Marketing, local understanding mix well for US liquor

Updated: 2013-05-21 11:06

By Chen jia (China Daily)

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Marketing, local understanding mix well for US liquor

Among Americans, "bottoms up" and "down the hatch" trigger the rapid draining of glasses and bottles. But what about the Chinese toast gan bei?

In China, it usually means downing shot after shot of alcohol. At some social occasions, invoking gan bei before drinking expensive Western brands can suggest that a foreign visitor is serious about establishing Chinese contacts.

The Chinese way of drinking has been of interest to makers and sellers of American wine and spirits, who are eager to make China part of their global marketing strategies.

"The potential for American spirits in the Chinese market is vast, especially as it pertains to American whiskeys," said Alexandra Sklansky, spokeswoman for the Distilled Spirits Council of the United States, a trade group.

Despite a global downturn, sales of US-produced whiskey increased significantly in China in 2011, according to market research firm Euromonitor International. Retail sales were up 20 percent and volume sales 7.7 percent, respectively, from the previous year.

US whiskey exports to China rose 159 percent between 2003 and 2012, according to official data.

The government figures don't account for all of the American whiskey sold in the Chinese mainland, however, because some is first exported to Hong Kong. The strong growth is due to rising consumer incomes in China and increased awareness of the quality and variety of American whiskey.

"The Chinese spirits market is immense, valued at almost $50 billion in retail sales in 2011," Sklansky said. "Though most of the market is dominated by locally produced white spirits, the Chinese have demonstrated an interest in imported products."

She pointed to several marketing challenges in China, including telling consumers the story of American spirits.

"Education about the history and heritage of American spirits is one of the largest challenges we face once our products appear in-market," the spokeswoman said.

"China is a very competitive spirits market. The biggest competitors for US spirits businessmen are domestic Chinese companies, which account for well over 90 percent of all spirits sales by volume," said Ben Jenkins, vice-president of the Washington-based Distilled Spirits Council.

Among spirits that China imports, Scotch whisky and French cognac are the two top-selling categories. One challenge for American whiskeys is that Chinese consumers tend to have less familiarity with their libation.

"One of our greatest opportunities is the growth in cocktail culture in China, as American whiskeys mix very well with a wide variety of ingredients," Jenkins said.

The council provides information on the Chinese market and regulatory requirements to US exporters of distilled liquor. It also lobbies for lower trade barriers for US spirits in China and, crucial to its member companies' marketing, organizes annual trade visits to China.

During these trips, the council hosts events to educate workers in the Chinese hospitality industry as well as liquor buyers about American whiskeys and other drinks. The events help put distillers in touch with Chinese importers that can help them enter the market.

"We expect China to continue experiencing strong growth in the next five to 10 years," Jenkins said.

China is also a prime target for American wines.

"Where else in the world do you have a middle-class population of 300 to 400 million, and most of them have not had a sip of Western-made wine?" said Stanley Chao, a Los Angeles businessman and author of "Selling to China", a book aimed at small and medium-size US companies.

"The Chinese want to try new things, and Western wine is on the top 10 list of things to try," Chao said. "They are also tired of beer or the Chinese hard liquors. Western wine is a wonderful substitute seen as a sophisticated drink at a moderate price. On top of that, it goes well with Chinese food."

Chao's consulting firm helps Western companies develop sales and marketing strategies for China and other Asian countries.

The expected surge in demand will create opportunities. Wineries in many countries will have to increase their supply to China, and many are likely to open sales and marketing offices there. In addition, Chinese producers, following the model of most other industries, are likely to copy Western processes in hope of establishing top-quality vintages.

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