Alcoholic Drinks in China 2024 Market Summary
EXECUTIVE SUMMARY
Alcoholic drinks in 2023: The big picture
Total volume of alcoholic drinks in China saw a marginal rebound in 2023, shifting from decline in 2022 to a slight single-digit increase in 2023. However, the off-trade channel experienced a slight decrease in volume sales, while the on-trade channel saw a low single-digit volume increase. The growth trend was mainly driven by consumers venturing out of their homes as pandemic control measures ended in China, leading to a resurgence of consumption in venues such as restaurants and bars. Looking at different categories of alcoholic drinks, lower alcohol drinks, including beer, RTDs, and cider/perry, showed varying degrees of growth in volume sales and retail sales prices, while spirits and wine experienced slight single-digit declines in volume sales.
2023 key trends
In 2023, a trend was seen towards consumption by younger people of legal purchasing age. The preferences of these drinkers in China have significantly diverged from those of traditional Chinese drinkers. Younger legal drinkers tend to choose lower alcohol drinks, such as RTDs, cider/perry, and beer, all of which saw an increase in volume sales in 2023. In addition, younger consumers of legal purchasing age pay more attention to the way they drink. Drinking alone at home for pleasure, and having a few drinks with friends in small gatherings, have become the main drinking patterns for such consumers.
A trend towards more premium consumption patterns was also evident in 2023. The premiumisation of alcohol consumption primarily stems from Chinese consumers’ pursuit of a higher quality of life, as observed across different price segments of products; for instance, premium lager saw a significant increase in sales compared with 2022, with high single-digit growth in total volume sales in 2023. In Chinese spirits, the growth of the super premium and premium segments significantly outpaced that of other price segments in this year.
Competitive landscape
Looking at specific categories, in spirits in China, Niulanshan Er Guo Tou, representing China’s economy Chinese spirits, maintained its leading position in total volume terms in 2023, and saw a rebound in its sales and share after a difficult year in 2022. In RTDs, Rio experienced dynamic double-digit total volume growth in 2023, due to its low alcohol content, successful new product launches, and proactive marketing strategies, thus moving up the ranking in overall alcoholic drinks. In beer, domestic economy lager brand Snow continued to hold a substantial lead in overall beer volumes, although second-placed Tsingtao also maintained a rising share. These also remained the two leading brands in overall alcoholic drinks. In cider/perry, Carlsberg’s Somersby performed remarkably well in 2023, achieving high growth in volume sales and share, and overtaking Strongbow to becoming the top-selling brand, driving the overall development of the category.
Retailing developments
From the perspective of the off-trade channel, supermarkets and small local grocers continued to account for the highest shares of total volume sales in 2023. However, the proportion of volume sales of alcoholic drinks via retail e-commerce continued to increase in this year, mainly due to significant growth in sales through content e-commerce platforms such as Douyin and Xiaohongshu, in addition to traditional e-commerce platforms. Drinkers are also increasingly attracted to the live-streaming and low-price sales strategies on these content e-commerce platforms. Furthermore, in spirits in China, there is a noticeable trend of manufacturers directly selling their products. Traditional distilleries aim to reduce the involvement of intermediaries by directly addressing consumers, thereby shortening the distance between them and consumers, and facilitating brand marketing activities.
On-trade vs off-trade split
With the lifting of COVID-19 control measures in China, the distribution split between the on-trade and off-trade channels changed in 2023, with the on-trade regaining some of its lost share, but unable to return to the pre-pandemic level. As on-trade venues in China returned to normal operations in 2023, many alcoholic drinks categories saw a resurgence in on-trade sales. Categories such as cider/perry, beer, and RTDs experienced a shift from negative to positive growth in on-trade volumes, reflecting the return of on-trade drinking to people’s daily lives after the pandemic. However, although wine and spirits saw a slowing of their on-trade volume declines in 2023, they were unable to return to growth.
What next for alcoholic drinks?
It is expected that during the period from 2023 to 2028, total volume sales of alcoholic drinks in China will maintain slow and stable single-digit growth. The CAGR for 2023-2028 is anticipated to be positive but only minimal, which will prevent a return to the pre-pandemic level of total volume sales in the short term. The prospects for lower alcohol drinks in China remain promising, driven by new drinking demographics. Younger drinkers of legal purchasing age and female drinkers are notably more inclined towards low alcohol drinks in their choices. They seek to enjoy drinking moderately while staying clear-headed and healthy, leading to the increasing popularity of lower alcohol drinks in China. Cider/perry and RTDs are therefore expected to maintain high single-digit or even double-digit annual growth rates during the forecast period. Meanwhile, Chinese breweries are actively pursuing brand rejuvenation, engaging in more cross-industry collaborations with other food and beverage categories to connect with younger consumers (of legal purchasing age) and cultivate a loyal customer base.
Simultaneously, premiumisation is expected to remain a continuous theme in alcoholic drinks in China moving forward. In 2023, craft beer, premium lager, and premium Chinese spirits all showed good growth momentum, and this is set to continue. Various breweries are beginning to develop high-end product lines, aiming to raise product prices. In the context of minimal total volume growth, they are likely to seek to achieve higher profit margins through the sale of more upscale alcoholic drinks.
MARKET BACKGROUND
Legislation
Legal purchasing age and legal drinking age
In China, the legal drinking age is not explicitly defined by specific legislation. However, the legal purchasing age is set at 18 years old, as stated in the Alcoholic Drinks Operation Management Regulations. As awareness grows amongst Chinese parents regarding the adverse consequences of early alcohol consumption, children are increasingly discouraged from engaging in drinking before reaching the age of 18. There were no alterations made to the legal purchasing age or legal drinking age legislation in China during the 12-month period leading up to December 2023.
Drink driving
In China, the legal limits for drink driving are determined by the Blood & Breath Alcohol Concentration and Examination for Vehicle Drivers (GB19522-2010). According to this regulation, individuals operating a vehicle with a blood alcohol level (BAL) of between 20mg/100ml and 80mg/100ml are over the limit and are engaged in drink driving. Those with a BAL exceeding 80mg/100ml are classified as drunk driving, which is considered a criminal act.
The 8th Amendment to the Criminal Law and China’s Road Safety Law, both effective from 1 May 2011, establish the penalties for driving after consuming alcohol. These penalties include fines, extended detainment periods, and in cases where serious accidents occur because of drink driving, criminal charges are filed. Furthermore, individuals found guilty in such circumstances will have their driving license permanently cancelled. There were no modifications made to the legislation pertaining to drink driving over the 12-month period leading up to December 2023.
Advertising
The Measures for the Administration of Alcohol Advertisements, which was implemented on 1 January 1996, aimed to enhance the regulation of alcohol advertising, safeguard consumer rights and interests, and promote healthy social behaviour. However, on 27 October 2017, the Measures for the Administration of Alcohol Advertisements was abolished following the promulgation of the Decision on the Abolition and Modification of Some Regulations (Order No. 92) by China’s State Administration for Industry and Commerce.
Since the abolition of the Measures for the Administration of Alcohol Advertisements, there is no specific legislation that explicitly prohibits the involvement of minors in alcoholic drinks advertisements. Nevertheless, the Advertising Law’s Article 10 stipulates these advertisements must not pose harm to the physical and mental health of minors. Article 40 prohibits alcohol advertisements targeting minors through mass media channels. In addition, Article 23 specifies that alcohol advertisements must not encourage uncontrolled drinking, showcase drinking or drink driving behaviours, or imply that alcohol can alleviate stress, anxiety, or enhance physical strength.
According to the Measures for the Administration of Broadcasting of Radio and Television Advertisements, broadcasters are required to exercise strict control over alcoholic drinks commercials and refrain from broadcasting them when and where minors are the primary target audience. Radio stations are allowed a maximum of two commercial advertisements for hard liquor per hour, while TV stations should limit the daily broadcast of hard liquor commercials to no more than 12 advertisements. Furthermore, between 19:00hrs and 21:00hrs, no more than two advertisements should be aired.
Smoking ban
To regulate smoking behaviour, the National Development and Reform Commission, in collaboration with the Supreme People’s Court and other government departments, implemented regulations in March 2018, which came into effect on 1 May 2018. According to these regulations, individuals caught smoking in designated smoke-free areas of high-speed trains or other train compartments will face restrictions on purchasing train tickets for a period of 180 days. This measure serves as a deterrent to discourage smoking in prohibited areas, and promotes a healthier and cleaner environment for all passengers.
Over 20 cities in China, including Beijing, Shenzhen, Shanghai, and Hangzhou, introduced their own local regulations to prohibit smoking in public indoor areas in 2023. This move aimed to create smoke-free environments and curb the negative impact of smoking on public health.
Opening hours
In accordance with the Entertainment Venue Management Regulations, which became effective on 1 March 2006, public establishments that serve alcohol are required to be closed from 02:00hrs to 08:00hrs. This regulation applies to venues providing entertainment services to the public.
On-trade establishments
According to Euromonitor International’s consumer foodservice research, total foodservice outlet numbers increased by 3% in 2023 compared with 2022. After the end of pandemic control measures in China, consumer spending in on-trade channels has noticeably increased.
OPERATING ENVIRONMENT
Contraband/parallel trade
Contraband/parallel trade in China has experienced a decrease due to intensified government crackdowns and tariff reductions, although it remains a significant long-term challenge for the country’s alcoholic drinks industry.
Duty-free
Duty-free shops in China are primarily located in first-tier cities and popular tourist destinations. Major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen have multiple duty-free shops, providing shopping convenience for both domestic and international tourists. In addition, the Chinese government is working to develop Hainan Island into a world-class duty-free resort. In 2023, the main duty-free policies and allowances for Hainan Island remained the same as the previous year. The quota was set at CNY100,000 per person per year. In addition, the number of duty-free goods categories was set at 45.
Cross-border/private imports
In general, cross-border/private imports of alcoholic drinks into mainland China remained the same in 2023 compared with previous years. Individuals aged 16 or older are allowed to carry two bottles of alcoholic beverages (750ml per bottle, 12% alcohol) without tariffs when crossing immigration. Any additional bottles will incur tariff charges. Individuals under the age of 16 are prohibited from carrying alcoholic beverages.
KEY NEW PRODUCT LAUNCHES
In December 2023, Pernod Ricard officially released its first China-made pure malt whisky, The Chuan from Emeishan. The design integrates features from both Eastern and Western traditions. In terms of barrel selection, it not only uses American bourbon barrels and Spanish sherry barrels, but also innovatively uses Chinese oak barrels from Changbai Mountain, giving The Chuan whisky a truly unique Chinese flavour.
Outlook
During the forecast period, the introduction of new alcoholic drinks in the market will be influenced by shifts in consumer demand. Currently, the major new products in the Chinese market are showing a continuous trend towards premiumisation and lower alcohol content. Breweries are constantly launching higher-priced new products and investing more in product presentation and packaging. Meanwhile, the craze for lower alcohol drinks is driving breweries to continuously introduce lower alcohol product lines, aiming to meet the new needs of a diverse range of consumers.