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Western Spirits - China - July 2017

“Western spirits in China generally have very low usage frequency compared to beer and Chinese spirits (ie Baijiu). However, the penetration of different types of Western spirits are actually not very low. This finding suggests companies and brands’ education should focus on telling consumers the various occasions that Western spirits can fit in so as to increase consumption frequency as well as encourage trial and trading up from other types of alcoholic drinks.”

- Lei Li, Research Analyst

This report will look at the following areas:

  • How companies and brands can optimise their portfolios?
  • What opportunities are there for female drinkers?
  • What brands could do to encourage higher consumption frequency?

 

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Table of contents

  1. Overview

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

            • The market
              • Figure 1: Retail market volume of Western spirits in China, 2013-17
              • Figure 2: Retail market value of Western spirits in China, 2013-17
            • Companies and brands
                • Figure 3: Market share of leading Western spirit players, by value, China, 2015 and 2016
              • The consumer
                • Penetration declines but category rankings remain stable
                  • Figure 4: Penetration on different alcoholic drinks, April 2017 vs February 2016
                • Gin is the most frequently drunk Western spirit type
                  • Figure 5: Drinking frequency on different alcoholic drinks, April 2017
                • Festivals and special events have the biggest consumption increase
                  • Figure 6: Consumption occasions in the last 12 months, April 2017 vs February 2016
                • History of winery and brand reputation associated more with premium
                  • Figure 7: Perceptions towards premium, April 2017
                • What we think
                • Issues and Insights

                  • How companies and brands can optimise their portfolios?
                    • The facts
                      • The implications
                        • Figure 8: Mid-price-range whisky or brandy brands, UK and US, 2014-17
                        • Figure 9: Selected limited Western spirit premium extension, international market, 2016 and 2017
                        • Figure 10: Bombay Sapphire Distilled London Dry Gin, Germany (imported from UK), 2015 and 2017
                      • What opportunities are there for female drinkers?
                        • The facts
                          • The implications
                            • Figure 11: Selected spirits with limited or health claims, international markets, 2014-17
                            • Figure 12: Selected flavoured Western spirits, international market, international market, 2016 and 2017
                          • What brands could do to encourage higher consumption frequency?
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • Western spirits market is small in China
                                  • Lack of knowledge suppresses Western spirits consumption
                                    • Premiumisation and desire for new experiences may drive consumption
                                      • Stability remains across segments
                                      • Market Size and Forecast

                                        • Western spirit is a niche alcohol type in China
                                          • Figure 13: Total consumption/volume sales, Chinese baijiu vs Western spirits, China, 2012-17
                                          • Figure 14: Spirits – Total market volume consumption per capita (population), China vs international markets, 2012-17
                                        • Retail volume and value of Western spirits are recovering slightly
                                          • Figure 15: Retail market volume of Western spirits in China, 2013-17
                                          • Figure 16: Retail market value of Western spirits in China, 2013-17
                                      • Market Factors

                                        • Lack of knowledge is the limitation for Western spirits consumption
                                          • Premiumisation and desire for new experiences
                                            • Geographic coverage could be expanded
                                              • Figure 17: Haiguan import volume, by segment, top five regions, China, 2016
                                          • Market Segmentation

                                            • Overall stable across all segments in retail market volume and value
                                              • Figure 18: Retail volume segmentation of Western spirits, China, 2013-16
                                              • Figure 19: Retail value segmentation of Western spirits, China, 2013-16
                                            • Brandy/cognac and whisky/bourbon are the leading segments
                                              • Rum, gin and liqueur’s overall segment increases thanks to innovation
                                                • Vodka and tequila may want to target Chinese baijiu drinkers
                                                • Key Players – What You Need to Know

                                                  • Top four players have the majority share in volume and value
                                                    • Various competitive strategies from campaign to online shopping
                                                      • Chinese food pairing with Western spirits
                                                        • Global premium gin innovations that can inspire China
                                                        • Market Share

                                                          • Pernod Ricard remains the category leader yet had market share loss
                                                            • Diageo had lost more volume share than value share
                                                              • Rémy Cointreau had both volume and value share win
                                                                • LVMH had better performance and market share increase in 2016
                                                                  • Figure 20: Market share of leading Western spirit players, by volume, China, 2015 and 2016
                                                                  • Figure 21: Market share of leading Western spirit players, by value, China, 2015 and 2016
                                                              • Competitive Strategies

                                                                • Pernod Ricard: via a massive brand portfolio and acquisition
                                                                  • Pernod Ricard: successful prevention campaign and cultural education
                                                                    • Rémy Cointreau: driving online sales
                                                                      • Figure 22: Price comparison of selected Rémy Martin ranges before and during 6.18 JD and Tmall shopping festivals, China, 2017
                                                                      • Figure 23: Rémy Martin official Tmall 6.18 promotion, China, 2017
                                                                    • Compete on food pairing – Martell Distinction and Moët Hennessy
                                                                        • Figure 24: Hennessy’s “Re-discover Chinese Taste”
                                                                      • LVMH: Hennessy’s strategy to target younger consumers
                                                                      • Who’s Innovating?

                                                                        • Global: Flavour becomes a key driver for spirits
                                                                          • Figure 25: Top flavours of new spirits, global, 2015-16
                                                                          • Figure 26: Selected spirits with herbs/herbal or spice/spicy flavours, global, 2016
                                                                        • Global: Premium and premium extensions
                                                                          • Figure 27: Diageo Haig Club Clubman, UK, 2016
                                                                          • Figure 28: Famous Grouse range, international markets, 2015-17
                                                                        • Global and China: premium gin
                                                                          • Figure 29: Selected premium gin, international market, 2016
                                                                        • China: Pernod Ricard – fighting counterfeits
                                                                          • Figure 30: A “scannable bottle” of Pernod Ricard, China, 2017
                                                                        • China: Rémy Cointreau – Tech-savvy with local social media
                                                                          • Figure 31: Rémy Cointreau Club connected bottle, China, 2016 and 2017
                                                                      • The Consumer – What You Need to Know

                                                                        • Brandy/cognac is the most penetrated Western spirit
                                                                          • High earners make the majority heavy and medium users of Western spirits
                                                                            • North region enjoys more on social, festivals and special occasions
                                                                              • Men associate “premium” with technical product aspects
                                                                                • Men and women have different learning preference about Western spirits
                                                                                  • Visiting the Western spirit factory/winery abroad most desired
                                                                                  • Penetration on Different Alcoholic Drinks

                                                                                    • Brandy/cognac is the most penetrated Western spirit but needs to drive more frequent consumption
                                                                                      • Figure 32: Penetration on different alcoholic drinks, April 2017
                                                                                    • Penetration declines but category rankings remain stable
                                                                                      • Figure 33: Penetration on different alcoholic drinks, April 2017 vs February 2016
                                                                                    • Liqueur remains the type that is preferred by women
                                                                                      • Figure 34: Penetration on different alcoholic drinks, by gender, April 2017 vs February 2016
                                                                                  • Drinking Frequency on Different Alcohol Drinks

                                                                                    • Gin is the most frequently drunk Western spirit type
                                                                                      • Figure 35: Drinking frequency on different alcoholic drinks, April 2017
                                                                                    • High earners make the majority of heavy and medium users
                                                                                      • Figure 36: Drinking frequency on different alcoholic drinks, by monthly household income, April 2017
                                                                                  • Consumption Occasions

                                                                                    • Festivals and special events have the biggest consumption increase
                                                                                      • Figure 37: Consumption occasions in the last 12 months, April 2017 vs February 2016
                                                                                      • Figure 38: Consumption occasions in the last 12 months, cross penetration on different Western spirits, April 2017
                                                                                    • North region enjoys more on social, festivals and special occasions
                                                                                      • Figure 39: Consumption occasions in the last 12 months, by regions, April 2017
                                                                                      • Figure 40: Selected Western spirits, China and international market, 2016 and 2017
                                                                                  • Perceptions towards Premium

                                                                                    • History of winery and brand reputation associated more with premium
                                                                                      • Figure 41: Perceptions towards premium, April 2017
                                                                                    • Men predominantly hold the technical view on premium
                                                                                      • Figure 42: Perceptions towards premium, by gender, April 2017
                                                                                  • Western Spirits Knowledge of Interest

                                                                                    • Branding and product specification are most needed for improving Western spirits knowledge
                                                                                      • Figure 43: Western spirits knowledge of interest, April 2017
                                                                                      • Figure 44: Perception of Western spirits knowledge, cross penetration on different types of Western spirits (drinkers), April 2017
                                                                                    • Men and women have different learning preference about Western spirits
                                                                                      • Figure 45: Western spirits knowledge of interest, by age and gender, April 2017
                                                                                  • Interest in Different Types of Marketing Activities

                                                                                    • Visiting the Western spirit factory/winery abroad most desired
                                                                                      • Figure 46: Interest in different types of marketing activities, April 2017
                                                                                      • Figure 47: Interest in different types of marketing activities, by gender, age, monthly household income, and family structure, April 2017
                                                                                      • Figure 48: Interest in different types of marketing activities, by gender, age, monthly personal income, and marital status, April 2017
                                                                                  • Meet the Mintropolitans

                                                                                    • Mintropolitans have higher penetration across all Western spirit types
                                                                                      • Figure 49: Penetration on different alcoholic drinks, by Mintropolitans vs non-Mintropolitans, April 2017
                                                                                    • Not necessarily more heavy users among Mintropolitans
                                                                                      • Figure 50: Drinking frequency on different alcoholic drinks, by Mintropolitans vs non-Mintropolitans, April 2017
                                                                                    • Mintropolitans consume more in various occasions
                                                                                      • Figure 51: Consumption occasions in the last 12 months, by Mintropolitans vs non-Mintropolitans, April 2017
                                                                                  • Appendix – Methodology and Abbreviations

                                                                                    • Methodology
                                                                                      • Fan chart forecast
                                                                                        • Abbreviations

                                                                                        Companies Covered

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

                                                                                        Western Spirits - China - July 2017

                                                                                        US $3,990.00 (Excl.Tax)