Hannah Keirl recalls sitting on the Shanghai Metro recently, between two locals in their mid-twenties. Both were busy watching Douyin on their phones. A wildly popular Chinese video app, it hosts clips that last no more than 10 seconds.
“They weren’t even managing the 10 seconds,” said Keirl. “They are the people who we are trying to attract and tell our brands’ stories. We really don’t have much time to get them engaged.”
Keirls is describing some of the challenges China’s unique spirits market has presented since she launched Spirits Box in the country’s biggest city nearly two years ago. One of the biggest is dealing with consumers’ attention spans that are as short as a dragon’s temper.
'Brands coming into China don't realise they need a marketing budget'
As a specialist spirits distributor with five staff, Spirits Box focuses on craft liquor, with brands including The West Winds gin, from Keirl’s native Australia, fellow Aussie The Grove rum and Mexico's Viejo Indecente mezcal.
Beside organising all the import paperwork, Keirl has to convince bars to stock a product and talk influencers into raving about it. She must get it on shelves in hotels and cocktail joints, telling its story to anyone who will listen so the brand will stand out from other imported labels. The trouble is, she is often approached to do so without being given a budget for marketing.
“The key thing that brands coming into China don’t realise is they need a marketing budget. They think, just because there’s 1.3bn people in the country, there’s a market for container-loads of exports,” Keirl said.
“Imported spirits only account for less than 5% of consumption. That’s tiny, when you think about the amount of people. Then you look at craft spirits and you’re only looking at 1-1.5% of the Chinese market. You have to find a way for your spirit to be heard against all the noise.”
Building a brand in China is about playing the long game. It has taken Keirl’s business 18 months just to establish a foothold for The West Wind, and only now has the investment in time and money started to pay off through rising sales volumes.
To reach this point, she has had to focus on telling the brand’s story to consumers through tastings and classes, and flown out to meet wholesalers and give them a brand education so when they go out to bars on their patch, they will have something to say about her products.
“It’s not the cheapest way to do it, but it’s really important to build relationships,” she added.
Online retail in China
China’s breakneck transformation into having a massively switched-on public has brought with it a consumer base who jockey their mobiles, zapping from one shopping site to the next. This might sound tempting, but it can pose problems for a distributor.
In a country where there are very few specialist liquor shops, and those that can be found are usually in the form of mom and pop stores, online retailers are a necessary evil, and one which requires brands to pay to play.
Some big online liquor retailers are notorious for not settling payments until an entire consignment is sold. For niche craft brands, this could mean waiting months and months for the final bottle to be sold and payment made.
Whereas in countries like Australia, the consumer internet evolved gradually from desktop to laptop to smartphone, China went from being largely internet-free to feeding a digital frenzy. Because of this, the public is used to searching for everything online. Consumers don’t even need to type in the name of a spirits brand; just take a photo and it will return perhaps 20 retailers.
Given the prevalence of digital drinks stores, prices are prone to taking on market behaviours when these stores come into play.
“Wholesalers start to put your brands on sites like Taobao, Tmall and JD and your pricing starts to go all over the place because you can’t control how much someone sells your product for. That affects the overall market,” said Keirl.
“If all of a sudden your price has gone down at one, the others will all have to eventually drop their prices too.”
Artisanal spirit demand
There are positives, though, from China’s overarching online market, not least in fulfilment. In first- and some second-tier cities, having orders delivered is child’s play, takes next to no time and costs just a few renminbi.
A consumer in Shanghai might have any spirit they like, premium or not, couriered in less than an hour. Even orders from the other side of the country are bound to arrive the next day.
Though there has been a quickfire growth in bars that serve cocktails, and clientele who are clamouring for artisanal spirits brands, China’s craft spirits market is nowhere near saturated, but it will be in time, Keirl believes.
She considers now to be the ideal time for brands to make their play into China, before the market gets too full, armed with a decent promotional budget.
“In Australia we probably have access to a thousand gins, but then a brand has to stand out from all the others. Right now in China, the choice is probably about 120 gins. That’s a much smaller number to stand out against in the first place,” she said.
"I really want people to know that China is big, there is opportunity, but you need to have a marketing budget. Otherwise, you come over and you’re spending so much time and energy, but the margins you are getting are not that big.
“Honestly, back yourself! Back your brand and we will back you at the same time,” she added.