Spirits Around the World: China

Apr 19, 2016 in Alcohol Beverage, Spirits Around the World, Startups

China’s drinking culture dates back centuries, but the country’s rapid economic development over the past 40 years influences many aspects of current alcohol production and consumption. A growing middle class has disposable income to enjoy a wide variety of beverages, whether the motivation to drink arises from seeking pleasure or status.

Traditional Chinese Spirits

China’s traditional drinking culture focuses on two spirits: baijiu and huanjiu. The most common variety of baijiu, also known as China’s vodka, is distilled from sorghum – although corn, rice and wheat get used as well. This spirit reaches up to 60 percent alcohol, making it a potent drink. It’s also the most popular spirit in China; 99% of all spirits consumed in China are baijiu. While baijiu certainly dominates the market, the one percent of non-baijiu spirits equals 38 percent of the global consumption of vodka, whiskey and other premium liquor.

Huanjiu, also called yellow wine, shares some characteristics with baijiu. It’s made with similar grains but the liquor does not go through a distilling process. The drink goes through an aging process and generally has 20 percent alcohol or less.

China’s rice wine, mostly produced and consumed in Sichuan, may be similar to sake in its production but the taste is quite distinct. The glutinous rice drink is sweet and the consistency often resembles syrup. China also has a growing red wine industry, which took off in the 90s when China faced a cereal grain shortage combined with major health concerns about the consumption of traditional liquor.

Popular Foreign Beverages

China’s economic boom spurred foreign brand imports, both for the purpose of status symbols and because many foreign drinks have lower alcohol content. Beer sits at the top of the preferred list, with the Chinese consuming 50 billion liters annually. Many Chinese drinkers indulge after work and choose beer over spirits with a high alcohol volume like baijiu. Beer also pairs well with many Chinese dishes, making it a favorite at home. In fact, the Chinese are the biggest consumers of beer in the world.

Imported wine has a special place in Chinese drinking culture, tied to the economic boom. Wealthy business owners and high-ranking officials alike sought out prestigious foreign wines, such as Bordeaux and Margaux, as a way to show off their status. China’s political culture prior to 2012 also had a heavy reliance on gifts to get benefits such as tax breaks, which drove a significant part of the market. In 2012, the government addressed this issue through an anti-corruption campaign, which had a heavy impact on wine imports for several years. However, the increased disposable income and Chinese investments in Bordeaux chateaus reversed this trend. China consumers drink 1.9 billion bottles of wine and approximately 20 percent of this wine comes from imports.

Significant Suppliers, Distributors and Brands in China

China is a large country with many distinct regional differences, which creates a marketplace spread across many suppliers, distributors, and brands.

The leading baijiu distributor and supplier is China New Borum Corporation, which services Shangon, Heilongjiang, and Sichuan. Specific brands with a strong foothold in the Chinese spirits market include Maotai, Wuliangye, and Luzhou Laojiao. China Distribution and Logistics LTD handles a significant volume of imported spirits, with brands ranging from Samuel Adams to Dalmore Scotch.

Challenges with Alcohol Distribution in China

China’s massive population, economic and political influences, and cultural differences from western countries make supplying and distributing alcohol challenging for many companies. Distributors are sometimes faced with language barriers, unfamiliar social influences, and a newly adaptive market.

China also faces a major counterfeiting problem that impacts consumer confidence. Picking up low-quality wine marketed as an expensive vintage is a fear shared by 44 percent of China’s wine drinkers.

The Chinese wine, beer, and spirits market is expanding rapidly as the middle class grows and increases their knowledge about non-traditional alcohol. However, for distributors and suppliers wishing to tap into the market, it’s paramount to understand the tastes of your specific Chinese regional market, discover the key players in the province, and properly localize everything from marketing material to packaging.