![]() Although the Moutai brand dominates the Chinese market with a massive 63%, followed by the Wuliangye brand with 26% (Forward- The Economist 2017), there is evidence that the remaining 11% are seeking other routes to commercial success.Īmongst the old brick alleyways and ginnels of Beijing is Capital spirits – a Baijiu distillery and bar dedicated to the fiery spirit, which can range in strength from late 30% ABV to a more common 50-55% and up to 65% ABV. That may well be changing, as the demand curve for Baijiu in 2018, discussed earlier, demonstrates.īaijiu is becoming more known as the Chinese population travel more and cross-cultural experiences are shared. However market economics are relatively new in China, and products have been developed to be functional rather than luxury consumer goods. Secondly, the Chinese are proud of their heritage and history, which in turn motivates them to re-tell the story as they travel further and more frequently than any other Chinese generation. With much to learn about the category and mature western markets eager for new, yet sustainable, experiences and products, and a strong existing supply chain then Baijiu could become a powerful force internationally and not just focused on the domestic market. Firstly, it indicates that the Baijiu market is still a young market with some distance to travel to maturity, unlike western spirits markets. ![]() The Millenial generation leads to Chinese consumption, which is important for a number of reasons. ![]() Over time economic cycles flush out weaker players and leave an existing core group. Mature consumer markets divide and innovate as they become more mature, as consumers seek the next better experience, with each brand being reflective of a ‘new’ audience refracting consumer differences as competitors challenge for market share. This clearly demonstrates the maturity, in western market terms, of the Baijiu activist marketing strategies in each sector imported spirits versus Baijiu. Taking a closer look at the statistics shows that the number of brands participating in each sector is relatively disproportionate, for example taking the two platforms together (JD&Taobao/Tmall) whisky has 523 brands whereas Baijiu has 829 brands. JD online is the strongest channel for spirits online retailing and sports a larger number of brands across each sector, than its more widely known competitor Taobao/Tmall by some considerable distance. Taobao & Tmall the e-commerce platforms operated by Alibaba Group give a strong indication as to the overall pattern in China and shows that the other categories of spirits, whisk(e)y, brandy, rum, gin, vodka, tequila combined only contribute one-third of the Baijiu consumption. However, there may be other forces at work. This known economic model shows that as the quantity demanded increases, the price increases, which denies the usual demand curve which declares that as price increases demand falls. This suggests that the Baijiu market demonstrates the Veblen effect, almost unknown for such a widespread market product. The Baijiu market was measured as worth $286.5M in 2018 sustaining massive value increases of 38.5% on the back of the 72% increase in retail prices since 2017 (Forbes 2018). With a 5,000-year heritage Baijiu naturally scores heavily as the first choice of the domestic market. With alcohol consumption growing in China more than 70% since 1990 (The Straits Times July 2019) to 11 litres of pure alcohol with men consuming 2.5 times more than women at 7 litres/head/year and women, the influences of the growing middle classes can be clearly seen. Research shows that when put together these known western spirits don’t get close to the consumption of Baijiu in China and suggest that Baijiu is the highest volume spirit consumed globally. Vodka, gin, rum, whiskey, Scotch, tequila, considering the amounts that are published on these spirits, the outside reader would imagine that these are the most consumed spirits in the world. ![]()
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