CHINA: Spirits slide but promise still glitters - research
A decline in the core spirits market in Asia should not be seen as a deterrent to international alcoholic drinks companies from entering the market, if the findings of a recent report on the Chinese market for beers, wines and spirits, published by Access Asia, is anything to go by.
According to the report Alcoholic Drinks in China: A Market Analysis, the core market for spirits has declined markedly in recent years but this has been due to consumers moving away from traditional spirits, and switching primarily for health reasons to beer.
Although the total spirits market declined in value by 12.82% between 2000 and 2006, this was largely due to the continued slide in sales of mass-market domestic grain spirits, the reports states. Indeed, such spirits represented 22.1% of total value sales in 2006, having declined from as much as 60.9% in 2000. So the market still supports some large companies, competing for an increasingly high-end market, the report contends.
Taken as a whole, the report says, the Chinese alcoholic drinks market is both large, and still growing rapidly. The increased number of drinking outlets, especially bars and nightclubs, as well as restaurants, have helped to increase market penetration for all alcoholic drinks. In addition, the spread of organised retail chains has helped to provide greater market penetration for the home consumption market. In addition, Chinese consumers are becoming more sophisticated, and highly brand conscious.
The Chinese beer market has grown at an astounding pace in recent years, the report goes on to say, spurred on by the massive levels of foreign investment in the market, along with the rise in the average levels of consumer spending in China, thanks to the economic reform policies of the government.
Total consumption of beer grew by 33.56% between 2000 and 2006 to reach 30.47bn litres, and China has now overtaken the US to become the largest national beer market in the world.
Wine is also beginning to gain greater consumer acceptance. The influence of Western eating and drinking habits has been key to this evolution, as have rising average incomes in China. Indeed, wine is now becoming the fashionable drink for the wealthy younger generations in China's cities, and the "badge" drink of China's wealthiest élite. The value of the market has more than doubled over the last five years.
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