China spirits consumption to slow

China, the world’s biggest spirits market, will see its consumption of domestic spirits slow between 2014 and 2018 according to IWSR.

The figures, presented to the Hong Kong trade by Vinexpo, seem to show that China’s taste for domestic spirits is waning – and being overtaken by imported spirits and wine.

In 2013 the Chinese market consumed over 1.1 billion nine-litre cases of spirits – 49% more than in 2009.

Yet this was almost entirely based upon consumption of locally produced baijiu. Despite the much vaunted boom in Cognac in China, imported spirits make up just 0.4% of the market in China the IWSR reports.

Of the 1.178bn cases drunk in China by 2013, 1.17bn were baijiu – the biggest single category in the world.

But the Vinexpo-commissioned IWSR study predicted that between 2014 and 2018 this spirits growth will slow to just 2.8% and consumption will hit 1.2bn cases by the end of that period.

Baijiu’s growth is expected to slow the most. Having shot up nearly 50% between 09-13, it will plummet to just 2.7% in the next five. The days of explosive growth are “probably over”, said the report.

The reasons are manifold: the anit-corruption crackdown, simple saturation of the market and changing consumer behaviour.

Baijiu’s loss though is wine and imported spirit’s gain. President Xi Jinping’s on-going purge has had an adverse effect on foreign imports as well which has been well documented.

Although the crackdown cannot be expected to end anytime soon, when the situation begins to ease, IWSR predicts it will be imports which profit most.

Baijiu’s growth may slow to just 2.7% but imported spirits can hope for something closer to 20%-22%, while wine consumption is forecast to grow at around 24%.

Spirits predictions from the IWSR see Cognac/Armagnac hitting growth of 28.5% to 2.7m cases by 2018; Scotch up 17% to 1.6m cases; rum 29% to over 200,000 cases and Tequila up 28% to 80,000 cases.

Wine consumption per capita is also predicted to grow, 25% from 1.2 litres to 1.5l between 2014-2018. This would represent a 66% increase in per capita wine consumption between 09-18.

The IWSR stated that the “fundamentals” for wine consumption growth in China “remain strong in the long term”.

This is bolstered by a growing domestic wine industry, the growing middle class looking for what they deem a “healthier” alternative to baijiu as well as one seen as “sophisticated”.