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Guangdong Region, China- A Growing Opportunity for Irish Spirits

29th March 2021

Michael Hussey, Manager Alcohol & Seafood, Bord Bia

At the recent Bord Bia virtual trade briefing on the Chinese market, a profile of the market and a market entry guide to China for the drinks sector was presented. The research shows that the market for imported spirits is growing strongly, from a low base, and that now is the time to build your presence as a new market entrant. According to IWSR, imports of Irish Whiskey to the Chinese mainland have grown from just under €1 million in 2015 to €6.1 million (including Hong Kong) last year.

As illustrated in Chart 1 below, whiskey sales in China are forecast to be worth around $2 billion at retail level by 2022 with the split between the on and off trade at 50:50. However, 75% of those off trade sales are through the e-commerce channel. This channel has been growing strongly and is forecast to continue growing strongly in the coming years. Whiskey consumption is growing in Tier 1 & 2 cities and new trends tend to start in Shanghai and Shenzchen (Guangdong province). Under 45 year olds, both male and female are the key demographic who are increasingly drinking imported whiskey, while older cohorts are more likely to consume imported brandy.

Guangdong Spirits Graph1.PNG

Whiskey sales in China (2013-2018) and 2022 forecast, by sales market

Guangdong province, with a population of 115 million people, has been identified as a good entry point for new brands entering the market. Whiskey and cocktail bars are booming in Guangdong, Particularly in the two main cities of Guangzhou and Shenzchen, but also in Shantou, Dongguan and Foshan. They are our main point of sale targets, since they offer a wide range of products beyond the main-stream brands, and have a high number of our target consumers (< 45 year olds) who are relatively affluent and are open to trying new brands.

Guangdong Spirits Graph2.PNG

The key things to consider when entering the Chinese market as a new entrant are-

  • Which region/s are you targeting?
  • Which channels are you targeting?
    • Retail (mainstream or specialist)?
    • Ecommerce partner. Ecommerce is a key part of the market and has to be part of your strategy through direct to consumer WeChat sales, or direct to consumer distributor sales. E.g. Jiuxian, Lookvin, 1919.cn, iSpirits, JD etc.
    • On Trade (mainstream or specialist such as whiskey bars, cocktail bars, cigar clubs etc.)
  • Finding the correct supply chain partners (national or regional importer, Tier 1 distributor, Tier 2 distributor).
  • Deciding your product selection considering the key demands from the market around age statements, flavour/finishes etc.
  • Deciding your pricing strategy for each channel considering the costs involved
    • Tariff 10%, consumption tax 20%, Vat 13%, 1-2% labelling & warehousing
    • Margins- importer 20%-25%, T1 distributor 30%-40%, T2 distributor 15%-20%
    • Margins- retailer 30%-60%, online 30%-40%, bars 50%
  • Devising your key message to differentiate you from other imported whiskies
  • Developing your online and offline promotion strategies for years 1-3.

Bord Bia is happy to work with you on developing your strategy for entry into the Guangdong or greater Chinese market. For the full report contact steven.spillane@bordbia.ie

Guangdong Spirits img.PNG

Specialist whiskey bar- Shenzchen

As a follow up to this research, Bord Bia will participate in Guangdong Whiskey Show in Shantou from 24th to 25th of April 2021.  The objective is to target key importers, distributors, retail, e-commerce, on trade customers, trade and online media, and key opinion leaders in the Guangdong region. This will be followed up in May 2021 with a virtual buyer showcase (“Meet the Maker”) and one to one meetings with Irish suppliers who wish to enter the Guangdong market. The objective is to showcase Irish spirits brand who are looking for importers, e-commerce and distribution partners for brands who wish to enter the market. Both events will be publicised pre and post the events using local social and online media to maximise the awareness of Ireland’s participation, and spread the word on the unique qualities and unique story of drinks products from Ireland. For more information on this event please contact Michael.hussey@bordbia.ie

Sources: IWSR, Eibens, Bord Bia