Diageo: Chinese baijiu market won’t recover until 2015

31st January, 2014 by Becky Paskin

Diageo has predicted the Chinese baijiu market will not return to growth until 2015, following extreme austerity measures by the government.

Shui-Jing-Fang-Red-Fortune

Sales of Diageo’s Shui Jing Fang declined 66% in the first half of this year

As a result of a clampdown on gifting and luxury spending in China over the last year, the super- and ultra-premium baijiu market has shrunk.

Despite claiming its own baijiu brand, Shui Jing Fang, played less in the high-end part of the market, the group suffered a 66% decline in net sales in the first half of its 2013/14 financial year thanks to “significant price discounting by competitors”.

Diageo CEO Ivan Menezes said he believed it would take a few more years before the baijiu market in China would stabilise.

“As the total market shrank the big players cut prices and there’s now a lot of stock in the system,” he said. “The overall category is going through a correction, which is why it will take us through 2015 to get it back into growth.”

Menezes added that while the Chinese government’s austerity measures had severely impacted baijiu and Cognac to a degree, its luxury Scotch portfolio “performed strongly”.

“The Johnnie Walker houses [in Shanghai, Beijing and Seoul], are doing really well. We have a lot of tailored products we sell there at $3-5,000 a bottle, and we are doing direct sales out of those operations.

“We put a lot of focus and investment behind building Johnnie Walker Blue which is up about 60% in the half, and this is really going directly to the consumer for consumption, and not dependant on gifting or government entertaining.”

In its half-year results, announced yesterday, Diageo reported volume share gains driven by Johnnie Walker Blue Label in China, and Johnnie Walker Gold Label XR and The Singleton in Taiwan.

Leave a Reply

If that's interesting, how about these?

Malibu rum unveils 'connected' bottles

Pernod Ricard has created 45,000 near field communication (NFC) enabled bottles more...

Tomatin releases cask maturation trio

Highland Scotch malt whisky distillery Tomatin has launched a collection of more...

Pernod Ricard deal bolsters Corby's FY results

Despite a sales slump across its core portfolio, Canadian distributor Corby more...

Baileys crowns moo-velous Champion Cow

Diageo-owned Irish cream liqueur brand Baileys has named its 2016 Champion Cow more...

Jack Daniel's unveils American Serve RTD in Oz

Jack Daniel's is targeting Australia's ready-to-drink whiskey market with the more...

UK spirits sales flop during Olympics booze boom

Despite "hugely impressive" overall alcohol sales for UK retailers throughout more...

Walsh Whiskey launches The Irishman in Oz

Walsh Whiskey Distillery has signed a distribution agreement with Spirits more...

UK govt. backs 'no safe level' for drinking

The UK government has backed proposed guidelines issued in January 2016 that more...

UK govt: Drinking alcohol 'no riskier than driving'

As the UK government readies to release new drinking guidelines, health more...

The Glenlivet: a brand history

Pioneers of The Glenlivet reveal how the brand fulfilled its bold aim of more...

US Tequila sales soar despite Trump tirade

Republication presidential candidate Donald Trump may have strong views on more...

Pernod Ricard sets sail with interactive store

Pernod Ricard Travel Retail EMEA has partnered with Harding Retail to launch more...

Patrón intros Sherry-matured Añejo expression

Patrón Spirits International is set to launch Patrón Cask Collection Sherry more...

Maxxium introduces Maker's 46 to the UK

Maxxium UK has extended its Bourbon offering with the launch of Maker's 46, a more...

ASA bans Captain Morgan TV ad

A television advert for Captain Morgan rum has been banned by UK regulator the more...

Altia and Distell bring Scotch into deal

Finnish drinks group Altia and Distell Group have agreed to extend an existing more...

SWA: UK needs 'ambitious' new free trade deals

Scotch Whisky Association chief executive David Frost has met with the more...

Żubrówka unveils 'modern' bottle design

Roust Group has created a new bottle design for its bison grass vodka brand more...

Rebel Yell crowns inaugural London winner

Thom Solberg of Black Rock bar in Shoreditch has won Bourbon brand Rebel more...

BenRiach releases 12 single cask whiskies

The BenRiach Distillery Company, owned by Brown-Forman, has released 12 single more...