The rise of a drinking culture at Chinese social gatherings, along with increased disposable income among younger consumers, are set to drive the value of China’s spirits market to over US$450 billion and take around 46.9% of global market share by 2021, according to analytics firm GlobalData.
The Chinese spirits market will grow at a compound annual growth rate (CAGR) of 15% between 2016 to 2021, to more than double to US$450 billion by 2021 from US$205 million in 2016. The Chinese spirits market will likely hold 46.9% and 66.2% of the global and Asia Pacific share by 2021, up from 32.8% and 52.3% in 2016, GlobalData estimates.
"The country’s GDP has grown at a rate of around 7% to 8% in the last few years, which has increased disposable income, especially in more cosmopolitan urban areas. With more dispensable income, these Chinese consumers love to spend on social occasions, especially on drink," said GlobalData analyst Ryan Whittaker.
China’s younger consumer base that drink on social occasions and the country’s increasing number of female drinkers will play a key role in the years to come for the Chinese spirits market. Per capita spirits consumption in the country was pegged at 7.3 liters in 2016, nearly a full liter over the global average of 6.4 liters and 6.2 liters in the Asia Pacific region. China’s per capita spirits consumption is set to rise to 14.4 liters by 2021, according to the report.
Specialty spirits are Chinese drinkers’ favorite category compared to other spirit types, as it accounted for 94.2% and 98.2% in terms of value and volume respectively in 2016. This large size is caused by the large amount of locally produced and China-specific spirits. The category, worth US$193.3 billion in 2016, is set to grow further at 15.1% per year, dominating the overall spirits market to 2021.
Brandy was second in the market with a 3.9% value share and a 0.9% volume share, followed by Whiskey, Vodka, Gin and Genever, Tequila and Mezcal, Liqueurs and Rum. Of these trailing category, Tequila and Mezcal demonstrates the most notable signs of potential growth ahead, according to the report. While the Tequila and Mezcal category is at the bottom in terms of value and volume, it will witness the fastest growth, rising at 21.6% over 2016 to 2021, says the report.
In 2016, six out of ten spirits consumers in China were male. Consumption was high among consumers with tertiary education, who accounted for 75.6% of the total, followed by 17.3% consumers with post-secondary education. In terms of geography, Spirits consumption is mostly concentrated in urban China with a significant share of 97.5%.
"Rural China’s consumption is almost negligible in all categories except Specialty Spirits. As the consumers were mostly from urban areas, hypermarkets and supermarkets emerged as the leading channel for spirits distribution in 2016, with a 54.4% share of volumes," Whittaker added.
Beijing Red Star Co., Ltd, Niu Lan Shan Distillery and Jiangsu Yanghe Group Co.,Ltd are the market leaders in the Spirits sector of China, according to the report.