Analysts expect China’s high-end alcohol market will see significant growth over the next 10 years despite the country’s economic downturn and crackdown on extravagance and corruption, while low-end liquor and beer companies will struggle.

Research by China International Capital Corporation (CICC) forecasts that luxury liquor – defined as being priced at over 200 yuan (HK$234) – will see 25 per cent growth in revenue this year. The luxury sector is seen as becoming more accessible to mass consumers over the next 10 years, providing room for “10 times growth in the coming decade”, CICC said, without providing specific sales forecast figures.

Medium-range liquor will see 10 per cent growth this year, but the low end – bottles priced below 80 yuan – will suffer declines in growth, CICC researchers said.

The beer industry, however, is experiencing weak volume growth, with several breweries posting slight declines in the first half of the year, a recent JP Morgan report said.

China Resources Beer, Tsingtao Brewery and Beijing Yanjing Brewery are feeling the pressure from higher expenses, lower sales and consolidation of the beer market. While some breweries may benefit from a more consolidated beer sector, analysts say the overall market has seen “a volume growth slowdown” and “intensifying competition”.

Separately, the scarcity and greater brand visibility of high-end alcohol has buoyed demand for expensive liquor, CICC researchers say. While China had 1,563 producers of luxury liquors in 2015, only around 10 high-end brands had over 500 million yuan in annual operating revenue. This concentration of profits on expensive liquor within a handful of brands has seen them promote products nationwide at lower costs, a trend accelerated by alcohol dealers that actively seek sales agency rights from a few well-known brands.

Luxury brands such as Moutai, distilled baijiu liquor favoured among the country’s elites, have been slowly recovering after Chinese President Xi Jinping’s anti-graft measures caused demand for luxury drinks to tank. Moutai, which was priced at almost 2,000 yuan a bottle four years ago, quickly fell to as low as several hundred yuan a bottle.

This followed several high-profile arrests of corrupt government bureaucrats that curtailed the practise of gifting Moutai among officials, and a 2012 ban on lavish banquets where free-flowing Moutai was often consumed.

Moutai remains China’s most expensive drink, with its wholesale price slowly climbing back, increasing from 820 yuan in March to between 900 and 930 yuan per bottle in late July. The price gains helped Moutai widen its lead over peers and pointed to “its irreplaceable value as a scarce brand,” according to the CICC report.

“The underlying driver is the upgrading in mass consumption,” the report said. “In an age of mass consumption, top brands tend to enjoy higher premiums. Moutai’s price is still reasonable given the strong demand.”

High demand mean that luxury liquors may be temporarily unable to keep up with supply, and analysts predict a production shortfall of 0.4 metric tonnes over the next five years.

Moutai, for example, plans to ship 8,000 tonnes of liquor in the second half of this year. In order to satisfy liquor demand for next year’s Spring Festival in late January, Moutai will likely end up with a total shipment volume of 12,000 tonnes for the latter part of 2016, ending the year with over 70 per cent more in sales volume than 2012, according to CICC.

While analysts remain wary that a macroeconomic slowdown in China’s economy could affect the consumption of high-end drinks, they are bullish on luxury liquors. “High-end liquor brands will likely maintain strong profitability,” CICC said.