(Yicai Global) June 7 -- No investments have been made in China's low-alcohol drinks industry this year, with industry insiders saying the sector’s rapid cooldown mainly results from the impact of changes to the market environment over the past two years.

Investors took part in nearly 50 fundraisers by low-alcohol beverage makers in 2021, a report by Tmall and Kantar Group showed. Last year, just six such brands completed seven funding rounds, according to data on corporate information platform Qichacha. And this year there have been none so far.

Investor interest has not only waned because of the impact Covid-19 had on alcohol consumption, but also because of the industry's own development

Too few brands really engaged in in-depth industry chain operations even when the sector was hot, Tao Shiquan, founder of baijiu brand Joyyouth, told Yicai Global. 

Most project founders lack the funds for follow-up operations and experience in running and building a brand, according to Yin Kai, founder of a Shanghai-based brand management firm.

China’s low-alcohol beverage market has huge potential, however, and according to a research report by Ries & Ries Consulting, young consumers favor such drinks, unlike older drinkers who prefer stronger liquor. About 75 percent of the young go for drinks with an alcohol content of 15 percent or less.

Green plum wine, which has better market consumption fundamentals, has been taken off among Chinese consumers.

At least 15 Chinese liquor makers produce low-alcohol drinks worth more than CNY200 million (USD28.1 million) a year, per data from the China Alcoholic Drinks Association. Leading palm wine brands grew exponentially, with their sales totaling CNY2.5 billion (USD350.9 million) last year, up from CNY1.2 billion in 2021.

The Chinese market for low-alcohol beverages will be worth more than CNY70 billion (USD9.8 billion) by 2025, with annual growth in excess of 32 percent in the plum wine segment, the Tmall and Kantar report predicted.

Editors: Shi Yi, Martin Kadiev