---
title: "After the Boom and Bust, What's Next for Pre-mixed Cocktails?"
description: "After explosive growth, pre-mixed cocktails saw a sharp decline in 2015, but for the category as a whole, this may be an opportunity to break down and rebuild. The market appears to have hit a bottleneck."
author: "钱睿荪"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2016-04-05"
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# After the Boom and Bust, What's Next for Pre-mixed Cocktails?

> After explosive growth, pre-mixed cocktails saw a sharp decline in 2015, but for the category as a whole, this may be an opportunity to break down and rebuild. The market appears to have hit a bottleneck.

After explosive growth, pre-mixed cocktails saw a sharp decline in 2015, but for the category as a whole, this may be an opportunity to break down and rebuild.
Pre-mixed cocktails seem to have hit a bottleneck.
Until a year ago, this statement was seen as alarmist by industry insiders. At that time, supermarket shelves were lined with colorful glass bottles, and product placements in hit shows like "Day Day Up" and "Running Man" were everywhere, with the entire market brimming with optimism. In August last year, a research report from Essence Securities indicated that China's pre-mixed cocktail market would stabilize at 20 billion yuan or even higher.
However, winter seemed to arrive quickly. Since the fourth quarter of last year, sales of pre-mixed cocktails have declined significantly, and distributors across the country have reported inventory backlogs. The bubble of pre-mixed drinks, once seen as a lifeline, burst swiftly, seemingly pouring cold water on an already sluggish beverage industry.
The first to face scrutiny was the cocktail leader Rio. According to the 2015 performance report released by Rio's parent company, Baorun Group (002568.SZ), the company posted a loss of nearly 200 million yuan in the fourth quarter of last year.
Meanwhile, the pre-mixed cocktail businesses of domestic liquor companies such as Yanghe, Gujing Gong, Wuliangye, and Shuijingfang were mostly much ado about nothing. Heinan Food (002387.SZ), which previously focused on protein drinks, also began auctioning off its pre-mixed cocktail factory last year.
The myth of pre-mixed cocktails can be traced back to 2014. At that time, Baorun Group (002568.SZ), which primarily dealt in flavors and fragrances, acquired Rio, the domestic cocktail leader. That year, Rio's sales revenue grew by 216% year-on-year, and net profit increased by over 300%.
Despite the current chorus of pessimism, many companies still hope to make a mark in the pre-mixed cocktail category.
Of course, compared to the companies that rushed in a year ago, entering during a downturn requires more caution.
In early 2016, beer giant Anheuser-Busch InBev launched the "Meiye" brand of pre-mixed cocktails in the Chinese market. In response to an inquiry letter from the Shenzhen Stock Exchange, Baorun Group stated that it would continue to focus on pre-mixed cocktails and invest further through a private placement. Qingdao Douglas Spirits Co., Ltd.'s "AK-47 Men's Cocktail" also made a high-profile appearance at the Chengdu Sugar and Wine Fair at the end of March.
A source close to Anheuser-Busch InBev told Jiemian News that the company began examining the pre-mixed cocktail market in late 2014. "Choosing pre-mixed drinks was not just because of the rapid growth at the time. Anheuser-Busch InBev has been trying to launch 'beer-like' beverages, including Meiye cocktails and Johnny Appleseed cider. This is a good supplement to the beer business, which faces growth challenges."
Qingdao Douglas Spirits is a spirits company whose flagship product is AK-47 vodka, and it also produces whiskey, brandy, and other strong spirits. The company's managing director, Pu Wei, stated that the current per capita consumption of pre-mixed cocktails in China is 0.06 liters, less than 1% of Japan's, and there is a considerable gap compared to the Asian average of 0.8 liters, indicating significant growth potential. Pu Wei believes that young consumers who start with pre-mixed cocktails will have a synergistic effect on the company's other spirits categories.
Moreover, the "AK-47 Men's Cocktail," which targets masculinity, uses black packaging, making it look somewhat unconventional on shelves compared to competitors. This distinctiveness is seen as an opportunity for future growth.
"As the industry enters an adjustment period, the elimination of immature brands will further release consumption potential. This is not a bad thing for quality companies with capital, production capacity, and talent reserves," Pu Wei said. He added that the industry bubble was largely due to overzealous producers who were unprepared.
"The consumption scenarios for alcoholic beverages and fruit juices are completely different, and the operational requirements for companies also differ. Alcohol is not a market where you can rely on one or two seasonal hits; it requires long-term investment. After market growth slows, companies can take the opportunity to calm down and adjust their business strategies. This is necessary for the long-term healthy development of the market."
Baorun Group also responded that in 2015, due to pronounced seasonality, sales expectations for the fourth quarter were too high, coupled with increased marketing expenses, leading to a profit decline. Baorun stated that it would control risks through differentiated products, timely marketing strategy adjustments, and increased brand promotion.
For domestic companies, a model to learn from comes from Japan.
Fruit-flavored low-alcohol pre-mixed cocktails (ready-to-drink, RTD) first appeared in Europe in the 1980s. In the late 1990s, the trend began in Japan, primarily among women and young men. According to reports, in 2013, Japan's pre-mixed cocktail revenue reached 196.2 billion yen (approximately 11.8 billion yuan), doubling from 2001, far outpacing other alcoholic beverages. Asahi, Kirin, Suntory, and Takara became industry leaders—all four are major players in Japan's alcohol industry.
According to a report by spirits company Pernod Ricard in late 2013, Japan sees over 500 new pre-mixed drink products annually, showing a trend of diversification. Kirin's "Honjuku" series, known for high juice content, claims juice content exceeding 45%, and its rich taste has won consumer favor. Suntory's "The O.N.E" focuses on low alcohol content, with less than 1% alcohol, offering a relatively refreshing taste. Meanwhile, heavy pre-mixed drinks with 7%-9% alcohol content maintain a growth rate of around 30%.
Domestic pre-mixed drinks currently account for about 0.3% of total domestic alcohol sales, leaving room for future growth, especially in small and medium-sized cities where channel penetration still has significant potential.
"AK-47" is currently distributed in over 100 cities in China, aiming to attract more urban youth. Anheuser-Busch InBev also has a strong distribution network in China and is confident in sales.
However, behind these recent entrants, marketing investments are no less than those of earlier pioneers. As the industry consolidates and concentration intensifies, large-scale advertising wars are inevitable.
Pu Wei told Jiemian News that in 2015, the company invested over 100 million yuan in marketing for its pre-mixed cocktail business, and in 2016, it will continue to expand investment on platforms favored by young consumers.
A new round of pre-mixed cocktail battles is about to begin. Will these new entrants be luckier this time?


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