2023 Alcohol Industry Economic Operation Report.txt

2023 Alcohol Industry Economic Operation Report

China Alcoholic Drinks Association

In 2023, China's alcohol manufacturing industry withstood external pressures and overcame internal difficulties, achieving positive results in high-quality development. At the same time, new issues and challenges in industrial development continue to emerge, market supply and demand structure adjustments, and intensified competition.

I. Development Characteristics of the Alcohol Industry in 2023

The trend of industrial concentration is more pronounced. The alcohol industry is still in a period of adjustment and transformation. The competition pattern for high-end products tends to solidify, and competition for mid-to-low priced products intensifies. The market share of famous wine-producing areas, enterprises, and brands continues to increase, and the growth pressure on regional brands is further highlighted. Market competition becomes more fierce, industrial differentiation is more apparent, and the degree of industrial concentration is enhanced.

The value of production areas continues to increase. The significance of production areas has been widely recognized by society. With the joint efforts of local governments, industry associations, and famous wine enterprises, the integration of production and urban development increasingly demonstrates its value. Characteristic industrial clusters are gradually taking shape, and events such as wine expos, wine culture activities, and beer festivals continue to promote the integration of production and urban development, enhancing the value of production areas.

Innovation leads healthy consumption. Alcohol consumption is becoming more rational. People pay more and more attention to quality, health, personality, and fashion. The market share of mass products with cost-performance ratios is expanding. The boundaries of categories tend to integrate, and the product structure of subcategories is gradually expanding. More and more companies are beginning to explore new types of integrated wines, expand their product lines, and meet the needs of different consumer groups.

The development of digitalization and greening is accelerating. Driven by industrial internet, big data, artificial intelligence, and other technologies, the alcohol industry has begun to achieve digital and intelligent upgrades, improving production efficiency and product quality. The ecological environment and green manufacturing have become keys to sustainable development. The alcohol industry pays more attention to environmental protection and energy saving and emission reduction, promoting the greening and recycling of production materials. Beer's beacon factories, carbon-neutral demonstration enterprises, fruit wine's digital purification technology, white wine's digital marketing system, storage and logistics system, market service system, etc., have revitalized the traditional industry.

Cross-border cooperation has significantly increased. Famous wine enterprises have carried out various forms of cross-border cooperation. Cross-border cooperation with tourism, culture, entertainment, and other industries has significantly increased, expanding the boundaries and business models of the wine industry. For example, Moutai's cooperation with Luckin on the sauce latte went viral, with the first-day sales volume breaking through 5.42 million cups and the first-day sales exceeding 100 million yuan. It not only successfully created a hit product and drove store sales but also strongly validated and upgraded the brand value with its strong communication and market response, bringing significant benefits to both parties.

International cooperation has been strengthened. The "Belt and Road" initiative has laid an important foundation for China's wine industry and products to go global and participate in international competition. Companies have carried out various forms of international promotion activities, promoting the international development of China's wine industry and enhancing the international market's awareness and competitiveness of Chinese wine products by participating in international events, exhibitions, and hosting international wine summits.

II. Development Status of Major Alcohol Industries

(1) White Wine Industry

With the adjustment of market supply and demand structure, China's white wine industry is still in a long-term resilient development stage, with intensified market competition and regional competition. Market advantages are concentrated in advantageous production areas and enterprises, and differentiation is intensifying. According to data from the National Bureau of Statistics, in 2022, the number of scale above white wine enterprises and white wine output decreased by 38.6% and 50.6% respectively compared to 2016; while the assets of scale above white wine enterprises increased by 88.8%, and profits increased by more than 150% during the same period. In 2023, white wine output continued to decline, with scale above white wine output decreasing by 2.8% year-on-year. The performance of leading enterprises continues to improve, with revenue and profits concentrating on high-quality enterprises. According to the 2023 financial reports disclosed by listed companies, most of the 20 listed white wine companies have achieved double-digit growth in revenue and net profit attributable to the parent company, especially the leading wine companies; while the revenue and net profit of midsection enterprises have declined.

The main issues faced by the white wine industry are: First, the white wine industry has a high concentration, and competitors continue to enter, with unbalanced development between regions, fierce market competition, and intensified competition between well-known brands and emerging brands. Second, the industry's innovation ability is insufficient, and some enterprises have unstable development.

(2) Beer Industry

Beer output has steadily recovered. In 2023, the scale above beer output was 35.555 million kiloliters, a year-on-year increase of 0.3%. High experience, cost-effective mass consumption is relatively prosperous, promoting the development of mid-to-low-end and sub-high-end beer products, with a sluggish ultra-high-end market and intensified competition. Beer product innovation and differentiated development have achieved significant results, with companies paying more attention to developing products with more characteristics and personalization to meet consumers' diverse taste needs and enhance market competitiveness.

The main issues are: First, the fluctuation of raw material prices brings cost pressure and potentially affects the flavor and quality of products. Second, market competition is intensifying.

(3) Wine Industry

After deep adjustment, the wine industry has entered a recovery period, with slightly increased output. In 2023, the scale above wine output was 1.43 million kiloliters, a year-on-year increase of 2.9%. Industry development is characterized by: First, quality improvement and international development. The Chinese wine industry is constantly pursuing quality improvement and international development, introducing international wine production technology and experience, improving product quality and competitiveness, and gradually winning international market recognition. Second, regional characteristics are prominent. Chinese wine-producing areas are gradually forming unique regional characteristics and brands, such as the wine-producing areas of Ningxia, Hebei, Shandong, and other places, which have gradually established a certain reputation and influence in the domestic and international markets. Third, the market is diversified. The demand for diversified consumer needs in the Chinese wine market, including high-end wines, imported wines, organic wines, and other different categories, promotes the diversified development of the market.

The problems in the development of the wine industry are: First, wine has not yet achieved popularization, consumer demands are unclear, and market share is squeezed. Second, the industry is highly internationalized and competitive, and the Chinese wine industry cannot compete fairly with imported wines. Third, the industry's profits are damaged, and the wine industry has deep-rooted problems, with a long way to go for high-quality development.

(4) Yellow Wine Industry

The development characteristics of the yellow wine industry are: First, the scale effect of advantageous production areas is becoming more and more obvious. In 2023, Shaoxing yellow wine enterprises achieved sales revenue and profit totals accounting for more than 40% of the national yellow wine sales revenue and profit total, an increase of 7-10 percentage points compared to 2022, indicating that the market share is concentrating in the advantageous production area of Shaoxing, and driving the growth of the entire industry through the advantageous production area. Second, the product structure is becoming more diversified. The product structure of China's yellow wine industry is becoming more diversified, with not only traditional yellow wine products but also new types of alcoholic products such as sesame wine and flower wine. These new types of alcoholic products not only enrich the yellow wine market's product line but also meet the diversified needs of consumers. Third, the concepts of high-end and youth are gradually penetrating. In recent years, with the upgrading of China's consumer market, yellow wine has gradually developed towards high-end and youth-oriented directions. The development and design of products such as "iced yellow wine," "yellow wine ice cream," "yellow wine facial mask," and "yellow wine cocktail," and online live sales through new media platforms such as TikTok and Xiaohongshu, attract young audiences, establish a "youthful impression" of yellow wine, allowing traditional yellow wine to maintain its classics and become internet celebrities. Fourth, the cultural empowerment and brand construction of yellow wine are further strengthened. Yellow wine enterprises actively participate in various cultural activities and selections, promote the yellow wine culture, showcase the unique charm and value of yellow wine, enhance the brand image and market influence of yellow wine, and thus promote the expansion of the yellow wine market.

The problems in the development of the yellow wine industry are: First, the consumption group of yellow wine is aging, and the consumption scene needs to be explored and created. Second, the regional characteristics are still obvious, the overall concentration of the industry is relatively low, and low-price homogenization competition restricts industrial development. Third, the yellow wine category accounts for less than 2% of the Chinese alcohol market, and the overall growth rate of yellow wine is far less than that of white wine. In the traditional yellow wine regional market of Zhejiang, there is also a trend of being squeezed by white wine in terms of government and business wine and banquet wine.

(5) Luzhou Liquor Industry

The Luzhou liquor industry has undergone product upgrades and diversified development, with products becoming more diverse and flexible, and sales revenue and profits increasing year by year. According to research by the China Alcoholic Drinks Association, since 2021, the sales revenue and profits of the Luzhou liquor industry have maintained rapid growth for four consecutive years, and the sales revenue and profits of the Luzhou liquor industry in 2023 have exceeded the pre-epidemic level. The attention to the Luzhou liquor category has increased. With the release and implementation of "GB/T 17204—2021 Alcoholic Beverage Terminology and Classification," T/CBJ9101 "Luzhou Liquor," and T/CBJ9102 "Luzhou Liquor Vintage (Baijiu Base)," and the activities of the Luzhou Liquor T Series Summit, China Luzhou Liquor Industry Development Conference, and Luzhou Liquor Value Forum, the Luzhou liquor category has attracted widespread attention in the production enterprises of Luzhou liquor, the white wine industry, the yellow wine industry, and the circulation field, consumer field, and capital field, and the category attention has increased.

(6) Fruit Wine Industry

The development characteristics of the fruit wine industry are: First, there are abundant raw material resources and good production endowments. The continuous increase in China's fruit production and the rich variety of products, as well as the wide range of raw material selection and strong adaptability of fruit wine, have laid a solid raw material foundation for the development of the fruit wine industry. The diversity of fruit raw materials and processing techniques has laid the foundation for the diversity and distinct personality of fruit wine, making the fruit wine field more diverse than other types of wine. Second, the social benefits of the fruit wine industry are prominent. Fruit wine enterprises distributed in various main production areas have played a great role in regulating the sales and processing and storage of local fruits, solving the problem of difficult sales, and have made significant contributions to promoting rural revitalization and driving local economic development. Third, the "tipsy economy" continues to heat up, and the fruit wine industry is developing well. In recent years, the Z generation of consumers has gradually become a new growth point in the alcoholic beverage market, and low-alcohol, pleasant fruit wine has become a new trend in drinking. According to the "2023 TikTok Platform Alcohol Industry Report" released by Feigua Data, in 2023, the sales volume of fruit wine/fruit wine on the TikTok platform increased by 83.8% compared to the previous year. The leading brand of fruit wine, Meijian Green Plum Wine, has achieved a sales breakthrough from 100 million yuan to 1 billion yuan since its establishment in 2019, and the leading brand of fruit wine, Youmei Blueberry Wine, achieved a year-on-year sales increase of 118% in 2023.

The problems in the development of the fruit wine industry are: First, there is a lack of well-known national enterprises, brands, and products. Second, there is a lack of cognition of raw materials, affecting production, quality, and marketing. Third, the production process and equipment of fruit wine are not strong in specificity, and there is little innovation. Fourth, the industry standards are not sound, and the production system needs to be supplemented.

(7) Alcohol Industry

Alcohol output increased, and profits decreased. According to industry association statistics, in 2023, the total output of alcohol from national fermentation alcohol enterprises reached a historical high. Affected by insufficient downstream demand for alcohol, industry profits declined.

Industry structure adjustment is obvious. First, the product structure is continuously adjusted, and the output of biofuel ethanol has increased significantly, with an increased proportion. Second, the enterprise scale structure is adjusted, and the output proportion of large enterprises has increased. According to the association's research data, the combined output of alcohol enterprises with an output of more than 100,000 tons accounted for 73% of the national alcohol output in 2021, which increased to 82% in 2023, and enterprises with an output of more than 200,000 tons accounted for 53% in 2021, which increased to 66% in 2023. Third, the output main production area structure is adjusted, and the advantageous position of Northeast alcohol is strengthened. In recent years, alcohol output has been concentrated in corn-producing provinces, with the output of Heilongjiang, Jilin, Henan, and Anhui continuously increasing, especially Heilongjiang, which is the most obvious, and the output of Jiangsu cassava alcohol has shown a downward trend. Fourth, the raw material structure is adjusted, with corn alcohol holding an absolute advantage, and the proportion of cassava alcohol continues to decrease.

In 2023, the import and export volume of ethanol and DDGS remained at a low level, with a limited impact on the domestic market. In 2023, the total import volume of ethanol was less than 10,000 kiloliters, and the export volume was more than 30,000 kiloliters; the import volume of DDGS was 137,100 tons, and the export volume was 10 tons.

(8) Brewing Cooking Wine Industry

In 2023, the development of grain brewing cooking wine showed characteristics such as steady market growth, obvious quality upgrade trend, continuous improvement of standards and specifications, and strengthened brand construction and market promotion. First, market demand is steadily increasing. With the pursuit of consumers for delicious food, attention to healthy eating, and the recovery and development of the catering industry, more and more consumers begin to pay attention to the quality and taste of cooking wine, and the market demand for grain brewing cooking wine is steadily increasing. Second, product innovation and quality improvement. To adapt to the changes in market demand, grain brewing cooking wine enterprises continue to launch new products and flavors, use higher-quality raw materials and advanced production processes to improve the taste and nutritional value of products, and meet the diversified needs of consumers. Third, industry standards and specifications are continuously improved. To promote the healthy development of the cooking wine industry, national and local governments have continuously strengthened the supervision of the industry and formulated a series of industry standards and specifications. Fourth, brand construction and market promotion are strengthened. To enhance brand image and market share, grain brewing cooking wine enterprises have strengthened brand construction and market promotion, improved consumer awareness and favorability of grain brewing cooking wine through online and offline integrated development, advertising, and event sponsorship, and some enterprises have cooperated with well-known chefs and food bloggers to expand brand influence through word-of-mouth.

(9) International Distilled Spirits and Liqueurs Industry

Development characteristics: First, market demand is steadily increasing. The international distilled spirits (liqueurs) market has maintained steady growth in recent years, and consumer demand for high-quality liqueur products is continuously increasing. Second, brand competition is fierce. There are many well-known brands in the international distilled spirits market, which compete for market share through brand construction, market promotion, and product innovation, forming a fierce competitive pattern. Third, emerging markets have great potential. Some emerging markets, such as some countries in Asia and South America, have an increasing demand for international distilled spirits (liqueurs), providing new development opportunities for the international distilled spirits industry.

Problems: First, quality control and food safety issues. The distilled spirits industry needs to strengthen quality control and food safety management to ensure product quality and safety, and improve consumer trust in products. Second, environmental and sustainability issues. The production process of distilled spirits generates a large amount of wastewater and waste residue, causing certain environmental pollution. The industry needs to increase environmental protection efforts and promote sustainable development.

III. Development Trends of the Alcohol Industry

First, policy support has been strengthened. Faced with a complex economic situation, the central government has proposed a series of policy measures to promote economic recovery and improvement, expand consumption and internal demand, and achieve the healthy development of the private economy. Major wine-producing and selling provinces such as Guizhou, Sichuan, Shanxi, Henan, and Shandong have also proposed a series of targeted support policies to promote the high-quality development of the wine industry, promoting the continuous and healthy development of the wine industry. The favorable conditions for wine industry development are stronger than the unfavorable conditions, and the basic trend of long-term improvement has not changed.

Second, market concentration will be further improved. With the rise of consumer demand for healthy drinking and the continuous deepening of rational consumption concepts, the horizontal competition formed by diversified consumer drinking needs will intensify, and the trend of the industry concentrating on advantageous production areas, leading enterprises, and famous wine brands will further appear. Leading wine companies have a more comprehensive product line, stronger channel support strategies, and more digital marketing methods, which give them an advantage in competition; the growth pressure on local famous wines and regional brands will further highlight, and small and medium-sized enterprises need to improve quality, personality, and brand personality to enhance competitiveness.

Third, the value of production areas will fully bloom. In the context of industrial structure and product structure adjustment, market competition is becoming more intense, and industrial transformation and upgrading are undergoing multiple changes. The construction of production areas represents an important direction for the high-quality development of the industry. The expression of production areas will extend to all types of wines, becoming the value orientation from wine production and brewing to market consumption.

Fourth, the technological revolution will promote industrial transformation. The Chinese wine industry will accelerate the transformation of intelligence, build a digital, networked, and intelligent wine factory, and continuously enhance core competitiveness with advanced manufacturing and lean operations. The application of modern technologies such as the Internet of Things and big data is accelerating, VR technology enhances consumer interaction experience, and AI technology deeply explores intelligent practices, injecting new vitality into the traditional wine industry.

Fifth, cultural competition has become a competitive highland. Culture is the soul of the industry, the soul of enterprises, and the soul of products and brands. As wine consumption demand becomes more diversified and personalized, the wine industry pays more and more attention to the cultural attributes of wine and brand images. Culture is becoming a new driving force and innovation core for the development of the Chinese wine industry, moving from an era of diverse corporate cultures to an era of industrial culture integration.

Sixth, the wine market has entered a new stage of development. With the acceleration of the famous wine process in Chinese wine consumption and the awakening of rational consumption consciousness, the widespread application of digital technology has shifted the focus of work between manufacturers from traditional channel sales to consumer value services, objectively promoting the wine market into a new stage of development. It is reflected in the increasing innovation of brand marketing, digital marketing, innovative marketing, cross-border marketing, and experiential marketing, and is becoming the main force for wine merchants' differentiation and wine industry transformation.

IV. Development Trends of Major Wine Industries

(1) White Wine Industry

The white wine industry is a highly competitive traditional industry in China. With the continuous growth of consumer demand for high-quality white wine and the continuous application of digital technology, white wine companies need to actively overcome difficulties such as rising raw material costs and fierce market competition. They need to actively carry out product upgrades and innovations, establish supply chain systems, strengthen brand construction and marketing promotion, and improve production efficiency and management levels through digital transformation to maintain market competitiveness. The release of "White Wine Industry Terminology Classification" and "Alcoholic Beverage Terminology and Classification" means that production standards will be further improved, which will positively promote the quality improvement of white wine. It is expected that the demand for white wine will increase in 2024, and the downward trend in output will slow down.

(2) Beer Industry

As a popular beverage, beer will develop in terms of taste innovation and brand differentiation in 2024, launching more products with rich flavors and unique packaging. The beer market will show characteristics of diversified product flavors,年轻化消费群体, precise digital marketing, and popularization of craft beer. Product packaging will meet different consumption scenarios with large packaging, standard packaging, and mini cans, and beers with unique taste and excellent quality will become the mainstream of the market. Low-sugar, low-calorie beers will also be favored by consumers. Offline traffic will gradually recover, offline membership stores, community franchise chains, and snack collection stores will rise, and O2O and same-city immediate retail will become the highlights of consumption growth. In 2024, raw material costs will be in a downward cycle, the double anti of Australian wheat will end, and the cost of barley is expected to decline, and the revenue of leading enterprises is expected to maintain steady growth, and profitability will continue to improve.

(3) Wine Industry

With the improvement of consumer cognition and consumption level of wine, China's wine market will continue to maintain a growth trend, and it is expected that the demand for the Chinese wine market will continue to grow in 2024, and the market scale will further expand, with the continuous growth of high-quality imported wines. Chinese wine companies need to strengthen quality construction, product innovation, and marketing strategies, seize market trends, meet consumer demands, and achieve sustainable development and industry-wide upgrading.

(4) Yellow Wine Industry

Yellow wine companies need to pay attention to the changes in consumer demands and the development of market trends, and continuously adjust and optimize their development strategies to adapt to the constantly changing market environment. By implementing strategies such as cultural empowerment, product innovation, quality improvement, marketing innovation, and market expansion, they can continuously improve product prices and values, shape high-end product cognition and brand recognition, and achieve more stable and sustainable development in the future.

(5) Luzhou Liquor Industry

With the development of the social economy and the desire for a better life among the people, the transformation of young consumption methods, the acceleration of aging, and the rise of the great health trend, the personalized and diversified demands for alcoholic beverages are increasingly strong. The personalized, diversified, and rich characteristics of Luzhou liquor give it a natural advantage in meeting the increasingly segmented personalized demands, making the industry and external expectations for the development of the Luzhou liquor industry increase. As a sweet-tasting spirit, Luzhou liquor companies should adjust their market positioning and consumer groups to attract more young consumers and female consumers.

(6) Brewing Cooking Wine Industry

With the recovery and improvement of China's economy and the increase in the level of urbanization, the market scale of the cooking wine industry will continue to grow, and the penetration rate will continue to increase. It is expected that by 2028, the market scale of China's cooking wine industry will reach 23.4 billion yuan. The market share will further concentrate on leading enterprises with advantages in brand, scale, and channels.

(7) International Distilled Spirits and Liqueurs Industry

On the one hand, imported wines will show a rapid growth trend. The demand for high-quality imported wines by consumers and the development of new products by distillers will promote the steady growth of the market for whiskey, brandy, rum, vodka, gin, tequila, sake, and other imported wines. On the other hand, products with high quality, good taste, good reputation, reasonable price, and emotional value will be more loved and recognized by consumers, and domestic whiskey and domestic brandy products are expected to enter the circle consumption in small batches.