(Original title: As giants compete for the Chinese market, how long can the foreign wine craze last with mixed blessings | Them after the epidemic)
Although the import data is good, the foreign wine market is showing signs of overheating.
Although the overall domestic alcohol consumption is weak, the foreign alcohol category represented by whiskey has delivered a report card with an increase in both import volume and import value.
During the just-concluded Sixth China International Import Expo (hereinafter referred to as the “CIIE”), several major international spirits giants collectively appeared and expressed their willingness to increase investment in the Chinese market.
A recent investigation by China Business News reporters found that although the import data is good, the foreign wine market has shown signs of overheating. However, most industry insiders believe that although there are factors behind the foreign wine craze, the market is chasing hot spots, but the different business models mean that it may not be repeated. The imported wines are short-lived.
Foreign wine giants: They are optimistic about the Chinese market
At this CIIE, world-renowned spirits companies have become one of the focuses of the food exhibition area. In addition to exquisitely crafted booths, they also have an almost luxurious lineup of exhibiting products, including many first-release new products and their high-end core products. They are very interested in The importance attached to the Chinese market is evident.
China Business News reporter noted that this year whiskey has become the focus of exhibitions by major international spirits companies. Diageo’s four major Scotch whiskey brands were all on display, and also exhibited a number of rare high-age single malt whiskey products such as Scotchton 54-year-old and Gleneagles 52-year-old; Pernod Ricard exhibited nearly 70 dry products. Edding and whiskey products cover representative production areas such as France, Scotland, and Ireland; another well-known spirits company, Eddington Group, in addition to displaying The Macallan’s highest vintage products, also exhibited for the first time another of its single malt whiskey hot spots. Selling brand Highland Knight; among the three new products exhibited by Rémy Cointreau Group for the first time in China, two are single malt whiskey products.
At the same time, relevant persons in charge of several major international spirits companies also expressed their focus and long-term optimism on the Chinese market in media interviews.
Pernod Ricard China CEO Guo Binchen revealed in a media interview that Chinese consumers are increasingly interested in whiskey products. From market insights, we can feel that after the epidemic, Chinese consumer demand continues to be segmented and diversified. This This trend is strengthening; channels are constantly evolving, consumption occasions are becoming more and more diversified, and the trend is becoming more obvious. Therefore, Pernod Ricard hopes to increase its product portfolio and market coverage in the Chinese market to capture new incremental demand.
From the perspective of the industry, the reason why international spirits companies attach so much importance to the Chinese market this year is because they have taken a fancy to the incremental potential of the Chinese market. In the past nine months, although domestic alcohol consumption has been overall weak, import data of foreign wine has shown double-digit growth.
Data from the China Chamber of Commerce for Import and Export of Food, Native Produce and Livestock show that in the first nine months of this year, the total volume and import value of foreign wine increased by 12% and 34% respectively. Among them, the import volume and value of brandy increased by 22.8% and 36.4% year-on-year, while the import volume of whiskey increased. 4.2% and 12.8%.
“We believe that the penetration rate of whiskey in China has increased significantly. This is a long-term and sustainable trend.” Fang Sihua, managing director of Edington Asia Pacific, said that this reflects the needs of Chinese consumers. The change is also related to the Macallan brand’s increased investment in the Chinese market.
In Fang Sihua’s view, the Chinese market is undergoing some new changes. For example, the epidemic has accelerated the growth of whiskey consumption at home. The gathering scene is recovering rapidly after the epidemic. Moreover, unlike consumers in other markets, Chinese consumers are full of curiosity about whiskey. , and prefers to start with high-end categories, which also gives him a more optimistic expectation for the continued growth of the single malt whiskey market.
In an exclusive interview with a reporter from China Business News, Cheng Zhanpeng, the new managing director of Diageo Greater China, also believed that although the proportion of imported spirits in China’s alcohol consumption is not high, with a current penetration rate of less than 5%, in China as a whole Among the growth in alcohol consumption, imported spirits are the fastest growing category, especially the whiskey category. Diageo is also continuing to invest in a series of investment projects in China, including the establishment of a logistics center in Shenzhen, a malt whiskey distillery under construction in Eryuan, Yunnan, and a newly unveiled Shanghai R&D center in August 2023.
A previous report released by Morgan Stanley predicted that the size of China’s whiskey market will grow from US$9 billion to US$15 billion by 2030, and more than 50% of China’s whiskey consumption is contributed by China’s young urban population under the age of 34.
Consumer Terminal: The boom in foreign wine has mixed blessings and sorrows
Compared with the continued improvement in import data, in the terminal market, the performance of foreign liquor categories represented by whiskey is not completely consistent.
Chen Xin, a senior Shanghai whiskey enthusiast, told China Business News that judging from his experience, the number of whiskey drinkers has increased in recent years. The frequency of whiskey appearances in daily drinking bureaus and events is significantly higher than in previous years. However, in recent years, the number of whiskey drinkers has increased significantly. Over time, Chen Xin also discovered that the popularity of whiskey was cooling down.
“The prices of some high-end whiskeys were very high before, but now they have dropped by 30 to 40%.” According to Chen Xin, the price of a high-end Japanese whiskey he had previously liked dropped from 6,500 yuan to about 4,200 yuan, almost falling to 4,200 yuan. 30%, while some popular whiskeys with retail prices exceeding 1,000 yuan per bottle are currently priced at only 600 to 700 yuan per bottle through group buying at dealers.
In addition to the fall in prices, sales in whiskey, brandy and other markets have also slowed down.
“The overall performance of the foreign wine market this year is that both price and volume have dropped, and it is unusual for the price of some high-end whiskey products to fall by 30%.” The person in charge of a large imported wine business in Guangdong told China Business News. From the perspective of real consumption, whiskey, brandy, etc. The market has attracted many young people, and the consumer base is indeed growing. However, the current oversupply in the market, coupled with the short-term impact of external factors on consumption, has accelerated the cooling of the foreign wine craze.
During the peak seasons of Mid-Autumn Festival and National Day this year, some foreign wine sellers reported that product sales slowed down significantly, and some products became inventory, so as to ensure that market prices would not continue to fall. Many wine merchants are worried about whether the market will deteriorate further at the end of this year.
Yang Zhengjian, dean of WBO Wine Business School, believes that the previous market enthusiasm was more about chasing hot spots, but currently the domestic foreign wine market has entered a period of minor adjustment.
As for the strong performance of this year’s import data, the industry believes that it does not fully correspond to market performance.
Xi Kang, specially invited executive director of the China Alcoholic Drinks Association and chairman of the China Spirits and Wine Committee of the Hong Kong Liquor General Chamber of Commerce, told China Business News that foreign wine itself is a niche wine type, mainly in Guangdong, coastal and inland economically developed cities. , its terminal consumption has indeed increased in recent years, but part of the data growth is mainly at the factory and channel end. For example, if the licensed goods of international spirits companies are cleared according to the annual sales plan, this will drive the rapid growth of import data in the same period. In addition, the imported wine industry has encountered a cold winter in recent years. In order to maintain business, some importers have also turned to whiskey, brandy and other fields to find gold, which will also drive some growth in data.
In addition, the person in charge of the above-mentioned major imported wine merchant also revealed that part of the increase in import data in the past two years was due to companies pressing goods to dealers, which eventually became channel inventory that has not been sold; some were hoarded by investors, such as the recent In the past two years, whiskey prices have been on the rise, attracting the attention of many investors. Therefore, he believes that this round of foreign wine craze should be classified as “50% real and 50% virtual”.
The reporter found on some social media platforms that there are many topics about whiskey investment. Some investors lamented that the price of each bottle of high-end whiskey in their hands has recently dropped by 5,000 yuan or more in just six months.
It is worth noting that the cooling of this round of foreign wine craze has also caused concerns in the market. Before this, there was a round of import boom in China’s imported wine market. However, with the entry of a large amount of capital and the low threshold for imported wine, the imported wine market was mixed, causing a collapse of market trust. Import volume dropped from 2018 to 2018. It began to decline continuously and failed to reverse the decline for five consecutive years. In the first nine months of this year, the import volume and import value of domestic imported wine dropped by 27% and 16.3% respectively.
However, in Xikang’s view, taking whiskey as an example, although the current situation of the whiskey market is somewhat similar to that of the period when imported wine was booming, it is also different. Different from the low threshold and brand dispersion of the imported wine industry, whiskey brands are relatively concentrated, and some well-known brands are basically owned by large international spirits companies. The latter have obvious advantages in brand promotion, market operations and industry rules formulation, which is different from The imported wine market faces a completely different situation. Therefore, after the short-term cooling, we are still optimistic about the development of whiskey in the Chinese market in the medium to long term.
Several major foreign wine giants have also realized this. Information released during the CIIE shows that Diageo, Pernod Ricard and Eddington Group have all accelerated their penetration into the Chinese consumer market, including accelerating their efforts to reach more young consumers through digitalization and the layout of new consumption scenarios. And use more Chinese elements to cater to the needs of the old stock consumer market.
Fang Sihua also believes that at present, “we must do our existing things well first, rather than be greedy for more and quick.”