Domestic whisky is expected to achieve a 100 billion industry (1)

●The market ushered in a window period of development, and young people became the main consumer force

●Talent shortage, e-commerce fake wine, single consumption scene and so on need to be solved

■Planning: New Express reporter Luo Yun

■Written by: New Express reporter Luo Yun

■Cartography Liao Muxing

In the world of whisky, products from the UK, USA, Japan and even India have all led the way, and the UK is irreplaceable. From the brand point of view, it has always been a high monopoly of the world spirits group. Judging from the data, due to the changes in the global economic situation, the adjustment of mainland tariff policies, and the growth of the whisky market and its share among young high-net-worth individuals, the next eye-catching growth point is China's domestic whisky.

1

British whisky remains the industry leader

According to the "2023 Whisky Annual Report" released by the China Whisky Association, there are currently more than 2,300 whisky distilleries around the world, and the distilled whisky is supplied to more than 9,000 brands to sell worldwide. Whisky distilleries have been established in more than 70 countries and regions, exporting more than 1.8 billion litres of whisky throughout the year. Although the number of countries and regions producing whisky is increasing, the position of the industry leader is still unassailable. In 2022, the UK ranked first in global whisky exports (about 1.169 billion litres), with total exports 5.84 times that of the US, which ranked second.

But the Scotch Whisky Association (SWA), the UK's main whisky producing region, saw its first decline in nearly three years. In 2023, the global export value of Scotch whisky will be 5.6 billion pounds (about 50.929 billion yuan), a year-on-year decrease of 9.5%, and the export volume will be 1.35 billion bottles (700ml), a year-on-year decrease of 19.2%, becoming the first time in the past three years that both volume and value have declined. In addition, exports to Chinese mainland will also increase from 84.9% in 2021 to 1% in 2023.

In terms of sales markets, the United States, which has the largest export value of Scotch whisky, slipped to £978 million, down 7% year-on-year, while exports of 127 million bottles also fell 7% year-on-year.

2

More and more Gen Z investors are joining the track

According to the 2023 Whisky Market Report, jointly produced by Noble & Co., a Scottish financial advisory company, and Brainnwave, an intelligence and decision-making company, by analyzing more than 850,000 bottles of whisky sold at auction, the confidence of enthusiasts in whisky investment and collection has also been hit by many factors such as global inflation, world geopolitical instability, declining disposable income, and weak willingness to spend.

According to the Scotch Whisky Association, whisky exports fell by 20% in the first half of 2023 compared to the same period in 2022. Prices for wines priced above £1,000 have fallen by 7% in 12 months. Between £100 and £1,000 saw a 17% increase in turnover and a 13% increase in turnover. The worst performers were in the £1,000-10,000 range, which saw a slower rate of volume growth and a weaker decline in prices than other segments. All this means that the price of whisky has become lower, and at the same time, there is more attention paid to low-priced products.

The international giants were also quick to react by adjusting the average price of their products in the secondary market, with the average price per bottle falling from £813 to £645. Looking at the regions, the Lowland and Islay whisky fell by more than 20%. In terms of branded distilleries, Granta fell 69%, Glenfiddich fell 56%, and Tamuling fell 52%.

The report also notes that whisky investors have traditionally been mainly from Europe and the United States, but since 2017, buyers from Asia have been exerting influence in the secondary market, and as more and more Gen Z investors join, the constraints of historical price references will be weakened, and future secondary market investors will be from all regions of the world and all ages, achieving true diversification.

3

The domestic whisky market ushered in a window of development

Industry voices believe that the increasingly perfect industry environment and market support, as well as the rapid development of digital marketing channels, have made the spread of whisky in China have unprecedented development conditions. On the one hand, the continuous expansion of China's whisky market, on the other hand, the overall decline in whisky imports, all kinds of signs indicate that domestic whisky is ushering in a window period of rapid development.

It is worth noting that since December 1, 2017, the mainland has adjusted the import tariffs on 187 consumer goods, of which the import tariffs on brandy and whiskey have been reduced from the original 10% to 5%. According to the data of the Liquor Importers and Exporters Branch, after the tariff adjustment, the import of liquor in mainland China rose slightly year-on-year, and the main imported liquor also showed an increasing trend, among which the momentum of spirits was strong.

According to the "2023 China Whisky Industry Development Research Report" released by the Whisky Professional Committee of the China Liquor Industry Association, the market size of mainland whisky in 2023 will be about 5.5 billion yuan, a year-on-year increase of 10%. The industry is still in its infancy, and the market sales are still dominated by foreign brands, and the domestic output is lower than the import volume. Among them, the United Kingdom, the United States, Japan and Ireland account for more than 95% of China's whisky imports, and the share of British whisky alone has expanded to 85.61%.

Compared with the liquor and beer market, which has become a red ocean, whisky is undoubtedly still in the blue ocean stage, and a small share means a larger market gap, fewer competitors and a higher probability of success.

Imported brand giants such as Diageo and Pernod Ricard have built factories in China to deepen the domestic whisky market. Diageo has invested in a malt whisky factory in Yunnan, and Pernod Ricard has also built a malt whisky distillery in Emeishan. Domestic brands are also making efforts, and liquor companies such as Gujing Gongjiu, Yanghe, Langjiu, Luzhou Laojiao, and Tianyoude Liquor have all made layouts in the whisky market. In the eyes of many industry insiders, although the domestic whisky market is still dominated by foreign capital, the "rise and breakthrough" of domestic whisky may only be a matter of time.

4

Young people have become the main consumer of domestic whisky

According to a report released by Morgan Stanley, the size of China's whisky market will grow to US$15 billion (about 107.27 billion yuan) by 2030, and more than 50% of China's whisky consumption is contributed by the young urban population under the age of 34.

Some industry voices said that the reason why the scale of China's whisky market has performed strongly in recent years is because the consumer group has grown fast enough. Behind the continuous expansion of the domestic whisky market is the result of the segmentation of the liquor market, and it is also the result of young consumers gradually becoming the consumer group of Chinese liquor.

At present, young consumers are the main consumer group. According to the data, among the whisky consumer groups, 18-29 year old consumer groups accounted for 39%, while 30-39 year old and 40-49 year old consumer groups accounted for 35% and 13% respectively. At the same time, in the past three years, 74.16% of lovers under the age of 30 have shown a trend of increasing drinking.

Unlike liquor, which relies on the post-60s and post-70s, behind whisky stands the post-80s, post-90s and even post-00s, that is, a new generation of consumer groups. The post-00s generation has shown a higher and higher acceptance of whisky, and has also shown a high enthusiasm and price acceptance for casks.

In addition, singles contribute the most to whisky consumption, with 64% of singles paying attention to whisky. Whisky lovers present a high level of academic qualifications, with 60% of them having a bachelor's degree. In terms of occupation, 19% of artists in advertising, marketing, and media prefer whisky. These enthusiasts have strong purchasing power, and more than 50% of them have a monthly income of more than 9,000 yuan.