Consumption downgrade? China’s national liquor baijiu reveals recent consumer sentiment
Data insights on the recent performance of Chinese liquor makers: Kweichow Moutai, Wuliangye, and more
China's national liquor, baijiu, is a traditional distilled spirit typically made from sorghum. Known for its strong aroma, it has an alcohol content between 40-60 percent. Baijiu holds a significant portion of the spirits market, both domestically and internationally.
Compared to the global spirits market, China's baijiu sector stands out for its sheer volume in China’s domestic market and the strong loyalty of its consumers. By 2023, the first and second most valuable spirits brands worldwide are China’s baijiu makers, driven by their baijiu sales in China’s domestic market — The baijiu manufacturer Kweichow Moutai (600519.SS) leads the global spirits brands with a total brand value of about 49.74 billion U.S. dollars. Wuliangye (000858.SZ), the second most valuable spirits brand worldwide, follows with a total value of 30.3 billion dollars, surpassing other global spirits brands by several magnitudes in brand value. [statista]

What makes baijiu the “national drink”
The commercial value and deep cultural roots have made baijiu the largest segment in China's liquor market, and a colossal player that can hardly be ignored worldwide.

Baijiu dominates China's alcoholic beverage market, largely because of its deep-rooted significance. Known as the "national liquor," baijiu is an integral part of China's social rituals. It's consumed routinely in casual gatherings, business meetings, and given as prestigious gifts.
Kweichow Moutai, the most prestigious brand of baijiu, is favored by Chinese elites and businessmen. It serves as a symbol of social bonding and respect, playing a crucial role in business negotiations and celebrations. The Moutai brand gained international fame after 1972 when Mao Zedong famously served it at state dinners during US President Richard Nixon's visit to China. Since then, Moutai has frequently been served at diplomatic events, helping it earn its title as the “national liquor”.
In commercial settings, some of the more expensive vintages can sell for as much as $30,000-$50,000 per bottle. Some record-setting auctions have even surpassed these figures, solidifying Moutai's reputation as a worthwhile investment among consumers.
So it is no surprise that in the capital market, baijiu has consistently accounted for a whopping 70%+ of the total market capitalization of all of China’s listed food & beverage sector, and have sailed through multiple market cycles.
A key long-term concern is whether baijiu companies will be able to attract enough millennials. There is a genuine fear among baijiu businesses and investors that many aspects of baijiu, ranging from its unique consumption rituals, to packaging and to its taste may not live up to the time. To reach the younger generation of consumers, Moutai collaborated with Luckin Coffee last year to create a Moutai-flavored latte. This successful campaign significantly increased Moutai's brand awareness among young consumers, transforming its brand image from a traditional spirit to a versatile brand that resonates with both older generations and the young.
Consumer trends: what baijiu consumption reveals
Given that baijiu is almost a staple consumption on various occasions, the retail sales of baijiu surely provide us with an important glimpse into recent Chinese consumer sentiments.
We recently launched a new data product for our institutional client at BigOne Lab. This product includes a nationwide sample of liquor stores, supermarkets and convenience stores, representing a panel of offline consumption scenes in China. Today, we want to share some key trends observed from baijiu retail sales during the 2024 Chinese New Year. These insights will help to understand current consumer sentiments and provide perspectives on widely discussed concerns like whether China is undergoing a "consumption downgrade".
Trend 1: High-end growth remained steady, but some sub-high-end was downgraded
The demand for high-end baijiu (800+ yuan/bottle) primarily comes from small-scale business banquets and gift-giving. During the 2024 Spring Festival, business activities were standard, and high-end baijiu consumption recorded single-digit growth compared to 2022.
Demand for sub-high-end (500-800 yuan/bottle), which primarily comes from family dinners and gatherings with friends and relatives, showed a noticeable downtrend in consumption in 2024.
Trend 2: Compared to the Chinese New Year of 2023, the terminal retail price showed a downward trend in 2024
During the 2024 Chinese New Year holiday period, more stores in our tracked sample sold baijiu at lower retail prices, compared to the Chinese New Year of 2023.
The price decline was more pronounced for the higher-end brand. Wuliangye's premium product, the eighth generation Wuliangye, experienced the largest drop in its retail price.
Trend 3: Mid-to-high-end and mid-end baijiu emerged as the winners of the "consumption downgrade" trend
As consumers seek more cost-effective options for non-business events such as family banquets and casual drinks, sales of mid-to-high-end baijiu (300-500 yuan/bottle) and mid-end baijiu (100-300 yuan/bottle) showed significant growth during the 2024 Chinese New Year.
The growth was partly driven by consumers "downgrading" from the more expensive high-end (>800 Yuan/bottle) and sub-high-end (500-800 Yuan/bottle) products, which are typically consumed at business events and gift-giving occasions.
Shanxi Fen Wine (600809.SS) and Anhui Yingjia (603198.SS), both prominent in the mid-to-high-end and mid-end baijiu category, benefited from this general trend. They exhibited outstanding growth during the 2024 Chinese New Year.
Investing in the baijiu industry
For investors, China's baijiu market’s size and the loyalty of its consumer base offer a stable investment opportunity, while the premium segment, led by brands like Moutai, shows exceptional room for growth and profitability.
Alongside Moutai, companies like Wuliangye (000858.SZ), Shanxi Fen Wine (600809.SS), and Luzhou Laojiao (000568.SZ) play significant roles in shaping the industry's landscape. Most leading baijiu makers are publicly listed on the Shanghai or Shenzhen Stock Exchanges, accessible to foreign investors through Hong Kong, such as the CSI Liquor Index ETF.
We've tracked the performance of top baijiu makers during the 2024 Chinese New Year holiday period (January 13 to February 23, 2023) using our nationwide panel of retail channels, which includes alcohol shops, supermarkets, and convenience stores.
Our panel consists of retail channel representatives of the nationwide consumer market. Currently, it's the only data panel covering the offline sales channel in China. It includes 5% of stores in first-tier cities (Beijing, Shanghai, Guangzhou, Shenzhen), 14% in new first-tier cities (provincial capitals and metropolitan areas such as Chengdu, Hangzhou, Chongqing, etc.), 12% in second-tier cities (mainly provincial capitals), and 69% in lower-tier cities (mostly rural and suburban areas).
Our dataset features changes in sales over the past three years (from January 2022 to February 2024), categorized by product price range, provinces, and companies. Additionally, it provides detailed insights into the terminal sales price changes for the signature baijiu product lines of top companies.
For interested institutional investors, you are welcomed to contact our team at more@bigonelab.com should you need detailed data insights on the baijiu industry and the tickers.