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Western Spirits - China - July 2017

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

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