Recently, there have been more and more moves by domestic liquor companies to lay out the whisky track. What are the reasons for enterprises to enter the market? What is the current domestic whisky market? What difficulties are still faced in the development of domestic whisky? This reporter conducted an investigation and interview.
Distilleries gather to lay out whisky
The reporter learned that Tianyoude Liquor recently put 3 whisky products on the e-commerce platform, and as early as 2016, Tianyoude Liquor set up a wholly-owned subsidiary to build a project with an annual output of 1,000 tons of barley whisky.
Whisky originated in Europe and is a distilled spirit made from grains that are saccharified, fermented, distilled, aged, or blended. In recent years, domestic liquor companies have entered the whisky track.
In November 2023, the Anhui Gucci Herbal Whisky Distillery project, jointly funded by Anhui Gujing Group and a French company, officially started, and production is expected to start in 2025. In April 2023, Emeishan Gaoqiao Whisky Liquor Co., Ltd. was established, with Sichuan Langjiu Co., Ltd. holding 85% of the shares, which also marked the beginning of Langjiu's emphasis on the whisky business.
Prior to this, a number of liquor companies have laid out the whisky track. In July 2022, Luzhou Laojiao cooperated with a British spirits group to launch a variety of products blended from Scotch whisky and liquor, at the beginning of 2022, the first batch of cask whisky barrels of Bacchus Distillery, a subsidiary of Bairun Co., Ltd., was officially pre-sold, in June 2020, Jinjiu released the Jinshi whisky flavored herbal spirit "Jinshi", and in April 2019, Yanghe Co., Ltd. and Diageo launched the first Chinese whisky "Zhongshiji".
In addition, some domestic beer and rice wine companies are also eyeing the whisky track. Tsingtao Brewery's proposed project will be able to produce 2,500 tons of whisky annually after it is put into operation; rice wine company Guyue Longshan recently revealed that its whisky products have entered the stage of full barrel production, and the pre-sale of whole barrels will be gradually implemented in small quantities this year.
Catering to young consumer groups with new products
As for the practice of domestic liquor companies testing the water of whisky, industry experts believe that this can not only enrich the business line of liquor companies, but also help them develop a young user base.
Cai Xuefei, an expert from China's liquor industry think tank, told reporters that the entry of liquor companies and beer companies into whisky is related to the advantages of lower promotion costs and more accurate target customers. Whisky has a certain overlap with the distribution channels and consumer groups of existing liquor companies, and the product demand is complementary, which can meet the differentiated needs of consumers such as self-drinking and friends, expand consumption scenarios, and cultivate the drinking habits of new consumer groups, so as to provide a new incremental market.
Xiao Zhuqing, a liquor marketing expert, and Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, both believe that the liquor and beer markets are saturated and the competition is fierce.
Ouyang Qianli, secretary general of the liquor branch of the Shandong Association of Individual and Private Enterprises, said in an interview with reporters that from the perspective of external factors, whisky is one of the few liquor categories that is growing rapidly, and it is a world-class category with wine, beer and other categories. From the perspective of internal factors, the total production capacity of liquor has reached its peak and will continue to decline in the future, which means that prescient liquor companies have begun to lay out the next track, and liquor companies have all channels except night games, or will reap dividends in the future of breakthroughs in the whisky scene.
The data shows that in recent years, the domestic whisky market has developed rapidly. According to the 2022 annual alcohol import situation released by the Liquor Importers and Exporters Branch of the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal Husbandry, the import volume of whiskey in mainland China in 2022 was 32.82 million liters, an increase of 8.4%, and the import value was US$560 million, an increase of 20.3%, accounting for 24.5% of the total spirits imports. The increase in whisky imports indicates that the demand for whisky in the domestic market is being released rapidly. According to the analysis of Shengang Securities, the whisky market will maintain a high growth rate in the next 3-5 years.
Behind the rapid development of the market, more and more young buyers are entering the market. According to the data of the "2023 Whisky Annual Report", at present, 76% of whisky buyers in mainland China are under the age of 40, and 37% are young consumers aged 18-29.
Xiao Zhuqing believes that whisky is an internationally recognized consumer category, with the increasing frequency of international exchanges, this international liquor industry consumption trend continues to infiltrate the domestic market, loved by young consumers, whisky is becoming a new component of young people's lifestyle, but also become one of the new trends of mainland consumption.
Development still faces many challenges
However, domestic distilleries still face many challenges in expanding their whisky business.
On January 30, the reporter visited a supermarket near Zengguang Road in Haidian District, Beijing, where the shelves were dominated by foreign brands such as Chivas Regal, Jack Daniel's, and Suntory, with prices ranging from tens of yuan to hundreds of yuan, making it difficult to see domestic whiskey. Compared to liquor, whisky products occupy a very small proportion of the area on the shelf. In a nearby Wumart supermarket, the reporter found no whiskey products on the liquor shelves.
Bai Wenxi said that the domestic whisky market has shown a rapid growth trend in recent years, and domestic whisky has gradually emerged in the market, and some brands have been recognized and favored by consumers. However, compared with internationally renowned whisky brands, domestic whisky still has a lot of room for improvement in terms of quality, brand, and market.
Ouyang Qianli said that at present, the consumption scene of whisky is still night market, and the purchase channels are concentrated in group buying and e-commerce, and most domestic whisky is still in the pipeline.
Zhu Danpeng, an analyst of China's food industry, said that as a foreign product, whisky has a certain brand tonality, and its promotion in China is in the introduction period, which requires a lot of resources, funds and flow.
At present, domestic whisky is still in the initial stage of development. According to the "2022-2023 China Whisky Industry Research Report" (hereinafter referred to as the "Report") released by the China Liquor Industry Association, there is a large gap in domestic whisky professionals. There are only about 100 technicians specializing in whisky production in China, about 70 professional distillers, and about 50 professional tasters. The report also pointed out that the restrictions on oak barrels and barrel aging of whisky in mainland China are restricted by the late start of the industry, and the barrel aging liquor is basically low-year, with about 45,000 kiloliters of barrel aged less than 2 years, and the proportion of barrel aged liquor for more than 5 years is relatively small, almost all of which are experimental liquors.
Cai Xuefei also believes that whisky represented by cognac is a niche market as a whole, and the overall market size is about 5 billion yuan. Whisky is still facing the lack of sociality, the category culture is relatively narrow, the quality of taste and flavor promotion is insufficient, and the business and gift market is relatively weak, which restricts the development of whisky.
However, the domestic whisky market is also improving. In April 2023, the Whisky Professional Committee of the China Liquor Industry Association was established. The content framework of the Chinese whisky product certification rules and group standards issued by the association stipulates the basic requirements for the certification procedures and management of Chinese whisky, fills the gap in domestic whisky product certification, and urges the industry to standardize its operation.
In the face of the immature whisky market in China, Bai Wenxi said that domestic liquor companies need to strengthen cooperation and exchanges with international whisky brands, learn advanced production technology and brand management experience, and continuously improve their competitiveness.
Xiao Zhuqing believes that whisky marketing requires a long period of cultivation and popularization of consumption scenarios, and it is a sign of market maturity to improve individual consumption behavior to group social consumption behavior and generate named purchases. Domestic whisky should start with quality, empower brands with quality, and gradually gain consumer recognition.
Source: China Consumer Daily • China Consumer Network