The Hainan Consumer Products Expo, held annually in Haikou, has emerged as a premier platform for global brands to engage with China’s burgeoning consumer market. In 2025, the event took on special significance for the UK, which was named the guest country of honour for the first time. This accolade underscored the strengthening economic ties between the UK and China, with British exports to China reaching £28.5 billion in 2024. The China-Britain Business Council (CBBC) played a pivotal role in facilitating the participation of British brands, including health retailer Holland & Barrett and tea specialist Whittard of Chelsea.

The Hainan Expo, now in its fifth year, attracted over 300,000 visitors and featured 4,000 brands from 80 countries, with a focus on premium consumer goods. China’s consumer market, projected to reach US$8.2 trillion by 2030, is a magnet for international brands, driven by a growing middle class and increasing demand for high-quality imports. For British businesses, the expo offered a strategic opportunity to showcase their products, build brand awareness, and forge partnerships in a market where e-commerce and cross-border trade are thriving. The UK pavilion highlighted Britain’s reputation for innovation and heritage, with CBBC members like Holland & Barrett and Whittard leading the charge.

Holland & Barrett, a household name in the UK for health and wellness products, made a significant impact at the 2025 expo. For the company, it was their first major appearance at Hainan, following a smaller presence in Hangzhou the previous year. Sophia, representing Holland & Barrett, expressed enthusiasm about the opportunity.

“We think it’s a good opportunity to make some business here, especially as the UK is the country of honour this year”. In China, where the health supplement market is expected to grow to US$50 billion by 2027, Holland & Barrett is a relatively new player, having entered the market just seven months before the expo. This necessitated a tailored approach to meet the preferences of Chinese consumers.

Unlike its established retail model in the UK and Europe, Holland & Barrett has adapted its strategy in China to focus on products designed specifically for local tastes. Sophia explained, “We make products especially for Chinese consumers, so we consider such things as localising ingredients and how we consume them”. This localisation effort includes developing supplements with appealing flavours, as Chinese consumers often prioritise taste alongside health benefits. This focus on consumer experience, coupled with the expo’s high visibility, positioned Holland & Barrett to capture the attention of China’s health-conscious urbanites, particularly millennials and Gen Z, who drive demand for premium wellness products.

Whittard of Chelsea, a British tea brand founded in 1886, also seized the opportunity to showcase its heritage at the Hainan Expo. Participating for the first time, Whittard was selected to represent the tea, coffee, and hot chocolate category within the UK pavilion. Katherine Oon, Whittard’s International Sales Manager, expressed excitement about the event. “This is our first time participating in the Hainan Expo and we are very excited to be part of the UK pavilion,” she said. Tea holds deep cultural significance in China, but Whittard distinguished itself by introducing British tea traditions to Chinese consumers. “We want to bring the British tea lifestyle and the traditions to the Chinese customers,” says Oon. “So it’s about educating them on afternoon tea, British blends like Earl Grey, English Rose and the Britishness of tea traditions.”

Whittard’s approach respects China’s rich tea culture while highlighting its unique offerings. The company sources teas globally, including from China, but its expertise lies in blending, a hallmark of British tea culture. At the expo, Whittard’s tea-tasting sessions were a highlight. “Tea tasting is always busy. It’s our experience, it’s a tea journey that every customer enjoys,” says Oon. These interactive experiences resonated with Chinese consumers, particularly affluent urban professionals who value premium and experiential products. The expo’s focus on cultural exchange allowed Whittard to position itself as a bridge between British and Chinese tea traditions, fostering consumer curiosity and brand loyalty.

Looking ahead, both brands outlined ambitious plans for 2025, leveraging their expo participation to deepen their foothold in China. Holland & Barrett aims to expand its product range and distribution channels, building on the momentum gained at Hainan. The company’s focus on localisation aligns with China’s growing demand for health products tailored to local preferences, supported by the country’s 105 cross-border e-commerce pilot zones. Whittard, meanwhile, is set for a significant push this year.

“2025 is going to be a big year for us. We set up a team in China, I will be relocating to Shanghai, and as a brand itself we are going to have more opportunities for collaboration for partnerships and introducing the whole British afternoon tea to the Chinese consumer,” says Oon. This strategic relocation and focus on partnerships reflect Whittard’s commitment to embedding itself in China’s market.

The success of Holland & Barrett and Whittard at the Hainan Expo underscores the broader opportunities for British brands in China. The event’s emphasis on the UK as the country of honour amplified their visibility, allowing them to connect with distributors, retailers, and consumers. CBBC’s support was instrumental, however, challenges remain, including navigating China’s regulatory landscape and competing with domestic brands. The CBBC advises British firms to invest in local partnerships and cultural understanding to succeed, a strategy both companies employed effectively.

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Humble beginnings

Mixue’s story begins in 1997 in Zhengzhou, a city in central China’s Henan province. Founded by Zhang Hongchao, the company started out as a small ice cream shop. Zhang’s vision was simple: to provide affordable, high-quality drinks and desserts to the masses. While other brands chased premium pricing and urban elites, Mixue focused on value for money, targeting students, young workers and smaller cities. This strategy proved to be a game-changer.

By keeping prices low – its signature ice cream cones sell for just 2 yuan (about 22 pence) – Mixue made itself accessible to a vast audience. Its menu, featuring bubble tea, fruit teas and soft-serve ice cream, is both indulgent and affordable. This combination of affordability and consistency has been key to its success.

Scaling at speed

Mixue’s expansion strategy is nothing short of remarkable. The company operates on a franchise model, which has allowed it to grow rapidly without the heavy capital expenditure typically associated with such expansion. Franchisees are drawn to Mixue’s low entry costs and strong brand recognition. The company provides extensive training and support, ensuring that every store maintains the same standards of quality and service.

This model has enabled Mixue to penetrate not only China’s megacities but also its smaller towns and rural areas. While Western brands often focus on affluent urban markets, Mixue has tapped into the vast potential of China’s lower-tier cities, where disposable incomes are rising, and consumer demand is growing.

But Mixue’s ambitions don’t stop at China’s borders. The company has expanded into Southeast Asia, Australia and even Japan, adapting its menu to local tastes while maintaining its core identity. This global outlook is another lesson for British businesses: think big, even if you start small.

The power of branding

Mixue’s branding is another cornerstone of its success. Its cheerful logo, featuring a snowflake and a smiling cartoon character, is instantly recognisable. The company has also embraced digital marketing, leveraging social media platforms such as WeChat and Douyin (China’s version of TikTok) to engage with younger consumers.

One of Mixue’s most successful campaigns involved user-generated content. Customers were encouraged to share photos and videos of their Mixue drinks, creating a buzz online. This grassroots approach to marketing has helped the brand build a loyal following, particularly among Gen Z consumers.

For British businesses, Mixue’s branding offers a valuable lesson: authenticity resonates. In an age where consumers are increasingly sceptical of traditional advertising, brands that can create genuine connections with their audience stand out.

Lessons for British businesses in China

Mixue’s rise holds several lessons for British businesses, particularly those looking to expand or compete in crowded markets.

First, affordability matters. In a cost-of-living crisis, consumers are more price-sensitive than ever. Mixue’s ability to deliver quality at a low price point has been central to its success. British businesses, especially in the food and beverage sector, could benefit from adopting a similar value-driven approach.

Second, don’t overlook smaller markets. While London and other major cities often dominate the UK’s retail landscape, there’s untapped potential in smaller towns and rural areas. Mixue’s success in China’s lower-tier cities shows that growth opportunities exist beyond the big urban centres.

Third, embrace digital innovation. Mixue’s use of social media and user-generated content highlights the importance of digital engagement. British businesses should consider how they can leverage social platforms (including Instagram, TikTok, and YouTube at home) to connect with younger audiences.

Finally, think globally. Mixue’s international expansion demonstrates the potential of taking a local brand to the global stage. For British businesses, particularly those with strong heritage or niche offerings, there may be opportunities to replicate this success abroad.

Challenges ahead

Despite its impressive growth, Mixue faces challenges. The bubble tea market is becoming increasingly crowded, with more upscale competitors like Heytea and Nayuki vying for market share. Maintaining quality and consistency across thousands of stores is no mean feat, and the company must continue to innovate to stay ahead.

There’s also the question of sustainability. As consumers become more environmentally conscious, brands are under pressure to reduce their environmental impact. Mixue has yet to make significant strides in this area, and this could become a sticking point as it expands further.

For British businesses, these challenges serve as a reminder that growth must be sustainable – both financially and environmentally. Brands that can balance rapid expansion with responsible practices will be better positioned for long-term success.

A sweet opportunity

Mixue’s rise is a testament to the power of a clear vision, strong branding, and a focus on affordability. Its story is particularly relevant for British businesses navigating an uncertain economic landscape. By learning from Mixue’s playbook, UK brands can find new ways to connect with consumers, explore untapped markets, and scale their operations effectively.

Mixue made its debut on the Hong Kong Stock Exchange on Monday, 3 March, raising $444 million in an IPO by selling 17 million shares in the deal at a fixed price of HK$202.5 each, with shares jumping as high as HK$298 on the first day of trading. But beyond the financial headlines, there’s a broader lesson here: in a world of constant change, businesses that stay true to their values while adapting to new realities are the ones that thrive. For British entrepreneurs and established brands alike, Mixue’s journey offers a refreshing dose of inspiration – and perhaps a hint of what’s possible with the right mix of ambition and strategy.

So, the next time you see a bright yellow-and-pink logo, take a moment to consider the story behind it. Mixue isn’t just serving up sweet treats; it’s serving up a masterclass in modern business.

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Historical background of plant-based diets in China

The consumption of vegetarian food in China is not a modern phenomenon. Buddhism, which entered China around 2,000 years ago, has had a significant influence, as many Buddhists in China practice vegetarianism as an extension of the religion’s teachings on compassion and non-harm.

Temples across China often run vegetarian restaurants, and traditional Chinese vegetarian dishes often aim to replicate the texture and taste of meat using ingredients like tofu, wheat protein, and mushrooms. This has given rise to a rich tapestry of vegetarian dishes that form an integral part of the Chinese culinary landscape.

However, meat consumption has long been a sign of status in China, and per capita consumption has shot up since the reform and opening up movement of the late 1970s started to push up people’s incomes. According to the USDA Foreign Agricultural Service, China is the largest consumer of meat in the world (understandable given its population size), and meat consumption has increased five-fold over the past 30 years.

The Chinese market for plant-based foods today

Exact numbers of vegan and vegetarian diners in China can be elusive. Some estimates have suggested that 4-5% of China’s population identifies as vegetarian or vegan. With a population of over 1.4 billion, this translates to anywhere from 56 to 70 million people.

Whatever the number of people who eat a plant-based diet, it is clear that the market for plant-based food in China is experiencing significant growth.

In monetary terms, the vegetarian and vegan food market in China has grown from just under US$10 billion in 2018 to US$12 billion in 2023. Over the past 10 years or so, plant-based meat substitutes (usually made from plant-based proteins such as pea or soy) have contributed a lot to the growth of this market. In 2018, the Good Food Institute valued the market for plant-based meat substitutes in China at over US$834 million, and this number is expected to increase by 20-25% every year.

Chinese millennials and Gen Z are the main driving force behind this growth, with around half of all millennials surveyed for a report by Bloomberg Businessweek and Starfield (a Chinese plant-based meat brand) stating that they consumed plant-based meat for health reasons.

An ad for Omnifoods’ plant-based ‘beef’ burger

Plant-based brands in the Chinese market

The Chinese market has seen a surge in the number of domestic brands offering plant-based products. Some of the leading names include Zhenmeat, Starfield and OmniFoods. These brands offer a variety of meat substitutes, ranging from pork to seafood, using ingredients such as soy, peas, and seaweed. The push towards alternative sources of protein has been supported by the Chinese government, and in a speech during the 2022 session of the 13^th CPPCC National Committee, Xi Jinping encouraged agricultural officials to explore cell-cultured and plant-based protein sources in a bid to ensure food security.

Moreover, in 2023, the China Vegan Society introduced the China Vegan Food Certification (CVFC), the first programme of its kind in China, with the aim of standardising the vegan claims made by products and increasing consumer trust. The first batch of recipients includes Beijing-based dairy alternative startup, Yeyo.

Western brands have also identified the potential of China’s plant-based food market. Beyond Meat, one of the front runners in the plant-based meat sector, entered the Chinese market in 2020 and has since launched partnerships with big names in the food and beverage industry, such as Starbucks and KFC.

Swedish oat drink company Oatly has also seen massive success in the Chinese market. Oatly used a bottom-up, B2B approach, targeting high-end coffee shops in cities like Beijing and Shanghai to establish its brand, before launching on Tmall in 2018. Since then, it has established a high-tech production in Ma’anshan, Anhui Province to keep up with demand.

Trends and prospects

Several factors suggest a promising future for the vegetarian and vegan food market in China:

1. Growing interest in health and wellness: Modern urban Chinese consumers, especially the younger generations, are increasingly health-conscious. As China has seen a rise in lifestyle diseases (e.g., type 2 diabetes, hypertension, chronic liver disease, etc.), many view plant-based diets as a healthier alternative to traditional diets rich in meat and dairy.
2. Rising environmental concerns: As China grapples with environmental challenges, the carbon footprint of the meat industry has come under scrutiny. Amos Tai, a Hong Kong-based professor of environmental science, told Al Jazeera that the five-fold increase in China’s per capita meat consumption has contributed to nearly 20% of the country’s air pollution. Plant-based diets are seen as more sustainable, although ultra-processed alternative meats still require a lot of energy to produce.
3. Government initiatives: In 2016, the Chinese government announced a plan to cut the country’s meat consumption by 50% as part of its push to reach net zero by 2060. This endorsement, while not strictly pushing for vegetarianism, indicates a shift towards more plant-centric diets.
4. Innovation and investment: As the market grows, there has been an influx of investments in alternative protein companies. In 2022, Shenzhen-headquartered plant-based meat company Starfield attracted a US$100 million Series B investment round, the largest ever for a vegan protein brand in China. Increased investment in plant-based brands will encourage the creation of products that more closely mimic the taste and texture of real meat, making the transition easier for many consumers.

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The China Whisky Outlook 2024 featured three panels about China’s whisky market, its challenges and its potential. The discussions centred on the following themes: How to Export Your Whisky to China; How to Protect Your Whisky Brand in China; and The Chinese Whisky Landscape: Domestic Consumer, Local Brands and Global Distilleries. Here are some of the key takeaways.

The Chinese distillery boom is happening on a massive scale

“There is a wall of local money supporting these local [Chinese] distilleries, and there will be a huge marketing spend as a result aimed at educating Chinese drinkers about whisky,” explained Paul Skipworth, Chair of Eden Mills Distillery. “This is good for the whisky industry as the number of drinkers will skyrocket as a result of this marketing spend”. There are about 48 whisky distilleries under construction in China.

Chinese whisky drinkers are much younger than you think

“We will see more consumers buying single malt whisky to drink rather than just those looking at an alternative investment,” says Michael Ren, a whisky buyer and consultant to Chinese collectors. The average Chinese whisky consumer is much younger than that of the UK, with mostly Gen Z (born after 1997) consumers choosing whisky as their spirit of choice. These younger drinkers are eager to move away from baijiu – the ubiquitous white spirit found across China that makes up over 96% of China’s spirits market. The demand for rare single malt whiskies in China is soaring as limited supply is met with a growing demand. Young, wealthy Chinese consumers want to buy into an international lifestyle that has history and heritage whilst also showing off their individuality by tracking down rare bottles.

The next whisky trend in China will be the premium middle market

“There is a massive opportunity to be enjoyed in China,” says Iain Weir of Ian Macleod Distillers, the producers of Tamdhu, Rosebank and Glengoyne. In recent years, single malt sales have been dominated by the top end of the market – quality, rarity and scarcity have always been priorities for Chinese buyers and collectors. However, as Chinese whisky buyers move from collecting to consuming, the next big opportunity will be the premium middle market.

Protecting your trademark is a vital first step 

“China has a very different IP system to the UK”, explains Sarah Talland of law firm Potter Clarkson. “China has a ‘first to file’ system, which means the first person that comes along can register your trademark. If you don’t get there first, someone else might do it for you.” Therefore, it’s imperative to register a trade mark as soon as you can, and certainly, before you enter the market or even open discussions with distributors or partners, “because if someone else registers it, there is very little you can do about it.” Ten or fifteen years ago, Talland says, “you would have been blocked from the market.” Today, however, there are more hopeful outcomes for brands. Options include seeking to buy back the trademark, waiting it out, or challenging based on new bad faith provisions.

Make sure you also register a Chinese name for your whisky

“Before you look to enter China, it’s important you have your own Chinese name,” says Talland. “If you don’t make a clear Chinese name and register one, then someone will likely make one for you and call it something very different. It will get a colloquial name which you can’t then control and whoever coins it can use and register it and block you from making your own use of it. So, we always discuss the Chinese name of the company. Explore the meaning and transliteration, ensuring it has a strong connotation in China and then make sure you protect that as well.”

Skipworth told the story of how when Belvedere vodka was launched in China, the brand was already colloquially known in Chinese as ‘Snow Trees’ and care had to be taken in promoting the brand in China between the global brand position and the Chinese name.

Think local; don’t try to tackle the whole of China

“Don’t feel you need nationwide distribution,” says Iain Weir. China is a huge market with many different consumers. Focus on one or two key areas initially, and treat China as multiple markets rather than just one. Make sure you meet your potential distributors in person. Ideally, they’d be passionate and enthusiastic and have their finger on the pulse of your target consumer.

Get a distributor who understands the prestige market…

“There are some very good distributors in China, but you have to do your homework,” says Weir. “We went to see them, and they came out to Scotland to see us, and we chose very, very carefully. It helps to find people that have an international approach and are aligned with your objectives and ambitions. Our distributor already had successful expertise in prestige wines, had been to Europe and Australia on a regular basis, and understood selling at the premium level and the precise marketing required for fine wines. There is quite a lot of crossover there. The other things I would always be looking for are energy, enthusiasm and passion – that’s the key to selling whisky.”

…but be careful how much power you give them

“Some companies expect the distributor to take care of the China-facing marketing, but they might find out that the brand is being marketed in a different way and they have lost their brand control,” says China-Britain Business Council’s James Brodie. Brands must be absolutely clear on the terms of contracts with partners. It should be the brand, not the distributor, for example, who holds the trademark, says Brodie.

Social selling is the future for smaller distilleries

“China is the world’s largest and most mature e-commerce alcohol market,” says Weir. “We had a key opinion leader (KOL) at Tamdhu distillery who was live-selling on Chinese social media channels and sold upwards of 300 bottles in two hours.”

“The rise of Douyin selling is phenomenal,” adds Paul Skipworth. “Finding an innovative, modern, omni-channel distributor who does all your route to market, a little bit of traditional distribution, but is very comfortable with direct-to-consumer marketing is the route for smaller distilleries.” China’s sales channels are entirely different from those in the US, UK and EU, and social selling via WeChat or live streaming platforms such as Douyin or Xiaohongshu is the norm. KOLs (China’s version of influencers) are also a great route to market, and livestream selling by KOLs can offer immediate and impressive returns if done correctly.”

Chinese distilleries are tourism destinations first

“China is jealous of the tourism pull of places such as Speyside in Scotland and wants to create its own whisky tourism industry,” says Barry McFarlane of PM Group. “The tourism industry in China will come first as the whisky they produce won’t be ready for years,” he explains. A number of international companies, including Diageo, Pernod Ricard and Angus Dundee, have launched distilleries in China. On top of that, there are now estimated to be a further 50 domestic distilleries making whisky. Both international and domestic distilleries are pushing a tourism-first policy, creating architecturally designed facilities in areas of natural beauty with hotels, restaurants and amenities aimed at the huge domestic tourism industry.

A booming domestic whisky industry in China is good for everyone

“By creating quality, the whisky market in China, which amounts to less than 1% of the Chinese spirits market, will build and develop a new audience. And a rising tide lifts all boats,” says Alan Park, head of legal at the Scotch Whisky Association. Park has been involved in setting regulations for Chinese whisky and says the Chinese authorities are supportive of creating a high-quality, China-origin whisky – good news for all fans of whisky.

The post 10 takeaways from the China Whisky Outlook 2024 appeared first on Focus - China Britain Business Council.

In this series of infographics, we look at the key things brands need to know about the Chinese whisky market, including sales figures and customer profile.

The sales value of whisky in China:

The trade value of whisky imports to China:

The Chinese whisky drinker:

How China’s global ranking as a whisky importer has changed:

Where are China’s distilleries?

Value of whisky imports by country:

Scottish whisky exports to China:

Event: The China Whisky Outlook 2024

This June, Barley will be co-hosting ‘The China Whisky Outlook 2024’ in partnership with the China-Britain Business Council and the Scotch Whisky Association. 

The event will be held in Edinburgh on 20 June 2024 in partnership with Potter Clarkson and will cover topics including how to protect your Scotch whisky brand in China, how to export your whisky to China, and the Chinese whisky market landscape.

Speakers include Iain Weir (Ian Macleod), Paul Skipworth (Eden Mill St Andrews/SMWS), Sarah Talland (Potter Clarkson), Lindesay Low (SWA), Tom Pattinson (Barley), James Brodie (CBBC) and more to be announced.

The free event is open to businesses in the whisky industry who have entered or plan to enter the Chinese market. To express interest or to register click here.

Potter Clarkson’s dedicated FMCG team specialise in maximising the value of food and drink brands and products. If you’d like to discuss how they can help you identify, protect, exploit and enforce your ideas and innovations, please contact them at fmcg@potterclarkson.com.

The post Infographic: The Chinese whisky market appeared first on Focus - China Britain Business Council.

The heavy bass of the music bounces off the walls of the club, arms wave in the air, and waiters deftly dart around the cavernous nightclub, buckets of ice packed with bottles carried over their heads. They bring trays of glasses to VIP tables where jugs of chilled green tea are used as mixers for the bottles of Chivas Regal whisky that are dotted on nearly every table. In one of the many VIP rooms, I sit on a sofa and watch as a bottle of Chivas so big it has to be lifted by a pulley system fills jugs mixed with green tea over ice.

It’s 2006, Beijing, and I’m in Mix, one of a number of huge nightclubs where the newly emerging middle class are coming to let their hair down, dance to techno and show off their wealth. They are doing this by buying enormous quantities of a new Western drink – whisky.

When I first landed in China, I thought Chivas Regal was a chain of nightclubs, such was the vast amount of branding inside and outside nearly every nightclub in the country in those heady days.

In the first decade of the 21^st century, all kinds of brands were trying to crack the lucrative China market and spirits brands were no exception. But Pernod Ricard had decided to push Chivas Regal, which they purchased in 2001, into the market and for a few years at the end of that decade, ‘Chivas and Green Tea’ was the go-to drink for clubbers around the country. It revived the Chivas brand, increased Pernod Ricard’s revenues significantly and helped introduce whisky to a market entirely dominated by the white spirit baijiu.

That year, 2006, China leapt into the top 10 whisky-drinking countries for the first time ever, in no small part thanks to Pernod Ricard’s sustained promotion drive that involved not just sponsoring clubs but fashion shows, international DJs, and even opening their own bar. In 2006, £90 million was spent on whisky in China, according to the Scotch Whisky Association (SWA). Today, that number has increased tenfold, with the value of whisky sales in China reaching nearly a billion pounds.

Growth and expansion: The Chinese whisky market gains influence

China’s national spirit, baijiu – a pungent white liquor made from sorghum that is toasted at banquets, weddings and business meetings – makes up 96% of the country’s spirits market. Whisky absorbs just 1%, with brandy being the dominant imported spirit and vodkas, gins and rums comprising the rest.

Still, a single percent of China’s staggering £120 billion annual spirits sales amounts to a big chunk of revenue. China became the world’s fourth largest whisky market by value in 2023 – up from sixth in 2022. And according to Euromonitor International, China’s whisky sales are expected to double from £920 million in 2023 to £1.8 billion by the end of 2025, which will make China’s whisky market greater than Germany’s. Euromonitor predicts whisky – including Scotch whisky – will be the fastest-growing spirit in China in the coming years, booming by 88% between 2023-2026, and the whisky market in China is expected to grow at around five times the rate seen globally.

In 2022, the Asia-Pacific region overtook the EU in Scotch whisky sales to become the industry’s largest market, and exports of Scotch whisky rose a whopping 37% in 2022 according to the SWA – in no small part due to double-digit growth from China.

For brands, China is becoming increasingly important. China is now Pernod Ricard’s second-largest market, and businesses, both international and domestic, are fully aware that there’s a lot of room for further growth.

Moreover, imports are only part of this picture. There are currently around 48 whisky distilleries either in production or under construction in China as local and international players look to diversify their offerings with Chinese origin whisky.

The rise of the single malt aficionado: A snapshot of the Chinese whisky drinker

Kelvin Tam, the Scotch Malt Whisky Society Brand Ambassador and Development Manager for Hong Kong and Macau, said recently that the number of whisky enthusiasts in China is currently estimated to be between 500,000 and a million. By comparison, 20 years ago, there were a mere 300 whisky drinkers in the whole country.

As well as the rapidly rising number of Chinese whisky drinkers, it’s the demographic of that drinker that is catching the eye of global marketeers. Whilst in the West, whisky has traditionally been preferred by an older audience, in China, it is the young who are drinking more of it. It is estimated that 47% of Chinese whisky drinkers belong to Gen Z (born between 1997 and 2012), and according to a report released by Morgan Stanley, in China, whisky represents more than 50% of the volume of alcohol consumed by the young urban population born after 1990, ahead of brandy and baijiu.

Often well-educated and wealthy, these urban youngsters are buying into a lifestyle that represents culture, class and history. Chinese consumers are more adventurous and willing to experiment with new products, brands and experiences.

The big international whisky brands have realised that the scattergun approach of heavily branding nightclubs and selling cheap whisky to novice punters might have worked a couple of decades ago but is no longer the primary route. In 2023, the volume of imports rose by 6.4%, but their value soared by 23% as buyers looked towards premium products.

The whisky market in Asia “started very much with blends and big brands, trying to do big plays,” says Pedro Mendonça, Global Reserve Managing Director at British drinks company Diageo. “Over the last decade, single malt has taken off, and people are discovering and finding their own way in and appreciating the different flavours and the different characteristics.”

Chivas Regal was still making up nearly 29% of China’s whisky consumption by volume in 2019, but young Chinese consumers, who have their own tastes and preferences, have driven the rise in popularity of higher value, lower volume products. Single Malt Scotch such as Glenfiddich and The Macallan have tripled and doubled their market share respectively in China since then, according to Euromonitor.

In a bid to educate and engage with China’s first generation of whisky aficionados, Diageo has organised 13 whisky summits across China since 2017 and claims to have reached over 12,000 potential Chinese whisky lovers through a “whisky culture education” institution called Diageo Whisky Academy.

Homegrown: The era of the Chinese distillery

Now that an established audience is emerging, the race is on to create a whisky in China for a Chinese audience. French company Pernod Ricard was the first international spirits company to release a Chinese whisky, made at its own distillery in China’s western Sichuan province. The company said it will invest £110 million over a decade in the project, and when its first release ‘The Chuan’ hit the shelves in December 2023, it led to a lot of global headlines.

Pernod Ricard’s The Chuan is the first China-origin whisky created by an international drinks brand

“This first-ever product of The Chuan celebrates the vision of Pernod Ricard to create a prestige malt whisky made in China,” said Jerome Cottin-Bizonne, CEO of Pernod Ricard China, in a press release about the distillery. “We are proud to put China on the world map of whisky by presenting this exceptional malt whisky of The Chuan.”

Diageo has invested over £55 million in its own Eryuan Distillery in Yunnan Province. Chinese brewery Qingdao Beer and Chinese winery Grace Vineyards both have distilleries in the works, whilst baijiu manufacturers Gaolong and Daiking have diversified into whisky production. Gaolong has been producing a range of Chinese-made whiskies for some time; its ‘Gaolong Blended Chinese Whiskey’ and ‘5 Year Old Bourbon Cask Single Malt’ are for sale on the UK-based retail site The Whisky Exchange.

Diageo’s Eryuan Distillery in Yunnan

Cognac company Camus has partnered with baijiu producer Gujinggong to create the £24 million Guqi distillery in Bozhou; and another well-established baijiu producer Yanghe has also moved into whisky making.

Perhaps most astonishing of all has been a major project funded by the MengTai Group that saw the wholesale relocation of stills and equipment shipped in from Scotland by Forsyths to the Ordos region of Inner Mongolia to create a £20 million distillery. The Rothes-based company prefabricated a modular distillery including a two-ton mash tun, copper stills, condensers and stainless-steel tanks. This was shipped over to Inner Mongolia and reassembled, with the aim of producing “world-class whisky” after the two years of maturation in casks that the Chinese national standards require. Like many other Chinese distillery owners, the MengTai Group has engaged experienced managers and head distillers from Scotland to lead the project in a bid to ensure quality and authenticity are retained.

Angus Dundee Distillers – makers of Tomintoul and Glencadam, among others – has also opened its own distillery near Hangzhou. “We’ve been in China since 2005 and decided China was a market for the future,” says Brian Megson, the Director of Angus Dundee Distillers. Megson says that Chun’an Distillery will be finished in two to three years, before then requiring a further four to five years to produce whisky.

The race is on to create a whisky in China for a Chinese audience

Megson explains that the company had plenty of options when looking for the optimal site. “We wanted to find somewhere that’s not just good for whisky production but also good for the visitor centre. This area is great for tourism, and the numbers are mind-boggling. Hangzhou is a big city, and Shanghai is not far away. We found somewhere that was suitable and found a plot and have had a good amount of support from the local authorities.”

Further south, a large consortium of mainly Western investors has opened the Nine Rivers distillery near Xiamen in eastern China. Led by former drinks importer Jay Robertson, the project was developed after the cost of importing drinks “went through the roof”.

Nine Rivers undergoing construction with grand ambitions

Robertson explains that Nine Rivers is sustained through crowdfunding. Sixty-two percent of the investment comes from the board, composed mostly of expats and international investors, and 38% from micro investors, with the entry amount dropping as low as USD $1,000.

Robertson believes Nine Rivers will become China’s single biggest single malt whisky. “We have had interest from corporate money and engagement from big baijiu companies and one big scotch whisky producer, but we’re not interested in that,” he says. “Our strategy is to have lots of people with skin in the game. China is an influencer-led country. Everything has always been a word-of-mouth culture where recommendations from friends and family trump advertising spending.”

Robertson says that Nine Rivers aims to make 1.31 million LPA (Litres of Pure Alcohol) at launch, which would be more than the 1 million LPA Pernod Ricard produces from its two-still set-up, but less than the four stills that give Diageo the capacity for 2 million LPA. However, Nine Rivers has the ability to expand up to 7.5 million LPA as and when the demand requires, he argues, which would make it the largest distillery in the country.

A new terroir for a new whisky territory 

China’s continental size means that the vastly varying natural environment can influence the flavour of any whisky produced. From the dry plains of Inner Mongolia, which is home to the MengTai distillery, to the subtropical jungles of Yunnan, where Diageo has its base – the landscape couldn’t be further removed from the rugged mountains of the Scottish Highlands.

“Yunnan Province is renowned for its temperate climate, rich natural biodiversity and pristine water sources,” a Diageo spokesperson tells me. “Our distillery in Eryuan County will be carbon neutral, and we envision a 100% sustainable approach to malt whisky making that embraces the natural resources and beauty of the region.”

Pernod Ricard’s operation is based in the hot and humid Sichuan province and shares the same water sources on Sichuan’s Mount Emei as Nongfu Spring, China’s leading bottled water brand. “The year-round precipitation coupled with summer heat creates the exceptional environment for whisky making that increases the intensity of flavours with more evaporation,” says a Pernod Ricard spokesperson.

But whisky is not just the sum of its parts. The parts matter a great deal, too. Much debate has been had in Chinese whisky circles about whether local barley and grains should be used to produce whisky or whether they have to be imported.

“I believe core whisky consumers expect a Chinese whisky to be ‘Chinese’, which means made entirely in China, from mashing to fermentation to distillation to maturation, all carried out in China,” says Kelvin Tam of the Scotch Malt Whisky Society. “Blending with imported whisky, even if resulting in better whisky, will be considered cheating, hence rejected by at least core consumers.”

Whisky is not just the sum of its parts. The parts matter a great deal, too.

According to both Whisky Advocate and Global Drinks Intel, Pernod Ricard’s The Chuan whisky includes imported distillate. Pernod Ricard states that: “Chinese ingredients have been fused into high-standard whisky making, such as the use of both European and Chinese barley and the unique mastery of three types of oak from three continents that defines its complexity.”

Diageo says that it will combine its “prestige whisky expertise and craftsmanship with local natural resources to create the finest quality Chinese origin single malt whisky with unique character and provenance. Where possible, we will look to optimise local sourcing for the production process.” However, they say that they cannot comment at this time on what that means in terms of type and location of grain, mixed or pure Chinese distillate, type of barrels, as the distillery has not yet formally launched. “Our single malt whisky produced in China will have its own unique brand and characteristics,” Diageo says.

Brian Megson of Angus Dundee also tells me that there are “options of both importing barley or using local grains” in their Chinese distillery. However, according to Robertson of Nine Rivers, all barley is imported to China (from the US, Australia and Europe) as the Glycosidic nitrile content of Chinese Barley is too high, which can lead to carcinogenic compounds being created in the malting process. “Even the beer in China is made with imported barley,” he claims.

Ultimately, how much does it matter? Each territory has its own rules, as Robertson points out. “Australian whisky mostly uses the same wash from the same brewery; the US has many types of whisky – corn whisky, rye whisky, bourbon whisky, Tennessee whisky – with different rules about maturation. Ireland, you have much more flexibility of wood; in India you can call almost anything whisky, Japan has little regulation,” he says. “In China the regulations are similar to Scotch, but it needs two years in a barrel instead of three.”

Robertson says that he wants to differentiate Nine Rivers from Scotch as much as possible. “We are in China, it’s the world’s biggest economy – they are now at the top of the food chain in nearly every single industry. It’s the ones that break out who become world-beaters. Why try and get into the slipstream of Scotch? Yes, it’s whisky but there are a lot of things that we can do differently – bringing in terroir, utilising local yeasts and creating our own cooperage (barrel maker).”

Without the strict rules that are imposed on Scotch, whisky made outside of Scotland has the flexibility to use different maltings, waters and casks to create something wholly new.

Wu Hao, the master distiller at the Laizhou distillery, is experimenting with whisky aged in Chinese yellow wine casks. “We season the casks with yellow wine for about 24 months,” he says. “Whisky matured in a yellow wine cask is similar in style to a sherry whisky but gives a hint of fermented rice – something that Chinese consumers would be familiar with. When we cook food, we always include rice wine so the flavour is very familiar to the Chinese market. It’s a great innovation in that it follows traditional techniques but uses Chinese culture,” he explains.

Laizhou is the largest distillery currently operational in China

Laizhou also has its own cooperage, and, says Chen, they have been putting whisky into any and every barrel they can get their hands on. “China is a big market with a large population, and we don’t know what flavour [whisky] Chinese consumers will love, so we want to have all different flavours of casks – bourbon, every type of sherry casks, rum, tequila casks. Our objective is to get as many casks as exist in the whisky world to help find what flavours the Chinese consumers will love,” he says.

The group has also spent years analysing what types of local woods might be used in their production. “Mizunara wood from Japan is a branch of Mongolia oak which originates from China. Mongolian oak is the same as Mizunara but it’s hard and difficult to bend, so it has some problems when used to make whisky with leakage, meaning the angel’s share is often as much as 30%,” he says.

Laizhou currently uses nearly all English barley, but they are experimenting with local grains, too. It’s likely local distilleries will experiment with a wide range of grains and processes to find their unique Chinese flavour profile. Chen explains that when the Chinese market determines what that preference is they have the capacity to pivot in that direction very quickly.

With a global shortage of wood for barrels to age the distillate, rumour has it that the Chinese baijiu producers that are moving into whisky production are pushing for oak staves, chips and even powder to be used to flash age whisky. However, global institutions, including the Scotch Whisky Association, have been keeping a close eye on this emerging market, aiming to ensure the existential concept of what a whisky is does not get too diluted.

Investment by big players into producing a local origin whisky demonstrates the vast untapped potential of whisky in China

“Over several years, the SWA has been working with a variety of stakeholders, including the China National Institute of Food and Fermentation Industries, the Chinese Alcoholic Drinks Association and the Foreign Spirits Producers Association in China to provide input on the revision of the Chinese Whisky Standard,” says Lindesay Low, Deputy Director of Legal Affairs at the SWA.

“The whisky category in China has been built by Scotch Whisky. Now that domestic producers are taking an interest in making whisky, the SWA wants to make sure that, so far as possible, they follow the same high standards that apply to Scotch, Irish, US Bourbon and other internationally traded whiskies. This is to maintain the category’s premium reputation and to ensure that Chinese consumers, who have become accustomed to this type of whisky, are not short-changed, for example, by being sold whisky that has not been aged in wooden barrels,” says Low.

“Places like India and the US have established whisky industries, and producers there make their whisky in line with established laws and practices”, Low says. “In China, however, where whisky has not been distilled in significant quantities previously, the Chinese authorities were keen to learn from other countries when creating their new standard. Our position was that because Chinese consumers were accustomed to Scotch Whisky, they should follow that definition as closely as possible, taking account of local conditions.”

Rules, regulations and cultural challenges 

The aim of domestic companies and global behemoths alike is to create a Chinese-origin whisky that will supply the growing domestic market, avoid import regulations, bypass shipping costs, and circumnavigate any geopolitical tensions. If done well, they might have the potential to be exported globally like the Taiwanese Kavalan and Japanese Nikka whiskies.

China might be a vast market, but its unique make-up presents challenges, too. Whilst spirit imports rose by 22.8% in 2023, bottled wine imports to China fell 17.6% by value and 29.1% by volume during the same period. This was partly due to political conflicts between China and Australia and other wine-producing regions. On top of this, an oversupply of domestically produced wine and a growing (government-led) nationalistic drive to promote, support and buy domestically may further complicate the picture. And markets can swing far more rapidly in China than in more established regions. Operating in China for new brands can be daunting, with significant obstacles across language, culture, regulatory and intellectual property.

The SWA has been instrumental in keeping whisky import tariffs at just 5% (compared with 10% prior to December 2017), but it’s important for brands looking to enter the Chinese market to be fully aware of the risks – as well as the clear benefits.

Sarah Talland of law firm Potter Clarkson has supported a number of whisky companies entering the Chinese market and is well aware of the potential pitfalls that can arise. “In China, there is a first-to-file trademark system that effectively means someone else can ‘steal’ your brand with little consequence if they file your trademark before you do”, she says. “Therefore, it’s essential to create your own Chinese name before your customers or third parties do it for you.”

An error many companies make is contacting possible partners in China without obtaining their own IP protection first. “This could result in you being blocked from the market or being forced to work with distributors you would prefer not to, if someone else registers first,” she explains.

Talland tells me that there are many brands that have done this well. Both Glenfiddich and Bruichladdich sensibly ensured they had their trademarks protected and logo copyright in place and took local guidance on suitable Chinese names before they entered the market on a large scale. Now they are both successful whisky brands in China.

With rapidly growing demand and an increased awareness of whisky, sales of both volume and high-value whisky are predicted to continue to rise and rise. The investment by some of the big players (and the emergence of newer makers) into producing China origin whisky goes to show the vast untapped potential of whisky in the country. Is China’s market a challenging one? Without doubt. But are the risks worth the seemingly endless rewards? For many, it seems so.

Event: The China Whisky Outlook 2024

This June, Barley will be co-hosting ‘The China Whisky Outlook 2024’ in partnership with the China-Britain Business Council and the Scotch Whisky Association. 

The event will be held in Edinburgh on 20 June 2024 in partnership with Potter Clarkson and will cover topics including how to protect your Scotch Whisky brand in China, how to export your whisky to China, and the Chinese whisky market landscape.

Speakers include Iain Weir (Ian Macleod), Paul Skipworth (Eden Mill St Andrews/SMWS), Sarah Talland (Potter Clarkson), Lindesay Low (SWA), Tom Pattinson (Barley), James Brodie (CBBC) and more to be announced.

The free event is open to businesses in the whisky industry who have entered or plan to enter the Chinese market. To express interest or to register click here.

Potter Clarkson’s dedicated FMCG team specialise in maximising the value of food and drink brands and products. If you’d like to discuss how they can help you identify, protect, exploit and enforce your ideas and innovations, please contact them at fmcg@potterclarkson.com.

The post The long read: The rise and rise of whisky in China appeared first on Focus - China Britain Business Council.

In September 2023, Luckin Coffee launched a partnership with Kweichou Moutai, one of the world’s largest spirits companies, selling a baijiu-infused latte for RMB 38 (£4.27) per cup (although discounts usually made it around RMB 19). Despite many being sceptical of the coffee/baijiu mashup, consumers still flocked to Luckin in their millions. According to Luckin, 5.42 million cups of the coffee were sold on the first day of launch, with sales topping RMB 100 million (£11.2 million).

Now, Moutai has teamed up with Luckin again, this time launching a coffee-less chocolate drink that tastes “just like baijiu-filled chocolate”. The collaboration has been created to coincide with the run-up to Lunar New Year, with campaigns featuring Year of the Dragon imagery and slogans like “The First Cup of the Year of the Dragon”.

The timing is apt, as Lunar New Year celebrations are often accompanied by copious amounts of baijiu, and consumers will often shell out for a pricier brand like Moutai (500ml bottles of Moutai typically retail for upwards of RMB 1,500 (£168)) to mark the occasion.

Yet despite the good timing, the collaboration has failed to drum up the massive interest that the first round attracted. As Dao Insights reported, although the Weibo hashtag “Luckin Moutai collaborate again” (瑞幸茅台再联名) attracted 50 million views, it only reached number five on the Hot Search list – the previous collaboration reached the top spot.

It is hard to say why some campaigns go viral in China when others don’t, but it could be that this second campaign lacks the element of surprise and novelty – Moutai has already released a popular baijiu chocolate with Dove, so consumers could already imagine what the fusion of baijiu and chocolate would taste like.

This underlines the importance of keeping co-branded campaigns fresh and exciting and embracing collaborations that push the boundaries of your brand’s values – other examples from the China market in recent years include Gucci x North Face and Mac Cosmetics x Honor of Kings (an online multiplayer game).

These collaborations also reflect the continuing relevance of the “guochao” trend. Guochao, which translates to “national trend” (or ‘China chic’), encapsulates the rise of brands that celebrate and promote Chinese cultural identity, as well as the growing popularity of home-grown Chinese brands. Moutai’s recent collaborations reflect both sides of this trend. On the one hand, the decision to partner with Luckin rather than Starbucks aligned well with Moutai’s identity as a Chinese company and resonated with the national pride of Chinese consumers. On the other hand, marrying Western favourites like coffee and chocolate with a traditionally Chinese spirit was a smart way to integrate global tastes with local preferences.

The post Why have Luckin and Moutai teamed up for a second time? appeared first on Focus - China Britain Business Council.

The perception of terms like ‘organic’, ‘natural’ or ‘bio’ is different in China. People in the West are already used to natural ingredients and have a clear understanding of what is considered organic. Those products are also well defined and described, with organic certification always added to the label.

In general, Chinese consumers are more pragmatic in using the term ‘natural’ because the concept is wider; basically, whatever is naturally grown is perceived to be healthy and organic, without the need for special labels or government regulations.

Regardless of naming or certification, the desire for these products is growing as a part of a wider trend of better awareness of healthy diets and concerns about food safety. According to a report released by the State Administration for Market Regulation, in 2021, sales of organic products in China reached US$ 14.2 billion, an increase of 18.3% over 2020, ranking it fourth in the world.

Between 2018 and 2021, the number of people buying organic food at Hema Fresh (a brick-and-mortar grocery outlet owned by Internet giant Alibaba) quadrupled, with a penetration rate of nearly 30%. Many customers start by buying organic vegetables and gradually expand to various organic foods and products, among which female consumers with children are the main buying group.

Looking at the evolution of the market, organic food in China has huge potential in international and domestic markets.

Organic agriculture in China

China is one of the world’s largest agriculture producers and consumers of agricultural products. Agriculture is one of the country’s most important economic sectors, employing over 295 million farm workers.

China is the world’s biggest producer of rice and an important source of wheat, corn, tobacco, soybeans, peanuts, cotton, potatoes, sorghum, peanuts, tea, dairy, millet, barley, oilseed, pork and fish, which provide the country with a small portion of its foreign trade revenue.

More than 2.95 million hectares of land were farmed organically by the end of 2022 in China. Organic crops are usually cultivated naturally with manure or compost and treated only with natural pesticides and insecticides.

There are three main organic food production models in China. In the first, a big company leases land from a farmer and pays them. The second model is that under the permission of local governments, big companies sign an organic food production contract with farmers. The third one is organic producer associations. Farmers set up an association by themselves to conduct large-scale organic food production.

What kinds of organic food products are popular in China?

Organic formula and other baby food products are increasingly in demand. Several food scandals have had an impact on this change in buying habits, including melamine-contaminated milk in 2008, which sickened 300,000 children. Online retail platform JD – China’s second largest e-commerce platform behind Alibaba – reports that sales of organic infant food supplements grew 6.6% in 2019 and 11.2% in 2020.

For foreign brands, there is a real opportunity to import their products and establish themselves in China by meeting the specific expectations of this market, especially as they are seen as exemplary from a health point of view.

Similarly, the organic dairy industry in China has been growing steadily in recent years, driven by increasing demand for healthy and safe food products. The increasing demand for organic dairy products in China can be attributed to several factors, including rising awareness of the use of fertilisers, pesticides, and bovine growth hormones in conventional dairy farming practices, which has led consumers to opt for healthier options.

Organic dairy products are thought to have higher levels of beneficial nutrients such as vitamins, omega-3 fatty acids, antioxidants, and conjugated linoleic acid (CLA).

Dairy aside, organic fruits, vegetables, meat, poultry, and seafood have all experienced significant growth in recent years due to increasing demand for healthy and safe food. There is also a rising awareness of environmental sustainability and animal welfare concerns among consumers. Organic fruits and vegetables are particularly popular, accounting for over 70% of the market share.

In general, consumers are willing to pay a premium for organic products that are free from harmful pesticides, herbicides, and synthetic fertilisers. The Chinese government has been promoting the industry’s development by providing subsidies for organic farming and encouraging sustainable agriculture practices.

How are organic food products in China purchased and distributed?

China’s organic food industry is divided between supermarkets, independent small grocers, internet retailing, direct selling, and more. The market for organic food products in supermarkets has experienced significant growth in recent years, fuelled by health awareness, rising disposable incomes, and concerns about the environment.

Leading supermarkets in China, including  , have responded to the increasing demand for organic products by expanding their offerings.

Nevertheless, as the largest internet retailing market in the world, online-to-offline (O2O) models are often the most efficient sales channels for organic food in China. As the biggest consumer market for organic packaged foods and beverages, and the fastest-growing organic food market in Asia, China’s organic market offers many opportunities for foreign B2B investors.

There are several key market players in the industry, including China Mengniu Dairy Company Limited, Abbot China, Ausnutria Dairy (China) Company Ltd, TINGYI (Cayman Islands) Holding Corp, and WH Group Limited.

What other organic products are popular in China?

Physical health has risen to the top of Chinese consumers’ interests since the Covid-19 pandemic. Beyond food, this philosophy is also reflected in the consumption of other products, such as beverages and cosmetics.

The organic cosmetics market in China is still considered a niche, but Chinese buyers are slowly starting to show interest in using more organic and natural products. This shift is visible mostly in first-tier cities, among Gen Z and millennials.

The use of natural products in cosmetics requires organic brands to go through formulas and regulations to assure customers that the product is safe. However, in China, there is no central agency that issues an organic certification, as is common in other countries. For this reason, Chinese consumers trust foreign organic certified products more than local brands, as they are believed to be better.

As the green trend continues to grow in an expanding market, more companies will invest in green technologies for higher efficacy and better safety performance. Chinese beauty consumers from first-tier cities are more connected to global trends and want to follow them, resulting in a change in their shopping behaviours.

The adoption of sustainable packaging for cosmetic products by larger players has further bolstered the market growth. For example, Procter & Gamble recently announced a significant shift to plant-derived packaging for some of its leading China cosmetic brands and is using sugarcane-derived plastic from Brazilian company Braskem.

L’Oréal recently helped reduce the environmental impact of its packaging by introducing two new assessment tools, namely Sustainable Packaging Scorecard (SPS) and Packaging Impact Quick Evaluation Tool (PIQET), to its package design process.

Organic product certification and other legal issues

A major problem in China is the proliferation of brands that sell fake organic products. This trend has been responsible for a practice called “greenwashing”, which refers to a company that provides false or misleading information about their products being eco-friendly to gain market share.

The use of words such as ‘green’, ‘eco’ and ‘sustainable’ to describe products that are not environmentally-friendly are a form of greenwashing.

Foreign enterprises can register their green trademarks in China and market organic goods and services. Green marks used by companies give them a way of advertising and promising consumers to provide 100% organic and biodegradable products which are free from causing any harm to the environment.

A few countries, such as the European Union, the United States and China, accept the registration of green trademarks. But recently, in China, companies interested in registering green trademarks have been encountering difficulties and facing the rejection of their applications.

China’s Trademark Law prohibits the registration of deceptive trademarks. A brand that greenwashes its underlying products can be considered fraudulent. Analysts speculate that these rejections have something to do with China’s concerns over greenwashing.

In 2020, a national standard on organic products covering mandatory requirements for production, processing, labelling, and management came into effect in China, as well as the revised organic certification rules.

China’s Certification and Accreditation Administration (CNCA) released a catalogue of products eligible for organic certification. China classified this new standard and the accompanying new certification regulations as voluntary, and on this basis, did not notify either to the World Trade Organization (WTO).

However, if products are to be marketed in China as organic, compliance with this standard and accompanying regulations is mandatory.

The new organic standard includes changes to production and processing inputs, such as adding microbial preparations for control and prevention of animal diseases, adding detergents and disinfectants in plant production, adding requirements for packaging materials for feed products, adjusting lists of food additives, processing aids, and feed additives eligible for organic production and/or processing.

The new organic certification rules appear to have streamlined some certification practices. For example, an overseas organic production site that has acquired organic certification for at least four years (inclusive) can be waived from a 12-month organic conversion period before being certified to the Chinese organic standard.

If an organic product is produced or processed overseas, the product sample can be tested by a local testing agency. Under the new regulations, field inspections will take place on a limited number of farms if the organic production organisation consists of multiple farmers, instead of inspecting each individual farm.

Likewise, if the certified organic product is harvested multiple times a year, site inspections will be reduced to once a year. The 2019 organic certification catalogue has been modified to include all products in the supplementary catalogues released between 2012 and 2018. Notably, goji berries have been added to the new catalogue, but honey has not.

China has taken significant steps to try and increase the level of consumer trust in the organic industry. The CNCA mandates that all organic products have a 17-digit organic code, which consumers can input on the CNCA website to verify its authenticity. This has made traceability technology a crucial element of the Chinese organic industry.

Only 220 foreign brands, as of the end of 2022, were certified as organic in China, compared to more than 14,000 local products.

Conclusion

Since there are no clear regulations or one organic certification that can be seen as a guideline to what is or isn’t organic in China, it is essential for natural brands to educate their potential customers about the benefits of their products. Foreign companies cannot just assume that consumers are familiar with the terms already used in the West.

Most Chinese consumers are price-sensitive and look for value when buying organic products. China’s demand for organic food has grown at a fast pace in the past decade and it is expected that both production and demand will continue to grow.

The post How popular are organic products in China? appeared first on Focus - China Britain Business Council.

In September 2023, Chinese baijiu brand Kweichou Moutai, one of the world’s largest spirits companies, launched collaborations with Chinese coffee chain Luckin and international chocolate brand Dove that took the market by storm. What can other brands learn from these popular promotions?

Moutai x Luckin Coffee

Luckin Coffee launched a partnership with Moutai in early September, selling a baijiu-infused latte for RMB 38 (£4.27) per cup (although discounts usually made it around RMB 19). Despite many being sceptical of the coffee/baijiu mashup, consumers still flocked to Luckin in their millions. According to Luckin, 5.42 million cups of the coffee were sold on the first day of launch, with sales topping RMB 100 million (£11.2 million).

Founded in 2017, Luckin Coffee was a venture capital darling, leveraging ultra-cheap prices and quick delivery to win over Chinese consumers. The company took a hit in autumn 2020 after it admitted to fabricating over USD 300 million in earnings and was delisted from US markets, but has since bounced back with a vengeance, surpassing Starbucks in terms of income and number of stores by mid-2023.

Moutai x Dove

Moutai quickly followed up its Luckin partnership with a collab with Mars-owned Dove chocolate. The baijiu-filled chocolates launched on 16 September priced at RMB 35 (£3.95) for a box of two pieces or RMB 99 (£11.12) for a box of six, and sold out within minutes. Since then, unauthorised merchants have been flipping the chocolates on e-commerce platforms for several times the RRP. And the demand wasn’t just due to a trendy product drawing attention online; feedback from consumers was overwhelmingly in favour of the product, with some even suggesting making it a permanent addition to Dove’s offerings in China.

Analysis and implications

These collaborations indicate Moutai’s desire to broaden its market and appeal to a younger customer base. The strong spirit is traditionally associated with formal banqueting and 500ml bottles typically retail for upwards of RMB 1,500 (£168) a bottle, putting it out of the reach of many consumers.

However, the success of these collaborations isn’t just an indicator of Moutai’s willingness of to innovate; it also sheds light on the evolving tastes and preferences of Chinese consumers.

Young Chinese consumers have an experimental palate
The younger Chinese demographic, influenced by global trends yet deeply rooted in their cultural heritage, are always keen to sample new products and flavours, especially when they combine familiar elements in unexpected ways. This is especially true for low-priced products like soft drinks, sweets and savoury snacks, as the risk of purchasing them is significantly lower. Brands in the Chinese market must constantly look for ways to innovate and launch new products to stay relevant.

Guochao isn’t going anywhere

These collaborations also reflect the continuing relevance of the “guochao” trend. Guochao, which translates to “national trend” (or can be more eloquently translated as ‘China chic’) encapsulates the rise of brands that celebrate and promote Chinese cultural identity, as well as the growing popularity of home-grown Chinese brands. Moutai’s recent collaborations reflect both sides of this trend. On the one hand, the decision to partner with Luckin rather than Starbucks aligned well with Moutai’s identity as a Chinese company and resonated with the national pride of Chinese consumers. On the other hand, marrying Western favourites like coffee and chocolate with a traditionally Chinese spirit was a smart way to integrate global tastes with local preferences.

Co-branding is an important strategy
Co-branded partnerships have long been an effective way for high-end brands to connect with a broader consumer demographic. During CBBC’s 2023 China Consumer conference, Sarah Rotherham, CEO of Fontaine Group, which owns the fragrance brand Creed, described how Creed worked on a collaboration with Chinese rap artist Benzo, embedding the fragrance into one of his songs, and with Chinese art toy ROBBi, in which limited-edition collectables were scented using Creed fragrances and sold along with non-fungible tokens (NFTs).

In conclusion, brands aiming to thrive in China’s dynamic consumer landscape need to be attuned to evolving tastes, ensuring they strike the right balance between innovation and cultural sensitivity.

The post Why alcohol infused coffee just went viral in China appeared first on Focus - China Britain Business Council.

Jessie Zhang is the founder of Star Gourmet Communications, an integrated marketing and communications agency that works with some of China’s best-known hospitality and lifestyle brands, including DaDong China World Mall, San Pellegrino and Opera Bombana.

What are the main trends in the hospitality industry in China at the moment? How do you see these trends evolving over the next five years?

The restaurant and hotel industries in mainland China have changed a lot since the pandemic.

For example, fancy restaurants and large-scale business hotels are no longer the first choice for consumers; instead, they are more inclined towards niche boutique hotels or “internet famous” (wanghong) B&Bs. Many travellers will plan trips around “checking in” (daka – to tick off a popular spot) at specific hotels or restaurants, such as the Songtsam Boutique Hotels in Yunnan and Tibet or Bright Qi Hotels & Resort in Zibo, Shandong, which is set into the side of an 800m cliff.

A stay in one of these hotels can set you back as much as RMB 5,000 (£573) per night, and they can be booked up months in advance. The popularity of these independent hotels has forced international chains like IHG and Marriott to launch their own boutique brands to cater to the changing market.

What trends have fallen out of fashion and why?

As I noted above, high-end business travel is losing its popularity. One reason for this is that the pandemic has had a major impact on business budgets, and companies of all sizes are looking to make cuts to their travel and entertaining expenses. The other reason is that young consumers are much more discerning in their choices and actively seek out unique, diverse experiences.

Jessie Zhang, founder of Star Gourmet Communications

Hospitality was one of the industries most affected by the pandemic. How have venues responded to this challenge?

Hotels and restaurants were proactive in finding ways to protect their businesses during the pandemic. For example, Michelin-starred restaurants started to offer delivery menus – something unprecedented for restaurants of that calibre – and pre-cooked and “semi-finished products” (such as those akin to the recipe boxes with pre-portioned ingredients offered by services like Hello Fresh in the UK).

As you mentioned, China’s food delivery industry expanded massively during the pandemic, and this is likely to continue even now that Covid restrictions have been dropped. How are restaurants – especially fine dining restaurants – ensuring that their delivery/takeaway options maintain a high standard?

The convenience of food delivery has fundamentally changed the way people approach dining in China, especially in first-tier cities like Beijing and Shanghai, and that is unlikely to change even now the pandemic is over. In fact, the pandemic significantly improved the level of delivery offerings because it forced restaurants to adapt quickly and try new things. Nowadays, many restaurants have a specific team focusing on creating delivery offerings or a central kitchen making dishes to push out on delivery apps.

Many Western chefs working in China are increasingly using local Chinese ingredients on their menus. What has brought about this change? Are there any producers or ingredients that you are particularly excited about right now?

I think this move is in line with trends around the world. In the past, a chef like Umberto Bombana (a three Michelin-starred Italian chef who has restaurants in Hong Kong, Macau, Beijing and Shanghai) would have sourced everything from Italy, even down to the smallest tomato; now, his restaurant in Beijing, Opera Bombana, has its own organic farm in the suburbs.

On the one hand, sourcing ingredients locally obviously reduces ingredient costs. On the other hand, the pandemic made it much more difficult to source some imported ingredients, especially those where freshness is paramount, so chefs had no choice but to go local. Local ingredients also have the advantage of creating storytelling opportunities. For example, Marino D’Antonio, executive chef of Giada Garden Italian restaurant, sources pork for his roast suckling pig from a village in Chengde, a few hours’ drive from Beijing. He can directly communicate with the farmers and ask them to slaughter the pigs according to his requirements while also demonstrating his commitment to “rural revitalisation”, which has been a priority for the Chinese government in recent years.

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