Battling Baijiu Dominance
Global liquor behemoths like Diageo and Pernod Ricard are setting their sights on the burgeoning demand for whiskies and cognacs amongst younger Chinese consumers. However, their journey is no easy feat as they strive to wrestle market share from the formidable producers of baijiu, China’s quintessential national spirit.
Historically, Western companies have concentrated on the opulent sector of the market within China. Nevertheless, recognizing a shift in consumer preferences and the emergence of affluent millenials and Gen-Z individuals, these companies aim to broaden their consumer base.
Challenging Landscape
Diageo, the renowned maker of Johnnie Walker whiskey, is strategically targeting the expanding middle class, along with millenials and Gen-Z, positioning its whiskies to resonate with both the mass market and elite consumers.
Despite this, penetrating the baijiu-dominated market remains the primary obstacle for Diageo and its Western counterparts. Baijiu producers are readily innovating, creating new offerings tailored to the evolving tastes of the young demographic.
Embracing Evolution
Diageo has tactically leveraged online platforms like Douyin (China’s TikTok) to widen its reach. Furthermore, the company has recently introduced rapid one-hour delivery services in collaboration with a local enterprise to cater to the shift towards home consumption and the budding trend of specialized whiskey bars.
Boston Consulting Group predicts a significant surge of nearly 80 million middle class and affluent consumers in China by 2030, depicting ample room for growth in the spirits sector.
Whiskey vs. Baijiu: A Market Disparity
While Western liquors constitute a mere 3% of the Chinese spirits market, baijiu reigns supreme with a staggering market value of $167 billion, dwarfing whiskey and cognac. However, Euromonitor forecasts an 88% growth for whiskey in the upcoming years, primarily fueled by the discerning tastes of the younger demographic.
Despite this positive trajectory, whiskey’s demand among young consumers remains confined to upscale venues, such as five-star hotels and Western eateries.
Diversification Strategies
Pernod Ricard is on a mission to expand its whiskey and cognac business in China, aligning with the increasing affordability of its offerings among a wider audience. The introduction of Martell Noblige Flame, a cognac product tailored for younger patrons frequenting nightclubs and music festivals, exemplifies Pernod’s commitment to diversification.
Chinese distilleries and liquor analysts are foreseeing a shift in consumer preferences, prompting local players to introduce a variety of spirits to cater to the evolving tastes of the younger demographic.
Paving the Path Forward
The influx of Western liquor brands in China has sparked a nascent interest in products traditionally overshadowed by baijiu. With changing dynamics in drinking culture and a proclivity towards Western-style consumption, the market is ripe for a significant transformation.
As both domestic and international players jostle for a share of the burgeoning market, the realms of whiskey and cognac are primed for disruption, hinting at a compelling future for the spirits industry in China.
