As the Chinese whiskey market shows robust growth, the dynamics between local and international brands provide intriguing insights. The "2023 China Whiskey Industry Development Research Report," released at the Whiskey Professional Committee of the China Alcoholic Drinks Association's annual meeting in Qiandao Lake, Hangzhou on March 26, 2024, sheds light on several key trends and challenges faced by the industry.
Among them, cities along the eastern coast such as Beijing, Shanghai, and Guangzhou, as well as other major first and second-tier cities, are the main regions for whiskey consumption. The top 10 cities for whiskey consumption are Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Xiamen, Tianjin, Suzhou, Yantai, and Dongguan.
Market Overview:
In 2023, the Chinese whiskey market achieved a remarkable size of 5.5 billion yuan, marking a 10% increase compared to the previous year. Over the past decade, the market has expanded more than fourfold, demonstrating resilience even in challenging economic conditions. International brands have predominantly driven this growth, as domestic production is still nascent.
Based on comprehensive data from customs and e-commerce platforms, the report indicates that the best-selling imported whiskey brands in China are currently Macallan, Dalmore, Glenfiddich, Chivas Regal, The Glenlivet, Johnnie Walker, Balvenie, Royal Salute, The Singleton, Jack Daniel's, Ballantine's, and Jim Beam. Notably, except for Jack Daniel's and Jim Beam, which are from the United States, all other brands originate from the United Kingdom.
This situation is reflected in import data. The report highlights that in 2023, the trend towards market concentration among leading brands and well-known regions intensified within China's whiskey market. The United Kingdom, the United States, Japan, and Ireland account for over 95% of China's whiskey imports, with the UK's share alone expanding to 85.61%. Additionally, China has emerged as a major new importer of world whiskeys in recent years.
Domestic vs. International Brands:
While international brands from the UK, USA, Japan, and Ireland continue to dominate the Chinese market, local production is beginning to gain momentum. However, the market remains heavily skewed towards foreign labels with local output still falling short of imports. The report highlights that China’s whiskey imports mainly come from traditional whiskey-producing nations, which collectively account for over 95% of the total import volume.
Challenges and Opportunities:
Despite the promising market expansion, the whiskey industry in China faces significant challenges. Price fluctuations have impacted market stability, with the average market price of whiskey falling by 7% in 2023, a stark contrast to the growth seen from 2017 to 2020. The decline in prices reflects broader economic pressures and a more rational market approach following years of rapid growth.
Consumer Preferences and Trends:
Consumer tastes are evolving, with an increasing preference for single-malt whiskies, particularly among affluent consumers. This shift indicates a growing sophistication in the whiskey consumption patterns within China. Domestic brands, although still developing, are starting to resonate more with local consumers who seek quality and authenticity in their whiskey choices. As consumer knowledge deepens and tastes evolve, the preference for single-malt whisky has grown significantly, particularly among whisky aficionados and the high-net-worth demographic. The report highlights that while single malts are often seen as the premium choice in the domestic market, blended whiskies continue to dominate overall consumption. Additionally, the context in which whisky is enjoyed is shifting from primarily business and social settings to more personal enjoyment. Drinking whisky at home or alone has become an increasingly popular consumption trend.
E-Commerce and Sales Strategies:
E-commerce platforms have emerged as a vital sales channel for whiskey in China, particularly during the pandemic when traditional retail channels were disrupted. In 2023, imported brands dominated online sales, but there is significant potential for domestic brands to carve out a niche in this rapidly growing segment.
Future Outlook:
The future looks promising for the Chinese whiskey market, with analysts predicting a potential doubling in size over the next five years. As the economy recovers and consumer spending power increases, both local and international whiskey brands are poised to benefit. The market's evolution will likely be characterised by increased competition, both from established global brands and emerging local distilleries.
The Chinese whiskey market is at a pivotal moment, as domestic producers start to make their mark in an industry long dominated by foreign brands. With a deep understanding of market dynamics and consumer preferences, whiskey producers can leverage this transformative phase to secure a significant share of this lucrative market.
Contact us for further insights and strategic guidance.