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On-trade Alcoholic Drinks - China - June 2015

“The market as a whole is showing signs of recovering, albeit in a volatile way. Levels of wine imports are recovering from the huge dip in 2013, baijiu brands are reporting rather positive figures in their first quarter reports in 2015, and beer, despite the disappointing 2014, is looking to a mild recovery.”
– David Zhang, Senior Drink Analyst

This report looks at the following areas:

  • How to target young female drinkers in the on-trade channels
  • How to cross-sell different types of alcoholic drinks in on-trade channels
  • How can occasion-based campaigns work in different on-trade channels?
  • How to appeal to consumers using flavour and taste as the key claim in on-trade channels
The government’s anti-extravagance campaign has certainly reshaped the competitive landscape of the on-trade alcoholic drinks market. While brands from all categories are doing some serious soul-searching in the hope of identifying the true demand of consumers, cross-category competition has become increasingly intensified.
 
Consumers are not making their purchase decision in a linear way focusing on one product category when deciding which alcoholic beverages they drink. They tend to undergo a complex process, where brands, product types and occasions are influencing their decision-making simultaneously.
 
Brands are competing with the whole alcoholic drinks market for a wide range of occasions and locations.

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Table of contents

  1. Introduction

      • Methodology
        • Limitation
          • Definitions
            • Abbreviations
            • Executive Summary

                • The market
                  • Figure 1: Fan chart of on-trade alcoholic drinks in China in volume, 2010-20
                • Market drivers
                  • Teetotalism – A growing trend among young urban consumers
                    • The fast-changing macro-economic environment
                      • The two tiered consumer structure
                        • The end of stocking adjustment
                          • Innovations in the market
                            • Innovative and less conspicuous packaging shows potential
                              • Figure 2: New launches in global alcoholic drink market, 2010-14
                            • Shareability is crucial in on-trade channels
                              • Flavour innovations – What’s next?
                                • Figure 3: Global new product launched with flavour as one of the key claims in Western spirits category, by flavour group, 2010-14
                              • What could baijiu learn from sake, its counterpart in Japan?
                                • The consumer
                                  • Drinking frequency and spending per visit are increasing
                                    • Figure 4: Change in alcoholic drink behaviour, March 2015
                                    • Figure 5: Alcoholic consumption change 2014-15
                                  • On-trade channels enjoy higher overall penetration
                                    • Figure 6: Penetration of alcoholic drinks in at-home and out-of-home occasions, March 2015
                                  • Wine and Western spirits are winning in the premium arena
                                    • Figure 7: Correspondence map for alcoholic drink market, March 2015
                                  • Beer dominate casual social occasions
                                    • Figure 8: Drinking occasions, by types of alcoholic beverages, March 2015
                                  • Chinese restaurants remain the key channel
                                    • Figure 9: Drinking locations of alcoholic beverages, March 2015
                                  • Keeping others happy stands out as the most important factor
                                    • Figure 10: Consumer decision-making process when drinking out-of-home, March 2015
                                  • Attitudes towards taste are polarised
                                    • Figure 11: General attitudes towards drinking alcoholic beverages out of home, March 2015
                                • Issues and Insights

                                    • How to target young female drinkers in the on-trade channels
                                      • The facts
                                        • The implications
                                          • How to cross-sell different types of alcoholic drinks in on-trade channels
                                            • The facts
                                              • The implications
                                                  • Figure 12: Switching behaviour from RTDs to Western spirits, March 2015
                                                • How can occasion-based campaigns work in different on-trade channels?
                                                  • The facts
                                                    • The implications
                                                      • Figure 13: Penetration of baijiu when socialising with family out of home, by location, March 2015
                                                      • Figure 14: Penetration of beer when dating/with my partner, by location, March 2015
                                                    • How to appeal to consumers using flavour and taste as the key claim in on-trade channels
                                                      • The facts
                                                        • The implications
                                                          • Figure 15: Agreement with selected statements on taste of alcoholic beverages, March 2015
                                                          • Figure 16: Agreement with selected statements on taste of alcoholic beverages, by user type, March 2015
                                                        • What it means
                                                        • Trend Application

                                                            • Click and Connect
                                                              • Return to the Experts
                                                                • Extend My Brand
                                                                • Market Drivers

                                                                  • Key points
                                                                    • Teetotalism – A growing trend among young urban consumers
                                                                      • The fast-changing macro-economic environment
                                                                        • Unbalanced economic development widening regional differences
                                                                          • The new normality of China’s economy
                                                                            • The two tiered consumer structure
                                                                              • The end of stocking adjustment
                                                                                • Urbanisation and ageing population leads to the Lewis Turning Point
                                                                                • Who’s Innovating?

                                                                                  • Key points
                                                                                    • Innovative and less conspicuous packaging shows potential
                                                                                      • Figure 17: New launches in global alcoholic drink market, 2010-14
                                                                                      • Figure 18: New products from Coca-Cola France with redesigned limited editions, 2009-14
                                                                                      • Figure 19: Selected innovative packaging designs in alcoholic drinks market 2014-15
                                                                                    • Shareability is crucial in on-trade channels
                                                                                      • Figure 20: Stormhoek’s new product line wine 4 friends, 2015
                                                                                    • Flavour innovations – What’s next?
                                                                                      • Figure 21: Global new product launches with new flavours in the alcoholic drink market, 2010-14
                                                                                    • Is flavour innovation really declining?
                                                                                      • Which flavours show potential in the beer category?
                                                                                        • Figure 22: Global new products launched with flavour as one of the key claims in beer category, by flavour group, 2010-14
                                                                                        • Figure 23: Red wine flavoured beer from Suntory launched in Japan, Q4 2014
                                                                                        • Figure 24: Oak cliff coffee ale from Deep Ellum Brewing launched in the US, Q4 2014
                                                                                        • Figure 25: Cubanisto from AB InBev launched in Belgium, Q4 2014
                                                                                        • Figure 26: Harviestoun’s Ola Dubh launched in the UK, 2014
                                                                                      • Which flavours show potential in the Western spirits category?
                                                                                        • Figure 27: Global new products launched with flavour as one of the key claims in the Western spirits category, by flavour group, 2010-14
                                                                                        • Figure 28: Western spirits products with honey flavour, Q4 2014
                                                                                      • What could baijiu could learn from sake?
                                                                                        • Clear food pairing suggestions
                                                                                          • Figure 29: Junmai Ginjo Sake launched by Hokkan Sake Brewing in Japan, Q3 2010
                                                                                        • Baijiu-based RTDs targeting female consumers
                                                                                          • Figure 30: Shochikubai Shirokoabegura Mio Sparkling Seishu (sparkling Sake) launched in Japan, Q1 2013
                                                                                      • Market Size and Forecast and Segment Performance

                                                                                        • Key points
                                                                                          • The market is stabilising
                                                                                            • Figure 31: On-trade alcoholic drink market in China, by volume, 2010-15
                                                                                          • Beer is losing market share
                                                                                            • Figure 32: Segment performance in the on-trade alcoholic drink market in China, 2010-15
                                                                                          • The bumpy recovery of wine and strong performance in spirits leads future growth
                                                                                            • Figure 33: Fan chart of on-trade alcoholic drinks in China, 2010-20
                                                                                          • Forecast methodology
                                                                                          • The Consumer – Alcohol Consumption Change

                                                                                            • Key points
                                                                                              • Drinking frequency and spending per visit are increasing
                                                                                                • Figure 34: Change in alcoholic drink behaviour, March 2015
                                                                                                • Figure 35: Alcoholic consumption change 2014-15
                                                                                              • At-home occasions tend to be driven by lifestyle
                                                                                                • Figure 36: Change in drinking frequency at home in the past 12 months, by gender and age, March 2015
                                                                                                • Figure 37: Change in drinking frequency increased in the past 12 months, by household income, March 2015
                                                                                            • The Consumer – Penetration of Different Types of Alcoholic Drinks

                                                                                              • Key points
                                                                                                • On-trade channels enjoy higher overall penetration…
                                                                                                  • Figure 38: Penetration of alcoholic drinks in at-home and out-of-home occasions, March 2015
                                                                                                • Beer: A boost in penetration but losing power for further expansion
                                                                                                  • Figure 39: Change in out-of-home drinking frequency in the past 12 months, by types of drinks, March 2015
                                                                                                  • Figure 40: Limited edition for Chinese New Year from Budweiser China, Q1 2015
                                                                                                  • Figure 41: Dry Pale Ale from Asahi launched in Japan, Q1 2015
                                                                                                • Baijiu: A shift from at home to on-trade occasions
                                                                                                  • Figure 42: Penetration of baijiu in at home and out-of-home occasions, March 2015*
                                                                                                • Wine remains a drink for at-home occasions
                                                                                                    • Figure 43: Wa Wine from Jacob’s Creek launched in Japan, Q2 2013
                                                                                                  • Baijiu is still struggling to appeal to the young
                                                                                                    • Figure 44: Penetration of baijiu in both at home and out-of-home occasions, by age, March 2015
                                                                                                  • Western spirits going mainstream
                                                                                                    • Figure 45: Penetration of drinking Western spirits out of home, by income, March 2015
                                                                                                  • Female drinkers shy away from drinking out of home
                                                                                                    • Figure 46: Repertoire analysis of drinking more than six types of alcoholic beverages, by gender and age, March 2015
                                                                                                  • Baijiu is further moving towards lower tier cities with no income skew
                                                                                                    • Figure 47: Penetration of baijiu when drinking out of home, by city tier, March 2015
                                                                                                • The Consumer – Attributes Associated with Different Types of Alcoholic Drinks

                                                                                                  • Key points
                                                                                                    • Wine and Western spirits enjoy premium status
                                                                                                      • Figure 48: Correspondence map for alcoholic drink market, March 2015
                                                                                                    • The wide range of flavours helps RTDs and cocktails to stand out
                                                                                                      • Beer stands out with its accessible prices
                                                                                                        • Unhealthy image and strong taste cripple baijiu’s future development
                                                                                                          • Baijiu’s positive perception remains strong among high earners…
                                                                                                            • …but consumers are leaving baijiu for other types of drinks across various occasions
                                                                                                              • Wine is moving further into business-related occasions
                                                                                                                • Figure 49: Selected attributes associated with different types of alcoholic drinks, March 2015
                                                                                                            • The Consumer – Drinking Occasions

                                                                                                              • Key points
                                                                                                                • Beer dominates casual social occasions
                                                                                                                  • Figure 50: Drinking occasions, by types of alcoholic beverages, March 2015
                                                                                                                • Wine drinkers are more likely to sip beer when socialising with family out of home
                                                                                                                  • Figure 51: Penetration of beer when socialising with family out of home, by usage of wine, March 2015
                                                                                                                • The skew towards male drinkers leave gap in the female segment
                                                                                                                  • Figure 52: Penetration of beer in various drinking occasions, by gender, March 2015
                                                                                                                  • Figure 53: Asahi cherry blossom special edition launched in Japan, Q1 2015
                                                                                                                • Baijiu excels in a wide range of occasions
                                                                                                                  • Beijingers are more willing to drink baijiu in causal social occasions
                                                                                                                    • Figure 54: Penetration of baijiu in selected casual drinking occasions, by selected cities, March 2015
                                                                                                                  • Baijiu is losing consumers to Western spirits
                                                                                                                    • Figure 55: Switching behaviour between baijiu and Western spirits, March 2015
                                                                                                                  • Food pairing has the potential to appeal to a wide audience
                                                                                                                    • Figure 56: Penetration of baijiu when accompanying a meal, by age, March 2015
                                                                                                                    • Figure 57: Nigori Sake from Takashi Sasaki launched in Japan, Q1 2015
                                                                                                                  • Wine stands out in celebratory occasions
                                                                                                                    • Men tend to drink wine when dating…
                                                                                                                      • Figure 58: Penetration of wine when dating with their partners, by gender, March 2015
                                                                                                                    • …but wine does not appeal to young male drinkers when it comes to accompanying a meal or casual social occasion
                                                                                                                      • Figure 59: Penetration of wine in selected occasions, by gender and age, March 2015
                                                                                                                    • Consumers switching to wine when travelling/on holiday or dating
                                                                                                                      • Figure 60: Switching behaviour between wine and other types of alcoholic drinks, by selected occasions, March 2015
                                                                                                                    • Western spirits: on par with baijiu on business events
                                                                                                                      • Guangzhou is leading the casual social occasions
                                                                                                                        • Figure 61: Penetration of Western spirits in selected occasions, by city, March 2015
                                                                                                                      • RTDs show potential as a gateway to Western spirits in certain occasions
                                                                                                                        • Figure 62: Switching behaviour from RTDs to Western spirits, March 2015
                                                                                                                    • The Consumer – Drinking Location

                                                                                                                      • Key points
                                                                                                                        • Chinese restaurants remain the key channel
                                                                                                                          • Figure 63: Drinking locations of alcoholic beverages, March 2015
                                                                                                                        • Specialised drinking venues gain popularity
                                                                                                                          • Figure 64: Penetration of drinking alcoholic beverages in pubs, bars, and wine lounges, by selected demographics, March 2015
                                                                                                                        • Western full-service restaurants attract young female drinkers
                                                                                                                          • Figure 65: Penetration of drinking alcoholic beverages at Western full service restaurants, by age and gender, March 2015
                                                                                                                        • Occasion-based promotions show potential
                                                                                                                          • Baijiu should target family gathering occasions at Asian full-service restaurants
                                                                                                                            • Figure 66: Penetration of baijiu when socialising with family out of home, by location, March 2015
                                                                                                                          • Beer can be romantic
                                                                                                                            • Figure 67: Penetration of beer when dating/with my partner, by location, March 2015
                                                                                                                        • The Consumer – Purchase Decision Making Process

                                                                                                                          • Key points
                                                                                                                            • Keeping others happy stands out as the most important factor
                                                                                                                              • Figure 68: Consumer decision-making process when drinking out of home, March 2015
                                                                                                                            • Consumers are adventurous
                                                                                                                              • High earners showing greater eagerness for innovation
                                                                                                                                • Figure 69: Agreement with selected statements on purchase decision-making process when drinking out of home, by household income, March 2015
                                                                                                                              • Brand loyalty is low
                                                                                                                                • Point of purchase campaign remains crucial
                                                                                                                                • The Consumer – General Attitudes towards Drinking Alcoholic Drinks Out-of-home

                                                                                                                                  • Key points
                                                                                                                                    • Attitudes towards taste are polarised
                                                                                                                                      • Figure 70: General attitudes towards drinking alcoholic beverages out of home, March 2015
                                                                                                                                    • Young female drinkers vs old male drinkers
                                                                                                                                      • Figure 71: Agreement with selected statements on taste of alcoholic beverages, March 2015
                                                                                                                                    • Baijiu drinkers versus Western spirits drinkers
                                                                                                                                      • Figure 72: Agreement with selected statements on taste of alcoholic beverages, by user type, March 2015
                                                                                                                                    • Social media becomes the major information source
                                                                                                                                      • Figure 73: Agreement with selected statements on information channels for alcoholic beverages, March 2015
                                                                                                                                      • Figure 74: Tuborg’s O2O campaign, Q2 2015
                                                                                                                                  • The Consumer – Attitudes towards RTD Alcoholic Drinks

                                                                                                                                    • Key points
                                                                                                                                      • RTD segment is expanding in a rapid pace
                                                                                                                                        • Figure 75: Attitude towards drinking RTD alcoholic drinks, March 2015
                                                                                                                                      • Cross-selling shows potential to target men in their 40s
                                                                                                                                        • Figure 76: Agreement of the statement ‘I usually drink other types of alcoholic drinks after having some ready-to-drink alcoholic beverages when drinking out of home’, by gender and age, March 2015
                                                                                                                                      • RTD shows potential as a gateway to Western spirits
                                                                                                                                        • Figure 77: Switching behaviour from RTDs to Western spirits, March 2015

                                                                                                                                    Companies Covered

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

                                                                                                                                    On-trade Alcoholic Drinks - China - June 2015

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