Chinese drinkers’ sentiment towards alcohol particularly on spirits is improving after the pandmeic as on-trade consumption resumes, according to the latest findings from IWSR’s ongoing alcohol consumer sentiment tracking.
After Covid-19 restrictions were lifted in China, consumer sentiment and personal confidence levels amongst Chinese alcohol drinkers have risen further, allied to a far more positive consumer attitude towards drinking out in bars and restaurants, says IWSR. Traditionally, pre-Covid the on-trade commanded over 45% channel share by volume.
The increases are evident in a broad spectrum of spirits from Irish, Japanese whisky to tequila/mzcal, cognac and low/no alcohol categories.
Within whisky, which commands around a quarter volume share of China’s spirits market (excluding national spirits), Japanese and Irish whiskies have historically performed well, with volume CAGR growth 2016-2021 of 22% and 56% respectively.
Single malt Scotch appears to have benefited particularly from the end of lockdowns. While the user base remains steady at around one in seven Chinese urban affluent adults who drink alcohol (the sample for the longitudinal tracking), those saying they drink Single Malt several times a week has jumped from 8% to 22% in February 2023 compared with September 2022. Half of single malt drinkers say they are drinking this beverage more often, and four in 10 think they are spending more money on a bottle when they buy it.
“China is one of the most positive global markets, with alcohol consumers generally feeling confident about their financial position and future,” says Richard Halstead, COO Consumer Research, IWSR. “China’s urban middle class consumers are positive in general and specifically in their attitudes and behaviour towards beverage alcohol.
“Personal confidence levels are higher than in 2022. Sentiment around drinking and dining in the on-premise has improved, and there is positive momentum across a range of beverage types, with premiumisation still occurring.”
The rebound in single malt Scotch reflects a broader uptrading sentiment in the whisky category generally. Irish whiskey is, says Halstead, “a notable success story”, with 43% of consumers saying they are buying more expensive bottles in February 2023, up from 32% in September 2022. Japanese whisky has experienced a similar dynamic (up from 35% to 46%), as has US whiskey (up from 38% to 47%).
Levels of price sensitivity are broadly in line with 2022, although both Irish whiskey and vodka have broadened their spectrum of acceptable prices in the eyes of Chinese consumers. At a time when many global markets are notably cost-conscious and characterised by downtrading, China stands out for its willingness to spend.
“Top-end stated spend on alcohol is comfortably in ultra-premium territory,” says Halstead. “Across all spirits categories, Chinese consumers consider a price within the ultra-premium band to be acceptable – but standard-and-below-priced drinks are often considered too cheap.”
However, a significant negative factor impacting consumer sentiment within China’s beverage alcohol market is the relatively pessimistic attitude of younger adult Gen-Z consumers, who account for an increasing proportion of the consumer base but have suffered from an unusually high level of unemployment in the past few years.
“Gen Z consumers are notably less positive than older generations, perhaps because they felt the impact of the pandemic at a more formative period in their lives,” says Halstead. “Despite the Chinese market being more optimistic in general, Gen Z consumers of legal drinking age are more likely to have financial concerns and worries about the future.”