TRAVEL EXPENSES TAKE OVER FROM THE DRINKING ONES
Growth of the revenues
Chinese incomes are growing and they are starting to enjoy the experience of travelling. However, growing income did not provide an increase in alcohol consumption according to a market research carried out by Millward Brown for valuable Chinese brands. Tourism seems to be more famous this season and travel agencies and hotels have known a boom in business.
Unfortunately, wine and baijiu declined in brand value with Moutai, a leading local alcohol brand plummeting by 6 percent. Hotels on the other hand are looking at an increase of 98% in brand value.
Companies like Moutai and Wu Liang Ye as well as wineries like Chang Yu and Great Wall are facing great difficulty as their stock value took a beating. This comes as a result of the government coming down heavily on luxury gifting and banquets. Foreign competition was also seen as an attribute to the slow down in the industry. Companies like Yanghe are keeping their value up by engaging in repositioning the brand and entering into corporate social responsibility (CSR) initiatives like participating in charity events and eco friendly campaigns.
Oversea Market for Chinese brands
However, these companies are now looking at overseas sales to up their market positioning by increasing sales to wineries in France and marketing to the UK, Spain, Italy,
and the UAE etc. This is contrary to the hotel industry trends where the local market is booming and the younger generation is taking to travel within the country. Hotels have upped their market value with Home Inn, Juatian, Jingiang and Hanting seeing a new growth in their segment. Companies are now working towards building new property with 5 star hotels on the rise as well as business complexes and furnished apartments and entertainment and retail hubs thriving on the surge.
More information about a case study of beverage in China