In March 2026, Pernod Ricard and Brown‑Forman are advancing merger negotiations. Should the transaction proceed, it would create a new global spirits powerhouse with a market capitalization approaching $30 billion. For global investors, the central story of this multibillion‑dollar deal extends beyond mere consolidation of legacy Western markets. The critical question is whether the combined giant can find a winning formula in China—the world’s last remaining large‑scale growth market for spirits consumption.
Global Spirits Industry Enters a Defensive Consolidation Cycle
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.
Even more alarming for global investors is that core markets in Europe and the U.S. are entering a downturn, with premium spirits sales softening and a generational consumption gap emerging.
Against this backdrop, China—the world’s second‑largest spirits market—is seeing its strategic value re‑rated by global giants. For Pernod Ricard and Brown‑Forman, China represents one of the few core markets where a merger could deliver genuine “one plus one equals three” synergies. Should the two combine, the deal would unlock complementary distribution networks and a more cohesive brand portfolio.
That raises a core question for global investors: the true value of this multibillion‑dollar merger hinges on whether the combined powerhouse can identify a decisive breakthrough for growth in the Chinese market.
Where Exactly Are the Growth Opportunities in China’s Market?
China’s baijiu industry is also grappling with elevated inventory levels and slowing growth—does this market truly offer incremental opportunity?
While the traditional premium baijiu segment has indeed entered a correction phase, new consumption drivers are emerging at a pace that has exceeded expectations.
The driving force behind this shift is generational change. According to Gallup, the percentage of American adults who drink alcohol has fallen to 54%, and 50% of Gen Z report that they never consume alcohol. In Western markets, categories such as RTDs and hard seltzers have already entered a saturation phase. China’s Gen Z, however, is not abandoning alcohol—they are gravitating toward lower‑alcohol alternatives and seeking out entirely new drinking occasions. According to the 2025 Low‑Alcohol Beverage Consumption Trends Report, China’s fruit wine category grew at an annual rate of 72% in 2025, while the sparkling wine category surged at an annual rate of 210%. This represents the most fundamental distinction between the Chinese and Western markets—and the core opportunity for global capital.
China’s leading baijiu houses are moving aggressively into the low‑alcohol, new‑style beverage segment. In 2025, Wuliangye launched a 29‑proof baijiu and, in partnership with the FIFA World Cup, introduced fruit wines and liqueurs, placing a full‑scale bet on the low‑alcohol new‑beverage category. Luzhou Laojiao’s 39‑proof product continues to lead the low‑alcohol baijiu segment by sales volume, and the company is now developing even lower‑proof variants. Fenjiu and Yanghe have also entered the low‑alcohol market with their own offerings.
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.”
The competition in China’s new‑beverage arena is heating up fast. For global spirits giants and investors alike, the true growth opportunity lies not in saturated Western markets, but in China’s nascent low‑alcohol new‑beverage segment.
China’s Alcoholic-Beverage Market Is Upgrading From a Sales Endpoint to a Global Strategic High Ground
Indeed, global spirits giants and speculative capital are already jockeying for position in the Chinese market.
China has already become Diageo’s largest market in the Asia‑Pacific region, and the company is shifting its focus from traditional baijiu toward the low‑alcohol, new‑style beverage segment. Meanwhile, Rémy Cointreau has introduced a “city‑specific drinking menu,” a move designed to align more closely with evolving Chinese consumption patterns.
Hillhouse Capital has invested in COMMUNE, China’s largest restaurant‑bar chain, placing a bet on the new social drinking occasions emerging among young Chinese consumers.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 heavyweights are also accelerating their push into the space. China Resources Group has acquired a string of baijiu distilleries in succession, designating lower‑proof baijiu as a key growth vector while simultaneously rolling out new categories such as fruit‑flavored beer and tea‑infused beer. Beverage brand Genki Forest has launched a 9% ABV sparkling alcoholic drink, and its founder, Tang Binsen, is concurrently investing in craft beer ventures and acquiring established breweries.
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.
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, the accelerating competition from Chinese domestic players could ultimately redraw the future landscape of the global spirits industry.
For Pernod Ricard and Brown‑Forman, the true test of this merger lies not merely in cost consolidation across Western markets, but in whether the combined entity can secure a second growth curve in China. That remains the most compelling open question hanging over this multibillion‑dollar deal.
Disclaimer: This press release may contain forward-looking statements. Forward-looking statements describe future expectations, plans, results, or strategies (including product offerings, regulatory plans and business plans) and may change without notice. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements.
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