China's drinks sector suffers New Year hangover

Uncertain future

"The average spend per bottle is between 80 and 200 yuan," she says.

Yang Chengping, chief adviser to Jiangxi Liquor and Spirits Association, says it is too early to tell whether China's alcohol market, especially the baijiu sector, will pick up in 2015, as the crackdown by the central authorities on extravagance is likely to stifle market demand in the long term.

While the nation's leading baijiu brands have turned their attention toward the low and medium-end market by offering lower prices, they have yet to see any noticeable increase in market demand.

"I am afraid that baijiu prices will continue to decline in 2015. We have also seen that there are fewer baijiu dealers in the market as the profit margin is quite slim. As a result, a large number of dealers have started to sell other products since 2013. But at the same time, we have seen the rise of e-commerce platforms selling liquor and wine. Dealers should learn from this and realize that the time has come for them to turn to new distribution platforms," said Yang.

Chinese consumers' online purchases of alcohol accounted for 34 percent of sales in 2014, with baijiu being a good example of a product with a growing presence in the online market, according to consultancy firm Nielsen's global survey on e-commerce.

Despite the slight downtrend in offline sales during Spring Festival in 2014 compared with 2013, the percentage of Chinese consumers purchasing baijiu during the period increased from 0.3 percent to 1.2 percent. Additionally, average per capita spending online for baijiu was 422 yuan, nearly twice that of offline channels.

"The rising purchase intent for consumable goods signals great timing for retailers to start creating an omni-channel experience for consumers who are actively using both digital and physical platforms to research and purchase," says Patrick Dodd, managing director of Nielsen China.