Research
Interview Synopsis

China's Western-style Spirits Market Review

  • Public Equity
  • Consumer
  • Europe

The imported Western-style spirit market in China is about 6 million cases and, out of this, Cognac and whisky make up the majority. Third Bridge Forum learned more about the intricacies of this market and how COVID-19 has affected it from a senior executive at Rémy Cointreau SA.

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The case of cognac and whisky in China: consumption set to continue growing

The Interview outlined China’s alcohol market. Within the spirits segment, Western-style spirits, although an attractive play in itself, take up a relatively tiny share — the vast majority belongs to baijiu. However, one important trend the specialist pointed out for spirits is that: “the overall market is flat to declining, and the decline is really, no surprise, from the national spirits, so imported spirits are growing.”

There are three main players in the Cognac market: Pernod Ricard, Moët Hennessy and Rémy Cointreau. The spirit’s cultural context and how it is normally consumed were also discussed. “Cognac is really a marker of success towards your peers or whoever you want to impress.”

The specialist discussed key growth drivers for Cognac and whisky, including an expanding middle class and recovery from the state’s clampdown on extravagant spending in 2013. Coronavirus also had a dampening effect for the industry, with a “total stop” on sales for six weeks, although there was a better than expected performance in April.

Regarding on-trade sales, the specialist divided this into traditional and modern categories. The former, which is the largest at present, includes karaoke and hotels, while the latter is Western-style bars and clubs – and it’s the latter part that is growing. However, there are varying levels of profitability in these different sales channels. “The best is e-commerce… and the worst is modern on-trade.”

Changes to the industry from now until 2021 and whether the underlying growth drivers from the past five years will remain intact were also on the agenda, as well as the growing importance of e-commerce.

To access all the human insights from Third Bridge Forum’s China’s Western-style Spirits Market Review Interview, click here to view the full transcript.

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