China 2015: CATEGORY UPDATES | Alcohol
BAIJIU BRANDS PURSUE NEW STRATEGIES TO STIMULATE DEMAND
Demand for baijiu continued to weaken and makers of the traditional white alcohol experienced profit pressure as price premiums eroded because of government policies that discourage extravagant official gift giving and entertaining.
Baijiu brands responded with various strategies, including: lowering prices, repositioning from premium to mid-market, seeking overseas markets and selling the bi-products of brewing grain as animal feed. Baijiu brands also expanded both online and physical distribution channels
Chinese wine brands also experienced a decline in demand for premium products, because of China’s slower economic growth rate, government austerity measures and the entrance of more foreign competition. Wine brands attempted to control costs, but also invested to improve grape cultivation and harvest.
Beer brands experienced stronger results. Several are owned by the major global brewers and benefited from resources and marketing expertise. Promotion around beer festivals and sponsorship of the FIFA World Cup helped drive consumption.