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Bacardi taps restaurants to expand in China

By Leng Cheng | December 15, 2014, Monday | Online Edition

BACARDI Ltd, the world’s largest privately held spirits maker, is planning to expand in the growing ready-to-drink cocktail market in China by opening sales channels into restaurants.

The bottled and canned pre-mixed drinks market in China has expanded 22 percent in the past five years and is estimated to grow 35 percent to 2.3 million cases this year, according to Beijing S&P Information Consult Co., a Chinese institute with no ties to Standard & Poor’s.

“This is about creating a category for people in China,” Bacardi Chief Executive Officer Michael J. Dolan told Shanghai Daily.  “We want to be the Chanel of the spirits industry, letting consumers make a statement about who they are.”

In China, baijiu, a white distilled liquor, remains the most popular spirit, but Western liquors like scotch, cognac and vodka also have become popular as expressions of wealth. The Chinese government crackdown on conspicuous consumption has dented sales for spirits companies, but the ready-to-drink cocktail market, which appeals to younger consumers, has been largely unaffected.

Bacardi has been selling its ready-mixed cocktails through pubs and karaoke bars, but now it plans to move into restaurants in China. Dolan declined to reveal how many restaurants the company hopes to supply, but he said he is “positive” about the big potential of the new sales channel.

Often called alcopops because they combine alcohol and soda pop or juices, prepackaged cocktails generally appeal to white-collar workers who see the drinks as statements of sophistication.

Li Yanwen, a 24-year-old clerk, said the pre-packaged drinks go well in karaoke bars but aren’t necessarily suitable for all restaurant meals.

“I might order them in a Sichuan restaurant,” Li said of the spicy food found there, “but they would be too sweet for other types of Chinese cuisine.”

Still, competing spirits makers are willing to try their luck in many new sales outlets, including some bakeries.

Bacardi will release new flavor for Chinese customers of its core brand Breezer, a fruit wine-based alcopop, according to Jon Grey, Asia Pacific regional president of the company.

Shanghai Bacchus Ltd, which produces the popular Rio brand of alcopops, was established in 2003. It  is an arm of Australian-based Bacchus Distillery. The company assembled a team of experts from China and Australia to develop unique product recipes for China. Its drinks are based on French brandy and vodka, Dutch rum, oranges from Brazil, cranberries from the US and lemon juice from Israel.

Today the company, located in a Pudong New Area industrial park, is one of the largest alcopop producers in China, with expansion plans afoot.

Rio and Breezer share a combined two-thirds of the alcopop market in China, according to S&P Consulting. Bacchus reported revenue of 365 million yuan (US$58.9 million) in the first half of 2014, almost double its 2013 turnover.

A smaller Chinese alcopop producer, Guangzhou Bo Rui Ltd., said its 2014 sales will top about 800,000 cases and opportunities for expansion abound.

“The market will rise to about 3 to 4 million cases in 2015,” said Ryan Tse, a marketing manager for Bo Rui’s Rodance brand of bottled cocktails.”The next five to 10 years will see rapid development.”

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