China's Wine and Spirits report by daxue consulting X Sopexa

October 2022
China’s Wine & Spirit
Industry Barometer
Report

Introduction to the Wine and Spirits market in China
1. 03
Wine trends in China
2. 07
19
Whisky and brandy trends in China
3.
29
Domestic industry competitors in China
4.
CONTENT OUTLINE

Introduction to the wine and spirits market in China

© 2022 daxue consulting
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4
China’s alcohol consumption mostly revolves around beer and baijiu
Source: Statista (2022)
144.4
152
159.4
2.96
3.07
3.25
1.08
1.11
1.6
2021 E2022 E2023
Spirits revenue in China by segment
(in billion USD)
Liquors & other spirits Brandy Whisky
China’s overall alcoholic drinks revenue is increasing, with spirit, beer, and wine being the top three revenue generating
segments.
• By revenue, spirits lead the alcoholic drinks market in China, which is
dominated by liquors, specifically Baijiu.
• Still wine is also taking the most revenue share when compared to
fortified wine and sparkling wine.
301.13 311.83 319.84
341.55
357.77
2020 2021 E2022 E2023 E2024
Alcoholic drinks revenue in China
(in billion USD)
Spirits; 47.8%
Beer; 39.1%
Wine; 8.2%
Ciders & Rice wine; 4.7% Hard Seltzers; 0.2%
Alcoholic drinks revenue distribution by
segments in China
(2021)

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5
Young consumers are driving the Chinese alcohol market
Guangdong Province
US$909.8 million
1
Shanghai
US$735.5 million
2
Zhejiang Province
US$189.1 million
3
Fujian Province
US$136.3 million
4
Beijing
US$136.1 million
5
Tianjin Province
US$124.6 million
6
Shandong Province
US$111.6 million
7
Jiangsu Province
US$79.7 million
8
Liaoning Province
US$34.9 million
9
Sichuan Province
US$20.1 million
10
China’s top 10 bottled wine-consuming provinces by value
Source: International Wine and Spirit Competition
Evolving demographics of China’s alcohol consumers:
• Gen Zs are becoming the main force of the alcohol
market in China, regarding the number of consumers
and per capita consumption levels.
• Among them, female consumers are a growing
demographic in wine consumption.
• Wine, western spirits, beer, and ready-to-drink
cocktails are generally preferred by the youngsters.
• Low-alcohol, fruity, and unique (collaboration with
other brands) drinks are also favored by this group.
• In terms of location, younger consumers in tier 4
cities have the largest consumer size and highest
growth rate compared to 1st, 2nd, and 3rd tier cities.
Source: CBNData
Generation Z consumers are a key target demographic for growth in the alcohol market in China.

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European wines and brandies dominate Chinese imports
Source: China Association for Imports and Exports of Wine and Spirits
Source: China Chamber of Commerce For
Import and Export of Foodstuffs, Native
Produce And Animal
2.74%
3.43%
3.86%
3.97%
4.02%
4.84%
4.96%
8.31%
9.04%
37.18%
Belgium
U.S.
South
Korea
Spain
Italy
Germany
Japan
Chile
U.K.
France
Top 10 alcohol beverage exporters to China by value
in the first half of 2022
France is the largest alcoholic beverage exporter to China by value with US$847 million in the first half of 2022.
China’s alcoholic import value in 2021
(in billion US$)
Spirits Wine Beer
Spirit has the highest import value for China in 2021 followed by wine.
Brandy is the largest imported spirit, accounting for 68% of the spirit’s
import value.
1.70
0.46
0.15 0.03 0.01 0.01 0.01
Brandy Whisky Liquor Vodka Gin Tequila Rum
China’s spirits import value in 2021
(in billion US$)
2.5 1.69 0.12

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Red wine is by far the most popular type of wine in China
Champagne and sparkling wine are
favored among young consumers and
higher earners.
94%
35%
25%
13%
Red wine White wine Champagne Rosé
Types of wines consumed by wine consumers
in China
(2020)
Source: Hong Kong Trade Development Council Research (2020) Source: Social listening by Daxue Consulting
China is predicted to be the world’s second-largest wine market by 2023 as wine popularity spreads through the country
Red wine is the most preferred type, with
94% of respondents stating to have bought
or consumed red white in the past year.
White wine is relatively more popular for
those aged 26-45 and possesses
intermediate wine knowledge.
Dinners (晚餐)
Gift-giving (送礼)
Dates (约会)
Parties (聚会)
Occasions which red wine frequently appeared on social media
Weddings (婚礼)
Vacations (度假)
23.4%
Birthday (生日)
30.6%
11.8%
10.9%
8.6%
6.4%
4.6%
The phrase “gift box (礼盒)”
for red wine is commonly
used, indicating Red wine’s
prominent reputation as a
gift in China.
Content on the Internet involving bar visits, first-class plane
experiences, and high-end hotel experiences, red wine has emerged
as a key comparative item for many online experience bloggers.

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Douyin and influencer marketing are key strategies to capture the rising digital market
8.4% 11.3% 13.1%
20.1% 25.9%
91.6% 88.7% 86.9%
79.9% 74.1%
2017 2018 2019 2020 2021
Wine sales by channel in China (2017-2021)
Online Offline
The pandemic correlated with an increase of 10% and 5.8%
y-o-y in online wine purchases in 2019 and 2020
respectively.
New media platforms targeting young consumers such as Douyin
and LRB are frequently utilized by various brands to establish
communications with the said customer segment.
Source: Interview by Sopexa
Offline channel is the go-to method to buy wine; Douyin is on the rise as a platform for wine marketing strategy,
especially to reach young consumers.
Retailer
For those wine lovers at entry level, it can take advantage of celebrity
promotion and live stream shopping. Now some new media are developing
very well.
Importer / Distributor
Currently, Douyin short videos, for the promotion and
advertising of wine, have a certain effect.
People who are born after the year 2000 prefer to buy wines
recommended on Douyin. Advertisement, celebrity promotion,
Livestream on Douyin, and other new media are also beneficial.

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Low-alcohol wines benefit from a boost in health awareness in China
As health is a significant factor in consuming alcohol in China,
low-alcohol wine has gained in popularity. As well as wine
bars, a place where consumers can purchase wine in glasses
instead of bottles.
The idea of wine being healthy was particularly common
among respondents in the 36-45 (59%) and 46-55 (55%) age
groups, mentioning that “drinking wine is good for health”
Health is one of the main motivations for the Chinese to drink wine.
Due to the growing health conscious of
Chinese people, low-alcohol, no-alcohol, low-
sugar, etc. are becoming an emerging trend.
Source: Hong Kong Trade Development Council (2020)
54%
39%
37%
37%
Health
The expression of a tasteful life
Taste preference
Relieving stress
Reasons Chinese consumers say they drink wine (2020)
Rosé wine is growing in Chinese
consumers, as it has a low alcohol
content, a refreshing all-around taste,
and a nice color.
Rosé is also often featured in photos
taken and posted by bloggers on Weibo
and RED and is associated with a high
click-rate.
HORECA Professional
Nowadays, consumers are looking for low-alcohol wines, such as
semi-sweet Riesling, which is popular because of its refreshing
taste and moderate sweetness.

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Economic downturns and international tensions contributed to a drop in wine imports
Source: China Association Imports and Exports of Wine and `Spirits (2022)
French wines are dominating the market. However, the cost
of production and importation have increased drastically due
to pandemic prevention measures and the war in Ukraine.
746 687 610
430 426
2,780 2,850
2,430
1,850 1,724
2017 2018 2019 2020 2021
China’s wine imports
Import volume (in million liters) Import value (in million USD)
Source: China Customs
The volume of wine imported to China has been decreasing over the past two years, international tensions toss-up the
top wine-exporting countries.
Importer / Distributor
There is no depth in the mind of consumer for wines that
have not been heard of in uncertain regions/varieties, etc.,
and there is a conservative mentality to try them.
The lack of wine awareness among Chinese consumers means they are
less likely to invest in trying wines from different origins.
Top 10 wine exporters to China by value in 2021
(in million US$)
France
Chile
Italy
Spain
Australia
753
332
165
146
55

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With affordable, quality wine, Chile reaps the benefits of Australia’s wine taxes
• Chilean premium wines are gaining popularity in China due to its
premiumization trend.
• Chile is also the largest bulk wine supplier to China in 2021 with a
58.91% market share, representing a growth of 101.57% by value.
Source: Vino Joy News (2022)
How Chilean wines gained traction on the Chinese market
Source: Asia Wine News
Wine from Chile is on the rise, thanks to quality improving drastically while staying affordable.
Chilean wines offer great “price-for-value” (性价
比), a trait highly valued by Chinese consumers,
due to its established procedures and techniques
in making wine and relatively low labor costs.
Zero-tariff on Chilean wines exported to China in
2015 which soared in sales. China then became
the number one export destination for Chilean
bottled wine.
Wine Category 2020 2021 % Change
Sparkling Wine $70,439 $82,809 +17.6%
Still wines in containers of <2 L $77,777,082 $110,218,773 +41.7%
Still wines in containers of between
2 and 10 L
$159,948 $364,940 +128.2%
Still wines in containers of >10 L $16,393,966 $27,848,134 +69.8%
Source: China Customs (2022)
Chilean wine exports to China

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Chinese wines fight an uphill battle against imports
The 5 major wine producing regions in China:
11.3
10.01
6.29
4.51 4.13
2016 2017 2018 2019 2020
China’s domestic wine production volume
(in millions hectoliter)
Source: International Wine & Spirits Competition Ltd.
The volume of domestic wine production has been decreasing from 2016 to 2020. First, low yields and high costs have
driven out early investors. Second, structural problems such as climate, technical constraints, and low productivity
facing wineries have caused Chinese wines to be less competitive compared to imported wines.
Shandong, specifically
Yantai, Penglai, and Qingdao,
is China’s largest wine region.
It produces over 40% of the
country’s wine.
Yunnan province is
growing a variety of
Cabernet.
Turpan and Hoxud in the
Xinjiang region, which
produces Cabernet
Sauvignon, Cabernet Franc,
and Chardonnay.
Hualai and Changli
in the Hebei region.
Ningxia, particularly
the Eastern Helan
Mountain Foothills.

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China’s young wine industry fights an uphill battle against imported wines
Source: GLG
Although production has decreased overall, experienced consumers who favor domestic consumption drive the
Chinese fine wines market
• No set criteria for selecting vineyard locations
• Lack of expertise in soil management and
assessment and cultivation techniques
• Still introducing equipment and ideas
• More time is needed to cultivate the sector
• Underdeveloped
• Limited number of wine offerings
• Not as suitable as other wine-growing
nations
• China’s grapes ripen during the rainy season
Wine grape
Wine-making
philosophy & technique
Laws & regulations
Wine offerings
Climate difference
• Imposes specific and strict requirements on
the grapes
• Official varietals and growing instructions
• Wine-making techniques and experiences
have been handed down for decades, even
centuries
• Long-established laws
• Diverse options with unique feature
• Traditional wine-growing regions in other
countries have less rainfall during the
ripening period
Domestic Wine Imported Wine

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The domestic wine industry is maturing
Changyu, both the largest and oldest winery in China, has spearheaded the rise of Chinese fine wines
• Driven by direct sales, the historical winery actively
leveraged new digital tools such as livestreaming and
e-commerce stores to reach its young and tech-savvy
consumers directly.
• In 2021, Changyu’s revenue from direct sales jumped
by 53.4% y-o-y, totaling RMB 689 million.
• Undergone a major strategic reform: from using
province-level distributors, in which its brands and
new products often failed to stand out, to setting up
six sales division systems for its four flagship
products, imported products, and online sales.
Source: Vino Joy
Château Changyu–Moser XV (张裕摩塞尔十五世酒庄)
HORECA Professional
More and more consumers begin to drink Chinese fine wines. Because
on the one hand, the national self-confidence has been enhanced, on
the other hand, Chinese fine wineries have a history of 20-30 years to
make good wines.
Source: Changyu

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The company had signed an agreement with the China Alcoholic Drinks Association
(CADA), the country’s main alcohol industry body, to build the Chinese wine industry
through technical knowledge and expertise exchange in China. TWE says the
agreement is testimony to the company’s commitment to partnerships with the
Chinese wine industry and the strong equity that the Penfolds brand has established
with its consumers in China.
“China is an emerging fine winemaking region and we’re confident we can produce a
premium Chinese Penfolds that maintains the distinctive Penfolds’ house style and
uncompromising quality,” said Mr. Ford, the Chief Executive.
SOCIAL MEDIA
Content strategy: frequent engagements with
followers on Weibo by product news, event
news, seasonal greetings; Comprehensive
CRM mechanism by Wechat mini program
Wechat official account & mini program
Penfolds奔富| 不凡空间
Weibo official account
Penfolds奔富| 66K followers
The mini program introduces the brand, its heritage,
showcase full collections of products, display online
and offline buying channels, and directly connect
with e-stores.
Penfolds’ strategy in China: localizing production to regain market shares
Case study – Penfolds

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Product strategy
▪ First China version of Penfolds priced at
between ¥ 140 and ¥ 240 a bottle, the
wine will be made mainly from cabernet
sauvignon grape variety sourced from
primary winemaking region in Ningxia.
▪ Tribute 177, this Cabernet-based wine, is
made from Californian grapes instead of
the heavily levied Australian ones and is
to be created exclusively for VATS Liquor
Store for the mainland Chinese market
only.
▪ A Chinese vintage product will also be
launched in late 2022.
Special bottle
Lot.518 / 618 California series
Big announcement to launch China-exclusive products
‘Tribute 177′ is described as a limited edition release, and
don’t expect to find this wine anywhere else as it is
“exclusively tailored for the Chinese market,” the company
executives announced at the China International Consumer
Products Expo held in Hainan, July 2022.
The advertisement features a locally famous actor as
campaign ambassador, with the tagline of “Venture Beyond”,
declaring the ambition that Penfolds holds for Chinese
market.
Participation in China International Consumer Products Expo (CICPE)
This edition marked the debut of Penfolds, which created a space-themed exhibition with
China-exclusive launches. This included a 177th-anniversary Tribute wine series and a
limited edition console with space for two special magnums.
Penfolds develops products specifically geared towards the Chinese market and promotes them through major events

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KEY FINDINGS
TWE, the biggest exporter of Australian wine to China bore the brunt of loss due to China imposed steep 218% tariffs on Australian
wine in 2020, Wine exports as a result plunged from AU$1.2 billion to just AU$200 million within a year. The ‘Made in China’ approach
will play a significant role to circumvent the Chinese tariffs
OUR INSIGHTS
Chinese wine drinkers are generally less aware of brands. “Made in China Penfolds” is catching up well on the trend that domestic
wine is reaping the benefits of Chinese wine consumers growing confidence in home-grown product.
BRAND BUILDING IS CRUCIAL
▪ Brand building strategies target on end consumers is important to gain awareness and visibility with pull effect to penetrate the
market
▪ Brand communication campaign to tell story about the “reborn” of this iconic south Australian brand with authentic Chinese DNA
could be a tactic approach to draw consumers attention and create interests to drive the buying motivation.
TARGET ON “NEW” CONSUMERS TO “GROW TOGETHER”
▪ Through the China strategy, Penfolds might want to target on the “newbies” of the wine category because the group of consumers
are young, relatively new to the category, have little knowledge and experience but looking for excitement and open to new.
▪ With China exclusive series to begin with, Penfolds could grow these consumers into more sophisticated and frequent drinkers in the
future with the full range product portfolio and its brand power.
▪ Promotions, discounts, loyalty schemes, and fun and experiential social events might be the driven for their interest to trying out the
new product
Brand building and educating customers are important strategies for foreign winemakers

Whisky and Brandy trends in China

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20
European spirits are at the top of whisky and brandy imports
Retailer
Star brandy products are surely from three spirits companies: Remy
Martin, Hennessy, and Martell, which have an absolutely
overwhelming market share.
The price range of VSOP & XO is around 400-500RMB & 1400-
2000RMB respectively. Above 2000RMB the product price is
directly to 18,000 RMB. … the price of cognac is relatively higher.
Retailer
• Cognac is often consumed during dinner and other social events, usually
mixed with ice or as a cocktail.
• Chinese also prefer high-end cognac as its consumption is motivated by
business and social drinking. Its packaging is also important in China, such
as French cognac, including the 3 major brands, often offers elaborate and
premium packaging.
In China, the top origin of cognac is France, and the top origin of whisky is the UK.
Taking the second rank, Japanese whisky captured
10.91% (US$50.61M) market share in China.
The United Kingdom is the top exporter to China for
whisky, taking 80.1% (US$ 371.74M) of the Chinese
whisky import market share in 2021.
French brandy is ranked first among brandies terms of
imported value, undoubtedly dominating the Chinese
import market with around 98.8% (US$1.68B) market
share in 2021.

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21
Brandy and whisky are mainly consumed in specialized bars or at home
• Whisky is viewed as a “trendy” drink in China, which has attracted
an increasing number of young consumers.
• Whisky bars are also popping up and becoming popular in China.
HORECA Professional
There appear many popular whisky bars crowded with young people
recently in China cities, which cater to their social attributes. Whisky
bars also play a role in educating consumers and promoting the
development of whisky in China.
French brands dominate the Brandy market due to its high
industry concentration, such as:
HORECA Professional
Brandy like VSOP grade is mostly consumed in KTV or bars, and
premium brandy of XO grade or above is widely consumed in high-
end hotels and private clubs, etc. There are many rich people who
buy them for their collections.
Source: Interview by Sopxa
For both brandy and whisky, offline channels make up the majority of sales in the Chinese market.
Brandy is also a must-have product in bars and nightclubs
and has an especially high demand in the Guangdong and
Fujian province.
Hennessey Remy Martin Martell
2.59 2.69 2.79 2.9 2.99 3.07
0.45 0.42 0.43 0.48 0.53 0.56
2020 2021 E2022 E2023 E2024 E2025
Brandy and whisky revenue in China, by place of
purchase
(in billion US$)
At home Out of home

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Brandy and whisky are considered status symbols in China
Source: Social listening by Daxue Consulting
Usually consumed by wealthier consumers, both brandy and whisky have their unique values to Chinese people.
VS
Topics most associated with brandy on Chinese social media (2021)
Bars
(酒吧)
33.2%
Hotels
(酒店)
7.0%
Entertainment Venues
(夜店)
4.6%
Parties
(聚会)
27.9%
Vacations
(度假)
18.8%
Dates
(约会)
15.3%
• An important symbol of France, which is often paired with French
food (法餐) like lobster (龙虾) and foie gras truffle (鹅肝松露).
• An emotional value linked to romance, where gifts for Tanabata
(七夕送礼) are used by brandy labels and marketing campaigns.
A high-end image is correlated in China, with buzzwords
related to locations such as: “whisky bar (威士忌吧)," "Hong
Kong (香港)," "Shanghai (上海)," "Beijing (北京)" and other
first-tier cities and professional tasting venues.
An emotional value is linked to relieving bitterness and
easing the mood, with expressions like "rainy season (雨季)"
and "twilight (黄昏)" being considered whisky season.
`
Whisky drinkers typically have a high standard of living and
focus on enjoyable consumption. Chinese also often pair
Whisky with "nuts (坚果)”- a high-end snack in China.
”Premium (高级感)" is also a popular term in whiskey
packaging design .

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RED official account
MACALLAN | 2953 followers Weibo official account
TheMacallan| 73K followers
Weibo KOL Collaboration
周小晨kiki | 3.4M followers
RED KOC collaborations
啃老师陪你喝一杯 | 144K followers
Case study – Macallan
Macallan aims to enhance premium brand image through quality posts and collaborations with lifestyle KOLs and
KOCs
PREMIUMIZATION – stay premium on the top prioritized markets
Macallan has identified a great potential for reaching more consumers in China who are
eager to discover premium spirits. The company has announced that they will continue to
invest in this strategy whilst maintaining their commitment to quality and premiumisation
of the channels that they operate in.
In December 2021, Macallan opened an
immersive exhibition in Shanghai to
translate its heritage and history to
potential customers. The exhibition,
called The Macallan Experience, comes
on the heels of the increased demand
for premium whiskies by consumers in
the Asia Pacific market.

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SUSTAINABILITY – a noteworthy trend for the alcohol beverage segment in China
▪ Macallan has put into place a sustainability plan. In 2021, it has launched a new collection – The Macallan Harmony Collection Rich Cacao,
with 100% recyclable packaging.
▪ This year, Macallan continued their partnership with Bentley Motors to announce the creation of Macallan Horizon, the prototype fuses
traditional craftsmanship, upcycled, or ethically sourced material, reflecting the sustainability core and the ambitions to build a sustainable
future of both brands. The product will launch in summer 2023.
The partnership started in July 2021, Macallan and Bentley announced again the strategic
partnership in August 2022, presenting the Macallan Horizon, a “highly innovative limited edition
single malt whisky being created by the brands”.
These 2 brands united by a long-term vision of a more sustainable future and a shared dedication
to innovation and excellence. While this partnership recognises the provenance and deep heritage
rooted in both brands, the focus is set on looking forward together to collaborate on innovative
products, immersive experiences, and captivating storytelling.
Macallan base their marketing strategy on cross-border collaboration and pop-up exhibitions in major cities

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KEY FINDINGS
CHALLENGES
- The favoritism for domestic products, emerging local brands and the rising RTD alcohol category is posing a threat to the
traditional Western spirit's market
OPPORTUNITIES
- Sustainability has gained importance in the Chinese alcoholic beverage market in recent years
- Strategic partnership or cross-border collaboration has become an important approach for brands that share values
OUR INSIGHTS
EXPANSION TO NORTHERN CHINA – tap into undeveloped areas
The rising number of whisky bars and whisky tasting classes have already penetrated lower tier cities in China, especially the south
China, due to the facts that the early business development of port cities (majorly tier 1 cities) in that area, and the socializing style of
southern Chinese tend to consume spirits including imported ones in high volume during business occasions.
To expand penetration to northern part of China by spreading trade activities collaborating with CHR nation-wide to tap all the tier 1
and new tier 1 cities in northern China.
CREATE TOPICS FOR ENTRANTS – make premium products approachable & affordable
Shown by a survey conducted with key retail market players, Macallan was mentioned the most as the premium whiskey brand in
China and has its unshakable position in the mind of whisky drinkers. Promoting Macallan as a quality yet approachable and
affordable whiskey in everyday drinking by interesting topics (ie. ride on the craze of cocktails by young generations and the trend of
food-paring) could be a door knocker to enter the circle of whisky entrants.
Expanding to northern China and making their brand more approachable could help Macallan conquer the Chinese market

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Local spirits dominate the market as they are deeply rooted in Chinese culture, where Baijiu is omnipresent in the various distribution
channels as the leading category in China, accounting for over 90% of all spirits consumption. However, Cognac, the ultimate quality
reference on the market, remains the leader of imported spirits.
With the development of urbanization and the rise in Chinese living standards, on-trade consumption is densifying. Imported Western
spirits have become a common and popular product for business and personal banquets and gift-giving occasions in China. Furthermore,
the arrival of the bar culture has given rise to a new trend in spirits consumption among the younger generations.
Educational activities
▪ Trainings - for professionals of the industry, such as importers, distributors, e-commerce,
retailers, sommeliers, restaurants managers…etc.
▪ Bartender training & competition - To raise awareness and train bartenders about Cognac and
maximize the word of mouth and highlight the Cognac as the top-of-mind product around the
bartender profession
▪ Participation in trade fairs - such as CFDF, Toewine, Interwine, Prowine…etc.
Digital Campaigns
▪ Social media – Through WeChat, Weibo, and Douyin activation, and KOL partnership to create
regular, relevant, visual and high-quality content to educate readers and transmit their passion
for Cognac
▪ E-learning platform - Continue to connect with Cognac lovers through recurrent broadcasts of
hard-hitting content and entertaining visual aids to build loyalty among existing followers and to
acquire new followers of both professionals and amateurs.
▪ E-commerce platform – Partnership with the e-commerce giant in China to multiply visibility and
reach the target of end consumers
Case study – Cognac
Over a decade, Cognac has built its by educating different target groups of professionals, trade partners, media, KOLs, and
professional schools' students about the origins of Cognac to raise brand awareness.

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Campaigns taken by brands
▪ CRM by Fan Club on WeChat mini program (Remy Martin club, Martell Blue Book, Hennessy Le Club), and continuously make
contact with the followers with brand news, event news, interactive mechanisms such as games, quiz, and lucky draw.
▪ Pop events / Immersive experience events (Remy Martin’s Cognac Express, Martell Cognac Voyage)
▪ Sponsorship on sports (Martell for Polo)
▪ IP collaboration (Hennessy x NBA)
▪ Invite high profile Chinese artist to be the brand ambassador (Hennessy- Wang Erjia王尔嘉 and Dilraba迪丽热巴)
Expanding to northern China and making their brand more approachable could help Macallan conquer the Chinese market
PR Campaigns
▪ Continuous media exposure by press releases to increase awareness and boost knowledge of
Cognac among professionals and consumers
▪ Press events – Workshops, press trip, anniversary ceremony of Cognac GI…etc. for journalists and
KOLs, which are essential to create quality and educational content while providing an experience
allowing the media to communicate about Cognac and publish quality articles and media coverage.

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KEY FINDINGS
CHALLENGES
- Current consumption patterns perceived as unattractive by the new generations
- General lack of knowledge about the origins and authenticity of Cognac (GI, PGI and PDO)
OPPORTUNITIES
- Despite the long history in Chinese market, China is a still developing market for Cognac
- The development of urbanization and bar culture particularly appreciated by the younger generations
- A booming HORECA sector with increasing demand
OUR INSIGHTS
MAKE HORECA A KEY DISTRIBUTION CHANNEL
The HORECA sector is the preferred channel where consumers are looking for recommendations and advice from. The
development of the "bar culture" also pushes bartenders to be new prescribers. Bars in China are becoming more and more
sophisticated, where expertise, taste and a sense of detail of the bartenders are required. Thus, the professionals of HORECA
sector, especially bartenders, would be the best advocates at the front line for Cognac to arouse consumers’ curiosity and interest.
Maintain and Reinforce the community of professionals by constant trainings and workshops is the operational tactic to
continuously develop the Chinese market in the long run.
CONTINUOUS VISIBILITY AND ACTIVITY ONLINE TO PROACTIVELY REACH OUT TO END CONSUMERS
Employ consistent and integrated content strategy on all the social media platforms (WWRD) and online marketing means (KOL
collaborations, E-learning, E-commerce…etc), continuously make contact and engage with users to increase Cognac perception
among professionals and consumers. After a decade of cultivation from trade perspective, it’s time to shift the focus and strategy
to be more consumer oriented, communicate directly with the end consumers to educate them of the fundamental and essence of
Cognac to create desire and generate the pull effect from the consumer’s perspective.
Educating end consumers and developing HORECA channels are key points for Cognac to grow in China

ALL RIGHTS RESERVED
30
Baijiu dominates the liquor market in China
0.17% 0.16% 0.16% 0.16% 0.16%
0.14% 0.14% 0.12% 0.11% 0.11%
0.05% 0.05% 0.05% 0.05% 0.05%
2019 2020 2021 E2022 E2023
Vodka, rum, and gin revenue in China
(percentage of the total revenue of liquor)
Vodka Rum Gin
Tequila is also gaining popularity. The drink recorded a
y-o-y growth of 162.4% and witnessed the highest
growth among imported spirits.
Other liquors take up only a small percentage of the alcohol drink revenue in China, with vodka taking the lead.
1st 2nd
3rd
+66%
in import volume
in 2021
Source: International Wine & Spirits Competition Ltd.
The image of rum is changing. In the past, rum was
considered a cheap mixer in China and Asia. However,
imports and sales of premium rum are now growing in
China.
Older drinkers typically consume it neat or on the rocks,
while younger and more adventurous drinkers often
consume it in cocktails.
Source: Mersol & Luo (2019)

ALL RIGHTS RESERVED
31
Vodka is the most consumed liquor besides baijiu in China
10.9%
1.8%
2.5%
4.3%
7.2%
20.6%
52.7%
Others
Grey Goose
Eristoff
Stolichnaya
Smirnoff
SKYY Vodka
Absolut Vodka
Share of consumption volume of vodka by
brand in China
(2020)
1.12
1.41
1.82
2.67
2.77
3.08
8.02
U.K.
Latvia
Poland
France
Italy*
Russian
Federation
Sweden
Top 7 vodka exporters to China by value from
January to November 2021
(in million USD)
Source: China Customs (2021)
Shanghai consumed the most imported vodka in China, 61.7% of
the total import volume (4.6M liters) or 65.8% of the total import
value (US$15.56M).
China imports their vodka from 40 countries, with Sweden being its largest importer.
Although SKYY is an US
brand, Campari owns it and
exports from Italy to China

ALL RIGHTS RESERVED
32
Fruity cocktails are popular among Chinese consumers
“Liquid learning” is developing to be a new
phenomenon:
• Globally, consumers increasingly want an
educational cocktail experience in 2022.
• They have the desire to understand
everything from preparing the best
combinations to the heritage and history of
the spirits used.
• According to Boston Consulting Group and
Tencent, this is a trend that is particularly
strong in China.
• More than 50% of consumers in China
proactively learn about brand histories to
see whether their own values are reflected.
Sources: Mintel (2021) & BinWise Inc.
Tasting training, generally brands will regularly go to the store to launch
new products and train employees on product knowledge. For large-scale
events, exhibition activities will be organized.
Retailer
Source: Bacardi (2021)
Most mentioned cocktails in posts on Chinese social media
(Summer 2021)
Source: Social listening by Daxue Consulting
“Summer cocktails”, a combination of fruits and beers or spirits, are becoming increasingly trendy on Douyin and
Xiaohongshu.
Long Island Iced Tea
66.7%
Mojito
60.4%
Mai Tai
60%
Tequila Sunrise
57.1%
Cosmopolitan
50%

ALL RIGHTS RESERVED
33
The top 10 most popular gin brands in China
No. 1 Beefeater 必富达
No. 2 Tanqueray 添加利
No. 3 Gordon’s 哥顿
No. 4 Hendrick’s 亨利爵士
No. 5 Bombay Sapphire 孟买蓝宝石
No. 6 BOLS 波士
No. 7 Monkey 47
No. 8 Sipsmith 希普史密斯
No. 8 Gilbey’s 杰彼斯
No. 10 The Botanist 植物学家
Source: maigoo & Chinapp
Case study – Gin
Gin is increasingly getting popular among gen Z in China, especially as a base for cocktails
▪ The imported volume of gin in China reached 3.1 million litres in
2021, increasing 29% from 2020, whilst the imported value
reached RMB15 million in 2021, registering an increase of 20%
▪ Gin is leading the craft spirits revolution in Asia. Domestic brands
are appearing in China, experimenting with local botanicals, for
example, Sichuan peppercorn.
▪ According to data from the UK Wine & Spirits Trade Association,
gin is the fastest growing spirit across the world.
▪ For the past few years, imported gin brands, especially from UK,
has been steadily penetrating the market by making the presence
in rising cocktail bars as Chinese Gen Zs increasingly look for
premium, hand-crafted tastes.

ALL RIGHTS RESERVED
34
ADAPTATION & LOCAL SOURCING – include flavors that appeal to the Chinese palate
A common trend shared by many Gin importers is the adaptation of local sourcing. While adapting their products to the Chinese
market by tweaking their ingredients with botanicals from the region for more modern flavors, they find the way to plant the
temptation for young drinkers, especially when Chinese gin (中国式金酒 ) became an emergent trend on social media.
Porcelain Shanghai Dry Gin, contains at least 90% Chinese
native botanicals, is one of the latest Chinese craft gin to hit
the market, also an example of the emerging Chinese gin.
Case study – Gin
Some Gin importers are catering to Chinese tastes by sourcing local ingredients, giving their products a unique taste
Examples Gins sourcing locally
▪ Hendrick's Gin, best known for its infusion of cucumber and rose, and the sweet and
fruity flavor of Midsummer Solstice, resonates well with the Chinese, especially among
female drinkers.
▪ Peddlers Gin, one of the first international spirits distilled in China, has its products’
bottle, typography and overall image inspired by 1930s Shanghai. Among the botanicals,
the brand uses are Sichuan pepper and Buddha’s hand citrus peel.
▪ Crimson Pangolin, set their distillery by Changsha, sourcing botanical ingredients locally,
including juniper from Shandong and the coriander seeds.
▪ The London Distillery Company joined with Chinese company Gotham East to explore
how they can adapt the terroir of China, offers fully organic products like Dodd’s Gin and
Kew Organic Gin, which are well-received by young Chinese drinkers.

ALL RIGHTS RESERVED
35
WHAT MARKETING CAMPAIGNS IN CHINA
▪ Collaboration with the “World’s 50 Best” bar - Since its 2016
launch, Peddlers Gin has thrived through partnerships with
top bars featured on the “World’s 50 Best” list.
▪ Bartender Open - Crimson Pangolin holds the competition
annually, offers a platform for young mixologists to
showcase their skills and flairs.
▪ Master Classes - Monkey 47, with a premium position and
pricing in China, conducts master classes for bartenders to
better reach the consumers.
▪ Tasting Events - Four Pillars, the Australian small-batch
brand, hosts frequent tasting events
UNIQUE GIN FOR THE YOUTH
A Spanish gin product, Morpho Helena introduced by Lady
Penguin, and the South African gin brand Howling Ow,
both products have the discolouration feature and
presented through online shopping channels in China,
created the new drinking experience that drove young
consumers’ attention and curiosity. The novelty of the
product generated new social media popularity, along with
reasonable pricing (with around RMB200 per bottle on
Tmall store).
Case study – Gin
Similarly to brandy importers, gin brands brands also organize campaigns to educate consumers, retailers and
bartenders alike

ALL RIGHTS RESERVED
36
KEY FINDINGS
THE CRAZE OF CUSTOMIZATION
As China has such an abundance of local botanicals and exotic flavours, that gives gin makers a great selection of ingredients for
creating customized flavour of gin.
For cocktail drinkers, short videos and posts demonstrating how to make your own drinks and cocktails at home is becoming a popular
topic and can be easily found on social media.
OUR INSIGHTS
As China welcomes a steady recovery from the pandemic and cocktail enthusiasts fill bars all over China, craft gin brands are looking
forward to a warm reception for their new offerings from both bar owners and drinkers. However, how to stand out among so many
players is a matter of importance for brands.
MARKETING IS THE KEY
▪ Take advantages of the uprising new media (Douyin and Red, and also the mainstream media WeChat and Weibo) with a consistent
content strategy of online marketing to keep the close connection and engagement with the Chinese Gen Zs.
▪ Leverage Word-of-mouth marketing strategy by KOLs and KOCs
▪ Create unique brand identity by making a personalized statement that interprets the brand’s features and characteristics to
differentiate themselves to cater young consumers in China who are looking for uniqueness are attracted to novel topics
Case study – Gin
As gin gets more popular among cocktail enthusiasts, effective marketing is a key tool to stand out of the crowd of
other gin brands

ALL RIGHTS RESERVED
37
The alcopop market shows substantial potential for growth
Source: Bairun Flavor & Fragrance Co.
Based on Tmall data, low ABV drinkers are
mostly made up of first-tier city women
aged between 18-34 years old.
Young white-
collar workers
Sophisticated
mothers
Senior middle
class
Gen Z
Occupational and generation groups of low ABV drinkers
China’s low ABV sales are increasing. The sales of low ABV are
predicted to increase by 188.8% in 2023 when compared to 2018.
14.4 16.5 18.4
23.1
30.1
39.1
0.8 0.9
1.6
2.9
3.7
4.8
2018 2019 2020 2021 E2022 E2023
China’s low ABV sales revenue
(in billion RMB)
Offline Online
Source: leadleo (2022)
• Ready-to-drink (RTD) is particularly well-known amongst the light
drinkers in China as it is easy to consume, have lower alcohol
content, and is cheaper than cocktails at bars.
• RIO is the most popular RTD alcopop brand in China which was
first launched in 2003.
• RIO’s products are accessible throughout China’s 1,300 count-
level cities and more than 260 large prefecture-level cities.
Source: Mersol & Luo (2020)
Alcopops with a low ABV (Under 15%) and sweet AND FRUITY flavors are becoming more popular among young
Chinese consumers

ALL RIGHTS RESERVED
38
Despite its popularity, Chinese baijiu production is decreasing
11.98
8.71
7.85 7.4 7.15
0
2
4
6
8
10
12
14
2017 2018 2019 2020 2021
Chinese baijiu production
(in billion liters)
Source: National Bureau of Statistics of China
• A government crackdown in 2012 on officials' luxury spending hit Baijiu distillers hard: Almost 70% of distillers were forced to halt or cut
production. Given baijiu's production cycle -- which runs to about five years for sauce-fragrance varieties -- the effects of this sudden cut to
demand on production only appeared in 2017
• Nevertheless, baijiu sales revenues have been on an upward trend starting from 2018.
• In 2020, 50% of domestic baijiu production comes from Sichuan province.
Source: International Wine and Spirit Competition (2021)
613
565
536
562
584
480
500
520
540
560
580
600
620
2016 2017 2018 2019 2020
Chinese baijiu sales revenue
(in billion RMB)
Source: RsA Asia
Following a government crackdown in 2012, production of baijiu in China has decreased

ALL RIGHTS RESERVED
39
The baijiu market faces multiple challenges
Retailer
The regular tool of promoting Chinese baijiu
is direct discount.
Most of the baijiu consumers are older, as the younger generations prefer
wines, beers, cocktails, and western spirits.
Source: World Baijiu Day (2021)
Despite an increase in overall alcohol consumption during the
pandemic, imports have been negatively impacted by lockdown
measures.
2.4
3.0
3.9
2.8
2017 2018 2019 2020
China’s baijiu import volume
(in million liters)
81%
18%
1%
China’s baijiu import origin
(2020)
Source: RsA Asia
1,593
1,445
1,176
1,040
2017 2018 2019 2020
Number of baijiu manufacturers in China
After the 2012 crackdown on production, the industry has decreased by
34.71% from 2017–2020.
Source: RsA Asia
Others
Taiwan
Hong Kong
The pandemic, government crackdowns, and lack of interest from young consumers impact baijiu consumption

ALL RIGHTS RESERVED
40
How is the baijiu market leader overcoming these challenges?
17%
10%
4% 3% 3%
63%
Moutai Wuliangye Yanghe Laojiao Shunxin Others
Chinese baijiu sales revenue by manufacturers
(2020)
Moutai is the Chinese baijiu manufacturer that has the
biggest sales revenue in the market in 2020 with RMB98
billion in revenue.
Source: RsA Asia
Source: CNN
• Facing an aging consumer base, baijiu producers have had to find
new ways to cater and market their products to gen Z consumers,
who usually don’t like its’ strong taste.
• According to data from online sales on JD, baijiu buyers aged 21 to
35 only accounted to about 23% of sales.
• Baijiu manufacturers have tried multiple forms of cross-media
advertising to appeal to young consumers
• Among them, Moutai has launched Baijiu flavoured ice-cream in
2022
Thanks to its dominant position on the market, Moutai has been able to whether the storm of new regulations and
invest into new marketing strategies

© Copyright 2019 – Daxue
42
42
OUR MISSION IS TO GUIDE BUSINESSES TO HOLISTIC GROWTH IN CHINA
Through our market research and strategy consulting, we equip businesses with the
knowledge and guidance to achieve growth in China and beyond

© 2022 DAXUE CONSULTING
ALL RIGHTS INCLUDED
43
Who We Are
We are Daxue Consulting:
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• With 3 offices in China: in Shanghai, Beijing and Hong Kong
• Employing 30+ full-time consultants
• Full, complete, national coverage
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• Using our expertise to draw precise, reliable recommendations
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49
INTRODUCING
Sopexa
2022

We believe
Sopexa boasts unparalleled expertise in the food and beverage industry.
And, thanks to this experience, we can leverage the past
as we look to the innovations of the future.
The agency acts as a conduit between different countries and areas
of expertise as well as the understanding of markets and cultures.
An agency driven by pleasure and passion for food.
foodenrichesthesoul

Because your products connect inspired novices and enthusiasts,
generations, and cultures. Because we want to tell the story of your
products beyond their regional, national, and international borders.
Because we understand your audiences, their aspirations, their
expectations, and the markets they are in. Because we thrive to
create, innovate, and reinvent ourselves. Because the world and
your products evolve every day towards more social and
environmental commitments.
For the love of life, of the earth, for the love of food.

We love food and beverage so much we’ve made it our life’s work.
Multicultural - Our team hails from the four corners of the earth
and are unbeatable at decoding local challenges and opportunities.
Creative - We craft campaigns and experiences that make
consumers want to try and taste your products. Responsible - We
are committed to sustainable solutions. Visionary - We believe that
gastronomic products feed the souls and lift the spirits of consumers
around the world. Expert - We are the global reference
and specialize in crafting our clients' recipes for success.

53
+250
International talents
60
years our agency has been
dedicated to food & beverage
160,000
opinion leaders fueling
our relationship capital
31
nationalities

34
agencies
through the
world
4
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hubs Europe,
Americas,
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the f&b specialist agency
HOPSCOTCH is an international communication group,
created in France
A group led by its founders, guided by an
entrepreneurial vision
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expertise
Whose core value proposition is ‘global PR’
Is structured around a unique blend of expertise :
digital – event – public relations – marketing services
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Consolidated Turnover aggregated Hopscotch Sopexa*
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We are
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grow sales
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public affairs
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57
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We create and manage collective campaigns for public institutions and international professional organizations with public co-funding.
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Food
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and Maritime Fishing
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Commission, which manages EU programs
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MANAGED SINCE 2012
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vs. 33% for unaccompanied submissions
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