Chinese alcoholic brands are teaming up with beverages that Gen Z consumers enjoy, in an effort to attract younger customers. Recently, China's prestigious spirit maker Kweichow Moutai partnered with the coffee chain Luckin and created a new coffee drink that sold 5.5 million cups on its first day, grossing RMB 100 million (US$ 13.6 million).
The coffee drink, packaged with an iconic Moutai label and containing less than 0.5 percent (alcohol by volume) of 53 degrees Moutai, is priced at 38 yuan (US$5.2), however, consumers can get it at 19 yuan with coupons.
Topics such as "Young people's first sip of Moutai" or "No drunk driving" have gone viral online, wooing more consumers to try the new beverage.
It is not the first time that alcoholic brands in China have made efforts to attract younger consumers by linking with beverages that Gen Z consumers prefer, yet none of them have made such a phenomenon.
In August, Chinese milk tea leader Nayuki worked with Luzhou Laojiao, the domestic liquor brand, to roll out its new gifting package and online games.
Last September, Luckin Coffee launched a partnership with Moutai, selling a baijiu-infused latte. Though many were skeptical about the new drink mix, millions of consumers invaded Luckin’s coffee shops to try it.
Founded in 2017, Luckin Coffee was a venture capital darling, leveraging ultra-cheap prices and quick delivery to win over Chinese consumers. The company took a hit in autumn 2020 after it admitted to fabricating over US$ 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.
Younger people in China are turning away from the country’s most popular spirit baijiu, which is why Moutai is seeking collaborations with other trendier brands. Moutai’s has an obvious desire to broaden its market and appeal to a younger customer base.
The strong spirit is traditionally associated with formal events and a 500ml bottle typically retails for RMB 1,500 (US$ 205), putting it out of the reach of many consumers.
After its successful collaboration with Luckin, Moutai quickly followed up with a partnership with Mars-owned Dove chocolate. The baijiu-filled chocolates launched in September priced at RMB 35 (US$4.7) for a box of two pieces or RMB 99 (US$ 13.5) for a box of six, and sold out within minutes.
Since then, unauthorized merchants have been selling the chocolates on e-commerce platforms for several times the original price. And the demand wasn’t just due to a trendy product drawing attention online; feedback from consumers was overwhelmingly in favor of the product, with some even suggesting making it a permanent addition to Dove’s offerings in China.
However, the success of these collaborations isn’t just an indicator of Moutai’s willingness to innovate; it also demonstrates the evolving tastes and preferences of Chinese consumers.
Young Chinese consumers
Influenced by global trends yet deeply rooted in their culture, younger Chinese tend to like to try new products and flavors, especially when they combine familiar elements in unexpected ways. This is especially true for low-priced products such as soft drinks, sweet and savory snacks, which don’t represent a big investment.
Brands in the Chinese market must constantly look for ways to innovate and launch new products to stay relevant.
In recent years, there has been a rise of brands that celebrate and promote Chinese cultural identity, as well as the growing popularity of home-grown Chinese trademarks.
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 consumers. On the other hand, marrying Western favorites like coffee and chocolate with a traditionally Chinese spirit was a smart way to integrate global tastes with local preferences.
Many young Chinese are rejecting baijiu while coffee gains extraordinary traction among such consumers. Luckin Coffee has both driven and benefited from that surging popularity. In its second quarter ended 30 June, total net revenues surged 88% year-on-year to RMB6,201.4 million (US$855.2 million) while, extraordinarily, it opened 1,485 new stores to bring its total number of outlets to 10,836 (7,188 self-operated and 3,648 in partnership).
Co-branding as a strategy
Collaborations between two brands have long been an effective strategy for high-end brands to attract 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).
Finding a balance between innovation and cultural sensitivity can be the key to success for brands aiming to thrive in China’s constantly changing consumer landscape.
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