BRANDS ADJUST STRATEGIES FOR CHANGING CONSUMER TASTES AND REGULATORY IMPACT
The alcohol category grew 30 percent in brand value in BrandZ Top 100 Most Valuable Chinese Brands 2016, following a 22 percent decline a year earlier when China’s anti-corruption campaign, regulatory reforms, and the economic slowdown hurt beer, baijiu and wine, the category segments included in the ranking.
Several brands drove the overall category improvementwithmarketingstrategies that responded to the changing consumer expectations shaped by regulations and the slower economy. Changing drinking habits also fueled the category’s recovery, with the rise of more social drinking in bars or pubs.
For special occasions, the Chinese continued to prefer their traditional drink, baijiu, the white, high alcohol content drink made from distilled sorghum. But other beverage options, like wine, continued to gain share because of high baijiu prices, evolving tastes, and more women drinkers.
The 11 brands of beer, baijiu and wine included in the 2016 BrandZ China Top 100 are, in order of their brand value ranking: Moutai, Yanghe, Tsingtao Beer, ChangYu, Harbin Beer, Wu Liang Ye, Snow Beer, Luzhou Laojio, Gujing Gong Jiu, Yanjing Beer, and Pearl River.
BEER MOVES TO PREMIUM
Beer consumption grew at a weak pace, at least for the mass product, probably impacted by the slowdown in GDP growth and even rainy weather. Although the Internet grew as a beer sales channel, the beer market remained relatively regional and fragmented.
At the same time, strong demand for premium brands continued, reflecting the broader consumer shift to quality. As Chinese brands added premium offerings they faced competition from global brands positioned at the high end of the market.
Snow Beer introduced more premium variations. Although not well known outside of China, Snow Beer leads the world in total consumption. Tsingtao Beer faced pressure because of its mid-market positioning and its large exposure in restaurants, where government efforts to retrain extravagance impacted sales
Harbin Beer, one of the oldest breweries in the north, successfully increased popularity. Pearl River, especially strong in the south, in Guangdong province, grew sales, but costs increased.
Despite weaker volume growth, Yanjing Beer continued to dominate in Beijing and certain central and western regions. It is the only Chinese brand without a foreign partner, such as AB-InBev or SABMiller.
The planned merger of the giant global brewers would consolidate market share and raise antitrust issues that could a ect brands like Snow Beer, jointly
held by SABMiller and China Resources Enterprises, a state-owned company.
BAIJIU AND WINE ADJUST TO REGULATIONS
The baijiu and wine brands, especially impacted by the government e orts to curb extravagance, continued to adjust to market conditions and anticipated category consolidation.
Moutai, China’s leading premium baijiu, increased 51 percent in brand value, having declined 28 percent a year earlier. Considered an exclusive brand, Moutai adjusted its pricing, marketing and
distribution to while protecting its reputation for quality.
In addition, Moutai tried to help western drinkers cultivate a taste for baijiu. San Francisco proclaimed November 15, 2015, Moutai Day, to commemorate the centennial anniversary of the brand’s introduction to the city.
As Wu Liang Ye investigated introducing its baijiu to western markets, it improved domestic results by lowering prices and controlling its sales
and marketing costs.
Luzhou Laojiao, also a premium baijiu, continued to feel the impact of the government’s e ort to curb extravagance. It attempted to further trim its product portfolio and rely more on data to formulate strategy. Gujing Gong Jiu strengthened its position as a leading premium baijiu in certain provinces, like Anhui.
Yanghe focused on its mid-price baijiu o ering, which helped the brand reach younger drinkers. To expand the market, Yanghe also introduced a baijiu with lower alcohol content, called Weifenzi. In addition, the brand continued to expand its presence beyond Jinagsu province, on the coast north of Shanghai.
ChangYu, one of the pioneer brands in Chinese wine making, announced plans to buy a majority stake in a Spanish wine maker. This transaction advances ChangYu’s plan to increase imports, expands its portfolio of wines, and provides greater access to wine making best practices.