CHINA: China opportunities for drinks firms "just beginning"
The opportunities in Chinese cities such as Shanghai are "just beginning" for international drinks firms, according to experts
Opportunities for international drinks firms in China are “just beginning” but companies should be equally aware of Far East companies eyeing opportunities in the West, according to industry experts.
A four-strong panel debated the potential for drinks companies in China during a two-hour session hosted by the Worshipful Company of Distillers in Central London last night (May 3). Martin Riley, Pernod Ricard's chief marketing officer, pointed to China's emerging middle class which estimates suggest could hit 430m by 2015. The current figure is 300m.
“Even if this estimate is only 50% right, that's still a massive amount of people who will be open to our brands,” he said. The demand for premium brands, particularly Cognac and whisk(e)y is “dramatic” and disposable income is rising, Riley added. He pointed to the top three current international brands in China, which are Hennessey Cognac, Martell Cognac and Chivas Regal whisky.
However Riley highlighted a number of issues international firms face in operating in China, including the cost of wholesalers and advertising. He also pointed out consumers are “more sophisticated” now and “you have to have local talent that understands local differences”. “The colour and shape (of a bottle) can have great significance in Chinese culture,” he said.
However, he added: “The opportunities are just beginning (in China) and international spirit companies have a chance to play a very important role.”
Bill Farrar, group sales & marketing director at the Edrington Group, said he did not believe China was “isolationalist” pointing to the fact it is currently building the largest airport in the world. He said as more Chinese consumers travel it will “have an impact”.
But he warned there was a chance China could “go its own way”, as locals stick to local brands.
Chris Pitcher, a partner at equity broker Redburn, also warned that China could “start looking externally”, with companies eyeing investments in the west. He added: “Look east, but look east with open eyes, because they are looking west at us.”
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