Like a dog with two tails

Big-name suppliers have every reason to feel happy as Chinese New Year approaches. Shay Waterworth outlines exactly how much this festival means

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CHINESE NEW YEAR can be bigger than Christmas for some drinks suppliers. The annual event, known to the Chinese as Chun Jié or Spring Festival, is on February 16 and this year marks the Year of the Dog zodiac. The dog represents loyalty, which is fitting because, despite more Chinese people living abroad than ever before, around 3bn journeys are expected to be made by people returning home to celebrate – the greatest human migration on the planet. The influence of China’s immense population, especially the people who travel internationally, has been changing the landscape of the global drinks industry – and brands are beginning to wake up to this reality.

SANTA’S PRESENTS

There are two big celebrations in China each year – Chinese New Year and the Mid-Autumn Festival. During the latter, which takes place in September, the Chinese traditionally eat moon cakes and take a week off work to worship the mountain gods after a good harvest. The periods covering both festivals are commonly known as gifting seasons, when symbolic presents are given to family members and friends – just like Christmas.

Traditionally these gifts would be either a piece of fruit to symbolise life and a new beginning or, more recently fresh milk (a rare commodity in China). But now, rather than an apple in a box, the emerging demographic from China is beginning to broaden its gifting ideas.

Scotch whisky, brandy and wine are some of the biggest beneficiaries of China’s booming middle class and, as someone who has lived in the country, I can say that the fashionable obsession with western culture is rife. The theme for a majority of billboards is a picture of a white, blond-haired woman wearing an expensive watch with the Eiffel Tower standing tall in the background. This western focus has driven the international sales of big brands. For example, Ballantine’s launched its single malt range in Taiwan last year and some Bordeaux wine producers now have their own Chinese ambassadors.

For Chivas Brothers, however, it’s party time in China. “Chinese New Year presents a significant opportunity for Royal Salute,” says Mathieu Deslandes, Chivas Brothers’ marketing director, acknowledging its 10% volume growth in the past year in China.

“While Christmas is becoming increasingly important as a gifting season, we do not currently see quite the same high volume of sales as we do for Chinese New Year, which is also celebrated in many other Asian countries where we have a strong presence, such as Hong Kong, Taiwan, Malaysia and Korea.

“We experience our highest volume of sales during the festive periods, with the majority of these coming through gifting. In Korea, for example, gifting represents around 20% of total Royal Salute volume sales – and Chinese New Year accounts for a high proportion of it.”

THE BIG BOYS

With a potential 1.4bn Chinese people to target with gifts, Chinese New Year is now a gold mine for desired labels. Johnny Walker is one of the most sought-after brands in the country, and in the run-up to last year’s festival it launched a Chinese New Year edition of its Blue Label range.

Diageo was one of the first big brands to recognise the opportunity and this is the fifth year it has released this extension. The limited-edition decorated bottles retail at £175 for a litre – £19 more than the standard bottle.

“During this festive period it’s wonderful to be able to provide whisky consumers with a gift that is luxurious and unique from such an iconic whisky brand,” said Dayalan Nayager, managing director at Diageo Global Travel. “The exquisite design of the Chinese New Year bottle will help to engage new consumers and reward existing ones with a limited-edition collectable.”

Sam Fischer, president of Diageo Greater China & Asia, gave a presentation toward the close of last year about the company’s plans for the festive period, paying particular attention to the gifting culture in China.

Traditionally, baijiu would be the spirit of choice but now this is changing. The only luxury item which will not benefit from China’s gifting seasons is the watch industry, as presenting a clock or watch as a gift symbolises ageing and isn’t accepted.

Diageo also launched a Johnnie Walker Blue Label for the Mid-Autumn festival. Fischer says: “We simplified and made our message more effective and net sales were 20% higher than all the different limited editions we launched in the previous year.

“In China, during the Christmas and Chinese New Year gifting seasons, we built on last year’s success of the Johnnie Walker Blue Label Striding City limited edition by launching the 2017 edition. The series was so successful that we expanded it to a more accessible limited edition for Johnnie Walker Black Label.”

However, it isn’t just Diageo using its elbows in the travel retail sector.

Tito’s Handmade Vodka has released ‘Tito’s, a vodka for dog people’ for the Chinese New Year, decorated in red and gold packaging – an obvious crowd-pleaser for the Chinese, not just in China but in the US. There is thought to be a Chinese diaspora in the US of nearly 5m and together, with the US interest in Chinese culture, this opens the door for Tito’s to sell its expression on home soil too.

MORE WINE?

Last year, Drinks International editor Christian Davis travelled to China to visit Changyu, the world’s largest winery. Generally, when the Chinese decide to invest in something, they do so wholeheartedly – and now China’s wine industry is being harvested by a group of investors.

Aurélien Jousse, export manager for China for the Les Dauphins brand, owned by Cellier des Dauphins, believes Chinese New Year is one of its most opportunistic markets to flourish in. “Next year we hope to see a lot more sales and activity,” says Jousse. “The opportunity is important as Les Dauphins is already very popular with the trade and is growing in awareness.

“We have a dedicated China brand manager based in Shanghai and she is working with the trade to develop sales and consumer awareness. Initial results are very promising.”

According to Jousse, Les Dauphins was recognised as the number one French power brand in China in the latest China Landscapes report from Wine Intelligence.

“Our shipments have surged by more than 60% in 2017 vs 2016, with the biggest orders coming in Q4 to prepare for Chinese New Year.”

CHINATOWN DEVELOPMENT

In 2012, the census estimated that the Chinese diaspora equalled 50 million, almost the same size as England’s population. This has a big influence on the development of Chinatowns in cities around the world and the increasing number of celebrations taking place each year. San Francisco has the reputation of having the biggest Chinatown in the world, with London being among the most influential.

“London Chinatown has the biggest Chinese New Year celebration in Europe,” says Damian Williams, operations manager at Opium bar in London’s Chinatown.

“Chinese New Year is the busiest time of year for us, more so than Christmas. The celebrations are crazy and that’s one of the reasons we launch a new menu for the festival each year.”

According to Williams, millennials account for 30% of the Chinese population, putting particular focus on the bar industry. However, inside China it is a different picture for the on-trade.

Rob Bevis, president at specialist wine importer for the on-trade, Roque Wines in Shanghai, says: “The roughly nine-day holiday period of Chinese New Year sees a real slow-down in business in Shanghai – many people leave the city to visit family in other areas. Business is good in the lead up but not so great during the holidays.”

This is probably the biggest difference to western culture. In Europe and the US, restaurants and bars are booked up for the majority of December to host parties for companies, families and groups of friends. Essentially the opposite happens in China, and this could be an area to watch over the coming decade.

As airports and trains fill up with Chinese nationals returning home to celebrate the New Year, opportunities for brands in travel retail are becoming significant. But as the changing attitude of China’s millennials and middle class continues to move away from tradition and target the luxury western lifestyle, the dollar, or equivalent, sign will flicker on the eyes of importers, the Chinese on-trade and international brands with history.