Christmas special III: what does the popularization of mulled wine🍷tell you about China? | Following the yuan

Understand how China consumer market works via these 3 trends that dominate Shanghai this Christmas (3/3)

Welcome to the last edition of Christmas special! This time, we will talk about mulled wine and how this ancient Roman concoction evolved into Shanghai’s winter beverage of choice. (Here, another reason for you to think about the Roman Empire.)

In 2014, one of my first articles for Caixin’s lifestyle platform Enjoy (RIP) , which marked my forey into writing, was a DIY mulled wine tutorial. At that time, pre-short-video era, mulled wine was perceived as somewhat of an exotic choice by local consumers.

Today, it’s the winter drink in Shanghai. It’s a staple offering of restaurants, bars and markets from late November to January. And for the first time, social e-commerce platform Xiaohongshu, otherwise known as China’s middle-class consumers’ search engine, put out an official Shanghai mulled mine map. Featuring 40+ restaurants and bars, the map encourages users to do a themed bar crawl on their winter #citywalk.

Xiaohongshu launched a mulled wine map for Shanghai, and encourages consumers to 'check in' at multiple bars to win gifts. Image: XHS

What are the driving factors of mulled wine’s mass popularization?

Rachel Gouk, the Shanghai-based Malaysian founder of popular English food & drink blog Nomfluence, views mulled wine as a long-time favorite in the restaurant and bar scene.

To my further probe on its rise to mainstream popularity, she said that it’s “an easier-to-understand drink” compared to White Russians and Hot Toddies. “Wine! Hot! Spices! Sweet!” She wrote to me on WeChat. “People want it because it’s festive.”

Nomfluence’s guide of mulled wine in Shanghai. Read here,

While agreeing with her observations, I feel like domestic mass consumer brands and local bars didn’t catch on until recent years. In 2021, the domestic retailer Freshippo launched a mulled wine DIY kit, followed by a ready-to-drink version in 2022. The wine e-tailer Lady Penguin 醉鹅娘 also debuted boxed mulled wine in 2022. This year, both Luckin Coffee and Tims Horton China introduced Mulled Wine Americano as their Christmas specials.

Mulled wine coffee from Luckin Coffee and Tims Horton China.

I believe the most important driver is that heated red wine is relatively low in alcohol volume (%Vol) and the flavor is neutralized with added sugar/honey, which pleases new wine drinkers and fits into China’s low ABV market trend.

In recent years, the notion of “tipsy 微醺” has been cleverly used in marketing for alcopops and other low-alcohol drinks with %Vol below 15. With an alcohol volume of around 10 %Vol or lower, mulled wine can be seen one of the many players in this sector, which also includes premixed drinks, cider, plum wine, tea wine, etc.

wine e-tailer Lady Penguin 醉鹅娘 launched mulled wine in a box in 2022. Image: Brandstar

In 2022, the size of China's low-alcohol drink market was forecast to reach 33.8 billion yuan (US$4.74 billion), nearly 60% of the estimated beer market size. And as the domestic low-alcohol drink market further matures, the industry's market size is expected to exceed 70 billion yuan by 2025, according to a 2022 report by market research consultancy Kantar, e-commerce giant Tmall and flavor and fragrance market leader Bairun (002568.SHE).

Another obvious factor of its popularity is its warmth, which makes it winter friendly and female friendly.

It suits Chinese preference, the traditional belief that one should not have iced/cold drinks, especially during winter. For Chinese women, hot drinks are also believed to be a suitable choice during their menstrual period, making mulled wine a go-to option for social outings. (Quoting ancient Chinese medical text Huangdi Neijing and Chinese philosopher Mencius, state media People’s Daily claimed that “drinking hot water upholds thousands of years of history in China.” 😂)

Where is it going?

There are two ways to look at the future of this imported cultural product: it's likely to spread to lower-tier cities, following trends from tier 1 and 2 cities with the help of social media, and physical products from the likes of Luckin.

Another lens is the product level, depending on the industry, it can either be a seasonal gift or adds flavor to brands’ seasonal offerings.

Currently, engagement is primarily seen in the food and beverage sector. For example, Shanghai coffee shop and creative space Common, wine boutique Little Tipsy Isle and the owner of restaurant Herasa organized a mulled wine workshop in mid-December for just over a dozen community members.

But it is likely to go beyond. For example, any consumer brand can make a DIY package or gift box for their valued customers during winter time, and in few years when big data tells product people that the smell and taste of mulled wine reminds consumers of winter, there can be mulled wine-flavored candies and candles. Products like this may be familiar to the expat community but would bring a novel experience to local consumers.

If you think mulled wine is already pretty mainstream, we are only at the start of it.

Let me know if there are other trends you want me to unpack, before that, have a good holiday, and drink loads of hot water or mulled wine! 🔚

The previous two editions if you missed them: