CMB2018: Current Situation and Trends on Wine in China

Alcoholic wine production in China is to the tune of 1000 billion RMB/Yuan (around s $64 billion). Grape wine, beer, rice wine which is easier to produce, and white liquor- are all constituents of this alcoholic beverages segment. China has a long history  of  winemaking but grape wine was not spread throughout China. As a consumer China is no. 3 now in terms of value but will become the second biggest in value in 2021 (in 3 years), says Demei.

The consumption of imported wine doubled in volume every 2 years till 2012 but then it slowed down due to the world-known check on corrupt practices by the government. Comparatively speaking, the domestic wine always grew in consumption. But since 2014, the imported wine started growing fast again.

He also stressed that before 2015 they used to import mostly first growths from Bordeaux, and expensive wines. But since then they have been importing bigger volumes but the average price went down very fast. Then the e-commerce entered the market in a big way and the customers started looking for lower and lower prices. Today the average price is $3.48 per bottle. Lot of low ended European wines are now in the fray too. It used to be $2 for the Spanish wines, lowest ever. The arrival of online stores like Alibaba has resulted in continuously lowering prices of wine since they work on higher volumes and lower quality. Here are some charts he displayed for various figures regarding the imported, domestic and bulk wines imported.  Countries exporting most Bulk wine are Spain, Chile and Australia.

Graphs courtesy Demei Li : Press each of the 8 slides for appropriate graphs

Not a mono market

China is a big country with 1.4 billion people where translation is very important. China is not a mono market, so it is not feasible to deal with the whole country. The food habits are different in different parts so unified palate does not exist. Food changes the wine requirement. Thus it is not a global market for everything.

Different regions have different eating habits; some like their food salty while others prefer it spicy. Some like the food to be sweet. So we have to talk about what wines they like. Making wines especially for china would be mistake. If you do that, customers would think you are making bad wine for them, exclusively for the Chinese market.

Another problem one faces is that most existing wine drinkers are already in the wine business and so wine tasting with then may not promote higher consumption. The habitual wine consumer can be categorised into these categories: A small population who drink and buy wine regularly. Then there are those who know what they like and like anywhere else in the world have their buying source. These buyers are mainly based in First-tier cities. Then there is a category like in India where they have family relatives studying or living abroad. But most of the consumers are those who have been working in wine related business-no promotions would be helpful for selling wine to this category.

It was no surprise to learn that over 60% of French wine is from Bordeaux.  The Chinese don’t know about Gewürztraminer- but are conversant with Cabernet Sauvignon and Chardonnay.

Chinese want to taste wine

Wine is not part of their daily life so we cannot expect them to get an experience; it is too complicated. Chinese consumers like fruity wines -they may not go for Montrachet from Burgundy. Lighter wine and good balance is fine for them. A heavier wine with tannins may not be good- Chinese don’t like more tannic or higher acidity in their wine.

Big wineries like Great Wall have a major share anyway. Boutiques have a decent niche. It’s the mid size wineries which find it difficult to market. Of course Gold medals won at competitions like CMB would help. The customers respect independent organisation.-especially boutique wineries.

White before Red earlier

Interestingly, today 90% of Chinese drink red wine. But before 1996, a year before Hong Kong was returned to China as its territory, they drank mostly white wine. In 1997, the Chinese society changed a lot. The Chinese started having more connection and connectivity with the western counterparts. Besides the health benefits, red wine is known to give good value in the market because of complexity and capability to mature.

‘You cannot sell white wine at high prices. You can tell the success story of Romanée -Conti and then sell red wine. Moreover in China we drink to improve relations- since red colour is nice and liked, red wines are more convivial,’ said Demei. He however informed the audience that in the past 3-5 years there had been a change in the coastal areas where white wine paired better with seafood. Beer causes some problems, white liquor is too hard and therefore white wine is getting more popular, ‘ he said, advising the foreign producers to forget about Rose wine as it was very fragile and after one year, it was not good enough to drink.

Best wine producing Region

‘Yantai is the best region for good quality wine, as the support from government is good’ said Demei. It may interest our Indian viewers to know that Tibet has been chosen as an area to produce wine. ‘There was a National Wine Conference in 1999. We discovered that Tibet had good latitude,’ is the plausible explanation for this step, ' said Demei.

But his comprehensive answer came in reply to a question by a member in the audience who asked him,’ with all his international experience and working with various regions in China, where would you set up a winery, if you had a choice. ‘Ningxia’ was his prompt and succinct answer.

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