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Focus – For Western liquor manufacturers, taking on the challenge of producing China’s national liquor is an extremely difficult task.

Written by Emma Rumney and Casey Hall

London/Shanghai, March 6 (Reuters)Global drinks giants seeking to capitalize on young Chinese drinkers’ growing appetite for whiskey and cognac are facing challenges in the fight against China’s dominant liquor baijiu producers.

Western companies such as Diageo DGE.L and Pernod Ricard PERP.PA The company has so far focused on China’s luxury goods market, but believes the growing number of affluent young consumers and changing drinking habits could further broaden the appeal of its products.

Diageo, the maker of Johnnie Walker whisky, said its whiskeys target not only high-end consumers, but also the growing middle class, millennials and Gen Z.

But they are trying to undermine the dominance of producers of baijiu (a hot, clear distilled spirit known as China’s national drink), who, along with their Western peers, are inventing unique new products aimed at younger consumers. is facing the issue.

Diageo currently operates online stores on platforms such as Douyin, China’s TikTok, and in December launched a one-hour delivery service for its products in partnership with local businesses, said Diageo’s managing director for Greater China. , Atul Chapalwal told Reuters.

“There is huge room for growth,” Chaparwal said, adding that Chinese people are drinking more at home and there are more bars and boutiques specializing in whiskey.

Boston Consulting Group predicts that between 2022 and 2030, the number of middle-class and affluent consumers in China will increase by 80 million, reaching nearly 40% of the population.

Western spirits account for only about 3% of China’s spirits market, the world’s largest.

According to Euromonitor, the baijiu market will be worth about $167 billion in 2023, dwarfing whiskey at $2.8 billion and even cognac, which has a long history in China but is still worth just over $9 billion. .

Euromonitor predicts that whiskey, including Scotch, will be the fastest-growing spirits in China in the coming years, jumping 88% between 2023 and 2026, analysts said. For now, demand among young people remains niche and limited to five-star hotels. And a Western restaurant.

Nightclub cognac, baijiu latte

Pernod Ricard wants to grow both its whiskey and cognac businesses in China. Jérôme Cotin Bisonne, Pernod Ricard’s China managing director, said more people can now buy Pernod drinks and young people want more options.

Last September, the group launched Martell Noblige Frame in China, a cognac product targeted at younger customers at nightclubs and music festivals.

In China, alcohol is traditionally consumed with meals and during celebratory events, and baijiu is ubiquitous at banquets, business transactions, and as a gift option.

Bottles sell for anywhere from $1 to several hundred dollars, depending on the brand, but sales of the most famous and expensive labels have slumped, prompting producers to innovate to meet demand for more diverse drinks. I’m forced to.

Cafe latte is 38 yuan, Luckin sold 5.4 million people visited on the first day.

Cai Xuefei, general manager and liquor analyst at Zhiqu Consultancy, said Chinese beverage companies are also increasingly offering other spirits to meet the demands of younger consumers.

Their dominance has so far meant limited success for Western companies trying to expand their market share, said Daniel Teitzlin, co-founder of Gotham East, an alcohol distributor focused on imported spirits. He said he was there.

cocktail party

Even cognac, China’s most popular international spirit, has only gained popularity among wealthy drinkers in southern provinces such as Guangdong, where baijiu culture is less widespread, says Teitzlin. he said.

Diageo has been acquiring a stake in baijiu producer Sichuan Shuijingfang Co. Ltd. for more than a decade as new Chinese companies enter the whiskey market.

Jay Robertson, CEO of China-based whiskey start-up Nine Rivers Distillery, said whiskey has benefited from the separation of alcohol and food and a shift towards more Western-style drinking styles. He said there was.

Favoring local products could give domestic companies an advantage, but international companies are trying to avoid that.

Pernod now offers Chuan Pure Malt, made at a distillery in China. It was opened During December. Diageo plans to open a distillery in China this year.

Even small shifts in China’s market share could be rewarding for Western players.

Bob Hong, a 43-year-old IT professional from Shanghai, recently started drinking whiskey. Whiskey is increasingly appearing at foreign-style cocktail parties and is becoming more affordable compared to high-quality baijiu, he said.

“If you can see more (international spirit) in China, more people will choose China,” he said.

(1 dollar = 7.1980 Chinese Yuan)

Top 5 global alcohol markets in 2022 https://reut.rs/3T7RSzj

Sales of baijiu, cognac and whiskey in China (billions of dollars) https://reut.rs/49xer6e

Sales of baijiu, cognac and whiskey in China (billions of dollars) https://reut.rs/49zY5cZ

Growth forecast for various spirits in China https://reut.rs/3OUMtcf

Top 10 most valuable alcohol brands in the world in 2023 https://reut.rs/49jHtGw

(Reporting by Emma Rumney in London, Casey Hall and Brenda Go in Shanghai, and Sophie Yu in Beijing; Editing by Susan Fenton)

((Emma.Rumney@thomsonreuters.com; +447391409253;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Summarize this content to 100 words
Written by Emma Rumney and Casey Hall
London/Shanghai, March 6 (Reuters) – Global drinks giants seeking to capitalize on young Chinese drinkers’ growing appetite for whiskey and cognac are facing challenges in the fight against China’s dominant liquor baijiu producers.
Western companies such as Diageo DGE.L and Pernod Ricard PERP.PA The company has so far focused on China’s luxury goods market, but believes the growing number of affluent young consumers and changing drinking habits could further broaden the appeal of its products.

Diageo, the maker of Johnnie Walker whisky, said its whiskeys target not only high-end consumers, but also the growing middle class, millennials and Gen Z.
But they are trying to undermine the dominance of producers of baijiu (a hot, clear distilled spirit known as China’s national drink), who, along with their Western peers, are inventing unique new products aimed at younger consumers. is facing the issue.
Diageo currently operates online stores on platforms such as Douyin, China’s TikTok, and in December launched a one-hour delivery service for its products in partnership with local businesses, said Diageo’s managing director for Greater China. , Atul Chapalwal told Reuters.
“There is huge room for growth,” Chaparwal said, adding that Chinese people are drinking more at home and there are more bars and boutiques specializing in whiskey.
Boston Consulting Group predicts that between 2022 and 2030, the number of middle-class and affluent consumers in China will increase by 80 million, reaching nearly 40% of the population.

Western spirits account for only about 3% of China’s spirits market, the world’s largest.
According to Euromonitor, the baijiu market will be worth about $167 billion in 2023, dwarfing whiskey at $2.8 billion and even cognac, which has a long history in China but is still worth just over $9 billion. .

Euromonitor predicts that whiskey, including Scotch, will be the fastest-growing spirits in China in the coming years, jumping 88% between 2023 and 2026, analysts said. For now, demand among young people remains niche and limited to five-star hotels. And a Western restaurant.

Nightclub cognac, baijiu latte
Pernod Ricard wants to grow both its whiskey and cognac businesses in China. Jérôme Cotin Bisonne, Pernod Ricard’s China managing director, said more people can now buy Pernod drinks and young people want more options.
Last September, the group launched Martell Noblige Frame in China, a cognac product targeted at younger customers at nightclubs and music festivals.

In China, alcohol is traditionally consumed with meals and during celebratory events, and baijiu is ubiquitous at banquets, business transactions, and as a gift option.
Bottles sell for anywhere from $1 to several hundred dollars, depending on the brand, but sales of the most famous and expensive labels have slumped, prompting producers to innovate to meet demand for more diverse drinks. I’m forced to.

Cafe latte is 38 yuan, Luckin sold 5.4 million people visited on the first day.
Cai Xuefei, general manager and liquor analyst at Zhiqu Consultancy, said Chinese beverage companies are also increasingly offering other spirits to meet the demands of younger consumers.
Their dominance has so far meant limited success for Western companies trying to expand their market share, said Daniel Teitzlin, co-founder of Gotham East, an alcohol distributor focused on imported spirits. He said he was there.

cocktail party
Even cognac, China’s most popular international spirit, has only gained popularity among wealthy drinkers in southern provinces such as Guangdong, where baijiu culture is less widespread, says Teitzlin. he said.
Diageo has been acquiring a stake in baijiu producer Sichuan Shuijingfang Co. Ltd. for more than a decade as new Chinese companies enter the whiskey market.
Jay Robertson, CEO of China-based whiskey start-up Nine Rivers Distillery, said whiskey has benefited from the separation of alcohol and food and a shift towards more Western-style drinking styles. He said there was.
Favoring local products could give domestic companies an advantage, but international companies are trying to avoid that.
Pernod now offers Chuan Pure Malt, made at a distillery in China. It was opened During December. Diageo plans to open a distillery in China this year.

Even small shifts in China’s market share could be rewarding for Western players.
Bob Hong, a 43-year-old IT professional from Shanghai, recently started drinking whiskey. Whiskey is increasingly appearing at foreign-style cocktail parties and is becoming more affordable compared to high-quality baijiu, he said.
“If you can see more (international spirit) in China, more people will choose China,” he said.
(1 dollar = 7.1980 Chinese Yuan)
Top 5 global alcohol markets in 2022 https://reut.rs/3T7RSzj
Sales of baijiu, cognac and whiskey in China (billions of dollars) https://reut.rs/49xer6e

Sales of baijiu, cognac and whiskey in China (billions of dollars) https://reut.rs/49zY5cZ
Growth forecast for various spirits in China https://reut.rs/3OUMtcf
Top 10 most valuable alcohol brands in the world in 2023 https://reut.rs/49jHtGw

(Reporting by Emma Rumney in London, Casey Hall and Brenda Go in Shanghai, and Sophie Yu in Beijing; Editing by Susan Fenton)
((Emma.Rumney@thomsonreuters.com; +447391409253;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/focus-challenging-chinas-national-drink-is-tall-order-for-western-liquor-makers Focus – For Western liquor manufacturers, taking on the challenge of producing China’s national liquor is an extremely difficult task.

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