This report is the first consumer based study offered by just-drinks.

just-drinks has conducted extensive consumer and trade research and learned who the Chinese consumer is, explaining their drinking behaviour and introducing the challenges that international spirits face in the market. The international spirits category refers to whisky, Cognac, vodka and other spirits which are imported into the country.

Consumer interviews have been conducted across six key cities in China, among male drinkers aged between 21 and 35 years old that had consumed any alcohol in the last month. In addition to the consumption criteria, respondents were also drawn from the top 30% personal income bracket for each city. This ensured that the study focused on the socio-economic group which has a high enough level of disposable income to participate in the international spirits category.

In Chapter 1, we introduce our forecast model. The following chapters of this report will look more deeply into the different components of our model: the core consumers of international spirits, the current drinking behaviour across channels, and the key players within each key international spirit category.

The findings of these chapters are used as inputs to the model that forecasts the growth and volumes of the key international spirits brands in China.

In the final section we give an overview of the whisky, cognac and vodka categories, and offer market projections until 2012.

Chapter 1: Forecasting the growth of the international spirits market in China. The international spirits category has experienced rapid growth in recent years. However, the category remains relatively small compared to other markets in Asia. The Chinese spirit market is dominated by domestic spirits, called Baijiu, the two leading international spirits groups; Diageo and Pernod-Ricard hold an estimated .1% and .2% market share respectively. In this chapter, we introduce our forecast model and highlight the growth of this category.

Chapter 2: Marketing challenges for international spirits in China. While there are clear opportunities for international spirit brands in the Chinese market, there are distinct marketing challenges that need to be overcome, as discussed in this chapter - low familiarity with international brands; homogenous promotional and communication strategies adopted by international brands; a highly competitive marketplace; low brand commitment - the target consumer is fickle and spoilt for choice; and a high level of counterfeiting and parallel imports in key channels.

Chapter 3: The 'target' Chinese consumer of international spirits. Who is the international spirit consumer? We will take a closer look at males aged 21-35 who are frequent visitors to modern accounts. In this chapter we will describe the motivating factors in their lives, their ambitions, the trends they follow and what they like to do during their free time. This research was conducted via telephone interviews in five key markets in China: Shanghai, Beijing, Guangzhou, Nanjing and Chengdu. Respondents were aged 21-35 years old. All were from the top 30% household income bands in each market. The total sample size was 2001.

Chapter 4: Introduction to drinking behaviour. This chapter will provide an overview of the key channels in which alcohol is consumed as well as providing an introduction to drinking behaviour and preferences at a category and brand level. It is divided into two main sections, and examines the key channels and categories along with the perceptions of these key categories.

Chapter 5: Whisky - an overview. This chapter will provide an overview of category dynamics, and profile key whisky brands in China. It looks at where, and how often whisky is consumed across markets, brand awareness, usage and image, plus, it provides profiles of key whisky brands.

Chapter 6: Cognac - an overview. In this chapter we provide an overview of category dynamics, and profile brands in the Cognac category in China. It will focus on Cognac consumption across markets, awareness and usage of key Cognac brands, and image perceptions.

Chapter 7: Vodka - an overview. This chapter offers an overview of the key category dynamics of the vodka category in China, and profiles the key brands. It looks at vodka consumption across the market, awareness and usage of key vodka brands and image perceptions.

Chapter 8: Projections for dark spirits brands to 2012. This chapter offers projections for the whisky and Cognac categories and their key brands in China until 2012.

Chapter 9: Projections for vodka to 2012. Vodka has experienced a rapid growth in usage in China over recent years and is expected to grow from 392,000 cases in 2006 to 3.8m cases by 2012. In this chapter, we will offer projections for the vodka category until 2012 by brand.

Chapter 10: Summary. This chapter includes on- and off-trade market for international spirits by category and total in China with forecasts to 2012.

Introduction

Chapter 1 Forecasting the growth of the international spirits market in China
DDMA forecast model
Greater acceptance of international spirits
Continued expansion of key consumption channels
Western-style bars
Karaoke TV rooms (KTVs)
Nightclubs/discos
Greater distribution control and efficiencies
Increasing levels of disposable income and the immergence of new markets
Brand proliferation
Summary

Chapter 2 Marketing challenges for international spirits in China
Low familiarity with international spirit brands
Homogenous promotional and communication strategies adopted by international brands
Highly competitive market-place
Low brand commitment
High level of counterfeiting and parallel imports in key channels

Chapter 3 The ‘target’ Chinese consumer of international spirits
Chinese young urban professionals today: Overview and introduction
Chinese youth today: Concerns and individuality
Criteria in selecting a career
Definition of happiness
Places and countries that influence youth trends and culture

Chapter 4 Introduction to drinking behaviour
Channels where alcohol consumption has taken place in the last month
Perceptions of key categories
Summary

Chapter 5 Whisky – an overview
Frequency of whisky consumption across markets
Brand and advertising awareness
Key brands – brand image and brand personalities
Chivas
Brand personality
Johnnie Walker Black Label
Core brand image
Brand personality
Jack Daniel’s
Brand image
Brand personality
Johnny Walker Red Label
Core brand image
Ballantine’s/Royal Salute
Core brand image
Summary

Chapter 6 Cognac – an overview
Introduction
Cognac consumption across markets
Brand and advertising awareness
Key brands – brand image and brand personalities
Hennessy
Core brand image
Brand personality
Remy Martin
Core brand image
Brand personality
Martel
Core brand image
Brand personality
Summary

Chapter 7 Vodka – an overview
Introduction
Vodka consumption across markets
Awareness and usage of key vodka brands
Key brands – brand image and brand personalities
Absolut
Brand image profile
Brand personality
Smirnoff
Brand image profile
Brand personality
Finlandia
Brand image profile
Brand personality
Stolichnaya
Brand image profile
Brand personality
Summary

Chapter 8 Projections for dark spirit brands to 2012
Whisky
Cognac

Chapter 9 Projections for vodka to 2012

Chapter 10 Summary

List of figures
Figure 1: Perceived differences between Cognac and whisky (%)
Figure 2: Selected international spirits: Incidence of counterfeit and parallel product in the market, 2005 (%)
Figure 3: Largest concerns in life: Chinese males aged 21-35 (%)
Figure 4: Criteria for a job selection: Chinese males aged 21-35 (%)
Figure 5: Sources of personal happiness: Chinese males aged 21-35 (%)
Figure 6: Key categories image map
Figure 7: Frequency of drinking whisky
Figure 8: Barriers to whisky consumption
Figure 9: Brand awareness – key whisky brands
Figure 10: Advertising awareness – key whisky brands
Figure 11: Brand usage – key whisky brands
Figure 12: Cognac consumption by account type
Figure 13: Barriers to Cognac consumption
Figure 14: Brand awareness – key Cognac brands
Figure 15: Advertising awareness – key Cognac brands
Figure 16: Brand usage – key Cognac brands
Figure 17: Vodka consumption by account type
Figure 18: Barriers to vodka consumption
Figure 19: Brand awareness – key vodka brands
Figure 20: Brand awareness – Absolut Group
Figure 21: Advertising awareness – key vodka brands
Figure 22: Brand usage – key vodka brands

List of tables
Table 1: Market volume of international spirits by category in China, 2001-2006 (‘000 nine-litre cases)
Table 2: Incidence of drinking international sprits in last two weeks (%)
Table 3: Key International dark spirits brands, above-the-line expenditure, 2004-2006 (US$m)
Table 4: Frequency of consumption by channel
Table 5: Types of alcohol consumed
Table 6: Whisky consumption frequency across markets
Table 7: Cognac consumption frequency across markets
Table 8: Vodka consumption frequency across markets
Table 9: Total on- and off-trade market for whisky (by major brand and total) in China, 2001-2012 (‘000 nine-litre cases)
Table 10: Total on- and off-trade market for Cognac (by major brand and total) in China, 2001-2012 (‘000 nine-litre cases)
Table 11: Total on- and off-trade market for vodka (by major brand and total) in China, 2001-2012 (‘000 nine-litre cases)
Table 12: Total on- and off-trade market for international spirits (by category and total) in China, 2001-2012 (‘000 nine-litre cases)