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1、October 2022Chinas Wine&Spirit Industry Barometer ReportIntroduction to the Wine and Spirits market in China1.03Wine trends in China2.0719Whisky and brandy trends in China3.29Domestic industry competitors in China4.CONTENT OUTLINEINTRODUCTION TO THE WINE AND SPIRITS MARKET IN CHINA 2022 daxue consul
2、tingALL RIGHTS RESERVED4Chinas alcohol consumption mostly revolves around beer and baijiuSource:Statista(2022)144.4152159.42.963.073.251.081.111.62021E2022E2023Spirits revenue in China by segment(in billion USD)Liquors&other spiritsBrandyWhiskyChinas overall alcoholic drinks revenue is increasing,wi
3、th spirit,beer,and wine being the top three revenue generating segments.By revenue,spirits lead the alcoholic drinks market in China,which isdominated by liquors,specifically Baijiu.Still wine is also taking the most revenue share when compared tofortified wine and sparkling wine.301.13311.83319.843
4、41.55357.7720202021E2022E2023E2024Alcoholic drinks revenue in China(in billion USD)Spirits;47.8%Beer;39.1%Wine;8.2%Ciders&Rice wine;4.7%Hard Seltzers;0.2%Alcoholic drinks revenue distribution by segments in China(2021)2022 daxue consultingALL RIGHTS RESERVED5Young consumers are driving the Chinese a
5、lcohol marketGuangdong ProvinceUS$909.8 million1ShanghaiUS$735.5 million2Zhejiang ProvinceUS$189.1 million3Fujian ProvinceUS$136.3 million4BeijingUS$136.1 million5Tianjin US$124.6 million6Shandong ProvinceUS$111.6 million7Jiangsu ProvinceUS$79.7 million8Liaoning ProvinceUS$34.9 million9Sichuan Provi
6、nceUS$20.1 million10Chinas top 10 bottled wine-consuming provinces by valueSource:International Wine and Spirit CompetitionEvolving demographics of Chinas alcohol consumers:Gen Zs are becoming the main force of the alcoholmarket in China,regarding the number of consumersand per capita consumption le
7、vels.Amongthem,femaleconsumersareagrowingdemographic in wine consumption.Wine,westernspirits,beer,andready-to-drinkcocktails are generally preferred by the youngsters.Low-alcohol,fruity,and unique(collaboration withother brands)drinks are also favored by this group.In terms of location,younger consu
8、mers in tier 4cities have the largest consumer size and highestgrowth rate compared to 1st,2nd,and 3rdtier cities.Source:CBNDataGeneration Z consumers are a key target demographic for growth in the alcohol market in China.2022 daxue consultingALL RIGHTS RESERVED6European wines and brandies dominate
9、Chinese importsSource:China Association for Imports and Exports of Wine and SpiritsSource:China Chamber of Commerce For Import and Export of Foodstuffs,Native Produce And Animal2.74%3.43%3.86%3.97%4.02%4.84%4.96%8.31%9.04%37.18%BelgiumU.S.SouthKoreaSpainItalyGermanyJapanChileU.K.FranceTop 10 alcohol
10、 beverage exporters to China by value in the first half of 2022France is the largest alcoholic beverage exporter to China by value with US$847 million in the first half of 2022.Chinas alcoholic import value in 2021(in billion US$)SpiritsWineBeerSpirit has the highest import value for China in 2021 f
11、ollowed by wine.Brandy is the largest imported spirit,accounting for 68%of the spirits import value.1.700.460.150.030.010.010.01BrandyWhiskyLiquorVodkaGinTequilaRumChinas spirits import value in 2021(in billion US$)2.51.690.12WINE TRENDS IN CHINA 2022 daxue consultingALL RIGHTS RESERVED8Red wine is
12、by far the most popular type of wine in China Champagneandsparklingwinearefavoredamongyoungconsumersandhigher earners.94%35%25%13%Red wineWhite wineChampagneRosTypes of wines consumed by wine consumers in China(2020)Source:Hong Kong Trade Development Council Research(2020)Source:Social listening by
13、Daxue ConsultingChina is predicted to be the worlds second-largest wine market by 2023 as wine popularity spreads through the countryRed wine is the most preferred type,with94%of respondents stating to have boughtor consumed red wine in the past year.White wine is relatively more popular forthoseage
14、d26-45andpossessesintermediate wine knowledge.Dinners(晚餐晚餐)Gift-giving(送礼送礼)Dates(约会约会)Parties(聚会聚会)Occasions which red wine frequently appeared on social mediaWeddings(婚礼婚礼)Vacations(度假度假)23.4%Birthday(生日生日)30.6%11.8%10.9%8.6%6.4%4.6%The phrase“gift box(礼盒礼盒)”for red wine is commonlyused,indicating
15、 Red winesprominent reputation as agift in China.ContentontheInternetinvolvingbarvisits,first-classplaneexperiences,and high-end hotel experiences,red wine has emergedas a key comparative item for many online experience bloggers.2022 daxue consultingALL RIGHTS RESERVED9Douyin and influencer marketin
16、g are key strategies to capture the rising digital market 8.4%11.3%13.1%20.1%25.9%91.6%88.7%86.9%79.9%74.1%200202021Wine sales by channel in China(2017-2021)OnlineOfflineThe pandemic correlated with an increase of 10%and 5.8%y-o-yinonlinewinepurchasesin2020and2021respectively.Source:Stati
17、sta(2022)New media platforms targeting young consumers such as Douyinand LRB are frequently utilized by various brands to establishcommunications with the said customer segment.Source:Interview by SopexaOffline channel is the go-to method to buy wine;Douyin is on the rise as a platform for wine mark
18、eting strategy,especially to reach young consumers.RetailerFor those wine lovers at entry level,it can take advantage of celebritypromotion and live stream shopping.Now some new media are developingvery well.Importer/DistributorCurrently,Douyinshortvideos,forthepromotionandadvertising of wine,have a
19、 certain effect.People who are born after the year 2000 prefer to buy winesrecommended on Douyin.Advertisement,celebrity promotion,Livestream on Douyin,and other new media are also beneficial.2022 daxue consultingALL RIGHTS RESERVED10Low-alcohol wines benefit from a boost in health awareness in Chin
20、aAs health is a significant factor in consuming alcohol in China,low-alcohol wine has gained in popularity.As well as winebars,a place where consumers can purchase wine in glassesinstead of bottles.The idea of wine being healthy was particularly commonamong respondents in the 36-45(59%)and 46-55(55%
21、)agegroups,mentioning that“drinking wine is good for health”Health is one of the main motivations for the Chinese to drink wine.Due to the growing health conscious ofChinese people,low-alcohol,no-alcohol,low-sugar,etc.are becoming an emerging trend.Source:Hong Kong Trade Development Council(2020)54%
22、39%37%37%HealthThe expression of a tasteful lifeTaste preferenceRelieving stressReasons Chinese consumers say they drink wine(2020)RoswineisgrowinginChineseconsumers,as it has a low alcoholcontent,a refreshing all-around taste,and a nice color.Ros is also often featured in photostaken and posted by
23、bloggers on Weiboand RED and is associated with a highclick-rate.HORECA ProfessionalNowadays,consumers are looking for low-alcohol wines,such assemi-sweet Riesling,which is popular because of its refreshingtaste and moderate sweetness.Source:Interview by Sopexa 2022 daxue consultingALL RIGHTS RESERV
24、ED11Economic downturns and international tensions contributed to a drop in wine importsSource:China Association Imports and Exports of Wine and Spirits(2022)French wines are dominating the market.However,the costof production and importation have increased drastically dueto pandemic prevention measu
25、res and the war in Ukraine.7466876104304262,7802,8502,4301,8501,724200202021Chinas wine importsImport volume(in million liters)Import value(in million USD)Source:China CustomsThe volume of wine imported to China has been decreasing over the past two years,international tensions toss-up th
26、e top wine-exporting countries.Importer/DistributorThere is no depth in the mind of consumer for wines thathave not been heard of in uncertain regions/varieties,etc.,and there is a conservative mentality to try them.The lack of wine awareness among Chinese consumers means they areless likely to inve
27、st in trying wines from different origins.Top 10 wine exporters to China by value in 2021(in million US$)FranceChileItalySpainAustralia75333216514655Source:Interview by Sopexa 2022 daxue consultingALL RIGHTS RESERVED12With affordable,quality wine,Chile reaps the benefits of Australias wine taxesChil
28、ean premium wines are gaining popularity in China due to itspremiumization trend.Chile is also the largest bulk wine supplier to China in 2021 with a58.91%market share,representing a growth of 101.57%by value.Source:Vino Joy News(2022)How Chilean wines gained traction on the Chinese marketSource:Asi
29、a Wine NewsWine from Chile is on the rise,thanks to quality improving drastically while staying affordable.Chilean wines offer great“price-for-value”(性价比),a trait highly valued by Chinese consumers,due to its established procedures and techniquesin making wine and relatively low labor costs.Zero-tar
30、iff on Chilean wines exported to China in2015 which soared in sales.China then becamethe number one export destination for Chileanbottled wine.Wine Category20202021%ChangeSparkling Wine$70,439$82,809+17.6%Still wines in containers of 10 L$16,393,966$27,848,134+69.8%Source:China Customs(2022)Chilean
31、wine exports to China 2022 daxue consultingALL RIGHTS RESERVED13Chinese wines fight an uphill battle against importsThe 5 major wine producing regions in China:11.310.016.294.514.01820192020Chinas domestic wine production volume(in millions hectoliter)Source:International Wine&Spirits Com
32、petition Ltd.CAGR-18%The volume of domestic wine production has been decreasing from 2016 to 2020.First,low yields and high costs havedriven out early investors.Second,structural problems such as climate,technical constraints,and low productivityfacing wineries have caused Chinese wines to be less c
33、ompetitive compared to imported wines.Shandong,specifically Yantai,Penglai,and Qingdao,is Chinas largest wine region.It produces over 40%of the countrys wine.Yunnanprovince is growing a variety of Cabernet.Turpan and Hoxud in the Xinjiangregion,which produces Cabernet Sauvignon,Cabernet Franc,and Ch
34、ardonnay.Huailai and Changli in the Hebeiregion.Ningxia,particularly the Eastern HelanMountain Foothills.2022 daxue consultingALL RIGHTS RESERVED14Chinas young wine industry fights an uphill battle against imported winesSource:GLGAlthough production has decreased overall,experienced consumers who fa
35、vor domestic consumption drive theChinese fine wines market No set criteria for selecting vineyard locations Lack of expertise in soil management andassessment and cultivation techniques Still introducing equipment and ideas More time is needed to cultivate the sector Underdeveloped Limited number o
36、f wine offerings Notassuitableasotherwine-growingnations Chinas grapes ripen during the rainy seasonWine grapeWine-making philosophy&techniqueLaws®ulationsWine offeringsClimate difference Imposes specific and strict requirements onthe grapes Official varietals and growing instructions Wine-making
37、techniquesandexperienceshave been handed down for decades,evencenturies Long-established laws Diverse options with unique feature Traditional wine-growing regions in othercountrieshavelessrainfallduringtheripening periodDomestic WineImported Wine 2022 daxue consultingALL RIGHTS RESERVED15The domesti
38、c wine industry is maturingChangyu,both the largest and oldest winery in China,has spearheaded the rise of Chinese fine winesDriven by direct sales,the historical winery activelyleveraged new digital tools such as livestreaming ande-commerce stores to reach its young and tech-savvyconsumers directly
39、.In 2021,Changyus revenue from direct sales jumpedby 53.4%y-o-y,totaling RMB 689 million.Undergone a major strategic reform:from usingprovince-level distributors,in which its brands andnew products often failed to stand out,to setting upsix sales division systems for its four flagshipproducts,import
40、ed products,and online sales.Source:Vino JoyChteau ChangyuMoser XV(张裕摩塞尔十五世酒庄张裕摩塞尔十五世酒庄)HORECA ProfessionalMore and more consumers begin to drink Chinese fine wines.Becauseon the one hand,the national self-confidence has been enhanced,onthe other hand,Chinese fine wineries have a history of 20-30 ye
41、ars tomake good wines.Source:ChangyuSource:Interview by Sopexa 2022 daxue consultingALL RIGHTS RESERVED16The company had signed an agreement with the China Alcoholic Drinks Association(CADA),the countrys main alcohol industry body,to build the Chinese wine industrythrough technical knowledge and exp
42、ertise exchange in China.TWE says theagreement is testimony to the companys commitment to partnerships with theChinese wine industry and the strong equity that the Penfolds brand has establishedwith its consumers in China.“China is an emerging fine winemaking region and were confident we can produce
43、 apremium Chinese Penfolds that maintains the distinctive Penfolds house style anduncompromising quality,”said Mr.Ford,the Chief Executive.SOCIAL MEDIAContent strategy:frequent engagements withfollowers on Weibo by product news,eventnews,seasonalgreetings;ComprehensiveCRM mechanism by Wechat mini pr
44、ogramWechat official account&mini programPenfolds奔富|不凡空间Weibo official account Penfolds奔富|66K followers The mini program introduces the brand,its heritage,showcase full collections of products,display onlineand offline buying channels,and directly connectwith e-stores.Penfolds strategy in China:loca
45、lizing production to regain market sharesCase study Penfolds 2022 daxue consultingALL RIGHTS RESERVED17Product strategy First China version of Penfolds priced atbetween 140 and 240 a bottle,thewine will be made mainly from cabernetsauvignon grape variety sourced fromprimary winemaking region in Ning
46、xia.Tribute 177,this Cabernet-based wine,ismade from Californian grapes instead ofthe heavily levied Australian ones and isto be created exclusively for VATS LiquorStore for the mainland Chinese marketonly.A Chinese vintage product will also belaunched in late 2022.Special bottleLot.518/618Californi
47、a seriesBig announcement to launch China-exclusive productsTribute 177 is described as a limited edition release,anddont expect to find this wine anywhere else as it is“exclusively tailored for the Chinese market,”the companyexecutives announced at the China International ConsumerProducts Expo held
48、in Hainan,July 2022.The advertisementfeaturesalocallyfamousactorascampaign ambassador,with the tagline of“Venture Beyond”,declaring the ambition that Penfolds holds for Chinesemarket.Participation in China International Consumer Products Expo(CICPE)This edition marked the debut of Penfolds,which cre
49、ated a space-themed exhibition withChina-exclusive launches.This included a 177th-anniversary Tribute wine series and alimited edition console with space for two special magnums.Case study PenfoldsPenfolds develops products specifically geared towards the Chinese market and promotes them through maj
50、or events 2022 daxue consultingALL RIGHTS RESERVED18KEY FINDINGS TWE,the biggest exporter of Australian wine to China bore the brunt of loss due to China imposed steep 218%tariffs on Australianwine in 2020,Wine exports as a result plunged from AU$1.2 billion to just AU$200 million within a year.The
51、Made in China approachwill play a significant role to circumvent the Chinese tariffsOUR INSIGHTSChinese wine drinkers are generally less aware of brands.“Made in China Penfolds”is catching up well on the trend that domesticwine is reaping the benefits of Chinese wine consumers growing confidence in
52、home-grown product.BRAND BUILDING IS CRUCIAL Brand building strategies target on end consumers is important to gain awareness and visibility with pull effect to penetrate themarket Brand communication campaign to tell story about the“reborn”of this iconic south Australian brand with authentic Chines
53、e DNAcould be a tactic approach to draw consumers attention and create interests to drive the buying motivation.TARGET ON“NEW”CONSUMERS TO“GROW TOGETHER”Through the China strategy,Penfolds might want to target on the“newbies”of the wine category because the group of consumersare young,relatively new
54、 to the category,have little knowledge and experience but looking for excitement and open to new.With China exclusive series to begin with,Penfolds could grow these consumers into more sophisticated and frequent drinkers in thefuture with the full range product portfolio and its brand power.Promotio
55、ns,discounts,loyalty schemes,and fun and experiential social events might be the driven for their interest to trying out thenew productCase study PenfoldsBrand building and educating customers are important strategies for foreign winemakersWHISKY AND BRANDY TRENDS IN CHINA 2022 daxue consultingALL R
56、IGHTS RESERVED20European spirits are at the top of whisky and brandy importsSource:Statista(2022)Source:Statista(2022)RetailerStar brandy products are surely from three spirits companies:RemyMartin,Hennessy,andMartell,whichhaveanabsolutelyoverwhelming market share.The price range of VSOP&XO is aroun
57、d 400-500RMB&1400-2000RMB respectively.Above 2000RMB the product price isdirectly to 18,000 RMB.the price of cognac is relatively higher.RetailerCognac is often consumed during dinner and other social events,usuallymixed with ice or as a cocktail.Chinese also prefer high-end cognac as its consumptio
58、n is motivated bybusiness and social drinking.Its packaging is also important in China,suchas French cognac,including the 3 major brands,often offers elaborate andpremium packaging.In China,the top origin of cognac is France,and the top origin of whisky is the UK.Taking the second rank,Japanese whis
59、ky captured10.91%(US$50.61M)market share in China.The United Kingdom is the top exporter to China forwhisky,taking 80.1%(US$371.74M)of the Chinesewhisky import market share in 2021.French brandy is ranked first among brandies terms ofimported value,undoubtedly dominating the Chineseimport market wit
60、h around 98.8%(US$1.68B)marketshare in 2021.Source:Interview by Sopexa 2022 daxue consultingALL RIGHTS RESERVED21Brandy and whisky are mainly consumed in specialized bars or at home Whisky is viewed as a“trendy”drink in China,which has attractedan increasing number of young consumers.Whisky bars are
61、 also popping up and becoming popular in China.Source:Statista(2022)HORECA ProfessionalThere appear many popular whisky bars crowded with young peoplerecently in China cities,which cater to their social attributes.Whiskybars also play a role in educating consumers and promoting thedevelopment of whi
62、sky in China.French brands dominate the Brandy market due to its highindustry concentration,such as:HORECA ProfessionalBrandy like VSOP grade is mostly consumed in KTV or bars,andpremium brandy of XO grade or above is widely consumed in high-end hotels and private clubs,etc.There are many rich peopl
63、e whobuy them for their collections.Source:Interview by SopxaSource:Interview by SopexaFor both brandy and whisky,offline channels make up the majority of sales in the Chinese market.Brandy is also a must-have product in bars and nightclubsand has an especially high demand in the Guangdong andFujian
64、 province.HennesseyRemy MartinMartell2.592.692.792.92.993.070.450.420.430.480.530.5620202021E2022E2023E2024E2025Brandy and whisky revenue in China,by place of purchase(in billion US$)At homeOut of home 2022 daxue consultingALL RIGHTS RESERVED22Brandy and whisky are considered status symbols in China
65、Source:Social listening by Daxue ConsultingUsually consumed by wealthier consumers,both brandy and whisky have their unique values to Chinese people.VSTopics most associated with brandy on Chinese social media(2021)Bars(酒吧酒吧)33.2%Hotels(酒店酒店)7.0%Entertainment Venues(夜店夜店)4.6%Parties (聚会聚会)27.9%Vacat
66、ions(度假度假)18.8%Dates(约会约会)15.3%An important symbol of France,which is often paired with Frenchfood(法餐)like lobster(龙虾)and foie gras truffle(鹅肝松露).An emotional value linked to romance,where gifts for Tanabata(七夕送礼)are used by brandy labels and marketing campaigns.A high-end image is correlated in Chi
67、na,with buzzwordsrelated to locations such as:“whisky bar(威士忌吧),HongKong(香港),Shanghai(上海),Beijing(北京)and otherfirst-tier cities and professional tasting venues.An emotional value is linked to relieving bitterness andeasing the mood,with expressions like rainy season(雨季)and twilight(黄昏)being consider
68、ed whisky season.Whisky drinkers typically have a high standard of living andfocus on enjoyable consumption.Chinese also often pairWhisky with nuts(坚果)”-a high-end snack in China.”Premium(高级感)is also a popular term in whiskeypackaging design.2022 daxue consultingALL RIGHTS RESERVED23RED official acc
69、ountMACALLAN|2953 followersWeibo official account TheMacallan|73K followers Weibo KOL Collaboration 周小晨kiki|3.4M followers RED KOC collaborations啃老师陪你喝一杯|144K followersCase study MacallanMacallan aims to enhance premium brand image through quality posts and collaborations with lifestyle KOLs andKOCs
70、PREMIUMIZATION stay premium on the top prioritized marketsMacallan has identified a great potential for reaching more consumers in China who areeager to discover premium spirits.The company has announced that they will continue toinvest in this strategy whilst maintaining their commitment to quality
71、 and premiumisationof the channels that they operate in.In December 2021,Macallan opened animmersiveexhibitioninShanghaitotranslate its heritage and history topotentialcustomers.Theexhibition,called The Macallan Experience,comeson the heels of the increased demandfor premium whiskies by consumers in
72、the Asia Pacific market.2022 daxue consultingALL RIGHTS RESERVED24SUSTAINABILITY a noteworthy trend for the alcohol beverage segment in China Macallan has put into place a sustainability plan.In 2021,it has launched a new collection The Macallan Harmony Collection Rich Cacao,with 100%recyclable pack
73、aging.This year,Macallan continued their partnership with Bentley Motors to announce the creation of Macallan Horizon,the prototype fusestraditional craftsmanship,upcycled,or ethically sourced material,reflecting the sustainability core and the ambitions to build a sustainablefuture of both brands.T
74、he product will launch in summer 2023.The partnership started in July 2021,Macallan and Bentley announced again the strategicpartnership in August 2022,presenting the Macallan Horizon,a“highly innovative limited editionsingle malt whisky being created by the brands”.These 2 brands united by a long-t
75、erm vision of a more sustainable future and a shared dedicationto innovation and excellence.While this partnership recognises the provenance and deep heritagerooted in both brands,the focus is set on looking forward together to collaborate on innovativeproducts,immersive experiences,and captivating
76、storytelling.Case study MacallanMacallan base their marketing strategy on cross-border collaboration and pop-up exhibitions in major cities 2022 daxue consultingALL RIGHTS RESERVED25KEY FINDINGSCHALLENGES-The favoritism for domestic products,emerging local brands and the rising RTD alcohol category
77、is posing a threat to thetraditional Western spirits marketOPPORTUNITIES-Sustainability has gained importance in the Chinese alcoholic beverage market in recent years-Strategic partnership or cross-border collaboration has become an important approach for brands that share valuesOUR INSIGHTSEXPANSIO
78、N TO NORTHERN CHINA tap into undeveloped areasThe rising number of whisky bars and whisky tasting classes have already penetrated lower tier cities in China,especially the southChina,due to the facts that the early business development of port cities(majorly tier 1 cities)in that area,and the social
79、izing style ofsouthern Chinese tend to consume spirits including imported ones in high volume during business occasions.To expand penetration to northern part of China by spreading trade activities collaborating with CHR nation-wide to tap all the tier 1and new tier 1 cities in northern China.CREATE
80、 TOPICS FOR ENTRANTS make premium products approachable&affordableShown by a survey conducted with key retail market players,Macallan was mentioned the most as the premium whiskey brand inChina and has its unshakable position in the mind of whisky drinkers.Promoting Macallan as a quality yet approac
81、hable andaffordable whiskey in everyday drinking by interesting topics(ie.ride on the craze of cocktails by young generations and the trend offood-paring)could be a door knocker to enter the circle of whisky entrants.Case study MacallanExpanding to northern China and making their brand more approach
82、able could help Macallan conquer the Chinese market 2022 daxue consultingALL RIGHTS RESERVED26Local spirits dominate the market as they are deeply rooted in Chinese culture,where Baijiu is omnipresent in the various distributionchannels as the leading category in China,accounting for over 90%of all
83、spirits consumption.However,Cognac,the ultimate qualityreference on the market,remains the leader of imported spirits.With the development of urbanization and the rise in Chinese living standards,on-trade consumption is densifying.Imported Westernspirits have become a common and popular product for
84、business and personal banquets and gift-giving occasions in China.Furthermore,the arrival of the bar culture has given rise to a new trend in spirits consumption among the younger generations.Educational activities Trainings-for professionals of the industry,such as importers,distributors,e-commerce
85、,retailers,sommeliers,restaurants managersetc.Bartender training&competition-To raise awareness and train bartenders about Cognac andmaximize the word of mouth and highlight the Cognac as the top-of-mind product around thebartender profession Participation in trade fairs-such as CFDF,Toewine,Interwi
86、ne,Prowineetc.Digital Campaigns Social media Through WeChat,Weibo,and Douyin activation,and KOL partnership to createregular,relevant,visual and high-quality content to educate readers and transmit their passionfor Cognac E-learning platform-Continue to connect with Cognac lovers through recurrent b
87、roadcasts ofhard-hitting content and entertaining visual aids to build loyalty among existing followers and toacquire new followers of both professionals and amateurs.E-commerce platform Partnership with the e-commerce giant in China to multiply visibility andreach the target of end consumersCase st
88、udy CognacOver a decade,Cognac has built its by educating different target groups of professionals,trade partners,media,KOLs,andprofessional schools students about the origins of Cognac to raise brand awareness.2022 daxue consultingALL RIGHTS RESERVED27Campaigns taken by brands CRM by Fan Club on We
89、Chat mini program(Remy Martin club,Martell Blue Book,Hennessy Le Club),and continuously makecontact with the followers with brand news,event news,interactive mechanisms such as games,quiz,and lucky draw.Pop events/Immersive experience events(Remy Martins Cognac Express,Martell Cognac Voyage)Sponsors
90、hip on sports(Martell for Polo)IP collaboration(Hennessy x NBA)Invite high profile Chinese artist to be the brand ambassador(Hennessy-Wang Erjia王尔嘉 and Dilraba迪丽热巴)Case study CognacOver a decade,Cognac has built its by educating different target groups of professionals,trade partners,media,KOLs,andp
91、rofessional schools students about the origins of Cognac to raise brand awareness.PR Campaigns Continuous media exposure by press releases to increase awareness and boost knowledge ofCognac among professionals and consumers Press events Workshops,press trip,anniversary ceremony of Cognac GIetc.for j
92、ournalists andKOLs,which are essential to create quality and educational content while providing an experienceallowing the media to communicate about Cognac and publish quality articles and media coverage.2022 daxue consultingALL RIGHTS RESERVED28KEY FINDINGSCHALLENGES-Current consumption patterns p
93、erceived as unattractive by the new generations-General lack of knowledge about the origins and authenticity of Cognac(GI,PGI and PDO)OPPORTUNITIES-Despite the long history in Chinese market,China is a still developing market for Cognac-The development of urbanization and bar culture particularly ap
94、preciated by the younger generations-A booming HORECA sector with increasing demandOUR INSIGHTSMAKE HORECA A KEY DISTRIBUTION CHANNELThe HORECA sector is the preferred channel where consumers are looking for recommendations and advice from.Thedevelopment of the bar culture also pushes bartenders to
95、be new prescribers.Bars in China are becoming more and moresophisticated,where expertise,taste and a sense of detail of the bartenders are required.Thus,the professionals of HORECAsector,especially bartenders,would be the best advocates at the front line for Cognac to arouse consumers curiosity and
96、interest.Maintain and Reinforce the community of professionals by constant trainings and workshops is the operational tactic tocontinuously develop the Chinese market in the long run.CONTINUOUS VISIBILITY AND ACTIVITY ONLINE TO PROACTIVELY REACH OUT TO END CONSUMERSEmploy consistent and integrated c
97、ontent strategy on all the social media platforms(WWRD)and online marketing means(KOLcollaborations,E-learning,E-commerceetc),continuously make contact and engage with users to increase Cognac perceptionamong professionals and consumers.After a decade of cultivation from trade perspective,its time t
98、o shift the focus and strategyto be more consumer oriented,communicate directly with the end consumers to educate them of the fundamental and essence ofCognac to create desire and generate the pull effect from the consumers perspective.Case study CognacEducating end consumers and developing HORECA c
99、hannels are key points for Cognac to grow in ChinaLIQUOR TRENDS IN CHINA 2022 daxue consultingALL RIGHTS RESERVED30Baijiu dominates the liquor market in China0.17%0.16%0.16%0.16%0.16%0.14%0.14%0.12%0.11%0.11%0.05%0.05%0.05%0.05%0.05%201920202021E2022E2023Vodka,rum,and gin revenue in China(percentage
100、 of the total revenue of liquor)VodkaRumGinSource:Statista(2022)Tequila is also gaining popularity.The drink recorded ay-o-y growth of 162.4%and witnessed the highestgrowth among imported spirits.Other liquors take up only a small percentage of the alcohol drink revenue in China,with vodka taking th
101、e lead.1st2nd3rd+66%in import volume in 2021Source:International Wine&Spirits Competition Ltd.The image of rum is changing.In the past,rum wasconsidered a cheap mixer in China and Asia.However,imports and sales of premium rum are now growing inChina.Older drinkers typically consume it neat or on the
102、 rocks,while younger and more adventurous drinkers oftenconsume it in cocktails.Source:Mersol&Luo(2019)2022 daxue consultingALL RIGHTS RESERVED31Vodka is the most consumed liquor besides baijiu in China10.9%1.8%2.5%4.3%7.2%20.6%52.7%OthersGrey GooseEristoffStolichnayaSmirnoffSKYY VodkaAbsolut VodkaS
103、hare of consumption volume of vodka by brand in China(2020)Source:Statista(2021)1.121.411.822.672.773.088.02U.K.LatviaPolandFranceItaly*RussianFederationSwedenTop 7 vodka exporters to China by value from January to November 2021(in million USD)Source:China Customs(2021)Shanghai consumed the most imp
104、orted vodka in China,61.7%ofthe total import volume(4.6M liters)or 65.8%of the total importvalue(US$15.56M).China imports their vodka from 40 countries,with Sweden being its largest importer.Although SKYY is an USbrand,Campari owns it andexports from Italy to China 2022 daxue consultingALL RIGHTS RE
105、SERVED32Fruity cocktails are popular among Chinese consumers“Liquid learning”is developing to be a new phenomenon:Globally,consumers increasingly want an educational cocktail experience in 2022.They have the desire to understand everything from preparing the best combinations to the heritage and his
106、tory of the spirits used.According to Boston Consulting Group and Tencent,this is a trend that is particularly strong in China.More than 50%of consumers in China proactively learn about brand histories to see whether their own values are reflected.Sources:Mintel(2021)&BinWise Inc.Tasting training,ge
107、nerally brands will regularly go to the store to launchnew products and train employees on product knowledge.For large-scaleevents,exhibition activities will be organized.RetailerSource:Bacardi(2021)Most mentioned cocktails in posts on Chinese social media(Summer 2021)Source:Interview by SopexaSourc
108、e:Social listening by Daxue Consulting“Summer cocktails”,a combination of fruits and beers or spirits,are becoming increasingly trendy on Douyin andXiaohongshu.Long Island Iced Tea66.7%Mojito60.4%Mai Tai60%Tequila Sunrise57.1%Cosmopolitan50%2022 daxue consultingALL RIGHTS RESERVED33The top 10 most p
109、opular gin brands in ChinaNo.1Beefeater 必富达No.2Tanqueray 添加利No.3Gordons 哥顿No.4Hendricks 亨利爵士No.5Bombay Sapphire 孟买蓝宝石No.6BOLS 波士No.7Monkey 47No.8Sipsmith 希普史密斯No.8Gilbeys 杰彼斯No.10The Botanist 植物学家Source:maigoo&ChinappCase study GinGin is increasingly getting popular among gen Z in China,especially a
110、s a base for cocktails The imported volume of gin in China reached 3.1 million litres in2021,increasing 29%from2020,whilst the imported valuereached RMB15 million in 2021,registering anincrease of 20%Gin is leading the craft spirits revolution in Asia.Domestic brandsare appearing inChina,experimenti
111、ng with local botanicals,forexample,Sichuan peppercorn.According to data from the UK Wine&Spirits Trade Association,gin is the fastest growing spirit across the world.For the past few years,imported gin brands,especially from UK,has been steadily penetrating the market by making the presencein risin
112、g cocktail bars as Chinese Gen Zs increasingly look forpremium,hand-crafted tastes.2022 daxue consultingALL RIGHTS RESERVED34ADAPTATION&LOCAL SOURCING include flavors that appeal to the Chinese palateA common trend shared by many Gin importers is the adaptation of local sourcing.While adapting their
113、 products to the Chinesemarket by tweaking their ingredients with botanicals from the region for more modern flavors,they find the way to plant thetemptation for young drinkers,especially when Chinese gin(中国式金酒中国式金酒)became an emergent trend on social media.Porcelain Shanghai Dry Gin,contains at leas
114、t 90%Chinesenative botanicals,is one of the latest Chinese craft gin to hitthe market,also an example of the emerging Chinese gin.Case study GinSome Gin importers are catering to Chinese tastes by sourcing local ingredients,giving their products a unique tasteExamples Gins sourcing locally Hendricks
115、 Gin,best known for its infusion of cucumber and rose,and the sweet andfruity flavor of Midsummer Solstice,resonates well with the Chinese,especially amongfemale drinkers.Peddlers Gin,one of the first international spirits distilled in China,has its productsbottle,typography and overall image inspir
116、ed by 1930s Shanghai.Among the botanicals,the brand uses are Sichuan pepper and Buddhas hand citrus peel.Crimson Pangolin,set their distillery by Changsha,sourcing botanical ingredients locally,including juniper from Shandong and the coriander seeds.The London Distillery Company joined with Chinese
117、company Gotham East to explorehow they can adapt the terroir of China,offers fully organic products like Dodds Gin andKew Organic Gin,which are well-received by young Chinese drinkers.2022 daxue consultingALL RIGHTS RESERVED35WHAT MARKETING CAMPAIGNS IN CHINA Collaboration with the“Worlds 50 Best”ba
118、r-Since its 2016launch,Peddlers Gin has thrived through partnerships withtop bars featured on the“Worlds 50 Best”list.Bartender Open-Crimson Pangolin holds the competitionannually,offersaplatformforyoungmixologiststoshowcase their skills and flairs.Master Classes-Monkey 47,with a premium position an
119、dpricing in China,conducts master classes for bartenders tobetter reach the consumers.Tasting Events-Four Pillars,the Australian small-batchbrand,hosts frequent tasting eventsUNIQUE GIN FOR THE YOUTHA Spanish gin product,Morpho Helena introduced by LadyPenguin,and the South African gin brand Howling
120、 Ow,bothproductshavethediscolourationfeatureandpresented through online shopping channels in China,created the new drinking experience that drove youngconsumers attention and curiosity.The novelty of theproduct generated new social media popularity,along withreasonable pricing(with around RMB200 per
121、 bottle onTmall store).Case study GinSimilarly to brandy importers,gin brands brands also organize campaigns to educate consumers,retailers andbartenders alike 2022 daxue consultingALL RIGHTS RESERVED36KEY FINDINGSTHE CRAZE OF CUSTOMIZATIONAs China has such an abundance of local botanicals and exoti
122、c flavours,that gives gin makers a great selection of ingredients forcreating customized flavour of gin.For cocktail drinkers,short videos and posts demonstrating how to make your own drinks and cocktails at home is becoming a populartopic and can be easily found on social media.OUR INSIGHTSAs China
123、 welcomes a steady recovery from the pandemic and cocktail enthusiasts fill bars all over China,craft gin brands are lookingforward to a warm reception for their new offerings from both bar owners and drinkers.However,how to stand out among so manyplayers is a matter of importance for brands.MARKETI
124、NG IS THE KEY Take advantages of the uprising new media(Douyin and Red,and also the mainstream media WeChat and Weibo)with a consistentcontent strategy of online marketing to keep the close connection and engagement with the Chinese Gen Zs.Leverage Word-of-mouth marketing strategy by KOLs and KOCs C
125、reate unique brand identity by making a personalized statement that interprets the brands features and characteristics todifferentiate themselves to cater young consumers in China who are looking for uniqueness are attracted to novel topicsCase study GinAs gin gets more popular among cocktail enthus
126、iasts,effective marketing is a key tool to stand out of the crowd ofother gin brands 2022 daxue consultingALL RIGHTS RESERVED37The alcopop market shows substantial potential for growthSource:Bairun Flavor&Fragrance Co.Based on Tmall data,low ABV drinkers are mostly made up of first-tier city women a
127、ged between 18-34 years old.Young white-collar workersSophisticated mothersSenior middle classGen ZOccupational and generation groups of low ABV drinkersChinas low ABV sales are increasing.The sales of low ABV are predicted to increase by 188.8%in 2023 when compared to 2018.14.416.518.423.130.139.10
128、.80.91.62.93.74.820021E2022E2023Chinas low ABV sales revenue(in billion RMB)OfflineOnlineSource:leadleo(2022)Ready-to-drink(RTD)is particularly well-known amongst the lightdrinkers in China as it is easy to consume,have lower alcoholcontent,and is cheaper than cocktails at bars.RIO is the
129、 most popular RTD alcopop brand in China which wasfirst launched in 2003.RIOs products are accessible throughout Chinas 1,300 count-level cities and more than 260 large prefecture-level cities.Source:Mersol&Luo(2020)Alcopops with a low ABV(Under 15%)and sweet AND FRUITY flavors are becoming more pop
130、ular among youngChinese consumers 2022 daxue consultingALL RIGHTS RESERVED38Despite its popularity,Chinese baijiu production is decreasing11.988.717.857.47.01920202021Chinese baijiu production(in billion liters)Source:National Bureau of Statistics of ChinaA government crackdown
131、 in 2012 on officials luxury spending hit Baijiu distillers hard:Almost 70%of distillers were forced to halt or cutproduction.Given baijius production cycle-which runs to about five years for sauce-fragrance varieties-the effects of this sudden cut todemand on production only appeared in 2017Neverth
132、eless,baijiu sales revenues have been on an upward trend starting from 2018.In 2020,50%of domestic baijiu production comes from Sichuan province.Source:International Wine and Spirit Competition(2021)6584480500520540560580600620200192020Chinese baijiu sales revenue(in billion RM
133、B)Source:RsA AsiaFollowing a government crackdown in 2012,production of baijiu in China has decreased 2022 daxue consultingALL RIGHTS RESERVED39The baijiu market faces multiple challengesRetailerThe regular tool of promoting Chinese baijiuis direct discount.Most of the baijiu consumers are older,as
134、the younger generations preferwines,beers,cocktails,and western spirits.Source:World Baijiu Day(2021)Source:Interview by SopexaDespite an increase in overall alcohol consumption during the pandemic,imports have been negatively impacted by lockdown measures.2.43.03.92.820020Chinas baijiu i
135、mport volume(in million liters)81%18%1%Chinas baijiu import origin(2020)Source:RsA Asia1,5931,4451,1761,04020020Number of baijiu manufacturers in ChinaAfter the 2012 crackdown on production,the industry has decreased by 34.71%from 20172020.Source:RsA AsiaOthersTaiwanHong KongThe pandemic,
136、government crackdowns,and lack of interest from young consumers impact baijiu consumption 2022 daxue consultingALL RIGHTS RESERVED40How is the baijiu market leader overcoming these challenges?17%10%4%3%3%63%MoutaiWuliangyeYangheLaojiaoShunxinOthersChinese baijiu sales revenue by manufacturers(2020)M
137、outai is the Chinese baijiu manufacturer that has thebiggest sales revenue in the market in 2020 with RMB98billion in revenue.Source:RsA AsiaSource:CNNFacing an aging consumer base,baijiu producers have had to findnew ways to cater and market their products to gen Z consumers,who usually dont like i
138、ts strong taste.According to data from online sales on JD,baijiu buyers aged 21 to35 only accounted to about 23%of sales.Baijiu manufacturers have tried multiple forms of cross-mediaadvertising to appeal to young consumersAmong them,Moutaihas launched Baijiu flavoured ice-cream in2022Thanks to its d
139、ominant position on the market,Moutai has been able to whether the storm of new regulations andinvest into new marketing strategiesABOUT42OUR MISSION IS TO GUIDE BUSINESSES TO HOLISTIC GROWTH IN CHINAThrough our market research and strategy consulting,we equip businesses with the knowledge and guida
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150、re and passion for food.food enriches the soulWe love food and beverage so much weve made it our lifes work.Multicultural-Our team hails from the four corners of the earthand are unbeatable at decoding local challenges and opportunities.Creative-We craft campaigns and experiences that makeconsumers
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