The Chinese wine market has gradually recovered compared to last year but is still affected by the epidemic.
Wine sales in the first half of 2021 were higher than last year, especially during the Chinese New Year period, with sales higher than expected. “From the beginning of this year, the epidemic situation got better, and people’s life got back to normal, the sales volume slightly rebounded especially during Chinese New Year and the Spring Festival” confirmed PENG Yihong, General Manager in a wine import company in Guangzhou.
In terms of sales in 2021, French wines remain at the top of the list of the most popular purchase choices for Chinese consumers. This is especially true for Bourgogne and Bordeaux wines. Bordeaux has increased sales and remains the leader for France regions while Bourgogne seems to have the fastest growth sales. Champagne and Rhone Valley benefited from this good dynamic as well.
Following the tariffs on Australian wines, wines from other countries have gained to varying degrees, with wines from South Africa and South America emerging well. Chile is also on the rise with competitive advantages. Analyzing the results of his company and the wine industry surrounding him Bo YANG maintains that “Excluding Australia, sales in Chile grew the fastest, followed by South Africa. But France benefited as well of the situation”. Nonetheless, during the “618 Shopping Festival”, one of the main promotion periods of the year, Penfolds remains the top 1 wine brand that has been sold on Taobao, highlighting once again the power that can have a brand that has managed to build a strong reputation.
Red wines are still dominating the market, where Southern cities tend to prefer a lighter taste and Western and Northern cities rely on stronger tastes and fruity flavors. Being in contact with many consumers in the restaurant he works for as a sommelier, Lewin KONG notes that “consumers are becoming younger and younger, so lighter bodied reds will be more popular” even though “Middle-aged group will choose some relatively heavy-bodied wines”. Nevertheless, if red wine still dominates with a huge majority of sales, consumption of dry white and sparkling wine is also noticeably growing whether it is in the North or South of the country, but mostly in Tier 1 cities.
In terms of preference, consumers in Tier 1 cities are concerned about the quality and taste of wine, while consumers in Tier 2 and 3 cities are more concerned about value for money, even though Tier 2 city consumers tend to give more and more importance to the origin and taste. As for the willingness to drink organic or natural wine, there is not obvious interest in this type of wine in China, even though it is quite rising in Shanghai.
With more than 2,000 thousand wine bars, Shanghai is very different and way more mature than the rest of the country, and even though those trends are rising here and there with dedicated bars, it is far from being global. For now, most of Chinese consumers do not take this as a selling point or recognize them, and professionals tend to say that it will not increase within 5 years. Lewin KONG adds that “many consumers are unable to distinguish between organic and non-organic, natural, and unnatural. For example, in restaurants, fewer consumers specifically ask if a wine is organic or natural”.
In terms of consumer profile, the main target remains white collar, business people from 30 yo, whether they are wine amateurs or buying for corporate matters, representing the segment with more consumption power. While millennials might have some interest in wine, they are looking for cheap products, are very attracted by brands and are looking for more casual wines with good value for money. Overall, the origin, quality and price remain the main criteria, with the importance to communicate and reinforce the reputation of the wines and their origin.
Evolution and vision
The overall situation will depend to a large extent on the evolution of the epidemic, and experts do not expect a major boost in wine sales until the end of the year. Sales manager in Beijing, Yushan SUN notes that “the imports will gradually increase” and is “looking forward to normal sales in 2022” while Yang WU, General Manager in Shenyang is more moderate, insisting on the stability of the epidemic and that “there is still a large amount of supply before”. Indeed, the rise of logistics costs and stock that professionals already have might also prevent from a huge increase in import until the end of the year.
In the future, French wines are predicted to keep on dominating the market, with the Rhone Valley region repeatedly mentioned as a promising region, while Bordeaux and Bourgogne will continue growing. Italy also hase room for development but there is potential for New World wines, such as those from Chile and South Africa, and even wines from America that tend to gain popularity.
The consumption of wine in Chinese market has been declining since 2017, especially in 2020 when the market was under the impact of the pandemic. Wine import has also been in a downward trend ever since the highest import volume in 2017. The impact of the pandemic, the misperception of high price, and the lack of strong brands and wine knowledge were contributing factors to the current situation of the Chinese wine market.
Chile and France continued their strong position in China wine market and enjoyed a progression in market share while Australian wine now no longer plays a significant role.
Chilean wine enjoys the same policy advantage of zero tariff as Australia enjoyed before, which is a key factor to offset the loss of its Chinese agents and distributors. As for Australia, Chile is also in the southern hemisphere, the wines all have a similar taste of sweetness and richness of fruity flavor. At the same time, Chile’s large grape growing area, large wine production volume, rich varieties of grape, competitive price, and stable economic and trade ties between the two countries are all factors that make Chilean wine a popular alternative to Australian wine and fill the market gap.
France had topped among the imported wines regarding value though under a negative impact of pandemic and a low grape vintage due to extreme weather condition. China has become the largest market for Bordeaux wines. In 2020, China’s imports of Bordeaux fine wines accounted for about 30% of the export value of Bordeaux fine wines. With the changing international situation, the share of Bordeaux Grand Cru exports to China is expected to increase. The Bordeaux Wine Association also said it will launch a series of new marketing programs in mainland China this year to further attract Chinese consumers.