China’s Wine and Spirits Market (4): Other Imported Liquors, Accessories and Events Preferences

Today, many liquor suppliers are keen to sell imported alcoholic beverages other than wine and spirits (such as sake, soju, fruit wine, mead etc) to consumers in China. They are also eager to promote various drinking accessories and related services. According to a survey conducted by HKTDC Research ¹, the mainland market for other imported alcoholic beverages, drinking accessories and related services is still at an early stage and consumer experience is limited. For instance, only 11% of the respondents have consumed other imported alcoholic drinks in the past six months, and only 20% of them have spent money on drinking-related services and activities.

However, the consumer desire for novelty is growing stronger and stronger. The percentage of respondents (27%) interested in purchasing alcoholic beverages other than wine and spirits in the coming year was markedly higher than that of respondents who have done so in the past six months. A larger proportion of respondents (37%) were interested in using and participating in drinking-related services and activities in future. So the mainland market for new imported alcoholic beverages, drinking accessories and related services can be expected to grow. Liquor suppliers should take note and prepare to take advantage of the trend.

1. Other Imported Alcoholic Beverages

Low Market Penetration

At present, only a small number of consumers have tried other imported alcoholic beverages and they do not do so often. According to this survey, only 163 of 1,440 wine consumers (11%) had consumed other imported liquors in the past six months. The response did not vary much between respondents of different genders, age groups, monthly household incomes or cities of residence. Among those who had consumed such beverages, 56% drank once a month or less and 27% drank 2-3 times a month. In other words, only 17% of the respondents who had consumed other imported alcoholic beverages drank such drinks once or more a week. The survey found that at present consumers do not have much experience in drinking other imported alcoholic beverages.

Fruit Wine and Sake Most Preferred

Although consumers may not have much experience in other imported alcoholic beverages, they are beginning to develop an interest in these drinks. 27% of the respondents (382 in number) indicated that they were interested in buying other imported alcoholic drinks in the coming year, a percentage significantly higher than the 11% of respondents (163 in number) who have consumed such beverages in the past six months. Clearly other imported alcoholic drinks are attracting the attention of consumers. There was little variation in the interest shown by respondents of different genders, age groups, monthly household incomes or cities of residence.

Among the respondents who expressed an interest in purchasing other imported alcoholic drinks in the coming year (382 in number), 80% said they were interested in buying imported fruit wine, 77% named imported sake, and another 52% said imported soju. Apparently, consumers are more interested in imported fruit wine and sake.

Novelty the Main Driver

Trying something new is the main reason given for buying and drinking other imported alcoholic beverages. 42% of the respondents said trying novel things and 40% named taste preference as their main consideration. Consumers are eager to experience alcoholic beverages other than wine and spirits. Other major considerations included: relieving stress (35%), expression of a tasteful life (35%), matching with food (31%), and social etiquette (31%). There was little variation among respondents of different genders, ages, monthly household incomes or cities of residence.

Optimum Price Points

The average price paid by respondents for a bottle of other imported alcoholic drinks was RMB190, but those earning a higher monthly household income were willing to pay more. Respondents with a monthly household income of RMB20,000-30,000 said the optimum average price for a bottle of other imported alcoholic beverages was RMB198, while those earning a monthly household income of over RMB30,000 were willing to pay RMB288. The optimum price per bottle did not vary much between respondents of different genders, ages or cities of residence.

Novel and Trendy Image

Liquor suppliers marketing other imported alcoholic beverages to mainland consumers should offer a wide range of flavours for consumers to choose from, and also highlight the trendy image of such drinks. 91% of the respondents agreed that they “hope there are more flavours of other imported alcoholic drinks for me to choose from”, while 76% of them said “buying and drinking other imported alcoholic beverages is a trendy activity”. Today’s mainland consumers see experimenting with other imported alcoholic beverages as a part of trendy urban life. 66% of the respondents said they liked to buy other imported alcoholic beverages as a gift for others. This suggests that as consumers learn more about these drinks, they may become a popular gift item for alcohol lovers.

2. Drinking Accessories and Related Activities

Consumer Interest in Buying More Drinking Accessories

Among the drinking accessories purchased by the consumers, a bottle opener or corkscrew and glasses were the most popular, accounting for 51% and 47% respectively, way ahead of other accessories. Other popular products purchased were wine racks (22%) and decanters (14%). Less popular were more professional drinking accessories such as liquor dispensers (6%), mixers (4%) and pourers (4%). 23% of the respondents never purchased any drinking accessories. At present the respondents mainly buy the basics rather than sophisticated accessories.

Nevertheless, consumers show interest in buying more adventurous drinking accessories. While 23% of the respondents pointed out that they had never purchased any drinking accessories, only 4% said they were not interested in buying them in future. Accessories which the majority of respondents were interested in buying in future were wine racks (20%) and decanters (18%), followed by wine stoppers (15%), bottle openers or corkscrews (12%), glasses (12%) and ice buckets or ice tongs (11%). Meanwhile, 8% of the respondents indicated that they were interested in buying bartender kits for making cocktails. The responses suggest that consumers may gradually buy more such products to enrich their drinking experience. One focus group participant said: “I think a wine pourer, glasses, a stopper and decanter are the must haves of wine lovers.” The interest in drinking accessories was broadly similar across respondents of different genders, ages, household incomes and cities of residence.

Drinking-Related Services and Activities

The percentage of consumers using or participating in drinking-related services and activities was rather low. 80% of the respondents said they had never used or taken part in drinking-related services and activities. For those who had participated, wine exhibitions were the most popular (10%), followed by wine storage service (7%) and wine tasting events (7%). The participation was very low for certificated wine tasting courses (3%), visits to wineries or wine cellars (3%), wine club membership (3%), and wine appreciation classes (1%). Clearly the present market penetration of drinking-related services and events is extremely low.

There was a little more participation from respondents with intermediate wine knowledge ² or those earning a higher monthly income. 10% of respondents with a monthly household income of RMB20,000-30,000 had participated in wine tasting events, while 14% of intermediate respondents had visited wine exhibitions. The interest in drinking related events varied little among respondents of different genders, ages or cities of residence.

Favourite Services and Events

It is worth noting that many consumers may enjoy drinking services and events in future. 37% of the respondents expressed their intention to use or join such services and activities, including activities they had never tried before. For instance, only 1% and 3% of the respondents have attended wine appreciation classes or certificated wine tasting courses respectively, yet 13% and 12% of the respondents expressed an interest in these for the future. 14% of the respondents with an intermediate level of wine knowledge intended to join wine appreciation classes and 15% of those with a monthly household income of RMB20,000-30,000 planned to join certificated wine tasting courses. The respondents also showed some interest in using or taking part in other activities, such as wine storage service (11%), participating in wine tasting events (11%), visiting wineries or wine cellars (10%) and visiting wine exhibitions (10%). The response was similar for respondents of different genders, ages and cities of residence.

There are many reasons why consumers are interested in these services and activities. Some may wish to gain more knowledge about alcoholic beverages. One focus group participant said: “I find joining wine tasting events can help me learn how to appreciate wine and pair it with food. This helps me a great deal in enriching my wine knowledge.” Others wish to broaden their social circle. Another focus group participant said: “Attending activities such as wine tasting events and wine appreciation classes allows me to make friends sharing the same interests.” In sum, consumers have now gradually come to realise the advantages of participating in drinking-related activities. Although the participation rate is rather low at present, consumer enthusiasm is growing.

Conclusion

It is clear that the mainland market for other imported alcoholic beverages, accessories and related activities is not well developed. However, a significant number of consumers say they plan to spend more on these products and services in the future. This is the sign of a growing market.

Liquor suppliers should therefore look for opportunities to expand the mainland market as it rebounds after the coronavirus pandemic. Consumers with a monthly household income of over RMB20,000 should be their target. These consumers show greater interest in such beverages, accessories and services, and will also spend more money on them. The suppliers should also seek to educate these consumers. Hong Kong has a mature market for these products and services and local industry players are very experienced, so Hong Kong companies are well placed to provide quality products and professional services to mainland consumers.

¹ See Appendix for background information on this consumer survey.

² Survey respondents were asked how much they knew about wine and how they would rate themselves: as a beginner (with limited knowledge of wine, who would take other people’s advice before making purchase decisions), intermediate (with some knowledge of wine and an interest in learning more), or connoisseur (with years of experience and an in-depth knowledge of wine). For details, see China’s Wine and Spirits Market (1): Wine Consumption Trends and Habits.

Appendix

Survey Background

Mainland China is one of the world’s fastest-growing markets for wine and spirits. As the Covid-19 pandemic continues, it has also been one of the few regions where economic activity has been able to recover within a short time. The mainland’s retailing and catering sectors have been developing rapidly in recent years, and as they are likely to grow continuously after the pandemic is under control, the chances are that sales of wine and spirits will be sustained in the future.

Since the removal of wine duties in 2008, Hong Kong has become a trading hub for the industry in the Asia-Pacific region. Not only is there a full range of wine-related services available in Hong Kong, but wine traders can also benefit from customs-facilitation measures when importing wine to the mainland through the city. With the mainland wine and spirits market developing apace, more business opportunities are in store for Hong Kong. In view of this, HKTDC Research conducted a consumer survey on the mainland’s wine and spirits market to grasp some knowledge of the mainland middle class’ demand characteristics, spending mentality and purchase preferences for wine and spirits, in order to help Hong Kong companies understand this market and expand their businesses on the mainland with a more targeted approach.

Methodology

The survey carried out in May 2020 polled 1,440 mainland wine and spirits consumers by online questionnaire. Six online consumer focus group discussions had earlier been held in Guangzhou, Shanghai and Xian – two in each city – with the objective of taking an in-depth look at the spending mentality of mainland wine and spirits consumers.