Spirits recorded a double-digit total volume sales decline in 2020 because of the pandemic, mainly dragged down by the decreasing consumption of Chinese spirits, namely baijiu. From the on-trade perspective, due to the nationwide lockdowns and cancellation of social and festival gatherings, on-trade consumption was severely impacted, especially during the Spring Festival, when the outbreak started in China.
Although still niche products in China, accounting for around 2% of total spirits consumption, international spirits overall saw a weaker volume decline in comparison with baijiu in 2020. From the perspective of the different categories across international spirits, products such as cream-based liqueurs, Scotch whiskies, Japanese whiskies and cognac recorded increasing growth rates in terms of off-trade volume, largely thanks to the channel shifts from on-trade to off-trade among the young generation.
Despite recording a volume decline in 2020 because of the pandemic, international spirits were actively looking to e-commerce as a key channel to offset their losses in terms of total volume consumption. For example, leading international spirits company Rémy Cointreau Group deepened its cooperation with Tmall.
Spirits is expected to see an improvement in its performance but will still record a declining growth rate in total volume consumption terms in 2021, mainly dragged down by the decreasing consumption of baijiu. This can be attributed to the rising health and wellness awareness among consumers, as baijiu usually has a high alcohol content, typically over 50% ABV.
Although spirits was heavily impacted by the pandemic, the localisation of international spirits has not been halted, and will continue to be one of the drivers for international spirits’ future growth. For example, leading international spirits company Pernod Ricard Groupe entered consumer foodservice by opening its first flagship experiential store Drinks & Co in Shanghai in mid-2020.
Although the total volume sales suffered a double-digit sales decline in 2020, total value sales of spirits witnessed a less marked fall in sales in the same year, largely thanks to the continuous premiumisation trend in spirits, especially in baijiu. The increasing per capita disposable income in China has been helping shift consumer preferences from quantity and affordability to premium products, as local consumers are showing a greater interest in the quality and taste of baijiu and an increasing willingness to pay more for premium products.
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