Low-strength and organic alcohol market to expand in China

Posted by Josette Dunn on 12th January 2011

According to Datamonitor’s recently launched report, Market Insights: Alcoholic Beverage sales in China – the country which ranked number one globally in volume of alcoholic beverage sales in 2009 – are forecast to reach 61 billion litres in 2014, compared to 47 billion litres in 2009.Several factors have contributed to the immense growth of alcohol consumption in China. Among many, rising disposable incomes and resulting improved lifestyles are considered the most important.

Others, such as increasing consumption among female consumers are fuelling growth in the wine market particularly. The new generation of working women in China is both socially compelled to consume alcohol in order to stay equal in the eyes of their male colleagues and also is more financially independent now to afford the elitist drink.

Saritha Pingali, Datamonitor’s Consumer Markets Analyst and the report author said: “The female fast growing consumer segment may create demand for pre-mixed drinks and fruit-based alcoholic beverages like wines in the Chinese alcoholic beverages market as Chinese women are financially more independent but also believe that wine consumption is good for health and promotes beautiful skin.”

This presents a fantastic opportunity for Australian alcoholic beverage manufacturers and exporters to tap into this huge, growing Chinese market.

In addition, China’s entry into the WTO has ensured reduced import taxes on imported alcohol, which is encouraging an influx of several prominent international brands into the Chinese alcoholic beverages sector. This is allowing consumers to embrace foreign brands reflecting their increased affordability. This is also creating a variety of choice for consumers, thus driving demand for differentiated products.

Saritha added: “Government interference will continue to influence the consumption patterns of alcoholic beverages in China. Baiju, which has been the most favored alcoholic beverage in China, is now threatened by low-strength alcohols being promoted by the government. Effective from August 2009, the government has spiked taxes on high strength alcohols, compelling consumers to choose among wine and beer, which are both relatively low in alcohol contents.

Growing health concerns are driving demand for beverages with low alcohol content and organic alcoholic beverages. Datamonitor estimates that the per capita consumption of still wines (low strength wines), will grow nearly three times faster than that of the overall sector, between 2009-14.

Saritha concluded: “The increasing focus on health could also drive demand for organic alcohols in future. Furthermore, according to Datamonitor China has the fastest growing market for organic alcoholic beverages in the Asia Pacific till 2014.