China’s ecommerce growth bucks the global trend

As online alcohol sales in China continue to soar, could ecommerce growth offer a bright future to wine brands in the country?

China is the only one of the world’s largest alcohol ecommerce markets for which online alcohol shopping frequency continues to reach new heights, according to IWSR Drinks Market Analysis.

Development of the direct-to-consumer (DtC) and on-demand channels have been the driving force of its success, boosted by the removal of Covid restrictions in late 2022.

more than half (53%) of all alcohol buyers in China shop online, almost double that seen in any other major market.

And the proportion is expected to continue growing. IWSR data shows that 83% of non-users of the channel surveyed in 2023 said they were somewhat or very likely to buy alcohol online in the future, up from 71% in 2022.

IWSR compared this with the US, where online buyer penetration is only 14%. Despite this comparatively low figure, the US remains the second most valuable ecommerce market, and will continue to deliver some of the most growth globally, although at a lowered level due to a weak macro-economic environment and normalising consumer behaviours.

The 10 markets with the highest proportion of alcohol consumers who buy online (online alcohol buyers as a percentage of alcohol drinkers), are China (with 53% buying online), Brazil, UK, Japan, Australia, Germany, US, Italy, Spain, France (with online buyers making up 8%).

Online alcohol sales in China expanded at a value CAGR of 16% between 2018 and 2022, building a 39% share of global ecommerce sales. IWSR forecasts a 2022-27 CAGR of 6% growth, increasing the global share figure to 40%.

So what is driving the growth? IWSR argues that unlike some markets, where a boost in alcohol ecommerce was a “Covid-induced anomaly”, China’s channel growth is more long-term.

Retailer innovation is also sustaining growth of the channel, IWSR argued.

Wine leads the way

All of the main beverage alcohol categories in China are poised for growth in ecommerce. IWSR forecasts show that online wine sales will increase at a value CAGR of 8% between 2022 and 2027, the highest of any beverage category. Spirits CAGR is estimated at 5% over the same period, with beer, cider and RTDs expected to grow by CAGR 6% over the five-year period.

According to IWSR data, wine has a 3% value share of total beverage alcohol in China. In ecommerce, however, its share is 12%, highlighting how positive the channel could be for the category.

“Online wine growth is predicted to pick up over the forecast period as the previously ailing category bottoms out and starts to recover,” Shirley Zhu, research director for Greater China, IWSR, commented.

For spirits, baijiu has been responsible for the growth seen over the last few years. Zhu said: “In spirits, strong growth seen in 2022, due to the rise of DtC baijiu, will soften, but the category will continue to perform well. We expect baijiu companies to likely increase their investment in online channels, now that they’ve seen the results.”

Meanwhile, Zhu predicts that the ecommerce share of beer is likely to rise as more consumers seek convenience.