The Chinese liquor industry shifts from rapid growth to a quality-focused market, driven by changing consumer preferences. As brands adapt their strategies to navigate challenges, the sector braces for a transformative 2025 with increased digital marketing and international expansion as key priorities.
The Chinese liquor industry is undergoing a significant transformation, shifting from years of rapid growth to a more rational and balanced market. This change is largely driven by evolving consumer preferences and market saturation, compelling brands to adapt their strategies in order to remain competitive. As outlined in a recent report by the China Alcoholic Drinks Association, the country’s liquor market—including both domestic and imported spirits—has reached an impressive scale of nearly 2 trillion yuan (approximately $275.24 billion). The report also noted the presence of around 9.4 million registered enterprises within the sector as of 2024.
In its report, titled “Development of the Liquor Industry in China 2024,” the Association highlighted a deflation of the long-standing market bubble, paving the way for a business environment that prioritises quality over volume. This trend suggests a maturation of the market, wherein brands are focusing increasingly on cost-effectiveness, international expansion, and appealing to younger consumers. The report cited staggering statistics from Mintel, indicating that liquor and beer together constitute over 90% of total alcoholic beverage sales in recent years.
Marta Zhang, senior analyst at Mintel, remarked, “Liquor brands have been continuously innovating in digital marketing to adapt to market shifts and consumer behaviour changes.” As mid-tier and smaller brands grapple with issues like high inventory and altered consumption patterns, industry leaders are tasked with recalibrating their strategies in response to these challenges.
Among the top players, Kweichow Moutai Group is demonstrating resilience, with projections indicating a revenue of 173.8 billion yuan for 2024. This figure marks a year-on-year increase of 15.44%, with the company expected to achieve a net profit of 85.7 billion yuan—a 14.67% growth. Such performance indicates strong demand for premium liquor among discerning consumers.
Swellfun, a subsidiary of Diageo, has managed to avoid excess inventory by transitioning to a more controlled supply strategy, thus stabilising pricing and maintaining brand value.Projected revenues for Swellfun are expected to hit 5.22 billion yuan in 2024, aligning with a 5% rise in net profit to 1.341 billion yuan.
On the other hand, Shunxin Agriculture, known for its Niulanshan Erguotou brand, forecasts a net profit turnaround to between 1.9 billion and 2.6 billion yuan for 2024, in stark contrast to a loss of 2.96 billion yuan from the previous year. Huangtai Liquor predicts a similarly buoyant profit outlook, with estimates ranging from 250 million to 330 million yuan, reflecting a 266% to 319% increase.
Despite the stability enjoyed by leading firms, mid-tier and smaller liquor brands are experiencing heightened pressure due to competitive challenges and shifting consumption habits. Shede Spirits anticipates a sharp decline in net profit between 76.29% and 81.93%, while Qinghai Huzhu TianYouDe Highland Barley Spirit expects a 50-60% drop. Jiugui Liquor could see profits plummet by as much as 97.26-98.17%.
Looking ahead, Cai Xuefei, a liquor industry expert, emphasised that 2025 could be a transformative year, leading to deep structural adjustments across the sector. He noted that the consensus around rational development—propelled by government policies, price corrections, and inventory reductions—could lead to recovery.
As consumer preferences evolve, particularly among younger generations who favour lower alcohol content and new drinking experiences, liquor brands are urged to strengthen their digital marketing initiatives. Mintel’s findings suggest that domestic liquor stands out as a culturally rich category, with consumers demonstrating a stronger recognition of cultural heritage correlating with higher income levels. Zhang noted that, “Brands should enhance interaction to strengthen the cultural attributes of domestic liquor.”
Moreover, international expansion is emerging as a pivotal growth strategy for many brands, with China’s alcohol export value reaching $1.9 billion in 2024—a 6% increase year-on-year. Notably, liquor accounts for 51% of this total, indicating robust international demand and marking 2024 as a significant year in the globalisation of Chinese liquor.
In conclusion, the Chinese liquor industry is in a phase of transition characterised by strategic innovation, a shift towards quality-driven growth, and an increased focus on digital marketing and international markets. As brands recalibrate their go-to-market strategies, a keen understanding of consumer behaviour will be essential in navigating the industry’s evolving landscape.
Source: Noah Wire Services
