Image source: Visual China
When the international spirits giant Diageo shouted that "China will be brought to the center stage of the global whisky dialogue", another giant Pernod Ricard proposed to "create a signature malt whisky with Chinese characteristics", and both sides officially announced the construction of a whisky distillery in China and vigorously increased the Chinese whisky track.
At the same time, both bet on the Chinese liquor market, and Diageo has already placed Shuijingfang (600779. SH) income, Pernod Ricard has also invested in the sauce liquor store in recent years. For many years, these two giants have been in the Chinese market, focusing on each other's layout and tit-for-tat.
A number of wine industry experts on the titanium media APP analysis believes that behind the upgrade of the international giant "battle against the benchmark", the replacement and diversification trend of the core consumer groups in the Chinese liquor market has emerged, and the whiskey market has also risen, bringing many opportunities for the layout of the international spirits giant; China, as one of the largest liquor consumption markets, has long become the "eye meat" of the international spirits giant; the rise of emerging liquor markets such as whiskey is forcing the structural "fine-tuning" of the Chinese liquor market.
Decades of competition, the two giants compete for the Chinese market
Back more than 20 years ago, Pernod Rista and its brands Chivas, Martell and Royal Salute entered the Chinese mainland market; almost at the same time, Diageo's main brands Johnnie Johanna And Windsor also gradually emerged in the Chinese market, and the scale of business continued to increase, and in 2002, greater China was officially established in Shanghai. Since then, the battle between the two sides in the Chinese market has officially begun.
With the addition of brands such as Ballantine, Mamm, Absolute Vodka in 2008 and Monkey King 47 Black Forest in 2016, especially after the completion of the acquisition of the joint toome and vin & spirit in recent years, Pernod Ricard's position in the Chinese spirits market has continued to consolidate, with a distribution network covering the whole country, and even has the potential to "dominate" the Chinese spirits market. Diageo also continued to vigorously lay out the Chinese market, and in 2005, it was "Baili" to seize the Chinese women's wine market, making the brand once the first choice for women's foreign wine brands.
The momentum of competition between the two sides in the Chinese liquor market is also continuing. In February 2007, Diageo won 47% of the shares of Quanxing Group (later renamed Shuijingfang Group) and blew up the entire wine circle; in the following years, Diageo successively acquired all the remaining shares of Shuijingfang Group, and became its sole shareholder in 2013, indirectly controlling Shuijingfang (600779. SH）。 Obviously, at this stage, Diageo is in an overwhelming position over Pernod Ricard in the Chinese liquor market.
How to take back a city? After a long period of searching, in 2021, when sauce-flavored liquor was in full swing, Pernod Ricard finally invested in Huangshijiufang through its Chuangxiang Huanju Investment Fund, and the valuation of Haoshijiufang, which produced sauce liquor, was as high as 2 billion yuan in July of that year. Diageo, which occupies an advantage in china's liquor market, is of course not to be outdone, and its Shuijingfang also shouted in 2021 to enter the sauce wine, and intends to join hands with the sauce liquor company Guizhou Moutai Town Guowei Liquor Industry to establish "Guizhou Shuijingfang Guowei Liquor Company", but it ended in failure for various reasons. An industry insider told the titanium media APP that the competition between the two sides in the liquor sector reflects the trend of liquor moving closer to sauce wine.
Pernod Riga Diechuan Whisky Distillery, from the company's official website
In terms of whisky competition, both sides officially announced that they would build a whisky distillery in the Chinese market, Diageo said that it would invest 500 million yuan to build China's first malt whisky distillery in Fengyu Town, Eryuan County, and Pernod Ricard also announced the unveiling of its Diechuan Malt Whisky Distillery in Mount Emei, Sichuan Province, and planned to invest 1 billion yuan in ten years.
Behind the giant", whisky is regarded as the "blue ocean in the wine"
International spirits categories include brandy (Brandy), whisky (Whisky), gin (Gin), rum (Rum), vodka (Vodka), tequila, etc., why did Diageo and Pernod Ricard choose whisky to vigorously layout in the Chinese market?
A wine industry expert said: "After more than ten years of market incubation and accumulation, whisky has gradually started to volume, from the market data, whisky, especially single malt whisky growth momentum is obvious." According to the Customs Data Statistics Platform, the total import scale of domestic whisky in 2021 was 30.28 million liters, the import amount was 463 million US dollars, the total scale (liters) increased by 43.9% year-on-year, and the total amount increased by 92% year-on-year.
The trend of imports of whisky in recent years comes from the customs data statistics platform and the production of titanium media authors
According to data recently released by the Scotch Whisky Association (SWA), the export value of Scotch whisky in 2021 is 4.51 billion pounds, an increase of 19% over 2020; the export volume of 700ml scotch whisky in 2021 increased by 21% to 1.38 billion bottles. Among them, the Growth of the Asia-Pacific Region is strong, scotch whisky to the Asia-Pacific region is 21% increase in 2021, and exports to China are increasing by 84.9%.
It is understood that whisky is currently one of the seven favorite spirits of Chinese consumer groups, ranking second only to liquor, 2 times higher than vodka, 3 times higher than brandy and rum, and 10 times higher than gin (gin) and tequila. As the emerging world's largest single market, China's demand for whisky is also increasing rapidly, and the potential is huge.
Among them, Riwei (Japanese whisky) has been particularly hot in the Chinese market in recent years. According to the "Statistical Analysis of Alcohol Imports from January to December 2021" released by the Liquor Importers and Exporters Branch of the China Chamber of Commerce for Import and Export of Food, Soil and Livestock on March 7, China imported 1.8482 million liters of Japanese whiskey in 2021, an increase of 55.74% year-on-year, and the import volume was 50.6125 million US dollars, an increase of 101.38% year-on-year, and the market accounted for 10.91%. Japan ranks second among the sources of Chinese whisky imports, after the United Kingdom. Recently, there is no shortage of news in the market such as "Riwei" price increases and short supply.
Zhu Danpeng, a Chinese food and beverage analyst, told the Titanium Media APP: "With the continuous superposition of China's new generation of demographic dividends, the demand for spirits has also entered a period of consumption dividends of high-speed growth, rapid development and rapid expansion. Cai Xuefei, an analyst in the liquor industry, told the titanium media APP: "The economic development, population advantages and regional culture of the mainland in recent years have brought huge consumption capacity to the entire Chinese liquor market, and the internationalization of China's young consumer groups has played an important role in the growth of whisky sales and the layout of international spirits giants." ”
In fact, not only the international spirits giant, the field has also attracted the deep participation of many domestic leading liquor companies in recent years. Yang Chengping, a liquor marketing expert, told Titanium Media APP: "Yanghe shares (002304. SZ) has long been deeply involved in the whisky market. It is reported that as early as 2019, Diageo joined hands with Yanghe to launch the first Chinese-style whisky "ZhongshiJi".
At that time, Zhu Zhenhao, Managing Director of Diageo Greater China, expressed his strong optimism about the Chinese whisky market: "For a long time, Diageo has regarded China as one of the most important emerging whisky markets in the world. Diageo and Yanghe co-operatively launched ZhongshiJi, aiming to explore category innovations that meet the needs of consumer markets. ”
In May this year, 002568.SZ, the parent company of RIO cocktails, also said that it would launch a whisky-based spirits business segment, which is currently in the process of aging. In addition, Yiyuan Wines has also previously announced the acquisition of a 100% stake in Wanhao Asia for HK$15 million, and the latter's subsidiary Fujian Dexi owns a whisky factory in Fujian and is engaged in whisky trading.
International and domestic manufacturers have run to enter, and there is no shortage of voices in the market that regard the Chinese whisky market as a "blue ocean in wine", believing that there are only more than 10 whisky distilleries in China, which is far from meeting the growth space in this field. Zhang Haoran, secretary general of the Shiwujia Liquor Research Institute, told the titanium media APP that whiskey and other spirits have become more mature in foreign markets, and they still have a large room for growth in China.
Cai Xuefei also analyzed and analyzed that more mature wines such as whisky have strong development potential in the Chinese market. For domestic wine companies, in the case of weak overall production growth in wine and other categories, whisky is a new growth point. According to data released by Diageo executives, the current penetration rate of foreign liquor in the Chinese market is only 3%.
The replacement of core consumer groups has forced the structural "fine-tuning" of the drinking market
Not only the whisky market, but also the domestic liquor market in recent years can be described as "blooming everywhere". In addition to more mature categories such as foreign liquor and beer, low-grade fruit wine brands aimed at young consumer groups such as Luojiu, Plum See, and Seventeen Light Years are also threatening.
The logic behind it is not unrelated to the diversification trend of consumption in the mainland wine market. With the replacement of the core consumer groups in the liquor industry, the personalized demand for alcohol by young consumers is rising, and the drinking scene is also constantly diversifying. According to the "2021 Annual Alcohol Consumption Report" released by JD.com, more than 40% of alcohol consumers are post-85s.
The Jingdong Double Eleven Wine Consumption Atlas released by the Jingdong Consumption and Industry Development Research Institute mentions that from the perspective of age distribution, young people aged 20-25 prefer to drink cocktails and rum, and 26-35 years old prefer to drink cider and beer. Obviously, the preferences of young consumer groups are forcing the Structural Adjustment of the Chinese liquor market, and have also prompted the emerging liquor market to increase significantly.
Cider chart, derived from Visual China
According to the "Jingdong Supermarket 11.11 Foreign Wine Consumption Trend Report", Chengdu is one of the hottest cities for foreign wine consumption in 2021, with high-end foreign wines increasing by more than 16 times year-on-year, and in 2021, during the Jingdong 11.11 opening period, the sales of fruity low-grade wine increased by 24 times year-on-year. According to 2021 EARLY DATA data, in the first half of 2021, the sales of fruit wine on Taobao, Tmall, Tmall International and Jiuxian.com platforms surged by 1626.2% year-on-year to 324.3 million yuan, with sales of more than 3.6 million pieces, an increase of 1944.6% year-on-year.
In the above context, liquor giants have also opened the road of diversified development to capture young consumer groups. In recent years, such as Luzhou Old Cellar (000568. SZ) and other liquor giants jointly cross-border innovation to create milk tea wine, at the same time Laojiao set up a fruit wine company, launched "Green Language", "Flower Drink", "Pick Up Light" and other fruit wine brands, liquor leader Moutai also launched "Youmi" blueberry wine.
The rise of the emerging liquor market, the contribution to the two major spirits giants of Pernod Ricard and Diageo has been clearly reflected in its financial reports. According to the data, Pernod Ricard achieved sales of nearly 6 billion euros in the first half of fiscal 2022, and profit from continuing operations of nearly 2 billion euros, of which sales in the Asia-Pacific region increased by 16% year-on-year, and the company said it mainly benefited from the rapid development of markets such as China and India. Diageo achieved net sales of £8 billion and operating profit of £2.7 billion, representing an 18% increase in sales in Greater China, ahead of its global average of 15.8%.
In an interview with the media in November last year, Ainhua, managing director of Diageo China, said frankly: "In fiscal 2021, Diageo's net sales in Greater China have increased by 38%, and from the data point of view, the size and value of China's alcohol market are leading the world, and in just five years, Diageo Greater China's net sales have risen from 2% to 5% in the world." ”
However, the emerging liquor market may only be a "fine adjustment" to the structure of China's liquor industry. Cai Xuefei told the Titanium Media APP: "I think it will not have much impact on the entire domestic liquor market share for the time being, taking into account that China's liquor consumption is based on China's liquor consumption culture." Zhang Haoran also told the Titanium Media APP that emerging liquor markets such as whisky still need a lot of market education and consumer cultivation, which will be a challenge for brands that have not yet formed a leadership type. (This article was first published on the Titanium Media APP, the author | Zhang Haixia, the editor | Cui Wenguan)