Young, sophisticated consumers boost sales of foreign alcohol
For Huang Qifang, the highlight of her wedding banquet in 2015 was not the luxurious feast at the JW Marriott hotel in Shanghai, nor showing off the Korean-style wedding photos she spent tens of thousands of yuan on.
Rather, it was the sight of a solitary bottle of Macallan 12 Year single malt whisky that was on one of the 20 tables. It is customary for the newlyweds to demonstrate their gratitude to their guests by serving premium alcohol at the banquet. The most common option is baijiu.
“Everyone was taking photos of the bottle and posting it on their social networks, calling me the first and coolest bride they have seen to offer whisky to guests,” said Huang.
“And it was only priced at 380 yuan ($56) a bottle back then, much cheaper than the Wuliangye (Chinese liquor) I put on the other 19 tables,” added the 33-yearold Shanghai native.
Huang and her husband — they both used to work in the food and beverage industry in Shanghai — are avid drinkers, spending an average of 6,000 yuan on wine and spirits every month, with whisky accounting for the lion’s share.
“Some men splurge on cars. Some women splurge on shoes. We happen to share an interest in alcohol,” said Huang, who admitted that she enjoys sipping “whatever gets her tipsy” with her husband every night since they got married.
In their home, their alcohol collection comprises craft beer, wine, gin and whisky.
“The tougher the day is, the pricier the drink we have. And whisky is definitely on the top,” she added.
The couple is among the horde of young consumers today who are driving growth in the Chinese liquor market which has been stagnant since 2015 following the introduction of the anti-corruption campaign two years before. Sales of premium liquors like Chinese baijiu and brandy were severely affected by the crackdown as government officials were banned from gifting luxury items.
A 2014 report by Diageo, the world’s biggest producer of spirits, showed that the company’s revenue in China dropped by 14 percent that year, a result of the anti-corruption campaign.
But many foreign spirit brands and manufacturers have managed to weather the situation by readjusting their strategies in China to focus on the younger generation. In 2017, whisky sales in China soared by 19.5 percent year-on-year to hit 17.4 million liters in terms of imports, according to the Financial Times. Chinese luxury industry watcher Rupert Hoogewerf, the founder and publisher of Hurun Report, once said that more than 80 percent of the young generation in China has increased their whisky consumption since 2015, with about 70 percent indicating that they would continue to drink more whisky over the next three years.
According to research by Hurun Report, a luxury publishing group based in Shanghai, the average retail price of a bottle of whisky in China is now 520 yuan, while about 30 percent of the consumers they surveyed said they are ready to spend more than 1,000 yuan on a purchase.
Diageo said that its sales in China in the first half of this year had grown 32 percent from the same period last year.
“In China, the consumption of brown liquids such as cognac and whisky has yet to grow. But we think the potential is great. Right now penetration is only at less than 1 percent. This means there is a lot more room for growth,” said Jeff Lin, marketing director of Diageo China. In China, the world’s largest alcohol consumer, the sale of local white grain liquor, or baijiu, still far exceeds that of imported spirits. According to data from IWSR, an international alcohol beverage market data and analysis provider, imported spirits account for less than 2 percent of the overall alcohol market in China.
In July, luxury hotel brand Peninsula Shanghai partnered Scottish label Macallan to launch an exclusive 1991 vintage single malt whisky. There are only 220 bottles of this limited edition liquor which was aged in sherry oak casks. The price of the bottles range from 18,888 to 88,888 yuan, depending on the “auspiciousness” of their serial numbers.
“We have already ventured into collaborations with prestigious champagne and wine houses so we felt that it is now time for us to try to move into the world of spirits, especially whisky,” said Frederik Van den Borre, the hotel’s food and beverage manager.
“I don’t think there is a particular trigger event that has boosted whisky consumption in China. It’s just that with the education of different brands, and the introduction of the Michelin restaurant guide, young local connoisseurs have grown more sophisticated and are looking for a different excitement on the palate,” he added.
Andrew Khan, vice president of LVMH’s Moet Hennessy Diageo China marketing department, agreed that targeting the young crowd is the way to go these days. The brand’s two key growth engines, he said, are the US and China markets.
Sales of foreign alcohol brands used to be severely affected by the national anticorruption campaign, but many labels are now making a resurgence thanks to young and sophisticated consumers who are eager to explore new tastes
In April, Moet Hennessy, which has been in China as early as 1869, launched its 12-day “Hennessy Declassified” campaign in Xiamen, Fujian province, that mimicked the settings of the popular theatrical production Sleep No More by offering young consumers an immersive experience about the production process of its cognac. The event received nearly 4,000 visitors, with about 1,400 signing up for the brand’s tasting classes.
“I think the opportunity for spirits is enormous. It’s a long game for us, which means that we are only at the beginning despite having been in China for many years now,” said Khan.
“There are a lot of people out there who have little knowledge about Hennessy and we believe that is why they are not drinking it. So it’s very important for us to share knowledge so that we can introduce our cognac to the new generation of consumers.”
Part of Moet Hennessy’s efforts to drive brand awareness involve working with Chinese restaurants where chefs design dishes that pair well with X.O. and V.S.O.P cognac. The first dining establishment the brand has partnered with in Shanghai is Cantonese restaurant Yanting, which is located in the St Regis Shanghai Jing’an.
There, Liu Junping, the restaurant’s chef, has paired the cognac with Shunde cuisine, which is believed to be the source of Cantonese cuisine. Shunde cuisine is defined by its focus on preserving the original flavors of the ingredients. Dishes are never deep fried or slathered with heavy gravy or sauces.
For the cognac pairing menu, which is available till the end of the year, eight dishes, ranging from cold appetizers to the cuisine’s signature fish soup, are complemented with two types of spirits.
“Most of the dishes we have picked feature very light flavoring so that diners can still savor the taste of the two spirits after enjoying the food,” said Liu, who admitted this is also his first time pairing his creations with Western spirits.
“I think for whoever is interested in food and beverage, the surprise always lies in the conflict or contrast between different flavors and textures. What nature has gifted us has inspired us to create a variety of tricks on the palate,” he added.
In China, the consumption of brown liquids such as cognac and whisky has yet to grow. But we think the potential is great. Right now penetration is only at less than 1 percent. This means there is a lot more room for growth.”
Jeff Lin marketing director of Diageo China
With the education of different brands, and the introduction of the Michelin restaurant guide, young local connoisseurs have grown more sophisticated and are looking for a different excitement on the palate.
Liu Junping (top left), chef of the Cantonese restaurant Yanting in Shanghai, has paired the cognac with Shunde cuisine, which is believed to be the source of Cantonese cuisine.