The market was worth $205bn in 2016, but the rise in a drinking culture at social occasions, increased disposable income among younger consumers, and more female drinkers is set the boost the category.
Speciality spirits in particular are an important part of the market – accounting for 94% of value and 98% of volume in the spirits category in 2016 – as there are a large number of locally-produced spirits that are specific to the country.
Consumption concentrated in urban areas
In volume terms, the Chinese spirits market held 32.8% of the global share and 52.3% of the Asia-Pacific regional volume share in 2016. This is projected to reach 46.9% and 66.2% respectively by 2021.
The volume of spirits consumed is expected to rise from 8.4 billion liters in 2016 to 16.9 billion liters in 2021, growing at a CAGR of 15%.
China’s GDP has grown at a rate of around 7-8% over the last few years. This has increased disposable income, especially in cosmopolitan urban areas.
Chinese consumers are choosing to spend money on socialising, with drink a key part of these occasions. GlobalData also predicts that the increasing number of female drinkers will play a key role in the spirits market in the coming years.
Growth potential: tequila and mezcal
Per capita spirits consumption in China was 7.3 liters in 2016. In comparison, this is nearly a liter over the global average of 6.4 liters and 6.2 liters in the Asia-Pacific region.
Yet China’s per capita spirits consumption is set to grow even further: rising to 14.4 liters by 2021, according GlobalData’s Spirits Sector in China report.
“Specialty Spirits are Chinese drinkers’ favorite category compared to other sprit types; it accounted for 94.2% and 98.2% in terms of value and volume respectively in 2016,” said Ryan Whittaker, analyst, GlobalData.
“This large size is caused by the large amount of locally produced and China-specific spirits. The category, worth $193.3bn in 2016, is set to grow further at 15.1% per year, dominating the overall spirits market to 2021.
“Brandy was second in the market with a 3.9% value share and a 0.9% volume share, followed by whiskey, vodka, gin and genever, tequila and mezcal, liqueurs and rum.”
Whittaker points to tequila and mezcal as drinks with significant growth potential.
“While the tequila and mezcal category is at the bottom in terms of value and volume, it will witness the fastest growth, rising at 21.6% over 2016–2021,” he said.