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Should soju and shochu producers bet big on China?
Sales of local Asian spirits are expected to lag in the coming years, but China could provide a bright spot for Japanese and Korean brands.
Spirits across the board saw global volume declines in 2023, and global alcohol has entered negative territory in volume terms for only the third time in the past 15 years. China is, however, somewhat of a bright spot for certain categories of Asian spirits.
Korean spirit soju is expected to report stagnant sales over a five year period (2022-2027), while shochu could see a CAGR drop of 2%, according to IWSR Drinks Market Analysis.
According to the 2023 Brand Champions report produced by the spirits business, Jinro soju saw a 3.5% dip in volumes to fewer than 100m cases in 2023 after surpassing the milestone for the first time the previous year.
However, the Korean company still topped the list of the biggest spirits brands in the world for 2023.
Both soju and shochu are expected to see positive sales in one market in particular — China. These spirits are expected to grow their volumes with a 6% and 8% increase respectively in the country.
China is a key export market for Japanese shochu. Statista data shows that in 2022, exports to China outstripped any other market significantly, at ¥780 million (£3.8m) compared with ¥424m (£2.1m) in the US, its second biggest export market. Australia, South Korea and Hong Kong made up the rest of the top five markets that year.
National spirit
In China, it’s not just other Asian spirits which are seeing positive results in certain price bands against a backdrop of global declines.
Standard-and-below baijiu is expected to decline by a CAGR of 7% over five years (2022-2027), but ultra premium bottlings are predicted to soar by 7% over the same period, signalling a consumer trade-up.
Shui Jing Fang, a baijiu brand owned by Diageo, was named Local Brand Champion by the spirits business. The brand experienced an 11.2% increase in volume sales to 1.4 million nin-litre cases in 2023.
“In China’s baijiu market, those who continue with strong investments and development will become the biggest beneficiaries and reap the biggest rewards,” said Zong Hua Hong, chief corporate relations officer for the brand.
Zong Hua Hong said the company will continue to invest in premiumisation by “leveraging our unique 600-year heritage to drive a strong halo for the overall SJF trademark”.