Chinese alcoholic beverages – market possibilities

China is one of the world’s largest alcoholic beverage markets. For many years, the Chinese people preferred domestic alcoholic beverages. Recently the structure of demand changed. While the shelves of Chinese supermarkets are still filled with expensive ceramic jars with baijiu and the nation’s most revered high-alcohol “rice vodka,” more and more Chinese are learning to enjoy red wine and imported beer.

Chinese alcoholic beverages

Alcohol was consumed on Chinese soil 7000 years ago. It was always indispensable to religious ceremonies and important events, such as weddings and funerals. Jiu (酒) is the general term for alcohol. The traditional beverage was usually distilled from sorghum or rice, ranging from 20% (huangjiu) to over 40% of alcohol content (baijiu).

Chinese alcohol huangjiu

Huangjiu (黄酒) is an alcoholic beverage that is not distilled. Therefore, its color can be between yellow and dark brown, although there is a light-colored huangjiu. It is a beverage with a relatively low alcohol content (8-20%), made of sorghum, millet, or rice. Liaojiu (料酒) is a sub-type of huangjiu, typically used for culinary purposes, often in the form of rice wine from Shaoxing (绍兴):

  • mijiu (米酒) – made of sticky rice, similar to Japanese sake and Korean cheongju
  • yuanhongjiu (元红酒) – dry wine
  • jiafanjiu (加饭酒) and huadiaojiu (花雕酒) – semi-dry wine
  • shanniangjiu (善酿酒) – semi-sweet wine
  • xiangxuejiu (香雪酒) and feggangjiu (封缸酒) – sweet wine.

In Shaoxing, there is a tradition that when a daughter is born, a jar of wine is buried underground. This wine is given to the daughter on her wedding day. Therefore, the wine is called nuerhong (女儿红, daughter’s red). This wine is also known by another name, huadiaojiu (花雕酒), after the decorative jug in which the liquor is stored.

Chinese liquor baijiu

Baijiu (白酒) is a strong distilled alcoholic beverage made from sorghum, corn, barley, or rice. The alcohol content is 40-60%, and the price is RMB 60-200 for 500 ml. Officially, there are as many as twelve flavors of baijiu:

  • nongxiang (浓香), “strong”
  • jiangxiang (酱香), “umami flavor,” such as maotai (茅台) in the protocol
  • qingxiang (清香), “mild”
  • mixiang (米香), “rice flavor”
  • fengxiang (凤香)
  • laobaigan (老白干)
  • texiang (特香)
  • fuyu nongxiang (馥郁浓香), “very strong”
  • chixiang (豉香)
  • zhimaxiang (芝麻香), “sesame flavor”
  • dongxiang (董香)
  • jianxiang (兼香), “double.”

One of the most popular baijiu are jiangxiang, nongxiang and qingxiang. Beijing’s famous erguotou is a double-distilled baijiu. Gaoliangjiu (高粱酒) is an alcoholic beverage made from sorghum.

According to the global ranking of the 200 largest brands of alcoholic beverages, the top five companies are Chinese (compare average prices for a 500 ml bottle of a given brand):

  • Moutai (RMB 740)
  • Wuliangye (RMB 163)
  • Yanghe (RMB 65)
  • Luzhou Laojiao (RMB 68)
  • Gujing Gong Jiu (RMB 60).
Chinese alcoholic beverages top five brands

The next top brands are famous Jack Daniel’s, Hennessy, Smirnoff, Bacardi, and Johnnie Walker.

Top alcoholic beverages brands 2021
The largest brands of alcoholic beverages in the world in 2021, data: Brand Finance

Even though baijiu accounts for 80% of China’s sales in the alcoholic beverage sector, more and more Chinese people see it as an unhealthy beverage and reminiscent of bygone times, and they opt for beverages with lower alcohol content. Especially red wine and beer are gaining popularity.

Alcoholic beverages imported into China

Below is a list of alcoholic beverages exported to China:

  • 威士忌 (weishiji, whiskey)
  • 白兰地 (bailandi, brandy)
  • 伏特加 (futejia, vodka)
  • 朗姆酒 (langmujiu, rum)
  • 金酒 (jinjiu, gin)
  • 龙舌兰酒 (longshelanjiu, tequila)
  • 葡萄酒 (putaojiu, grape wine)
  • 泡酒 (paojiu, sparkling wine)
  • 啤酒 (pijiu, beer).

China’s alcohol imports fluctuate year-to-year. The latest figure is over 1.52 billion liters.

China imports of alcohol beverages 2013-2019
China imports of spirits in kiloliters, 2013-2019, data: 前瞻产业研究整理

Beer in China

Beer was introduced in China at the end of the 19th century. The first breweries were established in Qingdao (by Germans) and Harbin (by Russians).

The most famous beer brands in China are:

  • Tsingtao
  • Harbin (popular in restaurants and stores)
  • Yangjing
  • Budweiser (sold in clubs and karaoke bars)
  • Snow.

Beer import in China is over 584 million liters and declining (in 2018, it was 821 million liters). Over 70% of China’s imported beer comes from Europe.

China is the largest beer consumer in the world. Recently, craft beer and non-alcoholic beer have become popular in Chinese metropolises. Craft beer is up to 14 times more expensive than regular beer (7 RMB per liter of mass-produced beer, 100 RMB for specialty beer). Chinese consume beer alone with a snack/meal at home/in a bar (as opposed to baijiu, which is often consumed in a company).

Wine in China

Wine imported from Western countries was not widely available until Deng Xiaoping’s reform, China’s open-door policy. As soon as it was introduced to the Chinese market, wine consumption grew exponentially. In 2013, China overtook France and Italy and became the world’s largest consumer of wine (a staggering 2 billion bottles of wine were sold in China). Since 2018, for various reasons (trade war with the United States, Covid-19 pandemic), wine imports have been declining to hit 430 million liters in 2020.

In terms of the share of individual types of alcohol, the rapid growth in popularity of red wine, which overtook the classic Chinese baijiu, is noteworthy. Wine is trendy among the growing middle class, and the rising number of pubs and bars means more opportunities to consume it. It is worth mentioning that they are often consumed by women who, stereotypically, are excluded from drinking baijiu, which is considered a beverage for men. What are the business opportunities here?

  • About 80% of the wine consumed in China is from domestic wineries. The remaining 20% is imported from countries such as Australia, France, Chile, Italy, the US, Chile, and South Africa. French wines enjoy the greatest prestige; the price per bottle usually exceeds RMB 400.
  • Most Chinese consumers know very little about wines and opt for “luxury names” such as “Bordeaux,” “Chardonnay,” or “Burgundy.”
  • The color of the wine also matters. Red wine sells better because it is associated with wealth and happiness in China.
  • As in the case of many other products, it is easier to introduce premium wine to the Chinese market than low-budget or middle-priced wine, which loses its competitive edge with local products.

Export spirits to China

People born in the 1980s and 1990s in China account for approximately 30% of Chinese society, which is a target market for spirits exporters. They consume the most alcoholic beverages, most often choosing beer (91%), followed by wine (57%) and baijiu (31%).

Setting up an alcoholic beverages-distributing company in the Chinese market is not overly complicated. Like in the other sectors, wholly-owned foreign enterprises and joint ventures are the most common form of business presence in China. The company should follow the regulations of the local Administration of Industry and Commerce. It also should prepare labels according to the rules of the China Entry-Exit Inspection and Quarantine Bureau.

The biggest problem with exporting alcohol to China is that Chinese counterfeit spirits. Premium beverages with high alcohol content, such as Johnnie Walker, are often counterfeited, and the same happens with beer and wine brands. Nevertheless, if you protect your intellectual property (sign the NNN agreement) and carefully plan your expansion strategy in China, you can make it big in a huge market.

If you want to learn more about expanding your business to China, make sure to check out our post, “Exporting products to China and preparing for the Chinese market.”