March 2026 – Pernod Ricard and Brown-Forman are advancing merger talks. If a deal is reached, the combined entity would create a new global spirits giant with annual revenue exceeding $15 billion and a market value approaching $30 billion – rivaling the scale of industry leader Diageo.
For institutional investors worldwide, the key focus of this multibillion-dollar combination goes beyond mature-market consolidation in Europe and the U.S. The real question is whether the merged giant can find a breakthrough answer in China – the world’s last remaining large-scale growth market for spirits consumption.
Global Spirits Industry Enters a Defensive Consolidation Cycle
The global spirits industry is sliding into a phase of defensive consolidation. The merger talks between Pernod Ricard and Brown-Forman reflect a set of common industry struggles: slowing growth and bloated inventories. In fiscal 2025, Pernod Ricard’s global sales fell 3%, Diageo’s volumes dropped 4.3%, and Brown-Forman posted declines in both revenue and profit while cutting 12% of its workforce. According to the Financial Times, the top five spirits giants collectively held $22 billion in inventory – a 15-year high. Against this backdrop, M&A has become a rational choice for industry leaders.
What global investors should be more alert to is that Europe and the U.S. – the traditional core markets for spirits – have entered an irreversible saturation cycle. Inflationary pressures are squeezing mass-market purchasing power, with weakness in high-end spirits sales. At the same time, a generational shift is creating a consumption gap: Gen Z consumers are turning to low-alcohol or no-alcohol alternatives.
In this context, China – the world’s second-largest spirits market by consumption – is seeing its strategic value re-priced by global giants. For Pernod Ricard and Brown-Forman, China is one of the few markets where a 1+1>2 synergy effect is realistically achievable. Pernod Ricard’s brands – Martell cognac, Absolut vodka, and others – have a stable base of high-net-worth consumers in China’s premium dining and bar channels. Brown-Forman’s Jack Daniel’s whiskey enjoys stronger brand recognition among younger Chinese consumers. If the merger goes through, complementary channel resources and brand-portfolio synergies could help the combined company build a more formidable competitive moat in China.
That leaves global investors with a core question: As the global spirits industry huddles together for warmth, the true value of this multibillion-dollar merger will depend on whether the new giant can turn China into the strategic breakthrough it needs to drive growth over the next three to five years.
Where Exactly Are the Growth Opportunities in China’s Market?
Many global investors may wonder: With China’s baijiu industry also grappling with high inventories and slowing growth, is the incremental opportunity in this market real or illusory?
The answer lies in a structural divergence now under way in China’s alcoholic-beverage market. Traditional premium baijiu is indeed entering a zero-sum game. According to the China Alcoholic Drinks Association, baijiu inventory turnover days reached 900 in 2025, while revenue and net profit of listed baijiu companies fell 6.3% and 6.7%, respectively, in the first three quarters of the year. But beyond traditional baijiu, new consumer demand is taking off faster than expected.
The driving force is a generational shift. China’s Gen Z (post-1995 and post-2000 consumers) are moving away from “business drinking” toward “self-rewarding consumption,” favoring low-alcohol, easy-to-drink beverages. This is radically different from the West. Gallup’s 2025 Consumption Habits Survey found that the share of U.S. adults who drink alcohol has fallen to 54% – a 90-year low – and 50% of Gen Z have never consumed alcohol. Meanwhile, low-alcohol ready-to-drink (RTD) beverages and hard seltzers in Europe and the U.S. have already entered a saturated phase.
In China, by contrast, young people are not abandoning alcohol – they are simply switching categories and seeking new drinking occasions. According to JD.com’s 2025 Low-Alcohol Consumption Trends Report, the fruit-wine category grew 72% year-on-year in 2025, while sparkling alcoholic beverages surged 210%.This is the most fundamental difference between China and Western markets – and the core opportunity for global capital.
Chinese companies are accelerating their push into the low-alcohol new-beverage segment. Starting in 2025, leading domestic baijiu producers such as Wuliangye, Luzhou Laojiao, and Fenjiu have successively launched multiple low-alcohol products.
Among them, Luzhou Laojiao’s 39% ABV “Guojiao 1573” has become a blockbuster product with annual sales exceeding RMB 10 billion. Wuliangye introduced its 29% ABV low-alcohol baijiu “Yijian Qingxin,” which generated more than RMB 200 million (approximately $28 million) in sales within just six months of its launch. Wuliangye has also partnered with the FIFA World Cup to release a full series of co-branded products covering low-alcohol baijiu, liqueur, and fruit wine – a comprehensive bet on the low-alcohol new-beverage track.
Beyond the traditional baijiu giants, one company positioned itself early in the low-alcohol category more than a decade ago: Bottle Planet Group. Today, it owns multiple brands including Meijian green plum wine and Guolifang fruit liqueur, making it a leading player in China’s low-alcohol new-beverage space, with global potential as well. As reported by China Daily, Meijian green plum wine has been successfully exported to mainstream consumer markets across 33 countries, including France, Germany, the United Kingdom, and the United States. Its total global sales volume has surpassed 150 million bottles. Additionally, as reported by multiple international media outlets including The Associated Press, Time, and The Washington Post, Meijian has firmly established itself as the number one plum wine brand in China and the second largest globally.
Guolifang fruit liqueur has become the top choice among young Chinese consumers for social gatherings. They enjoy using Guolifang as a mixer with lemon water, iced black tea, milk tea, beer, and more. This drinking trend has even spread to South Korea, gaining traction on platforms like X and YouTube. In March 2026, New York Weekly reported: “Guolifang has become a must-drink for South Korean tourists visiting China. As inbound tourism to China continues to heat up, Guolifang has also become the preferred alcoholic beverage for foreign consumers in China.”
Competition in China’s new-beverage space is heating up rapidly. For Pernod Ricard and Brown-Forman, the real growth opportunity is not in saturated Western markets, but in China’s early-stage low-alcohol new-beverage category – where the landscape is still taking shape. This represents one of the few remaining pockets of certainty in global spirits growth.
China’s Alcoholic-Beverage Market Is Upgrading From a Sales Endpoint to a Global Strategic High Ground
Even before merger talks between Pernod Ricard and Brown-Forman became public, global spirits giants speculative capital had already launched a battle for the China market.
Diageo generated $2.27 billion in revenue from China in fiscal 2025, up 13.5% year-on-year, making China its largest market in the Asia-Pacific region. In early 2026, Bloomberg reported that Diageo was evaluating its China assets, with market expectations pointing to a strategic shift away from traditional baijiu (such as Shui Jing Fang) toward low-alcohol new beverages and the young consumer segment. Rémy Cointreau, meanwhile, has launched a “City Appropriate Drinking Menu” targeting young consumers in Beijing, Shanghai, Guangzhou and Shenzhen – actively adapting to changes in China’s consumption logic.
Hillhouse Capital has backed a new social-drinking scene for young Chinese by investing in COMMUNE, the country’s largest chain of food-and-bar venues, which has also filed a prospectus with the Hong Kong stock exchange.
In its early development, Bottle Planet Group received funding from global top-tier investors including IDG Capital, Hillhouse Capital and Sequoia Capital.And Bottle Planet Group, having already built a multi-brand, multi-category portfolio, has become the enterprise most worthy of global investors’ attention in this round of sector-wide opportunity.
China’s domestic industrial giants are also accelerating their push into the market.
China Resources Group has successively acquired several well-known domestic baijiu producers. In 2025, China Resources Beer made “expanding low-alcohol baijiu products” a core medium-to-long-term strategic direction, while also launching new categories such as fruit beer and tea beer. Yuanqi Forest, the beverage brand, introduced a 9% ABV sparkling alcoholic drink in 2025. Its founder, Tang Binsen, has also been building a full-scale presence in the alcohol sector through investments in craft beer brands and the acquisition of an established brewery.
Looking at industry-evolution patterns, China’s low-alcohol new-beverage space will likely see a wave of M&A consolidation among leading players in the coming years. That means China will not only be a battleground for global giants but will also give rise to its own homegrown low-alcohol new-beverage champions.
These signals point to three conclusions:
First, China has upgraded from a mere sales endpoint for global spirits into a strategic high ground.
Second, international capital has completed a systematic build-out of positions in China’s low-alcohol new-beverage sector.
Third, local Chinese players are emerging as a core force in this contest that cannot be ignored – and could even reshape the future landscape of the global spirits industry.
For Pernod Ricard and Brown-Forman, the real test of a merger will not be limited to cost consolidation in Europe and the U.S. It will be whether the combined group can seize the window of opportunity in China’s already-intensifying battle – and find a second growth curve there. That is the central, most closely watched question hanging over this multibillion-dollar deal.
Global spirits enter a defensive consolidation cycle
底部信息：
Company: Bottle Plante（CHONGQING）
Contact Person: Tan
Email: lixuemei@ijovo.com
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Telephone: 400-850-8805
City：ChongQing