                                                                      • Fan chart forecast
                                                                                                        • Abbreviations

                                                                                                        Companies Covered

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

                                                                                                        On-trade Alcoholic Drinks - China - July 2016

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