Potential of nation’s market too good to miss
Foreign investors among those making commitments to sink more cash into country
French consumer goods providers will continue to view China as a pivotal destination, as the country boasts a vast and lucrative market that can drive their sustained growth.
Despite a global downturn in investment sentiment, these executives remain committed to enhancing their presence in China. This strategy includes opening new stores and participating in the annual China International Import Expo in Shanghai and the China International Consumer Products Expo in Hainan province.
Upbeat about the Chinese market, Pernod Ricard, a French spirits and wine group, will focus on premium and diversified products in the years ahead.
“China stands as Pernod Ricard’s second-largest market, where we have established a presence for over 30 years and are now the leading imported spirits and wine company in China,” said Jerome Cottin-Bizonne, CEO of Pernod Ricard China.
To sustain its leadership and demonstrate its commitment to China, Pernod Ricard, the parent company of well-known spirit brands including Martell, Glenlivet, Royal Salute and Absolut Vodka, has been capitalizing on the strengths of its diverse product portfolio, a comprehensive distribution network covering all channels and the industry’s strongest footprint in China.
“Our consumer-centric approach is also a pivotal driver, fostering a close connection with consumers and enabling agile responses to the dynamic market and evolving consumer demands,” he said. Cottin-Bizonne added that the company’s commitment extends to investment in its brands, aiming to activate them across various occasions for Chinese consumers who have diverse demands and preferences.
In addition to pushing both online and offline sales in China to seize more market share, Pernod Ricard opened a distillery named The Chuan for malt whisky production in Southwest China’s Sichuan province in 2021.
Covering an area of about 18 hectares, the facility, located in Emeishan, Sichuan province, is the first malt whisky plant invested by a global spirit and wine producer in China. It opened a visitor center in 2023 and the distillery aims to bolster the local economy and domestic whisky culture.
According to market research company Euromonitor International, whisky sales in China are expected to reach $2.25 billion by 2025.
For its 2023 fiscal year from July 2022 to June 2023, Pernod Ricard delivered a strong performance in the Chinese market, achieving a 6 percent sales growth.
“As we are strategically navigating through a landscape of opportunities and challenges for 2024, our unwavering confidence in China remains steadfast,” said Cottin-Bizonne. “We will continue to unlock the power of our comprehensive product portfolio and adopt a ‘consumer-centricity’ strategy, fostering a closer connection with consumers and responding promptly to everevolving market and consumer demands.”
Eyeing a consumption uptrend in China, prominent global luxury house Kering Group, the owner of Gucci, Saint Laurent and Bottega Veneta brands, plans to open a minimum of 10 stores across a diverse brand portfolio in the country annually.
Jean-Marc Duplaix, Kering’s deputy CEO in charge of operations and finance, said that Chinese consumers contributed to 26 percent of the company’s total sales in the third quarter of 2023. They are expected to increase their international travel and make additional purchases in various countries.
The Paris-headquartered luxury conglomerate has around 6,000 staff members and more than 400 stores — almost a quarter of its global retail network — across 40 Chinese cities. Half of Kering’s stores in China were opened during the past decade.
Among Kering’s top 10 cities in terms of sales globally, five are in China. This highlights the significance of China as a pivotal market for the French company, he said.
“The reason extends beyond just the business aspect. It is about establishing a meaningful connection with Chinese consumers,” said Duplaix.
Many of Kering’s brands, such as Gucci, Saint Laurent and Boucheron, have either opened new stores or expanded current ones in Chinese cities, including Beijing, Shanghai, Chengdu in Sichuan province and Nanjing in Jiangsu province in 2023.
China is expected to be the world’s largest luxury consumption market by 2025. The Chinese mainland market, with strong growth in the first quarter, is expected to pick up pace again this year, said global market consultancy Bain & Co.
In recent months, Europe has seen the return of a large number of Chinese tourists after the COVID-19 pandemic and more sustained footfall is expected toward the year’s end and 2025.
This year could see solid growth overall, driven by China’s recovery and sustained growth in Europe and the Americas, Bain & Co said.
Noting online distribution has become a major industrial trend in China, Duplaix said Kering’s team in China has been authorized to tweak its sales strategy to suit local market. They are free to seamlessly integrate technologies and merge global resources with local digital tools.
With this year marking the 60th anniversary of the establishment of diplomatic relations between China and France, Duplaix stressed that Kering has long-term confidence in the Chinese market. The group will continue to explore new opportunities in China.
Supported by a stable economic recovery, China is set to offer more development prospects for both domestic and international companies, said Zhao Ping, vice-president of the Academy of China Council for the Promotion of International Trade in Beijing.
Zhao said that the government is likely to introduce additional policy initiatives this year aimed at bolstering foreign investor confidence and enhancing the quality of international trade and foreign direct investment.
This move will strengthen synergy between domestic and international economic activities, infusing growth momentum into the global economy, she added.
China will reinforce support for innovation and encourage foreign companies to engage in new development tracks to gain greater impetus for growth this year. Relevant measures include encouraging foreign investors to set up research and development centers in China, and cultivate emerging sectors like digital trade and the green economy, said Zhu Bing, director of the department of foreign investment administration at the Ministry of Commerce.