Raising a glass: an international approach to China’s beverage market

China’s beverage industry is entering a new phase of adjustment and reinvention. Economic headwinds, heightened consumer caution and a deflationary environment have put pressure on premium segments, while local players grow increasingly sophisticated and digital ecosystems continue to reshape how brands engage consumers. For global beverage companies, success increasingly depends on balancing long-term brand building with short-term resilience, sharpening localization strategies and managing portfolios with discipline and cultural sensitivity.

In this interview, Yan Rives, Marketing Director (China) at Suntory Global Spirits, discusses the challenges facing beverage companies in finding sustained growth in the short-term-oriented China market, the rise in popularity of low-ABV formats and the opportunities brought about by the silver economy.

Q.How would you describe the evolution of China’s beverage market over the past few years, and what major consumer shifts have been most influential in guiding business strategy?

A.The past several years have been undeniably challenging. Weak consumer confidence has led to more cautious, rational spending and more cherry-picking of products. Meanwhile, China’s small businesses have not fully returned to the business-entertainment occasions that previously fueled beverage consumption, reducing both their frequency and value.

On the business side, the market has been deflationary across many FMCG categories—especially in premium beverages. The situation worsened at the end of 2022 when many companies built up inventory in anticipation of a strong rebound that did not materialize after the country reopened from COVID restrictions. Much of the industry has since been working through elevated stock levels, while bankruptcies and liquidations added further pricing pressure as distressed inventory entered the market at steep discounts.

Still, a cautious recovery is emerging. Whisky has seen a modest return to growth, and 2025 is showing more pockets of category resilience. Our own portfolio reflects this shift: prestige brands remain under pressure, but our more accessible highball offerings are thriving as consumers favor more casual drinking occasions. Ready-to-drink (RTD) beverages, which declined sharply last year, are now rebounding in e-commerce and convenience channels, and we have seen our RTD portfolio return to strong double-digit growth.

Q.What are the biggest challenges in building and sustaining a premium beverage brand in China today?

A.Premium and luxury consumption has softened, not only due to domestic sentiment but also because the luxury shopping that shifted onshore during the pandemic has now partly moved back overseas. Interestingly, while Mainland sales may show a decline, global spending by Chinese consumers has actually increased.

The real challenge in China isn’t achieving short-term success—anyone can do that with a strong campaign or a successful innovation. The difficult part is sustaining growth over time. That requires a marketing model built on trackable returns in both commercial performance and brand health. It means appearing in the right environments, partnering selectively and maintaining discipline on pricing power in a market where small vendors can quickly distort price perception.

The long-term priority is clear: growing brand power faster than pricing. When that relationship holds, premiumization is viable. When it breaks, the market punishes you immediately.

Q.Chinese consumers have become increasingly health-conscious, especially post-pandemic. How should alcoholic beverage brands adapt to this trend?

A.Moderation and low-ABV drinking have become defining trends across categories. While China has a lower proportion of young non-drinkers compared with Western markets, demand for lighter options is strong, especially among younger consumers and across both at-home and on-trade [bought for immediate consumption on the premises] occasions.

Our RTD portfolio reflects this shift, with offerings around 3–5% ABV that are suitable for socializing without the desire for intoxication. For on-trade, we’ve seen a good amount of demand for spirits used in highballs (which are one part whisky, four parts soda), again reflecting the demand for a low-sugar, lower-ABV drink.

Non-alcoholic spirits remain in their infancy in China, though globally the trend is developing quickly. We have some competitors who are introducing these products, and that is definitely helping to shape consumer culture, but adoption is still early. For now, we are focusing on promoting responsible drinking through programs like Drink Smart. It will be interesting to see whether behaviors like “zebra striping”—alternating alcoholic and non-alcoholic drinks—emerge in China over time.

Q.China’s regional diversity can dramatically affect consumer tastes. How do you localize marketing and product development to respond to regional differences?

A.There are limits to how much localization is appropriate for international spirits. For full-bottle spirits, we do not localize much, and they are sourced globally. For RTDs, however, localization is essential. Fortunately for us, our portfolio is rooted in Japanese formulas, which align well with Chinese preferences—sophisticated flavor profiles, lower sweetness and an emphasis on balance.

When developing RTD formulas, we test across different cities to ensure broad appeal. And despite fairly significant regional culinary differences, sweetness and flavor preferences among our target consumers—those drawn to international brands—are surprisingly consistent.

Marketing the products also requires a level of localization, again differing by product line. Our RTD business is “local first,” while our premium portfolio strikes a balance between maintaining global brand identity and tapping into local culture.

Q.How do digital ecosystems and e-commerce shape brand-consumer interaction for your category?

A.The true split between online and offline retail is difficult to measure because many delivery platforms now blend both, but as a rule of thumb we assume 50/50. Historically, spirits have had a lower e-commerce share than categories like beauty—around 25% versus more than 60%—because introducing new categories requires offline experiences where potential customers actually get to try the drinks. Still, individual brand shares range widely depending on distribution and strategy.

Today, the key is seamless engagement across all touchpoints, as China no longer operates as “online vs. offline” or “social vs. e-commerce”—every platform does everything. Success requires a full-funnel approach, building broad reach with hero content and then guiding consumers toward more educational touchpoints.

Q.To what degree do you utilize live streaming e-commerce for brand-building?

A.Live streaming is essential in China, particularly for spirits, because consumers still crave education—how to drink, where the product comes from and the culture behind it. But it’s easy to become overly focused on mid- and lower-funnel metrics and chase short-term ROI at the expense of long-term brand equity.

We follow a full-funnel paradigm. First, build a broad reach with brand-building content; then move audiences toward live streams where they can deepen their understanding. Striking the balance is critical. As the marketing literature suggests, categories with lower purchase frequency—like spirits—should invest roughly 70% in brand building and 30% in conversion. That ratio is our guiding principle.

Q.How have you approached localization and adaptation in China in relation to supply chain resilience?

A.As a multinational company, we are naturally exposed to tariffs and geopolitical risks. The first layer of resilience is portfolio balance and maintaining a strong P&L to withstand volatility.

For RTDs, localization is increasingly straightforward. The capabilities of local manufacturers have improved dramatically. Our Japanese R&D teams have been impressed by the quality and responsiveness of China-based partners, who are willing to invest in new equipment, adopt best-in-class practices and continuously upgrade their output. Anyone who compares local RTDs from a decade ago with those today will see how far the industry has progressed.

Q.Competition from domestic brands is intensifying. What advantages can international brands still bring to China’s evolving market?

A.It varies by category. In RTDs, local players dominate with immense distribution reach—often into hundreds or thousands of cities. By comparison, we focus on 10 or so key geographies where consumers have stronger international-brand affinity and willingness to “premiumize.”

In whisky, the situation is reversed. International brands still lead the category, although more than 100 local distilleries are emerging. Their products will take time to mature, but early entries are appearing across price tiers, from luxury labels backed by large groups to promising mainstream entrants. Over time, these players will compete directly with global brands.

However, local competition also expands the overall category. Whisky penetration in major cities is only around 30%, leaving significant headroom. As the pie grows, everyone stands to benefit. So while we watch local developments carefully, there is reason for cautious optimism.

Q.Looking ahead, which emerging consumer trends or demographic groups will be most relevant for growth over the next three to five years?

A.Younger consumers remain essential. Historically, they have been the primary drivers of category growth and are critical for setting new cultural norms—such as adopting international spirits. Despite economic pressures, deprioritizing them would be a strategic mistake.

However, the silver economy—especially mature female consumers—is a significantly underexplored opportunity. This group is highly engaged, receptive to premium and international brands, and eager for new experiences. Few companies have dedicated strategies for them, and that will need to change.

In luxury, spending patterns are also shifting. Aspiring, lighter-spending consumers have cut back, but heavy spenders—though a small proportion of total consumers—now account for more than half of value in some categories. This concentration mirrors broader luxury trends worldwide.

Q.What opportunities exist for deeper innovation—whether in product design, sustainability or partnerships—that could redefine a company’s role in China’s beverage landscape?

A.Innovation needs clearer discipline. Line extensions should draw attention back to the core, not distract from it, and too many innovations can dilute brand strength. One of my early priorities was rationalizing our portfolio and concentrating investment behind the brands where we have a true route to win.

When innovation does happen, the opportunity is to localize meaningfully—balancing cultural relevance with authenticity. Consumers choose Scotch or Japanese whisky in part to connect with those cultures. If brands try too hard to imitate local spirits, credibility suffers. The dance between global identity and local resonance must be handled with care.

I’m personally fascinated by the rise of local-first design across sectors—from F&B to fashion—and how global brands are blending international aesthetics with modern Chinese cultural elements. The recent adidas runway incorporating Hanfu-inspired fashion is a great example. There is tremendous potential for this kind of culturally fluent creativity to influence packaging, partnerships and product innovation in our industry as well.