Premium drinks sales rise in China’s Guangdong in 2017

China’s southern Guangdong province, bordering Hong Kong and Macau, consumed RMB 58.1 billion (US$9.2 billion) worth of alcoholic beverages last year, mainly driven by high-end drinks, while lower end consumption continued to drop.

Guangzhou, capital of Guangdong province

The increase has been described as a sign of both consumers’ rising demand for premium beverages as well as how even the price increases of Baijiu, the main category leading the growth, last year failed to deter consumer enthusiasm for the fiery liquor.

According to the latest figures released by the Guangdong Alcohol Industry Association, the province’s premium drinks consumption priced RMB 500 (US$79.2) or above jumped 8.6% year-on-year, a sharper increase compared with 2016’s 2.16%. Mid-range consumption for beverages between RMB 100 (US$15.9) and RMB 500 increased 3.37%, while low end consumption (below RMB 100) dropped by 2.63% over 2016.

The consumption was mainly led by domestically produced Baijiu with a majority of RMB 21.5 billion (US$3.4 billion), followed by RMB 16.8 billion (US$2.66 billion) for beer, RMB 10.8 billion (US$1.7 billion) for wine and RMB 9 billion (US$1.4 billion) of imported spirits.

The rise is also partly a result of the price upticks of high-end Baijiu seen in the past year especially with popular brands such as Kweichow Moutai and Wuliangye.

Moutai for instance raised the factory-gate price to distributors (similar to wholesale price) across its product line by 18% last December ahead of Chinese New Year. The factory-gate price for its flagship brand ‘Flying Fairy’, which constitutes over 90% of Moutai’s overall sales, was raised from RMB 819 (US$129) to RMB 969 (US$153), pushing up the company’s suggested resale price to RMB 1,499 (US$237).

Chen Xingwu, secretary general of the association revealed that price hike has been a key topic related to premium Baijiu last year.

Mid-range products have also seen some moderate increases, and Guangzhou, Shenzhen happen to be two key markets in Guangdong province that prefer premium and mid-range drinks, he explained.

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