The Chinese Beverage Landscape: Alcoholic Beverage | Tractus

This article is part of a series exploring the beverage industry in China. For a comprehensive global market overview, refer to The Chinese Beverage Landscape: Market Overview and The Chinese Beverage Landscape: Nonalcoholic Beverage and The Chinese Beverage Landscape: Imported Beverage articles.

An integral part of China’s beverage market, alcoholic beverages are highly popular among Chinese consumers. Following a brief downturn in 2020 due to the pandemic, alcohol sales in China saw a return to growth in 2021.

Alcoholic Beverage Categories

Spirits is the most popular alcohol segment in the China market. China also is the largest spirits market globally, with a total sales value of approximately 1,152 billion CNY (US$160 billion*).  Baijiu, a traditional Chinese spirit, continues to rule the Chinese spirits industry with a market share of 98%. Among western spirits, brandy is the most popular with a market share of 77% in 2021, followed by whisky (17%), tequila (2%), vodka (2%), rum (1%) and gin (less than 1%).

Ready-to-drink beverages (RTDs), beer and wine are the second, third and fourth largest subcategories respectively after spirits. Within beer, dark beer was the best-performing category in 2021, with total volume of sales increasing by 29% to 620 million liters. In 2021, RTDs saw the highest year-on-year growth of 37.6%. This category is forecast to maintain double digit growth through 2026. Consumers aged 18-25 have the highest preference for RTDs.

While cider remains niche in the China market with total sales value only amounting to 55.7 million CNY (US$7.7 million*), it has huge potential, as total sales are expected to grow at a CAGR of 12.7% over the forecast period to 100 million CNY (US$13.9 million*) in 2026. 

Market Giants and Challenges

Snow, Tsingtao and Harbin are the three industry giants with the greatest brand shares of alcoholic drinks in 2021 – respectively 19.1%, 7.6% and 5.0%. These three brands’ beer can be found everywhere in China, and their low prices are competitive against international brands. Domestic companies’ brand awareness and price advantage are two challenges that foreign alcohol companies will encounter upon entering the Chinese market. Additionally, foreign companies might struggle to have a grasp on Chinese consumers’ preferences, as their tastes can vary significantly from those of western consumers.

Consumer Behavior and Trends

In 2021, China boasted an impressive count of 53,610 clubs and 9,329,801 restaurants, highlighting the robust consumption of alcoholic beverages in these establishments. With alcohol sales reaching a staggering 2,173.60 billion CNY (US$301.9 billion*) in 2021, it’s crucial for alcoholic beverage companies to take note of the shifting market, particularly the rise of Generation Z as the main alcohol consumers.  

Offline purchases remain dominant, but the rapid expansion of online channels for alcohol consumption, with Western spirits, wine, and liquor experiencing CAGRs exceeding 50%, 40%, and 25% respectively from 2018 to 2022, cannot be overlooked. The market is also witnessing an increasing diversity in flavor, with fruity options gaining popularity. While traditional flavors like beer and Baijiu enjoy customer loyalty, the wider range of flavors in fruity wines appeals to those seeking a fresh taste. A poll conducted by the China Liquor Industry Association and JD.com revealed that over 40% of respondents preferred classic/strong flavors, while nearly 70% expressed a positive attitude towards new flavors and brands.

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As the Chinese beverage market continues to evolve and grow, it is crucial for beverage manufacturers and other industry players to stay up to date with the latest trends, regulatory changes and consumer behaviors in order to remain competitive. At Tractus, we have extensive experience and expertise in helping companies navigate the complex F&B market in China. Our team can assist with market research, supply chain optimization, regulatory compliance, and more to help your business thrive in the Chinese market.

Authored by

Herminio Andres is the General Manager of Tractus’ China office based in Shanghai. Cathy Gu is a Senior Research Analyst based in the Shanghai office.

*The 2023 exchange rate has been used to convert the original data given in CNY to USD.