Chinese Spirits - China - June 2015

INTRODUCTION
Definition
Figure 1: Definition of Low/Mid/High MHI groups, by city tier
Methodology
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 2: Retail sales of Chinese spirits, by volume, China, 2010-20
Figure 3: Retail sales of Chinese spirits, by value, China, 2010-20
Companies and brands
Figure 4: Share of value in Chinese spirits retail market, by company, 2013 and 2014
The consumer
Usage of different types of alcoholic drinks
Figure 5: Usage of different types of alcoholic drinks, March 2015
Consumer perceptions of different types of alcoholic drinks
Figure 6: Consumer perceptions of different types of alcoholic drinks, March 2015
Purchase channel of Chinese spirits
Figure 7: Purchase channel of Chinese spirits, March 2015
Reasons for buying Chinese spirits
Figure 8: Reasons for buying Chinese Spirits, March 2015
Typical spending on Chinese spirits for different occasions
Figure 9: Typical spending on Chinese spirits for different occasions, March 2015
Purchase consideration factors for business occasions and special events
Figure 10: Purchase consideration factors for business occasions, March 2015
Figure 11: Purchase consideration factors for special events, March 2015
Consumption behaviours of and attitudes towards Chinese spirits
Figure 12: Consumption behaviours of and attitudes towards Chinese spirits, March 2015
Meet the Mintropolitans
Key issues
Will customisability become a standard feature of baijiu in the future?
How to market premium baijiu as a representation of good taste?
How to commoditise baijiu beyond price incentives?
What we think
ISSUES AND INSIGHTS
Will customisability become a standard feature of baijiu in the future?
The facts
The implications
How to market premium baijiu as a representation of good taste?
The facts
The implications
How to commoditise baijiu beyond price incentives?
The facts
The implications
Figure 13: Baijiu advert example with a football theme, China, 2015
TREND APPLICATION
Mood to Order
Experience Is All
Click and Connect
MARKET SIZE AND FORECAST
Key points
Market growth hits the bottom in 2014
Figure 14: Retail sales of Chinese spirits, by volume and value, China, 2010-15
Signs of recovery in 2015
Figure 15: Usage of baijiu in the past 12 months, by in-home and out-of-home, 2014 and 2015
Future outlook
Figure 16: Retail sales of Chinese spirits, by volume, China, 2010-20
Figure 17: Retail sales of Chinese spirits, by value, China, 2010-20
Forecast methodology
Key Market Driver Analysis
Retail price stabilises and the volume sales bounce back
Figure 18: Average retail price change of Chinese spirits, 2013-15
Greater variety of baijiu products with youthful images to engage with young consumers
Key Market Barrier Analysis
The strong taste of baijiu pushes consumers away
The perception of baijiu being harmful to health
Strong competition from other alcoholic drinks
Figure 19: Usage of selected types of alcoholic drinks in the past 12 months, by in-home and out-of-home, 2014 and 2015
MARKET SHARE
Key points
Wuliangye continued to lead value share but has had a big slump
Figure 20: Share of value and volume in Chinese spirits retail market, by company, 2013 and 2014
Jiannanchun Group showed the biggest value share increase amid intensive competition
Companies targeting mid-to-low end markets achieved better performance, reflecting the trend of commoditisation
WHO’S INNOVATING?
Key points
Baijiu with health positioning concept is trending
Adding healthy ingredients to enhance the health perception
Playing around with distillation techniques to enhance the health perception
Mini-packed baijiu marketed with youthfulness, friendship and mood-positioning is fast emerging
Jiannanchun has brought the “affordable luxury” concept with its new 779AD
COMPANIES & BRANDS
Yibin Wuliangye Group
Latest developments
Luzhou Laojiao Company Limited
Latest developments
Yanghe Distillery
Latest developments
Sichuan Jiannanchun Group
Latest developments
Jiangsu King’s Luck Brewery
Latest development
THE CONSUMER – USAGE OF DIFFERENT TYPES OF ALCOHOLIC DRINKS
Key points
Baijiu achieves the third highest usage rate both in and out of home, following beer and wine
Figure 21: Usage of different types of alcoholic drinks, March 2015
A significant increase in out-of-home consumption
Figure 22: Usage of baijiu in the past 12 months, by in-home and out-of-home, 2014 and 2015
Marketing career-life related themes to engage with 20-24-year-olds
Figure 23: Usage of baijiu in the past 12 months, by age, March 2015
Stronger pressure from western spirits and RTD alcoholic drinks in the South and East
Figure 24: Usage of different types of alcoholic drinks in the past 12 months, by region, March 2015
THE CONSUMER – CONSUMER PERCEPTIONS OF DIFFERENT TYPES OF ALCOHOLIC DRINKS
Key points
Methodology
Strong flavour and limited varieties could limit baijiu consumption
Figure 25: Consumer perceptions of different types of alcoholic drinks, March 2015
Baijiu is not perceived as being as suitable for gifting as wine and Western spirits
Figure 26: Example of spirits packed in chocolate-made bottles, Canada, 2014
Regional Difference Analysis
More consumers in the West and North consider baijiu “good value for money”
Figure 27: Consumer perceptions of Chinese spirits, by region, March 2015
Consumers in the East and Middle are more likely to associate baijiu with “premium” and reflecting “good taste”
Significantly fewer consumers in the South think of baijiu as premium and suitable for gifting
Consumer perceptions of baijiu between drinkers and non-drinkers mainly diverge on image rather than product
Figure 28: Consumer perceptions of Chinese spirits, by baijiu drinkers and non-drinkers, March 2015
THE CONSUMER – PURCHASE CHANNEL OF CHINESE SPIRITS
Key points
Offline retail channels play a dominant role
Figure 29: Purchase channel of Chinese spirits, March 2015
Online channels have emerged over the last two years
Figure 30: Online purchase of Chinese spirits, by age, March 2015
20-29-year-olds are more likely to buy from convenience and grocery stores
Figure 31: Selected purchase channels of Chinese spirits, by age, March 2015
Purchase channel of baijiu is comparably more convergent
Figure 32: Repertoire analysis of purchase channel of Chinese Spirits, March 2015
THE CONSUMER – REASONS FOR PURCHASING CHINESE SPIRITS
Key points
Baijiu drinking is deeply rooted in Chinese festival culture
Figure 33: Reasons for purchasing Chinese Spirits, March 2015
Figure 34: Reasons for purchasing Chinese baijiu, by age, March 2015
Purchase purpose varies by city
Figure 35: Reasons for purchasing Chinese spirits, by city, March 2015
Channels have their own advantages to meet consumer needs for different reasons for purchase
Figure 36: Selected reasons for purchasing Chinese spirits, by purchase purpose of Chinese spirits, March 2015
THE CONSUMER – TYPICAL SPENDING ON CHINESE SPIRITS FOR DIFFERENT OCCASIONS
Key points
Consumers are willing to pay twice the price or more for gifting and business occasions than self/family consumption
Figure 37: Typical spending on Chinese spirits for different occasions, March 2015
Income is a key driver for baijiu spending, particularly for self/family consumption and festive occasions
Figure 38: Average spending per person for different occasions, by monthly household income, March 2015
THE CONSUMER – PURCHASE CONSIDERATION FACTORS FOR BUSINESS OCCASIONS AND SPECIAL EVENTS
Key points
Well-known brand and premium packaging are key purchase consideration factors for business occasions
Figure 39: Purchase consideration factors for business occasions, March 2015
Younger consumers are more packaging-focused and older consumers over 30 are more product-focused
Figure 40: Selected purchase consideration factors for business occasions, by age, March 2015
Relevance and price are key purchase consideration factors for special event occasions
Figure 41: Purchase consideration factors for special events, March 2015
Providing value-added services to stand out from the competition
THE CONSUMER – CONSUMPTION BEHAVIOURS OF AND ATTITUDES TOWARDS CHINESE SPIRITS
Key points
More than half of consumers are brand loyal
Figure 42: Consumption behaviours of and attitudes towards Chinese spirits, March 2015
Figure 43: Agreement with statement “I stick to one or a few brands that I am familiar with when buying Chinese baijiu”, by age, March 2015
Growth potential from customised baijiu
Connecting baijiu drinking with everyday mood to encourage usage in daily life
Figure 44: Consumption behaviours of and attitudes towards Chinese spirits, March 2015
Lower alcohol content does not translate to a healthier image
Figure 45: Agreement with statement “Baijiu with lower alcohol content is healthier than that with higher alcohol content”, by age, March 2015
THE CONSUMER – MEET THE MINTROPOLITANS
Key points
Why Mintropolitans?
Who are they?
Figure 46: Demographic profile of Mintropolitans vs Non-Mintropolitans, by gender, age and personal income
Figure 47: Demographic profile of Mintropolitans vs Non-Mintropolitans, by marital status, city tier and education level
Baijiu has established a firm ground among Mintropolitans even under strong competition with Western alcoholic drinks
Figure 48: Consumer perceptions of Chinese spirits, by consumer classification, March 2015
Mintropolitans care more about premium packaging and customisability when buying baijiu for business and special events
Figure 49: Selected purchase consideration factors for business occasions and special events, by consumer classification, March 2015
Mintropolitans tend to enjoy baijiu as a common drink in daily life
Figure 50: Selected consumption behaviours of and attitudes towards Chinese spirits, by consumer classification, March 2015
APPENDIX – MARKET SIZE AND FORECAST
Figure 51: Retail sales of Chinese spirits, by volume, 2010-20
Figure 52: Retail sales of Chinese spirits, by value, 2010-20