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As early as 3,000 years ago during the Shang and Zhou dynasties, the Chinese opened up China's drinking culture through the original wine koji double fermentation method. To date, a rich variety of wines has been derived based on different raw materials, brewing, storage methods, etc. In addition to the continuous diversification of types, the marketing methods of the wine industry are also gradually adapting to the sales model of new e-commerce while retaining traditional offline sales. In the future, with the continuous rise of high-quality, diversified, and personalized consumer awareness, products, channels, and brands will become the key to new competition for wine manufacturers. Wine brands will follow the trend of coordinated development of digitalization and greening, accurately reach consumers with omni-channel and high-quality content, promote purchasing behavior, and then promote business growth.

1. Industry statusDefinition and research scope: Alcoholic beverages include liquor, beer, wine, fruit wine, foreign liquor, etc.

According to the new national standard "Terms and Classification of Beverage Alcohol" (GB/T 17204-2021), based on the winemaking process, alcoholic beverages can be divided into four types: distilled wine, fermented wine, blended wine and liquor. The alcoholic beverages in this report refer to alcoholic beverages with an alcohol content of more than 0.5% made from grains, fruits, etc. through fermentation, distillation or blending, including liquor, beer, wine, fruit wine, foreign wine, etc.

Market Overview: The sub-category with the largest share of the alcoholic beverage market is liquor

Wine culture has been passed down in China for a long time, and the market development of wine products has become relatively mature. According to the data from the National Bureau of Statistics, in 2023, the sales revenue of China's brewing industry products reached 1,080.26 billion yuan, an increase of about 9.3% year-on-year. Among them, liquor and beer occupy a dominant position in the market, with revenues of 756.3 billion yuan and 186.3 billion yuan in 2023, accounting for about 70.0% and 17.3% respectively. In terms of output, beer is the highest-output alcoholic product, but because the unit price is relatively cheap, the market size is smaller than that of liquor.

Marketing channels: The wine industry has developed from the planned supply stage to the new retail stage, and the penetration rate of e-commerce has continued to increase.

From the perspective of development history, the wine industry has developed from the planned supply stage to the new retail stage.According to the changes in the channel side, China's alcoholic beverage industry can be divided into five development stages. During the planned supply period, the state uniformly managed the alcoholic beverage market, and the sales channel was single. After entering the market configuration stage, as the state opened up the pricing power of liquor, offline channels began to develop, wholesale distribution models were gradually explored, and the variety and brand of alcoholic beverages gradually increased. In 2008, the sales side of the alcoholic beverage industry entered a multi-channel exploration period, and the emergence of vertical alcoholic beverage e-commerce marked the development of online sales channels in the alcoholic beverage industry. After 2013, with the continuous maturity of the online shopping model, more and more wineries established online sales channels, and comprehensive e-commerce platforms gradually entered the alcoholic beverage industry, and online channels developed rapidly. At the same time, traditional offline channels were restricted by policies such as official consumption control, and competition gradually intensified. The alcoholic beverage industry ushered in a stage of rapid development of all channels. After 2018, with the rise of live e-commerce and social e-commerce, the online sales channels of alcoholic products gradually became richer, and the online and offline channels developed in a coordinated manner, and the industry officially entered the new retail period.

From the supply side, China's wine and beverage industry continues to expand online transaction channels and product supply, with a clear trend of online expansion.With the popularity of e-commerce, more and more wineries and retailers have begun to expand their wine sales channels by deploying online channels, while vertical e-commerce and integrated e-commerce have increased SKU and GMV by increasing the number of online wine categories and enriching the wine product matrix. Data shows that the online wine market size will exceed 120 billion yuan in 2023, a year-on-year increase of 56.4%; in 2023, the live broadcast transaction of the wine industry on Tmall Double 11 exceeded 1.8 billion yuan, a year-on-year increase of 628%.

From the demand side, there is a clear trend of online consumption of alcohol and beverages.According to research data from 36Kr Research Institute, domestic alcohol consumption is still dominated by traditional offline channels (57.47% and 48.33% of consumers consume through shopping malls/convenience stores and alcohol specialty stores). However, with the rapid development of traditional e-commerce and the emergence of new e-commerce forms such as interest, social, and instant retail, more online consumption channels have been understood and accepted by consumers. For example, 31.95% of consumers purchase alcohol through traditional e-commerce platforms such as Taobao and JD.com, and more than 25% of users consume alcohol on a daily basis through social/interest e-commerce platforms represented by Douyin e-commerce and Xiaohongshu.

2. Observation on alcoholic beverage consumption and marketingConsumption trend 1: Women like to be tipsy, while men prefer strong liquor; domestic liquor and beer are the top two favorites among users

According to the survey data of 36Kr Research Institute, more than half of users prefer medium and low alcohol alcohol in terms of alcohol content, but there are certain differences in preferences between men and women: women are particularly fond of low alcohol alcohol, believing that being tipsy is the mood for drinking, and their choice of low alcohol alcohol is 24 percentage points higher than the average; while men prefer medium and high alcohol alcohol, and will not go home until they are drunk. In terms of the type of alcohol, domestic liquor and beer are the most popular, and are liked by more than 52% of users, far higher than wine (33.33%), fruit wine/liqueur (24.19%), foreign wine (14.46%) and yellow wine/rice wine (13.4%).

Consumption trend 2: Alcohol consumption continues to upgrade, consumers pay attention to taste and quality, as well as calories and packaging

In terms of price preference, users have a clear attitude of "not lacking money" when it comes to the most popular liquor and beer. For liquor, 23.39% of users are guided by taste, saying that as long as the liquor tastes good, the price doesn't matter; for beer, 32.85% of users said that they care more about the taste of beer than the price.

In addition to taste and texture (54.81%), wine quality (51.94%) is another major factor that consumers value. Behind this is the continuous rise of users' awareness of high-quality consumption, which is expected to drive up consumption of mid- to high-end wines.

In addition, as Generation Z gradually becomes the backbone of social consumption, their attention to various elements of alcoholic beverages is also leading the popular trend of alcoholic beverage consumption to a certain extent. Compared with the overall users, the packaging, calories and taste of alcoholic beverages are particularly attractive to Generation Z users, with TGI[1] as high as 176, 150 and 119 respectively. The data shows thatGeneration Z not only expects high-quality, low-calorie healthy drinks, but also pays attention to the "face" of drinks packaging, whether it is interesting, exquisite or hardcore.Wines that are both "good inside and out" are more likely to be favored by Generation Z.

Marketing strategy: Omnichannel + high-quality content marketing to meet the needs of the new generation of consumers

Faced with the rising awareness of high-quality consumption among consumers, the marketing strategy of the wine and beverage industry should not only provide diversified and convenient purchasing channels, but also meet consumers' personalized and quality demands. Omni-channel layout and high-quality content marketing have become the key to accurately reach consumers and promote the sales growth of wine and beverage brands.

Traditional wine e-commerce is mainly based on the shelf model, but is gradually shifting to a new retail model.The traditional shelf model refers to merchants purchasing products from wineries or agents based on their judgment of consumer preferences, and then putting them on the platform for sale. In recent years, in order to expand sales, wine e-commerce companies have gradually laid out a new retail model that integrates online and offline, providing users with instant wine purchase services to meet consumer needs for ordering anytime, anywhere and timely delivery. In order to expand channels, e-commerce platforms not only create their own apps and mini-programs, but also enter platforms such as JD.com, Taobao, and Meituan Takeaway to obtain order traffic from all channels. Represented by JD.com Wine World and 1919 Wine Direct Supply.

New live streaming/social e-commerce platforms are content-centric and are driving the continuous growth of sales and influence of wine and beverage brands.Nowadays, new e-commerce shopping models such as Xiaohongshu and Douyin are increasingly favored by consumers represented by Generation Z. Their content-centric marketing logic is committed to achieving two-way development of "people looking for goods" and "goods looking for people", helping brands to continuously grow their turnover. For example, Douyin has launched a full-domain business strategy, forming a closed loop of "planting grass-consumption-sharing" with field strategy, crowd strategy, and business strategy to achieve efficient conversion and increase transaction volume. Xiaohongshu uses a variety of forms such as live streaming and high-quality notes to strengthen category and scene planting; using personalized recommendation algorithms to accurately reach target users, achieving a closed loop from exposure to planting grass to conversion.

3. Development ProspectsUnder the strategic background of "digitalization and greening collaboration", wine brands need to explore the full-link transformation path

Digitalization and greening are two major trends in the current new round of scientific and technological revolution and industrial transformation, and are also two major characteristics of the era of new quality productivity. Promoting the coordinated development of digitalization and greening in the wine industry's raw material procurement, production process, product packaging and brand marketing is of great significance to improving the quality of wine products, supply chain efficiency, user experience, and brand influence.

In the procurement of raw materialsBrands can reduce carbon emissions by purchasing local agricultural products nearby and using clean energy vehicles for transportation.In the production stageOn the one hand, brands can use efficient water-saving equipment, fully automated brewing production equipment, pollution control equipment, etc. to improve overall energy efficiency and accelerate industrial energy-saving and low-carbon transformation and upgrading; on the other hand, through the application of digital technologies such as artificial intelligence, big data, and cloud computing, the production process can be automated and intelligent, as well as comprehensive management and monitoring of the supply chain, thereby improving production efficiency and reducing costs.In product packaging, brands can use recyclable packaging to achieve packaging recycling and reuse.In brand marketingThrough big data analysis, we can understand consumers’ purchasing habits and preferences, provide personalized products and services, and accurately push marketing content to increase customer stickiness and enhance brand marketing power.

Products, channels and brands are the key to competition among wine and beverage manufacturers, and the Matthew effect in the industry will become more and more obvious

Some liquor sub-categories have been developing for many years, and leading enterprises with high brand awareness, complete product systems, and obvious channel advantages have emerged, resulting in a high degree of industry concentration. Take the mature and largest market size of liquor as an example. In recent years, the number of liquor enterprises above designated size has gradually decreased, and the market share is concentrated in leading enterprises. According to data from the National Bureau of Statistics, the number of liquor enterprises above designated size in my country has decreased from 1,593 in 2015 to 980 in July 2023. In addition, from 2015 to 2021, the combined profit share of the six companies Moutai, Wuliangye, Yanghe, Luzhou Laojiao, Fenjiu, and Gujing Gongjiu increased from 40.8% to 55%[2], and the market concentration has increased. In the context of sufficient supply, the fierce competition environment will eliminate small and medium-sized enterprises with poor comprehensive strength, and the Matthew effect in the industry will become more obvious.

In the future, companies that are the first to complete omni-channel layout, supply chain construction, and branding will build a product moat and further seize the market. The 28 effect is inevitable.

Short video content + live streaming purchase will become a new marketing front for wine brands

When the consumption scenarios of alcoholic beverages are no longer limited to accompanying meals and giving as gifts, but expand to outdoor, social, and relaxing scenarios, C-end channels will bring new growth to brands. At the same time, with the diversification of consumer demand and the decentralization of information touchpoints, short video content seeding and live broadcast explanations will become new marketing channels for alcoholic beverage brands to reach consumers.

As of December 2023, the number of short video users reached 1.053 billion, a year-on-year increase of 41.45 million, becoming one of the most important carriers of content seeding. Wine and beverage brands combine the market trends shown by content platforms, deeply explore the potential needs of users, and then combine their own product tonality to output seeding content that conforms to the trend, attracting user attention while enhancing user awareness of the brand, continuously expanding influence and improving conversion rate.

In addition to short video content, live streaming e-commerce has also become one of the key directions for brands. As of December 2023, the number of online live streaming users reached 816 million, a year-on-year increase of 65.01 million. Live streaming e-commerce is the product of the two-way integration of live streaming and e-commerce in the context of the digital age. With its intuitive, three-dimensional and interactive transaction communication method, it provides wine brands with another new channel to understand user needs and tap new users.

In the new retail era, some wine brands have already entered the C-end channel through content seeding + live broadcast conversion. In the future, more and more brands will build live broadcast rooms through self-broadcasting and cooperation with influencers, seed users with content, and obtain new growth from live broadcast channels.

[1]TGI index = (the proportion of the target group with a certain characteristic / the proportion of the overall group with the same characteristic) * standard number 100. A TGI index greater than 100 means that the target group users pay more attention to the target issue than the overall average.

[2] Data sources: China Alcoholic Drinks Association, JD.com, Yunjiu, 36Kr Research Institute